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Companies may have to make amends after midterm elections

By Ylan Q. Mui and Jia Lynn Yang
Wasington Post Staff Writers
Tuesday, November 2, 2010; 12:30 AM

Republicans have a message for the businesses that worked closely with the Obama administration over the past two years on key controversial issues: We won't forget.

Take the case of Wal-Mart, the behemoth big-box retailer that liberals have long loved to hate. Several years ago, it began to break ranks with industry groups by speaking out in favor of an increase to the minimum wage and health-care reform. And, for the first time in its history, it gave more money to Democrats than the GOP for Tuesday's elections.

The corporation's moves caught the eye of Republican Rep. Dave Camp of Michigan. During a phone call with company lobbyists last year during the fight over the health-care bill, Camp bluntly reminded Wal-Mart of its unpalatable position on the issue, according to sources familiar with the conversation.

Now, Wal-Mart's political team finds itself in an awkward position. Camp is poised to become the next chairman of the powerful House Ways and Means Committee.

Companies that worked with the Democrats over the past two years would face a far less sympathetic audience from Republicans, who are expected to make significant gains in the midterm elections. If they gain control of Congress, party leaders have pledged to revisit the health-care bill and lower taxes for businesses.

"Some businesses joined in on the hang-me-last strategy," said Rep. Peter Roskam (R-Ill.). "I think upon reflection, in moments of candor, they may say they were foolish to do that."

Corporate America often views Washington politics as a bane. But over the past two years, many companies and industry groups felt compelled to get more involved as the Obama administration pushed an aggressive agenda on issues central to their economic well-being. Some said they had few options but to seek a seat at the table.

"When you're faced with legislation that's going to be enacted, it's a tough decision," said John Scofield, a Republican lobbyist for Podesta Group. "Do you fight or cut a deal?"

GOP leaders began speaking with lobbyists and corporate donors about the imbalance in their campaign contributions as momentum for a Republican upset built over the year. In this election cycle, corporate political action committees donated $262 million, with 53 percent going to Democrats and 47 percent to Republicans, according to the Center for Responsive Politics. During the last midterm elections, Democrats received only 35 percent of corporate PAC money.

Wal-Mart has given $1 million in the current election cycle to federal candidates, according to the center, with 53 percent going to Democrats. Company spokesman Greg Rossiter said the retailer backs candidates from both parties who support issues close to their customers, employees and shareholders.

The pharmaceutical industry, in particular, worked closely with the Obama administration and Democrats on Capitol Hill to pass health-care reform. During the debate, the group's top lobbyist at the time, Billy Tauzin, struck a deal with Democrats under which the industry would give up $80 billion in revenues over 10 years to help pay for the legislation. The Pharmaceutical Research and Manufacturers of America, or PhRMA, then spent tens of millions of dollars on television ads supporting the overhaul.

Tauzin's strategy did not sit well with House Republicans. Their leader, John Boehner, who is likely to become speaker should the Republicans win control of the House, blasted PhRMA in a scathing letter.

"Appeasement rarely works as a conflict resolution strategy," he wrote to Tauzin. "When a bully asks for your lunch money, you have no choice but to fork it over. But cutting a deal with a bully is a different story, particularly if the 'deal' means helping him steal others' money as the price of protecting your own."

Earlier this year, amid some members' grumbling that Tauzin gave up too much ground to Democrats, PhRMA replaced him as its president with John Castellani, the former head of the Business Roundtable, an association of corporate chief executives. Tauzin's departure should help PhRMA patch up any bad feelings among Republicans left over from the group's support of health-care reform, according to James Thurber, head of the Center for Congressional and Presidential studies at American University.

And just in case, the trade group signed up as a major sponsor at an annual fundraising dinner last month to support Catholic education, a pet cause of Boehner.

"There's going to come a time when pharma companies are going to want Republicans to take a tough vote for them, and they're going to be like, 'Why are we going to walk off a cliff for you guys? You were fighting against us,' " said one Republican lobbyist, who declined to be named in order to speak candidly.

Castellani rejected the idea that PhRMA had leaned too far toward the Democrats. "I've worked with both sides of the aisle, and that's consistent with PhRMA," he said. "Our mantra is we'll work with whoever's in charge."

This election cycle, the industry group says its PAC has given $195,655 to federal candidates and leadership PACs, 62 percent to Democrats, 38 percent to Republicans.

Other groups picked their battles. Earlier this year, the Independent Community Bankers Association, a powerful trade group, fought against a provision of the sweeping financial regulatory overhaul legislation that limits debit-card swipe fees. The provision, introduced by Richard J. Durbin (D-Ill.), the second-highest ranking member of the Senate, was criticized by the group as "harmful," "hazardous" and "discriminatory."

When that effort failed, the ICBA backed off its opposition to the broader legislation. Instead, it took no official position, leaving other financial services groups and frustrated Republican lawmakers in the lurch.

"You have to tailor your decisions and your posture based on who controls the agenda, but always and consistently with the best interest of your members in mind," said Cam Fine, executive director of the ICBA. "That's just a fact of life in Washington. You adjust to the climate that you're in."

Fine added that the legislation included benefits for community banks, such as exemption from oversight by the new consumer finance regulator, that made it palatable. And with Republicans likely to take over the House, the ICBA is hoping to work with the new Congress to roll back the swipe fee provision.

Many business groups welcome the possibility of a Republican takeover of Congress as an opportunity to play offense after two years in a defensive crouch. Republicans are viewed by many corporate lobbyists as being more sympathetic to traditional pro-business causes, such as lower taxes and lighter regulation.

And with many executives grumbling that the White House and Democrats have been pursuing policies that hurt business, Republicans will be eager to burnish their reputation as being pro-industry.

"I think you're going to have a Republican Congress that's going to be driving toward creating stability and predictability in the marketplace," said Roskam, the Illinois Republican. "We know what we need to do to make policies that can help create an environment where an American business can prosper."

Staff writers Perry Bacon Jr. and Paul Kane contributed to this report.

muiy@washpost.com yangjl@washpost.com

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