This should be the U.S. Chamber of Commerce’s moment.
A businessman occupies the White House. Republicans, who have received generous campaign donations from the Chamber, control both houses of Congress. And the agenda is full of favorite business issues such as tax reform, regulatory rollbacks and infrastructure spending.
Yet in recent months, the U.S. Chamber — historically one of the cornerstones of Washington politicking and policymaking — has been deeply shaken. Members are divided over the border-adjustment tax, health care and climate change. Some want the Chamber to more vigorously stand up to President Trump to protect free trade.
There has also been turbulence on the foreign front. The U.S.-India Business Council has operated under the U.S. Chamber’s wing since its founding in 1975. But on July 7, the council’s high-powered board — including top executives of PepsiCo, Cisco, Warburg Pincus, and MasterCard — voted 29-0 to break away, saying in a letter to members that the Chamber “adds no value, but imposes unnecessary bureaucracy.”
General Electric — the nation’s 1oth-largest company and maker of products as varied as CT scanners, software and gas turbines — has considered pulling out of the Chamber because it views the group as part of an antiquated Washington influence establishment, too exclusively aligned with the Republican Party, and no longer an effective advocate for GE’s interests or views, according to people familiar with the company’s thinking.
Companies like GE, which long relied on the Chamber to be their guide and advocate in Washington, are now as politically sophisticated and connected as the Chamber — if not more so. And in an era that allows virtually unlimited independent political spending, they can form their own more focused, and perhaps more effective, associations. Many lobbyists who represent companies individually think the Chamber has taken on the lumbering character of its aging building, a 92-year-old limestone edifice lined with Corinthian columns overlooking the White House.
“If there was a time in the past when they needed the Chamber for access to the White House, that’s kind of gone,” said a public affairs consultant who had worked with three Fortune 500 companies that have weighed leaving the Chamber. “Companies have the tools to create coalitions of like-minded firms on issues that are important to them.”
This comes on top of high-profile defections in recent years. Apple and Pacific Gas & Electric dropped support in 2009 in response to the Chamber’s attempts to cast doubt on scientific evidence of global warming and play down its economic significance. And Nike quit the Chamber’s board, saying “we fundamentally disagree” with the group’s climate posture, though it has remained a member.
Hewlett-Packard, Mars, Unilever and Yahoo have also dropped out.
“Currently our focus is on participating in trade associations that directly impact our business strategies and product portfolio,” Mars spokeswoman Denise Meredith Young said.
The pharmacy giant CVS quit in 2015 over the Chamber’s lobbying to ease restrictions on tobacco sales; CVS removed cigarettes from its stores in 2014.
Yet many of America’s biggest corporate names have chosen to remain — if not enthusiastic, at least mum and on the Chamber’s roster — paying dues to the association or its wholly owned affiliates devoted to specific issues. At least one major firm, investment manager BlackRock, has joined so it could monitor discussions on Securities and Exchange Commission regulations.
One reason for staying in the Chamber: Companies want to be on the same side as combative Chamber President Thomas J. Donohue, nearly 80, who took the reins of the group two decades ago and remains a formidable figure and fundraiser. The Chamber and its affiliates spent just under $104 million on lobbying in 2016, more than any other corporation or industry association by a whopping margin, according to the Center for Responsive Politics.
“The Chamber under Tom’s leadership has been a real force,” said Charles O. Holliday Jr., chairman of Royal Dutch Shell and former chief executive of DuPont. “I don’t necessarily agree with all their policies,” he added, singling out climate change, “but I think their voice has been useful.”
Founded in 1912, the U.S. Chamber sits atop a nationwide network of local chambers of commerce that operate largely on their own. It does not publish lists of members or their contributions.
It takes more than $4 million a week to run the 500-person national organization, which paid Donohue a handsome $6.6 million in 2015, according to the Chamber’s most recent Form 990 filing to the IRS.
Some Chamber members think that it’s time for Donohue, who bought a $2.8 million house in North Palm Beach, Fla., in 2011, to step down. But people who know him say he is staying. He has said that people will know he’s dead when he is carried out of the office in a box with flowers.
“He looks at his sustained activity in Chamber as keeping him alive and active and he looks at [longtime Motion Picture Assocation President] Jack Valenti who retired and died a short time later,” says Craig Fuller, a Reagan White House official who met Donohue in the mid-1970s.
At the Chamber, fundraising remains a strength. Companies, for instance, can pay $100,000 a year and the Chamber says it will “be their voice in Washington.”
When it comes to a big company, Donohue often “puts on his gladiator uniform,” said an admirer, and presses for contributions. He went at least once to Walmart’s headquarters in Bentonville, Ark., and received multimillion dollar contributions. Walmart, like many companies, steers its money toward Chamber affiliates, vehicles for promoting specific projects such as tort reform or compelling online retailers to pay sales tax.
The U.S. Chamber Institute for Legal Reform, a particularly popular affiliate, collected $44.8 million in 2014, according to its Form 990. It has filed lawsuits or briefs in cases that would limit employee class actions. The Partnership to Fuel America, part of the Chamber’s Institute for 21st Century Energy, worked to win approval of the Keystone XL pipeline.
But the sheer size of the Chamber can make it difficult unify positions.
The Chamber says it avoids issues that split its members, such as the border-adjustment tax. GE, for example, favors the proposed levy while Walmart opposes it.
Yet it has alienated some members and pleased others — notably big insurance firms — by giving its stamp of approval to GOP efforts to roll back former president Barack Obama’s Affordable Care Act.
“The larger you get, the tougher some of the issues become,” said Fuller, who has been a Chamber board member. “Most of time there is a sense that for the greater good we’ll stay engaged at the Chamber.”
Donohue said in a speech that the test for any policy boils down to “a simple question: Will it speed growth or will it impede growth?”
Neil Bradley, the Chamber’s chief policy officer, says that the Trump administration offers opportunities to advance its issues. Items on Trump’s agenda — regulatory relief, tax reform, an infrastructure plan and rolling back Obama’s health-care plan — “are the substantive things we expected and hoped to be dealing with,” Bradley said. But Trump’s protectionist views and desire to limit immigration conflict with the Chamber’s.
Many members would like the Chamber to be a more high-profile leader in promoting free trade, providing cover to companies that might be vulnerable if defying the president on their own.
“You could always say someone needs to yell louder or make a big stink about something,” Bradley said, but he added that when it comes to trade, the Chamber is “focused on getting the policy right.”
The Chamber says it has relaunched a media campaign called “Faces of Trade” to highlight U.S. exporters. And Donohue has traveled to Canada and Mexico for talks on the North American Free Trade Agreement, whose termination he said would be “devastating” for U.S. companies and jobs.
The Chamber asserts that its efforts saved the Export-Import Bank, which provides U.S. government credit for exporters and which conservative Republicans wanted to abolish. During the 2016 campaign, Trump called the institution “excess baggage,” only to let it stand this year.
But one GOP lobbyist cautioned that “they didn’t really save it.” Trump has nominated to its board two former members of Congress — Scott Garrett and Spencer Bachus — who have rejected its mission and vowed to close it. They could curtail the bank’s lending.
Many companies complain that the Chamber has become too closely aligned with the Republican Party.
In 2016, in direct contributions, the Chamber gave money to 17 Senate Republicans and no Democrats. Including the House, 95 percent of the Chamber’s contributions went to Republicans, according to the Center for Responsive Politics, a nonpartisan research group.
Its independent spending on elections came to $29.1 million, none of it for Democrats and only $199,861 — less than 1 percent — against Republicans in primaries.
In a move that infuriated Democrats, the Chamber spent $1.4 million on television ads last year to defeat Evan Bayh of Indiana in a race for his old Senate seat, even though Bayh, a centrist, had worked for the Chamber for five years.
“Evan Bayh is, well, more liberal than you may think,” one ad said, and defenders of the Chamber say Bayh’s voting record on business issues was far weaker than his opponent’s.
The Chamber says it applies a litmus test, backing lawmakers who support 70 percent of its priority measures.
In his last year in office, Bayh voted for the Lilly Ledbetter Fair Pay Act, which passed the Senate on a vote of 61 to 36. The Chamber counted that as a mark against Bayh, lowering his score to 43 percent. Another of the seven key votes that year: Bayh voted in favor of the Affordable Care Act, which the Chamber opposed.
By contrast, the Business Roundtable, a group of leading chief executives, does not score members of Congress or contribute to political campaigns.
Defeating Bayh helped dash Democratic hopes of retaking control of the Senate. Scott W. Reed, the Chamber’s senior political strategist, acknowledges that was the goal for 2016. “Last cycle, it was to make sure that [Sen.] Mitch McConnell (R-Ky.) was leader of Senate,” he said. “There’s no comparison between McConnell and [Sen. Charles E.] Schumer (D-N.Y.) about who’s going to be more pro-growth and support the free-enterprise system.”
Schumer’s spokesman Matt House replied that “the Chamber has devolved into a totally partisan organization, doing a disservice to its members and making it less effective.”
The Chamber’s campaign tactics can be harsh.
Last year, the Chamber spent $4.2 million on ads opposing Katie McGinty, a former White House environment official, deriding her “far left agenda” and suggesting that McGinty would kidnap “high-energy” children to tax them. “Run Jimmy! Run!” a mother cries out as a woman wearing high heels steps out of a black car.
Reed says the Chamber has altered its approach. This year, it ran ads supportive of Democratic Sens. Heidi Heitkamp (N.D.) and Claire McCaskill (Mo.) on specific bills, even though this is not an election year. And last year, it spent money to help defeat a Freedom Caucus member, incumbent Rep. Tim Huelskamp (R-Kan.), in a Republican primary, which Reed said sent a strong signal to the Freedom Caucus. “We think it’s important to rebuild the middle in both parties,” he said.
Though Donohue opposed Obama’s health care, financial and energy reforms, he still had access to senior officials at the White House, notably Obama confidante Valerie Jarrett and later Jeff Zients, who was head of the National Economic Council. Donohue visited the White House nearly a dozen times from February to June in 2009, including three encounters with the president, White House visitor logs show.
Later, Donohue backed Obama efforts on immigration reform and trade.
But on the Trans-Pacific Partnership, a complicated trade deal that the Obama administration forged, the Chamber “did less arm twisting than I would have anticipated,” said a former senior Obama administration official.
“I think they’ve become more oriented toward the Republican Party,” said Rep. John Delaney (D-Md.), a former chief executive who first ran for Congress in 2012 and later received a “Spirit of Enterprise” award from the Chamber.
“It’s unfortunate, because I think on many issues, the Democrats have been more supportive of things that would help the private sector,” Delaney added. “But I don’t think the Chamber has embraced the opportunity to build with Democrats bipartisan support.”
Perhaps the most nettlesome issue for the Chamber has been climate change.
The Chamber asserts that it is neutral on the Paris climate accord that Obama helped forge, but the Chamber has provided ammunition for foes of the agreement.
On June 1, when Trump announced his decision to pull the United States out of the Paris climate accord, he repeatedly cited a report co-commissioned by the Chamber. It was done by NERA Economic Consulting, a firm that has done studies paid for by the oil and natural gas industry.
The report said the economy would lose 2.7 million jobs, suffer 12 to 38 percent drops in industrial production, and cut average U.S. household income by as much as $7,000 by 2040. But Kenneth Gillingham, an assistant professor of economics at Yale University, said that the study omitted the influence of technological change, assumed that other countries had no carbon policies, and did not count benefits from climate policies.
The Chamber issued a statement saying the study used regulations proposed by the Obama administration, but Gillingham, who worked at the Council of Economic Advisers under Obama, calls that “blatantly false.”
The Chamber has long tried to instill doubt about climate change. In 2009, the New Mexico utility PNM Resources quit the group after a Chamber official suggested holding a climate change trial like the 1925 “Scopes Monkey Trial” over evolution.
Later the Chamber joined states including Texas and Virginia as well as fossil fuel companies in suing the Environmental Protection Agency, claiming that the EPA’s determination that greenhouse gases endanger human health was capricious and arbitrary. The courts dismissed the lawsuits.
A long list of high-profile companies in the Chamber support the Paris accord, including GE, Microsoft and the Walt Disney Co. At least eight of the 25 companies that signed a letter in a New York Times ad supporting the Paris accord are members.
Bruce F. Freed, co-founder of the Center for Political Accountability and a critic of the Chamber, said “companies have real problems when their spending conflicts with their business strategies and policy positions.”