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Forging an Alliance for Deregulation

By Michael Weisskopf and David Maraniss
Washington Post Staff Writers
Sunday, March 12, 1995; Page A01

The day before the Republicans formally took control of Congress, Rep. Tom DeLay strolled to a meeting in the rear conference room of his spacious new leadership suite on the first floor of the Capitol. The dapper Texas Congressman, soon to be sworn in as House majority whip, saw before him a group of lobbyists representing some of the biggest companies in America, assembled on mismatched chairs amid packing boxes, a huge, unplugged copying machine and constantly ringing telephones.

He could not wait to start on what he considered the central mission of his political career: the demise of the modern era of government regulation.

Since his arrival in Washington a decade earlier, DeLay, a former exterminator who had made a living killing fire ants and termites on Houston's wealthy west side, had been seeking to eradicate federal safety and environmental rules that he felt placed excessive burdens on American businesses.

During his rise to power in Congress, he had befriended many industry lobbyists who shared his fervor. Some of them were gathered in his office that January morning at the dawn of the Republican revolution, energized by a sense that their time was finally at hand.

The session inaugurated an unambiguous collaboration of political and commercial interests, certainly not uncommon in Washington but remarkable this time for the ease and eagerness with which these allies combined. Republicans have championed their legislative agenda as an answer to popular dissatisfaction with Congress and the federal government. But the agenda also represents a triumph for business interests, who after years of playing a primarily defensive role in Democratic-controlled Congresses now find themselves a full partner of the Republican leadership in shaping congressional priorities.

The campaign launched in DeLay's office that day was quick and successful. It resulted last month in a lopsided vote by the House for what once seemed improbable: a 13-month halt to the sorts of government directives that Democrats had viewed as vital to ensuring a safe and clean society but that many businesses often considered oppressive and counterproductive. A similar bill is under consideration in the Senate, where its chances of approval are not as certain.

Although several provisions of the "Contract With America" adopted by Republican House candidates last fall take specific aim at rolling back federal regulations, the moratorium was not part of that. In fact, as outlined that day in DeLay's office by Gordon Gooch, an oversized, folksy lobbyist for energy and petrochemical interests who served as the congressman's initial legislative ghost writer, the first draft of the bill called for a limited, 100-day moratorium on rule-making while the House pushed through the more comprehensive antiregulatory plank in the Contract.

But his fellow lobbyists in the inner circle argued that was too timid, according to participants in the meeting. Over the next few days, several drafts were exchanged by the corporate agents. Each new version sharpened and expanded the moratorium bill, often with the interests of clients in mind – one provision favoring California motor fleets, another protecting industrial consumers of natural gas, and a third keeping alive Union Carbide Corp.'s hopes for altering a Labor Department requirement.

As the measure progressed, the roles of legislator and lobbyist blurred. DeLay and his assistants guided industry supporters in an ad hoc group whose name, Project Relief, sounded more like a Third World humanitarian aid effort than a corporate alliance with a half-million-dollar communications budget. On key amendments, the coalition provided the draftsman. And once the bill and the debate moved to the House floor, lobbyists hovered nearby, tapping out talking points on a laptop computer for delivery to Republican floor leaders.

Many of Project Relief's 350 industry members had spent the past few decades angling for a place of power in Democratic governing circles and had made lavish contributions to Democratic campaigns, often as much out of pragmatism as ideology. But now they were in the position of being courted and consulted by newly empowered Republicans dedicated to cutting government regulation and eager to share the job.

No congressman has been more openly solicitous in that respect than DeLay, the 47-year-old congressional veteran regarded by many lawmakers and lobbyists as the sharpest political dealer among the ruling House triad that includes fellow Texan Richard K. Armey, the majority leader, and Speaker Newt Gingrich of Georgia.

DeLay described his partnership with Project Relief as a model for effective Republican lawmaking, a fair fight against Democratic alliances with labor unions and environmentalists. "Our supporters are no different than theirs," DeLay said of the Democrats. "But somehow they have this Christ-like attitude what they are doing {is} protecting the world when they're tearing it apart." Turning to business lobbyists to draft legislation makes sense, according to DeLay, because "they have the expertise."

But the alliance with business and industry demonstrated in the push for a moratorium is not without peril for Republicans, many GOP strategists acknowledge. The more the new Republican leaders follow business prescriptions for limited government in the months ahead, the greater the risk that they will appear to be serving the corporate elite and lose the populist appeal that they carried with them into power in last November's elections.

William Kristol, a key Republican analyst whose frequent strategy memos help shape the conservative agenda, said the way congressional leaders deal with that apparent conflict could determine their prospects for consolidating congressional power. "If they legislate for special interests," he said, "it's going to be hard to show the Republican Party has fundamentally changed the way business is done in Washington." After graduating from the University of Houston with a biology degree in 1970, Tom DeLay, the son of an oil drilling contractor, found himself managing a pesticide formula company. Four years later he was the owner of Albo Pest Control, a little outfit whose name he hated but kept anyway because a marketing study noted it reminded consumers of a well-known brand of dog food.

By his account, DeLay transformed Albo into "the Cadillac" of Houston exterminators, serving only the finest homes. But his frustrations with government rules increased in tandem with his financial success. He disparaged federal worker safety rules, including one that required his termite men to wear hard hats when they tunneled under houses. And the Environmental Protection Agency's pesticide regulations, he said, "drove me crazy." The agency had banned Mirex, a chemical effective in killing fire ants but at first considered a dangerous carcinogen by federal bureaucrats. By the time they changed their assessment a few years later, it was too late: Mirex makers had gone out of business.

The cost and complexity of regulations, DeLay said, got in the way of profits and drove him into politics. "I found out government was a cost of doing business," he said, "and I better get involved in it."

He arrived in the Texas legislature in 1978 with a nickname that defined his mission: "Mr. DeReg." Seven years later he moved his crusade to Washington as the congressman from Houston's conservative southwest suburbs. He sought to publicize his cause by handing out Red Tape Awards for what he considered the most frivolous regulations.

But it was a lonely, quixotic enterprise, hardly noticed in the Democrat-dominated House, where systematic regulation of industry was seen as necessary to keep the business community from putting profit over the public interest and to guarantee a safe, clean and fair society. The greater public good, Democratic leaders and their allies in labor and environmental groups argued, had been well served by government regulation. Countless highway deaths had been prevented by mandatory safety procedures in cars. Bald eagles were flying because of the ban on DDT. Rivers were saved by federal mandates on sewerage.

DeLay nonetheless was gaining notice in the world of commerce. Businessmen would complain about the cost of regulation, which the government says amounts to $430 billion a year passed along to consumers. They would cite what they thought were silly rules, such as the naming of dishwashing liquid on a list of hazardous materials in the workplace. They pushed for regulatory relief, and they saw DeLay as their point man.

The two-way benefits of that relationship were most evident last year when DeLay ran for Republican whip. He knew the best way to build up chits was to raise campaign funds for other candidates. The large number of open congressional seats and collection of strong Republican challengers offered him an unusual opportunity. He turned to his network of business friends and lobbyists. "I sometimes overly prevailed on" these allies, DeLay said.

In the 1994 elections, he was the second-leading fund-raiser for House Republican candidates, behind only Gingrich. In adding up contributions he had solicited for others, DeLay said, he lost count at about $2 million. His persuasive powers were evident in the case of the National-American Wholesale Grocers Association PAC, which already had contributed $120,000 to candidates by the time DeLay addressed the group last September. After listening to his speech on what could be accomplished by a pro-business Congress, they contributed another $80,000 to Republicans and consulted DeLay, among others, on its distribution.

The chief lobbyist for the grocers, Bruce Gates, would be recruited later by DeLay to chair his antiregulatory Project Relief. Several other business lobbyists played crucial roles in DeLay's 1994 fund-raising and also followed Gates's path into the antiregulatory effort. Among the most active were David Rehr of the National Beer Wholesalers Association, Dan Mattoon of BellSouth Corporation, Robert Rusbuldt of Independent Insurance Agents of America and Elaine Graham of the National Restaurant Association.

At the center of the campaign network was Mildred Webber, a political consultant who had been hired by DeLay to run his race for whip. She stayed in regular contact with both the lobbyists and more than 80 GOP congressional challengers, drafting talking points for the neophyte candidates and calling the lobbyist bank when they needed money. Contributions came in from various business PACs, which Webber bundled together with a good-luck note from DeLay.

"We'd rustle up checks for the guy and make sure Tom got the credit," said Rehr, the beer lobbyist. "So when new members voted for majority whip, they'd say, I wouldn't be here if it wasn't for Tom DeLay.' "

For his part, DeLay hosted fund-raisers in the districts and brought challengers to Washington for introduction to the PAC community. One event was thrown for David M. McIntosh, an Indiana candidate who ran the regulation-cutting Council on Competitiveness in the Bush administration under fellow Hoosier Dan Quayle. McIntosh won and was named chairman of the House regulatory affairs subcommittee. He hired Webber as staff director.

It was with the lopsided support of such Republican freshmen as McIntosh that DeLay swamped two rivals and became the majority whip of the 104th Congress. Before the vote, he had received final commitments from 52 of the 73 newcomers.

The Freeze The idea for Project Relief first surfaced before the November elections that brought Republicans to power in the House for the first time in 40 years. Several weeks after the election, it had grown into one of the most diverse business groups ever formed for specific legislative action. Leaders of the project, at their first post-election meeting, discussed the need for an immediate move to place a moratorium on federal rules. More than 4,000 regulations were due to come out in the coming months, before the Republican House could deal with comprehensive antiregulatory legislation.

DeLay agreed with the business lobbyists that a regulatory "timeout" was needed. He wrote a letter to the Clinton administration Dec. 12 asking for a 100-day freeze on federal rule-making. The request was rejected two days later by a mid-level official who described the moratorium concept as a "blunderbuss." DeLay then turned to Gooch to write legislation that would do what the administration would not.

At the Jan. 3 meeting in DeLay's office, Paul C. Smith, lobbyist for some of the nation's largest motor fleets, criticized Gooch's draft because it excluded court-imposed regulations. He volunteered to do the next draft and came back with a version that addressed the concerns of his clients. Under court order, the EPA was about to impose an air pollution plan in California that might require some of Smith's clients -- United Parcel Service and auto leasing companies – to run vehicles on ultraclean fuels, requiring the replacement of their fleets.

Smith removed the threat with a stroke of his pen, extending the moratorium to cover court deadlines. He also helped Webber add wording in a later amendment that extended the moratorium from eight to 13 months.

Peter Molinaro, a mustachioed lobbyist for Union Carbide, had a different concern: He wanted to make sure the moratorium would not affect new federal rules if their intention was to soften or streamline other federal rules. The Labor Department, for example, was reviewing a proposal to narrow a rule that employers keep records of off-duty injuries to workers. Union Carbide, Molinaro noted in an interview, had been fined $50,000 for violating that rule and was eager for it to be changed.

For his part, Gooch wanted to make sure that the routine, day-to-day workings of regulatory agencies would not be interrupted by a moratorium. His petrochemical clients rely on the Federal Energy Regulatory Commission to make sure natural gas and oil, used in their production processes, flow consistently and at reasonable rates.

Gooch said he had "no specific mission" other than helping DeLay. "I'm not claiming to be a Boy Scout," he added. "No question I thought what I was doing was in the best interests of my clients."

The War Room On the first day of February, 50 Project Relief lobbyists met in a House committee room to map out their vote-getting strategy for the moratorium bill. Their keynote speaker was DeLay, who laid out his basic objective: making it a veto-proof bill by lining up a sufficient number of Democratic cosponsors. They went to work on it then and there.

Kim McKernan of the National Federation of Independent Business read down a list of 72 House Democrats who had just voted for the GOP balanced budget amendment, rating the likelihood of their joining the antiregulatory effort. The Democrats were placed in Tier One for gettable and Tier Two for questionable.

Every Democrat, according to participants, was assigned to a Project Relief lobbyist, often one who had an angle to play.

The nonprescription drug industry chose legislators with Johnson & Johnson plants in their districts, such as Ralph M. Hall of Texas and Frank Pallone Jr. of New Jersey. David Thompson, a construction industry official whose firm is based in Greenville, S.C., targeted South Carolina congressman John M. Spratt Jr.

Federal Express, with its Memphis hub, took Tennessee's John S. Tanner. Southwestern Bell Corp., a past campaign contributor to Blanche Lambert Lincoln of Arkansas, agreed to contact her. Retail farm suppliers picked rural lawmakers, including Charles W. Stenholm of Texas.

As the moratorium bill reached the House floor, the business coalition proved equally potent. Twenty major corporate groups advised lawmakers on the eve of debate Feb. 23 that this was a key vote, one that would be considered in future campaign contributions.

McIntosh, who served as DeLay's deputy for deregulation, assembled a war room in a small office just off the House floor to respond to challenges from Democratic opponents. His rapid response team included Smith, the motor fleet lobbyist, to answer environmental questions; James H. Burnley IV, an airline lobbyist who had served as transportation secretary in the Reagan administration, to advise on transportation rules; and UPS lobbyist Dorothy Strunk, a former director of the Occupational Health and Safety Administration, to tackle workplace issues. Project Relief chairman Gates and lobbyists for small business and trucking companies also participated.

When Republicans leaders were caught off guard by a Democratic amendment or alerted to a last-minute problem by one of their allies, Smith would bang out responses on his laptop computer and hand the disk to a McIntosh aide who had them printed and delivered to the House floor.

The final vote for the moratorium was 276 to 146, with 51 Democrats joining DeLay's side. Still 14 votes short of the two-thirds needed to override a veto, the support exceeded the original hopes of Project Relief leaders.

One week later, DeLay appeared before a gathering of a few hundred lobbyists, lawmakers and reporters in the Caucus Room of the Cannon House Office Building to celebrate the House's success in voting to freeze government regulations and, in a pair of companion bills, curtail them. He stood next to a five-foot replica of the Statue of Liberty, wrapped from neck to toe in bright red tape, pulled out a pair of scissors, and jubilantly snipped away.

Standing next to him, brandishing scissors of his own, was the chairman of Project Relief.

Staff researcher Ann O'Hanlon contributed to this report.

© Copyright 1995 The Washington Post Company

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