The New Congress

Dec. 21, 2004
An even more politicized environment on Capitol Hill toughens the lobbying challenge, say four association chiefs at IW's summit.

It happens every two years. A new congress arrives in Washington, D.C., and along with it new political circumstances. The business community must adapt to both. But in the 106th Congress, which formally convenes this week, the challenge for business will be especially difficult, agree the presidents of four of the nation's most powerful, broad-based business associations. At a unique round-table discussion conducted by IndustryWeek, the top leaders of the American Business Conference (ABC), the National Assn. of Manufacturers (NAM), the National Federation of Independent Business (NFIB), and the U.S. Chamber of Commerce pointed to two realities that will affect business' efforts to press its public-policy agenda on Capitol Hill during the next two years.

  • The outcome of the November election, in which Democrats surprisingly shaved the Republican majority in the House to a razor-thin six-vote margin and kept the GOP from fattening its 10-seat edge in the Senate.
  • The lame-duck status of the Clinton Presidency and the looming 2000 election. With both the White House and Congress up for grabs in less than two years and partisanship running rampant amid the impeachment proceding against President Clinton, the Capitol Hill environment promises to be even more highly politicized than during the months prior to last November's election.
These dual factors framed the free-wheeling, often-animated 2 1/2-hour discussion at the IW Round Table among the four presidents -- the U.S. Chamber's Tom Donohue, NFIB's Jack Faris, NAM's Jerry Jasinowski, and ABC's Barry Rogstad. Held at the National Press Club in Washington, D.C., on Nov. 20 (before the House's impeachment inquiry), the session marked the first time the four men, who collectively wield vast policymaking clout in the capital, had met together since Donohue became the Chamber's president 15 months ago. None of the leaders was timid about offering his thoughts on the election and its implications. "For business, the election means that the road to 2000 has started," observed ABC's Rogstad, indicating that the partisan environment will hamper prospects for action on business issues. "In contrast to two years ago when all of us were very positive about being able to advance elements of our collective agenda," he said, "our challenge during the next two years will be to elevate the discussion that will surround the Presidential debate. We better darn well be vigilant for opportunities that hopefully will arise." Jasinowski offered similar counsel. "It is going to be much more difficult to move anything through Congress," he acknowledged. "The business community is going to have to show aggressive, positive leadership on an agenda -- early on." It's the only way, he said, that business will be able to "define the debate in a way in which we can get a couple of things done." Faris, who termed the election a "wake-up call for small business," predicted that the 106th Congress will "be pretty much in gridlock," thus making any legislation difficult to pass. "There will be no great advances in any direction," he said. As a result, lobbying will be complex. For business lobbyists, he warned, "the word 'simple' won't be there." Donohue described the lobbying challenge succinctly, declaring: "The way we do business up there [on Capitol Hill] is going to change." That's not only because of the 2000 election, he explained, but also because of the change in voting patterns of legislators. No longer do lawmakers totally vote either "for" or "against" business on all issues. For example, he said, legislators "who are with us on social issues are not with us on environmental issues -- and this goes all through the Congress." As a result, Donohue indicated, business will be forced, to an even greater extent than at present, to build coalitions among lawmakers on an issue-by-issue basis. "We will make friends and great companions among [legislators] on Monday, Tuesday, and Wednesday," he said, "then throttle their necks on Thursday, Friday, and Saturday. And try and make peace with everyone on Sunday and start the process all over again." The trick, Donohue added, "will be to build bipartisan coalitions of legislators around very partisan issues." Faris agreed, commenting that business will have to work with "blue-dog Democrats" (conservative Democrats generally from the South) in either advancing or blocking legislation. Like the other groups represented at the Round Table, NFIB is nonpartisan, Faris stressed. Yet, he said, when communicating its messages to Capitol Hill the federation finds that "a whole lot of Rs [Republicans] listen a whole lot better than a whole lot of Ds [Democrats] -- especially the leadership." Although the four leaders didn't explicitly say so, that's why the shrunken GOP margin in the new Congress concerns them; it clouds the outlook for the business agenda. What is that agenda? As the four presidents ticked off the priorities of their respective associations, it was apparent that the key issues for them will be much the same as in the 105th Congress (1997-98) -- or, for that matter, in the 104th (1995-96). Among these issues, not surprisingly, is a hardy perennial: taxes. "It's an area where we need to be united and really push forward," emphasized Jasinowski. Although both he and Donohue indicated taxes will occupy much of their organizations' attention, the issue is especially urgent for Faris and Rogstad. At NFIB, said Faris, reducing or eliminating the estate tax (which he and other opponents call the "death" tax) and cutting the payroll tax sit at the very top of its wish list. Equally important -- and more ambitious -- is a third tax-related item: "sunsetting" the current tax code and rewriting it from scratch. NFIB has obtained more than a million signatures on a petition urging Congress to scrap the code and, along with it, the Internal Revenue Service. NFIB's courageous campaign drew praise from Donohue, whose organization also has many IRS-hating small-business members but, because of its more diverse membership, hasn't been as aggressive in pushing the sunsetting legislation. "I cheer you on, Jack," he told Faris. "How do you get rid of the IRS? You are setting the groundwork for a much more logical and compelling look at the tax code in this country in a way that none of the others of us can do." Rogstad, meanwhile, reiterated that for ABC, fundamental tax reform remains its hot-button priority, as it has been for years. Getting such reform, he admitted, "is a long-term process." But unless it is accomplished, he said, it will be impossible to deal with many other issues, notably Social Security reform. Indeed, a Social Security "fix" was high on the priority list of each of the Round Table participants. As Jasinowski noted: "The President has said this is the No. 1 issue for the year. The Republican leadership has said it is the No. 1 issue. And we at the NAM and much of the business community believe we need to reform Social Security, because it is going bankrupt. It is laying very high payroll taxes [on employers] and not giving the right kind of return to workers." Among other priorities, Jasinowski mentioned that NAM's growth-and-productivity-oriented agenda features technology legislation, which ranges from bills dealing with electronic commerce to the skilled-worker shortage. Trade, too, is a top NAM priority, especially "fast-track" trade negotiating authority for the White House. For his part, Rogstad indicated that ABC also will push for the fast-track bill. And the association will closely monitor the budget process, which Rogstad predicts will be "fascinating." Although the fourth and fifth years of the 1993 budget agreement call for "draconian" spending cuts, he explained, "last year we just had the greatest increase in government spending that we've seen in a long time. I don't see anything that is going to change that in the ensuing year." As for the U.S. Chamber, Donohue cited two other issues that it will focus on. One is tort reform. That will go far, he said, in curbing the influence of trial lawyers who, he said, continue to "suck up more money?" The other is the environment. Several pieces of legislation, including "environmental justice" mandates, Superfund reauthorization, and measures relating to the Kyoto Protocol on global climate change, will require business vigilance, he said. Education reform also is a top priority of all four of the associations. Donohue reported that the issue ranked No. 1 among executives of local Chamber of Commerce executives in a recent Chamber poll. Rogstad, linking the issue with tax reform, suggested legislation that would enable companies to expense all education and training outlays. Jasinowski urged that quality standards be applied to education just as they are in industry and that individual retirement accounts be set up for lifetime learning; he also called for a strong industry role in implementing the 1998 law that transfers federally sponsored training programs to the states. Donohue accentuated the importance of keeping education decision-making a community-based responsibility. Agreed Faris: "The last thing we need "is somebody in Washington, D.C., deciding how Bountiful, Utah, should teach its kids English." He also urged experimentation with private and charter schools, despite the opposition of teachers' organizations. "Our biggest problem in education," fumed Faris, "is the teachers' union." After reciting their legislative wish lists, the four presidents speculated on what legislation might actually pass. Jasinowski expressed optimism about prospects for "very major tax reform and tax cuts." He also indicated that concern about skills shortages could lead to passage of education and training legislation, which he called "a sleeper issue." But Democratic gains in the House, he said, likely will spell doom for the fast-track legislation because of Congressional Democrats' close ties to organized labor. And both he and Donohue voiced concern that adverse health-care legislation, which business narrowly blocked last year, will be difficult to defeat again. Whatever its ultimate fate, the business agenda "is either going to gain steam or lose steam in a big hurry," Donohue commented. If either business or the Administration "can hit one or two quick wins," he added, momentum will build for their priorities. Otherwise, he foresees "a lot of dancing and not a lot of doing." Despite their focus on the lobbying environment in Washington, the Round Table participants agreed that it is essential for them to expend greater effort at the grassroots level -- specifically in communicating with business leaders on legislative issues and spurring their involvement. As Jasinowski lamented, throughout the nation business executives "are turned off by Washington politics." Because executives believe "there is no leadership in Washington," Rogstad observed, they "see no real merit" in taking time away from their business responsibilities to lobby in the capital or otherwise participate personally in the policymaking process. "The challenge all of us face," he said, "is to reenergize the business leadership, long-term" in public policy. To do that, the four presidents concluded that they must more effectively relate legislation to companies' financial performance. Business associations "haven't done enough bonding with our members to fully appreciate the extent to which they are focused on increasing shareholder value and profits," Jasinowski told his counterparts. Donohue concurred. "Part of our responsibility," he remarked, "is to educate our members on what a lot of this stuff could really do to them." Similarly, said Faris, at NFIB "we feel it's our responsibility to make sure that the small-business community knows and understands, first, the issues we see coming up and, second, what [these] issues could mean to the bottom line." Often, he stated, that means "staying in business." Faris also reported that in anticipation of the 2000 election, NFIB will pour more resources into community-level activism rather than increasing its Washington staff. And he sees nothing more important to business than that election. Its outcome will be determined, he declared, "by how well we do our jobs at the grass roots in 1999 and early 2000." To show how important the election will be for business, Faris noted that before the 1994 election, in which Republicans gained control of Congress, the chairmen of House and Senate committees voted NFIB's position on issues only 19.7% of the time; now committee chairs side with NFIB 97% of the time. But as a result of last November's Democratic gains, he warned, "we are very close" to seeing Congress revert to less business-friendly hands. But the possibility of a Democrat-controlled 107th Congress is two years away. Right now the four men and their associations face challenge enough in getting their agenda through the 106th Congress.
Roundtable Participants
The IW Round Table, an unofficial business "summit," brought together the CEOs of four of the nation's most influential broad-based business associations. Participants were: Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, Washington, D.C. He took over the reins of the nation's largest and broadest business association (its membership embraces 180,000 companies, 1,200 trade and professional associations, and 3,000 state and local chambers) in September 1997 and has beefed up the Chamber's lobbying staff and its policymaking clout. He came to the Chamber after 13 years as president and CEO of the American Trucking Assns. Jack Faris, president of the National Federation of Independent Business, which represents more than 600,000 small businesses. A former banker in Nashville, he has headed the NFIB since 1992 and has turned the Washington, D.C.-based association into a lobbying powerhouse. He was instrumental in business' defeat of President Clinton's health-care plan in 1994. Jerry Jasinowski, president of the National Assn. of Manufacturers. A Democrat and assistant Commerce secretary in the Carter Administration, he has led NAM -- an association of more than 14,000 member companies -- since 1990. He's considered one of Washington's most influential lobbyists, and has led many ad hoc industry coalitions on specific legislative issues. He's an economist. Barry Rogstad, president of the American Business Conference, Washington, D.C., an 18-year-old organization of 100 CEOs of midsized, high-growth companies whose entrepreneurial successes have commanded the ear of Congress and the Administration. Rogstad, who has been at ABC's helm for 10 years, is an important player in the debate over tax reform. He previously was chief economist at Coopers & Lybrand now Pricewaterhouse Coopers LLP. The Round Table was moderated by IW Editor-in-Chief John Brandt. IW conducted a similar Round Table following the November 1996 election.
It's The Economy, Stupid
It should underlie business' message, Round Table participants say. The subject of IW's Round Table that included the presidents of four major U.S. business associations was the business agenda and its outlook in the new 106th Congress. Inevitably, though, the conversation turned to a closely related topic: the economy. As part of a discussion on how to better communicate business' message to the public, Faris spoke of the need to "frame the issue" by explaining complex legislation not in academic, economic terms, but in a way "people on Main Street" can understand. He said Americans want to know three things: "What's in it for me. What's in it for me. And what's in it for me." Jasinowski elaborated, recommending that business' message always focus on "the notion that the economy is the key to our future success." Unfortunately, he admitted, "there are some in the business community who tend not to remember that we represent employees as much as we represent employers. Therefore, the standard of living of our workers is as important as the improved profits of our companies." As for the current economy, Jasinowski, an economist in the Carter Administration, foresees a slowdown in growth in the U.S. in 1999, but no recession. Donohue agreed -- barring a major international crisis. So did Rogstad. Even though the economy is slowing, emphasized Rogstad, the U.S. currently is enjoying "a remarkable period" that provides a rare window of opportunity for the nation to "sustain and improve the standard of living of our citizens." He recalled that he and the other participants in IW's Round Table in 1996 (only Donohue is a newcomer to the panel) also spoke of the window of opportunity that opened then. Regretfully, he said, policymakers didn't capitalize on it. Now, Rogstad insisted, "the window is still there," thus making the time right for tough action on the skills shortage, Social Security and Medicare, and other pressing issues. The question is, he said, "How can we get our act together?"

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