Lobbyists on a Roll: Gutting Reforms

Lobbyists on a Roll: Gutting Reform on Banking, Energy, and Health Care

Arianna Huffington, The Huffington Post, June 25, 2009

Remember all that change Americans voted for in November? Well, there's been a change in the plans for change.

The detour has come courtesy of a familiar nemesis: DC lobbyists who, this year alone, have watered-down, gutted, or out-and-out killed ambitious plans for reforming Wall Street, energy, and health care.

The media like to pretend that something's at stake when a big bill is being debated on the House or Senate floor, but the truth is that by then the game is typically already over. The real fight happens long before. And the lobbyists usually win.

They're used to administrations and newly elected Congresses that come in with big plans for the future. But, as Obama and Congressional reformers are finding out, the future doesn't have a well-funded lobby. The past, on the other hand, is extremely well represented.

Look at the auto industry. For decades, Detroit and its lobbyists fought tooth and nail against efforts to improve mileage efficiency standards or to close tax loopholes favorable to gas-guzzling SUVs. They were very successful at holding off the future. Until they went bankrupt.

"While I'm not spoiling for a fight, I'm ready for one," Obama said in his radio address last weekend, referring to his push for a new consumer finance regulatory agency. Let's hope he is, because getting a reform bill that still includes actual reforms through both houses of Congress is easier said than done.

The president has already seen what the lobbyists can do. In May, he signed the Helping Families Save Their Homes Act, and celebrated it as an example of doing "what we were actually sent here to do -- and that is to stand up to the special interests, and stand up for the American people."

But, in fact, those special interests had stood up to him and helped eliminate the most important legislative initiative affecting homeowners -- the cramdown provision in the bankruptcy bill.

It shows just how powerful the lobbyists are: even those representing the banks that helped bring about the financial meltdown still hold sway over our elected officials.

The same goes for the lobbyists representing the credit rating agencies which, despite having played a key role in causing the economic crisis, escaped with barely a wrist slap in the Treasury's big new reform plan. Here's how the Wall Street Journal put it:

If world-class lobbying could win a Stanley Cup, the credit-ratings caucus would be skating a victory lap this week. The Obama plan for financial re-regulation leaves unscathed this favored class of businesses whose fingerprints are all over the credit meltdown.

That's the thing about lobbyists: they serve no ideological master. It's not about right vs left or Democrats vs Republicans. It's only about the bottom line -- ie pushing their special interests, no matter how much it undermines the public interest. No wonder they are as likely to incur the wrath of the Wall Street Journal as Mother Jones.

Last year, 15,000 registered lobbyists spent more than $3.25 billion trying to sway Congress. This year has brought even more of the same. Oil and gas companies spent $44.5 million lobbying Congress and federal agencies in the first quarter of 2009 -- more than a third of the $129 million they spent in all of 2008, which in itself was a 73 percent increase from two years before. Medical insurers and drug companies are also digging deep: 20 of the biggest health insurance and drug companies spent nearly a combined $35 million in Q1 -- a 41 percent increase from the same quarter last year.

All that spending has proven to be money disturbingly well spent.

Take energy policy. President Obama arrived at the White House promising prompt and far-reaching policies on climate change. But the energy bill currently winding its way through Congress, officially called the American Clean Energy and Security Act, is in danger of becoming considerably less, uh, clean. As HuffPost's Ryan Grim reported last week, the coal lobby may be on the verge of a big victory -- essentially gutting the Clean Air Act by taking away the executive branch's authority, through the EPA, to regulate carbon emissions at the nation's dirtiest coal plants.

But, wait, you may be thinking, isn't the House Energy and Commerce Committee, which cut the deal with the coal industry, controlled by Democrats? As I said, lobbying isn't a Democrat vs Republican issue.

The Dems on the Homeland Security Committee are also killing a key provision in a chemical security bill. Art Levine has the details.

The story is very familiar: new rules are announced proclaiming a better, safer system for the future. But then industry lobbyists howl about "loss of jobs," and "decreased competitiveness," so waivers are added. Then some exemptions. Then some loopholes. Then authority to enforce the new rules is limited. By the time the bill hits the floor, it's still got the word "Reform" or "Clean" or "Safety" in the name, but the finished product is all about maintaining the status quo. And a very stubborn status quo it is. For instance, the reason a new chemical safety bill is needed is because this exact process of gutting reform happened in 2001.

Which brings us to health care and the reform-killing armada currently steaming towards Washington. Their attack is shaping up to be unprecedented. For example, the U.S. Chamber of Commerce has pledged $100 million to defeat reform -- while, of course, calling it reform.

Much of the battle will be focused on the so-called public option, which the American Medical Association has already given a cold shoulder to, telling Congress it "does not believe creating a public health insurance option... is the best way to expand health insurance coverage and lower costs." Indeed, the AMA has been steeling itself for this battle. Since the 2000 election, it has doled out almost $10 million to congressional candidates.

And, again, this fight won't break down along Democrat vs Republican battle lines. Case in point: Tom Daschle. The former Senate Majority Leader, who came within a few unreported chauffeur-driven rides of being Obama's health care reform czar, recently hinted that Obama would have to drop the public option. "We've come too far and gained too much momentum for our efforts to fail over disagreement on one single issue," he told ABC News.

Of course, as Daschle certainly understands, without that "one issue," there is no real reform. But that's the reform killer's M.O.: identify the essential element of any reform bill and remove it -- leaving behind a worthless shell.

Daschle later walked back his comment, but anybody who expects him to be on the side of health care reform hasn't been paying close attention to Daschle's career. Along with two other former Senate Majority Leaders, Bob Dole and Howard Baker, Daschle is part of something called the Bipartisan Policy Center, which released its own health care plan last week. As HuffPost's Sam Stein reported, among the funders (and listed as a "substantial contributor") of BPC is the pharmaceutical giant Schering-Plough, a member of the Pharmaceutical Research and Manufacturers Association, which seems determined to slay the public option.

Also working at BPC is former Clintonite Chris Jennings, who used his Clinton administration clout to earn millions lobbying for several health and drug companies.

And this isn't the first time Daschle and Dole have worked together. They're both currently employed by the lobbying firm Alston + Bird, which has dozens of clients with a vested interest in undermining health care reform. Neither man, incidentally, is a registered lobbyist -- Daschle is a "Special Policy Adviser," and Dole is a "Special Counsel." But we all know what they're being paid to do. Especially since, as Paul Blumenthal writes, almost fifty percent of Alston + Bird's income comes from health care clients.

According to a recent NYT/CBS News poll, a whopping 72 percent of the public favors the public option. An NBC/Wall Street Journal poll had the number even higher: 76 percent. And yet you can already feel it slipping away. As Matt Yglesias writes, "So just keep in mind that when people talk about political obstacles to a robust public plan, they're not talking about mass public opinion as an obstacle -- they're talking about the wealth and power of relatively narrow interests."

In 1993, the Clintons tried to bypass the minefield of having Congress play a part in developing health care legislation; they simply presented their completed plan to Congress. As we know, that approach failed miserably. But, according Robert Reich, who was there, Obama appears to have overlearned the lessons of that fight.

"Right now," he said on This Week, "the president has got to get involved, twist arms and say if I don't have A, B, and C I'm not going to sign this bill."

The response of George Stephanopoulos, who was also there, was illuminating. He noted that when the process began, Clinton had the support of several in the GOP. But, said Stephanopoulos, "the politics changed and it wouldn't matter what was in the bill at the end, the Republican Party decided they weren't going to go along with this... This week, you started to see that developing now."

Of course, the politics didn't just change by itself in 1993 -- those Republican senators had some help in "deciding" not to go along. That same dynamic is at play right now. Check out Nate Silver's fascinating statistical analysis of the impact insurance industry lobbying is having on the process.

As usual, you have to dig deep and crunch the numbers to see the anti-reform termites gnawing away at foundational change. They prefer to do their dirty work in the dark. But you can see the results when you hear a seasoned politician such as Dianne Feinstein start making statements like the one she offered this weekend on CNN: "I don't know that he has the votes right now. I think there's a lot of concern in the Democratic caucus."

"Concern"-ing a bill to death is an old Washington favorite. And that's how reform dies. We know those who represent the past are ready, armed -- and funded -- to stand up and fight. What about those who represent the future?