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The Most Powerful Lobby

HOW TO PERCEIVE THE AGENDA OF WASHINGTON. An excellent example exposing the connection: this article shows how those who fund the elections control the politicans' policies. It is through the BUSINESS ROUNDTABLE.

By John B. Judis,In These Times, February 21, 1994

The Roundtable is little known outside Washington, but in 3 decades it has become the nation's most powerful lobby on economic issues. It reflects the views of the biggest U.S. Companies. The Roundtable has shaped the laws governing labor unions, corporations, and financial institutions. It was the prime mover behi9nd the North American Free Trade Agreement (NAFTA).

The rise of the Business Roundtable reflects the decline of the American pluralsim. From the '30s through the 60s, business had the loudest but by NO means the onlyvoice in government. Key decisions were also influenced by other competing interests, including labor, farmers, small business and professionals. In the 6Os, economist John Kenneth Gaibraith argued that government served to mediate between the countervailing powers of business and labor. But Gaibraith could not make that claim today, when one voice increasingly drowns out the rest.

The Business Roundtable was founded in 1973 by John Harper, the head of Alcoa Aluminum, and Fred Borch, the CEO of General Electric. Harper and Borch were concerned about growing public hostility toward corporationsevidenced by support for government regulation of the workplace and environmentand about the power of unions to squeeze corporate profits in an increasingly competitive international market. On a trip to Washington, the two CEOs talked with John Connally, Nixons secretary of the treasury, and Arthur Bums, the chairman of the Federal Reserve. Connally and Burns advised them to set up a lobbying organization that would specifically represent large banks and corporations.

It hadnt been done before. Big business had its own organization, the Business Council, but the council did not lobby. In Washington, large banks and corporations lobbied on their own or through trade associations. They could also work through the Chamber of Commerce, but that organization was dominated by smaller firms.

For the most part, big banks and corporations maintained an amicable relationship with labor leaders, working together to raise the minimum wage and to introduce Medicare and other social legislation. But Harper and Borch now saw the need for a single lobbying organization that represented corporate America against the demands of labor unions, consumers and environmentalists. Economist Kim McQuaid later described it as a super holding company for big business political influence.

By design, the Roundtable was small and selectconsisting of some 200 CEOs from the largest banks and corporations. Harper was the first president, followed by Thomas Murphy of General Motors, Irving Shapiro of Du Pont and Clifford Garvin of Exxon. From the beginning, the Round-table enjoyed remarkable success. It played a key role in defeating an anti-trust bill in 1975 and a Ralph Nader plan for a Consumer Protection Agency in 1977. And it helped dilute the Humphrey-Hawkins full employment bill.

But the Roundtables most significant victory was in blocking labor law reform. Increasingly stymied by employers who ignored the National Labor Relations Act, labor unions sought to strengthen labor law to make it more difficult for companies to intimidate workers who wanted to form unions. Fearful of defeat, the AFL-CIO produced a timid bill that, after it was unveiled in 1977, passed the House easily and won the initial support of several large unionized corporations, including General Electric and General Motors. But the Roundtable voted to oppose the bill, and its members, including GM and GE, followed suit. Through its aggressive lobbying, it prevented the bills Senate supporters from rounding up the 60 votes in the Senate necessary to withstand a filibuster.

The defeat of labor law reform signaled the end of New Deal-style pluralism in Washington. From then on, almost every major government economic initiative bore the distinct mark of the Roundtable. In fiscal policy, for example, the Roundtable was responsible for broadening Reagans tax cut plan to include a sharp reduction in corporate taxes.

The Roundtable defined the reach of trade policy, which, it argued, should be focused on opening foreign markets to American trade and investmentbut not on regulating either foreign investment in the United States or American overseas investment. The Omnibus Trade Act of 1988 identified with the Democratic Congressin fact reflected most closely the thinking of the Business Round-table. In 1990, the Roundtable urged George Bush to initiate a free trade agreement with Mexico. Last year, the Roundtable lobbied for NAFTA and against any strong side agreements on labor and the environment. It provided the money and leadership for the main pro-NAFITA lobby, USA*NAFTA [sic].

The Roundtable also continued to block economic reform efforts. During the Reagan and Bush years, it successfully opposed changes in corporate governance that would have made boards of directors and CEOs more accountable to stockholders. In 1986, the Roundtable convinced the Securities and Exchange Commission to forgo new rules on merger and acquisitionsrules that might have prevented the speculative bust of the late 80s. Last year, the Roundtable got Clinton to water down his plan to impose penalties on excessive executive salaries. Citicorp CEO John Reed, the chair of the Roundtables Accounting Task Force, argued that Clintons plan would have had negative effects on U.S. competitiveness. Dont ask how.

The Roundtable began sticking its nose into the health care debate during the Bush administration. Its Health, Welfare and Retirement Income Task Force, chaired by Prudential Insurance CEO Robert C. Winters, cheered Bushs anemic plan, which consisted mainly of subsidies to the health care industry. The nations health care system works well for the majority of Americans, the Roundtable announces in a June 1991 statement. We believe the solutions lie no in tearing down the present system, but in building upon it.

Last March, Winters presented the Roundtables position before the White House Health Task Force. The group, Winters said, opposed requiring employers to insure their employees. It also opposed any price controls on insurance premiums or on doctor and hospital fees. Quick fixes or illusory savings through price controls or government imposed limits on health care spending will not work, Winters argued.

According to Winters, the main way to reduce costs would be to force Americans to join managed care networks and health maintenance organizations. Winters Prudential, of course owns many of these facilities.

Once Clinton presented his own health plan last fall, Winters task force recommended that the Roundtable endorse a rival plan drawn up by Rep. Jim Cooper (D-TN). Coopers bill would eschew government price controls; it would not require that employers buy insurance for their workers; and it would make insured employees pay taxes on benefits that exceed those of a bare-bones plan. Echoing Winters position, Coopers bill would cede direct control of health care to large insurance companies.

After pleas from Clinton, the Roundtable delayed a final decision on endorsing a health plan until after the State of the Union address. On February 2, in spite of furious lobbying from the administration, the Roundtable came out in favor of the Cooper plan. GM, Southern California Edison and several other corporations had backed the Clinton plan, but its not clear whether theyll break now from the Roundtables line.

If the past is any guide, the Roundtables opposition to Clintons bill will convince the president that he must reach a compromise with Coopertossing aside price and premium controls, perhaps delaying indefinitely the employ~ mandate for small business. Like Jimmy Carter, who woo~$ the Roundtables Irving Shapiro, Clinton has bowed and scraped before the Roundtables leadership. Last June, in his address to the Roundtables annual meeting in Washington, he described the organizations members as the most enlightened leaders of our nation, in any walk of life.

After the Roundtables rejection of his plan, Clinton merely expressed his disappointment, rather than using the occasion to point out the narrow self-interest of the CEOs. One White House official explained that the president doesnt like to bash corporations and likes to govern by consensus. But the question raised by the Roundtables clout is who really sets the terms of the consensus. It aint you and me, babe.

It is fine to know a relationship exists, it is much better to understand that relationship. The Business Roundtable is a keystone to such understanding. Other articles published at this site are selected for the sake of sharing my insights into the political process. Not only for the sake of enlightenment, but primarily so that we may know the difference between what is and what ought to be. The essay, "Eight Steps Forward" is in the ought category. Consider it please.


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