Business Influence on Government and Public Policy

1. 0 Business Influence onGovernment and Public Policy Chapter12 Professor Craig Diamond BA 385 November 4, 2009

2. 0 Outline of Topics • Corporate Political Participation • Lobbying (focus on federal) • Coalition Building • Political Action Committees • Strategies for Political Activism

3. Introduction • Business is one of many groups which try to influence government. • Business must obey the law and behave ethically in its response to government’s expectations and mandates.

4. Participation in the formulation and execution of public policy at various levels of government PoliticalInvolvement 0 Corporate Political Participation “Success in Washington is just as important as success in the marketplace.”

5. Lobbying Influencing public officials to promote or secure passage or defeat of legislation; also influence elections PACs CoalitionBuilding PoliticalStrategy Instruments through which business uses financial resources to influence election results Business and other groups joining forces to achieve common goals To secure position of advantage regarding a given regulation or piece of legislation 0 Corporate Political Participation

6. Purposes of Lobbying • Gain legislative support or institutional approval for some objective • Influence pending legislation • Support existing policy • Influence a perceived coming policy shift • Target the election or defeat of national, state, and local legislators.

7. Chamber of Commerce of the US • National Association of Manufacturers Umbrella Organizations Representation Examples • National Automobile Dealers Assn • National Association of Realtors Broad TradeAssociations • Washington and State Capital Offices • Law firms • Public affairs specialists • PACs • Grassroots lobbying Midrange Company-LevelLobbying Narrow/ Specific 0 Organizational Levels of Lobbying Figure 12-1

8. Lobbyists • Lobbyists can work for trade associations, individual companies, law firms, or consulting firms. • Often they are former government officials (one year rule)

9. 0 What Business Lobbyists Do for Clients • Get access to key legislators – this is key • Monitor legislation • Establish communication channels with regulatory bodies • Draft legislation, slick ad campaigns, direct-mail campaigns • Provide issue papers on anticipated effects of legislative activity • Influence outcome of legislation • Assist companies in coalition building around issues • Help members of Congress get reelected • Organize grassroots efforts Figure 12-3

10. Mobilizing the “grassroots”—individual citizens who might be most directly affected by legislative activity—to political action Grassroots Lobbying • Using the Internet to amass grassroots support, and enable grassroots supporters to contact their legislators Cyberadvocacy 0 Grassroots Lobbying

11. Lobbying Power • Business power and money often drowns out other interests that are less funded and have less focused efforts • Example: Pharmaceutical Research and Manufacturers of America (PhMRA) and individual companies spent $29 million to defeat legislation that would have allowed the importing of lower prices drugs.

12. 0 Coalition Building • Groups of companies or associations working together to influence legislative outcomes

13. Umbrella Organizations • U.S. Chamber of Commerce • Membership: local chambers of commerce, associations, companies, individual members • National Association of Manufacturers (NAM) • Manufacturing industries • Business Roundtable • CEOs of largest companies – focus on high level policy issues • National Federation of Independent Businesses (NFIB) • Small businesses, but very powerful

14. 0 Political Action Committees Political Action Committees (PACs) are groups, including businesses, that use financial resources to influence elections. • Golden Rule of Politics: “He who has the gold, rules.”

15. 0 Top 10 PAC Contributors to Federal Candidates (2005-2006) National Association of Realtors National Beer Wholesalers Association National Association of Home Builders National Automobile Dealers Association International Brotherhood of Electrical Workers Operating Engineers Union American Bankers Association Laborers Union American Association for Justice Credit Union National Association These 10 contributed total of about $30 million Figure 12-4

16. 0 Political Action Committees Arguments For PACs Arguments Against PACs PACs expect something in return other than good government and this can lead to differing treatment for those who give and those who cannot, such as the poor. PACs are a reasonable means that business may use to organize their contributions to candidates for office.

17. Political Action Committees • Does PAC funding buy votes? • Studies show a strong correlation between legislators receiving PAC funding and how they vote on issues supported by the PACs which funded them. • Often favors incumbents, which impedes political change.

18. 0 Soft Money • Soft money: a contribution made to political parties instead of political candidates • The Bipartisan Campaign Reform Act of 2002 (McCain-Feingold) was a sweeping change of U.S. campaign finance • The BCRA removed the influence of soft money on candidates running for national office. • But, created “527” groups

19. Money in Politics Watchdog Groups • The Center for Responsive Politics • Common Cause • The Center for Public Integrity

20. 0 Strategies for Political Activism Contingency Approach: • Identify the important issues in a legislative district • Determine the information a legislator possesses concerning voter preferences • Determine the importance of the issues to the legislator’s constituency • Identify the expected position of voters on the issues

21. 0 Strategies for Political Activism • Defensive (adversarial, act alone) • Form coalitions, persuade others • Active leadership role, help bring about social change Modes of Corporate Response