Defying Expectations, Business Finds a Democratic Congress Not So Bad

Posted December 14, 2007 at 6:28pm

Big business had big fears at the start of the year. Lobbyists for major corporations and trade associations woke up to nightmares of massive tax hikes and new laws that would hurt their industries’ bottom lines with a Congress under Democratic control.

But after 12 months of Democratic rule, lobbyists for business interests big and small say their worst fears have not materialized. And some say the Democratic Congress has courted their clients for not only campaign money but also for their suggestions on myriad legislative issues including the energy bill — which could have been much worse for oil companies — patent reform and free trade.

“Business has dodged a bullet,” said David Hoppe, vice chairman of Quinn Gillespie & Associates and a former chief of staff to then-Senate Majority Leader Trent Lott (R-Miss.). “Congress didn’t do enough to complain about.”

Not all business lobbyists believe that anxiety over a Democratic Congress was misplaced.

But nearly everyone agrees that legislative gridlock was a big help — at the very least, preventing the passage of any worst-case scenario legislation.

“The business community’s fears of this Congress were absolutely well-founded,” said Jade West, senior vice president of government relations for the National Association of Wholesaler-Distributors and manager of the Tax Relief Coalition. “The rhetoric from the Democrats as they took control was kind of gotcha rhetoric,” West said. “The only thing that has saved the business community from really bad policy appears to be Democratic ineptitude. They haven’t gotten done what they threatened — or promised.”

Democratic lobbyist Paul Thornell, who works in-house for Citigroup, pointed to progress on a patent reform bill, an extension to the Terrorism Risk Insurance Act and reform of the Committee on Foreign Investment in the United States.

“While they’re not all done yet, for Democrats downtown, these bills allow us to point to some meaningful points on the board for the business community,” Thornell said. “Action and results on these key measures stands juxtaposed with the spectre a year ago that we’d only be playing defense.”

Some business lobbyists said they were actually pleasantly surprised with the outreach of moderate Democrats in the House, including that of House Majority Leader Steny Hoyer (Md.), as well as several members of the Blue Dog and New Democrat coalitions.

One Republican business lobbyist who did not want his name used said that, in a complete reversal of expectations, some Democrats have made for a tuned-in audience — without the baggage GOPers carry from socially conservative groups, which can be at odds with corporate lobbyists.

“This Congress has been far more receptive to engaging in conversation and learning about issues that are important to business and trying to work with us than the Republican Congress ever was,” said one Republican business lobbyist. “The Republican Congress became very arrogant, and they ignored business for at least the last two years. … It was a huge surprise that Democrats were willing to reach out and talk to nontraditional allies.”

One area that nearly all business groups and corporate lobbyists point to as a success was the passage of a free trade agreement with Peru. Although it was a decidedly easy lift — once House Ways and Means Chairman Charlie Rangel (D-N.Y.) negotiated for more labor and environmental protections with the Bush administration — lobbyists earlier this year had worried the entire free trade agenda would be dead on arrival.

“Peru was a very large win for us and for free trade in general,” said Jay Timmons, senior vice president of government relations for the National Association of Manufacturers. “It was the first trade vote of this Congress, and it was a significant victory, and we’re hoping that lays the groundwork for future victories.”

Scott Parven, who founded the moderate-Democrat-focused Parven Pomper Schuyler at the start of this Congress, agreed that Peru was a big victory. He represents Panama, another country with a pending free trade agreement, and he said he is encouraging his clients to play both offense and defense.

“We’re at the very beginning of a major political shift in Washington,” Parven said. “Moving forward, given how thoughtful and moderate the Democrats in charge have been over this past year, it should serve as an example to K Street that they need to start playing offense and shaping proposals. A lot of major legislation is going to pass on macro issues. The notion of merely playing defense, hold and fold, will not be in the best interest of big or small business.”

Some advocates of the Democratic Party’s more traditional allies, such as unions and consumer groups, agree that business interests have held their own this year.

“For us, it’s been a year of raised expectation, very strong Congressional oversight, but few legislative results,” said Travis Plunkett, legislative director for Consumer Federation of America, who has focused on subprime mortgage lending and credit card practices. “We’ve seen a lot of smoke but little fire.”

On some measures, he said, consumer groups withdrew support or even outright opposed legislation after corporate and banking industry lobbyists got their hands on it. “The business community still has an enormous amount of clout with both parties,” he said.

He said he has heard Democratic Members or their staffers draw directly from business lobbyists’ talking points in meetings. Still, he said, the consumer side has moved “from an environment where we were on the defensive, trying to stop harmful proposals, to an environment where we actually have the opportunity to work with Congress to pass proposals that could benefit consumers.”

Certainly there are some sectors, such as companies in the student loan industry or businesses that say they have been hurt by an increase in the minimum wage, that argue this Congress has been every bit as scary as they could have imagined.

Other business lobbyists say that, while not disastrous, their clients are deeply disappointed that the Congress has not extended widely popular and typically bipartisan tax credits for businesses, such as those for companies doing research and development.

Some predict the worst is still to come from the corporate standpoint — if not next year, then by 2009 — on a whole range of issues, including the taxation of private equity partnerships.

“The big thing the business community is worried about, and worries about into the future, is taxes,” said Quinn Gillespie’s Hoppe.

In 2009, if Congress does not act, many of the Bush administration tax cuts will expire. “The business community is going to have to fight to make Congress do something, otherwise they’ll have the biggest tax increase in the history of the world.”