1 Business Influence on Government and Public Policy Professor Craig Diamond BA 385 November 4, 2009 Chapter 12

2 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 Corporate Political Participation Political Involvement Participation in the formulationand execution of public policy atvarious levels of government “Success in Washington is just as important as success in the marketplace.”

5 Corporate Political Participation Lobbying PACs Coalition Building Political Strategy Influencing public officials to promote or secure passage or defeat of legislation; also influence elections 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

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 Organizational Levels of Lobbying Umbrella Organizations Trade Associations Company-Level Lobbying Broad Midrange Narrow/ Specific Narrow/ Specific Representation Chamber of Commerce of the US National Association ofManufacturers Chamber of Commerce of the US National Association ofManufacturers National Automobile Dealers Assn National Association of Realtors National Automobile Dealers Assn National Association of Realtors Washington and State Capital Offices Law firms Public affairs specialists PACs Grassroots lobbying Washington and State Capital Offices Law firms Public affairs specialists PACs Grassroots lobbying Examples 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 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 Grassroots Lobbying Mobilizing the “grassroots”—individual citizens who might bemost directly affected by legislativeactivity—to political action Cyberadvocacy Using the Internet to amassgrassroots support, and enablegrassroots supporters tocontact their legislators

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

15 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 Top 10 PAC Contributors to Federal Candidates ( ) Figure 12-4 These 10 contributed total of about $30 million

16 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. Arguments For PACs Arguments Against PACs Political Action Committees

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 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 Strategies for Political Activism Contingency Approach: 1.Identify the important issues in a legislative district 2.Determine the information a legislator possesses concerning voter preferences 3.Determine the importance of the issues to the legislator’s constituency 4.Identify the expected position of voters on the issues

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