Welcome to the Machine, Part Two
Dinging the Chicks
Republicans, of course, see things differently. "The Democrats are terrified that our K Street Project is going to replicate the way that they behaved when they had the House and Senate," says Norquist. For him and many of his contemporaries, Democratic rule prior to 1994 was no less autocratic than that of Republicans today. But there's a fundamental difference: Democrats were limited by the basic tension between pleasing their labor base and corporate interests. Unions did, and still do, function as arms of the Democratic Party. When it came to the vastly bigger interests on K Street, someone like Coelho could aim only for financial parity and perhaps a slight advantage in jobs. The emerging GOP machine, however, is premised on a unity of interests between party and industry, which means the GOP can ask for--and demand--total loyalty.
With thin Republican majorities in the House and Senate, a market for Democratic lobbyists remains, and traditional bipartisan lobbying firms still thrive. But increasingly, the trade associations and their corporate representatives--those firms run by Republicans--are the beneficiaries of Washington's new spoils system. And like Mayor Daley's ward supervisors, they are expected to display total loyalty. "These guys come downtown thinking that they owe their job to somebody on the Hill or the influence that somebody brought to bear for them, and they think it's their primary function, in addition to working for the entities they've joined, to sustain the relationship between the Hill and themselves," says Vic Fazio, a top Democratic lobbyist and former congressman from California. "They rationalize it by saying it's good for the old boss and the new one, too."
Day-to-day, the most trusted lobbyists--like those who attend Santorum's meetings--serve as commissars, providing the leadership with eyes and ears as well as valuable advice and feedback. And generally, placing party surrogates atop trade associations makes them more responsive to the party's needs. However, the K Street strategy also provides the GOP with a number of specific advantages. From a machine perspective, such jobs are far more useful than appointive positions in the executive branch. Private sector work has none of government's downside. Political machines thrive on closed-door decision-making; on K Street, there's no other kind. Neither are trade associations subject to inspector generals or congressional oversight; there are no rules against whom you can meet with, no reporters armed with FOIAs. These jobs also make for better patronage. Whereas a deputy undersecretary might earn $140,000, a top oil lobbyist can make $400,000. Controlling K Street also helps Republicans accumulate political talent. Many ex-Clintonites who might have wanted top lobbying positions couldn't get them, and so left Washington for posts at universities, corporations, and foundations elsewhere. But the GOP, able to dole out the most desirable jobs, has kept more of its best people in Washington, where they can be hauled out for government or campaign work like clubs in a golf bag.
But jobs and campaign contributions are just the tip of the iceberg. Control a trade association, and you control the considerable resources at its disposal. Beginning in the 1990s, Washington's corporate offices and trade associations began to resemble miniature campaign committees, replete with pollsters and message consultants. To supplement PAC giving, which is limited by federal election laws, corporations vastly increased their advocacy budgets, with trade organizations spending millions of dollars in soft money on issue ad campaigns in congressional districts. And thanks to the growing number of associations whose executives are beholden to DeLay or Santorum, these campaigns are increasingly put in the service of GOP candidates and causes. Efforts like the one PhRMA made on behalf of Bush's Medicare plan have accompanied every major administration initiative. Many of them have been run out of the offices of top Republican lobbyists such as Ed Gillespie, whose recent elevation to chairman of the Republican National Committee epitomizes the new unity between party and K Street. Such is the GOP's influence that it has been able to marshal on behalf of party objectives not just corporate lobbyists, but the corporations themselves. During the Iraq war, for instance, the media conglomerate Clear Channel Communications Inc. had its stations sponsor pro-war rallies nationwide and even banned the Dixie Chicks, who had criticized White House policy, from its national play list. Likewise, last spring Norquist and the White House convinced a number of corporations and financial services firms to lobby customers to support Bush's dividends tax cut. Firms like General Motors and Verizon included flyers touting the plan with dividends checks mailed to stockholders; Morgan Stanley included a letter from its CEO with the annual report it mailed to millions of customers.
Lobby Horses
Although this arrangement is intended to mutually benefit the GOP and the businesses who support it, in practice, the new Republican machine must balance the needs of K Street with the interests of the party. Sometimes that requires the GOP to take positions that it knows will be unpopular with voters or open the party up to criticism from the press. Shortly after Bush took office, at the behest of business groups, congressional Republicans summarily tossed out a set of ergonomics standards that Bush's father had sent wending through the rule-making process a decade earlier. Similarly, in June, Republican-appointed commissioners on the Federal Communications Commission--bowing to the wishes of large broadcasters and newspaper chains--dumped 50-year-old federal regulations on media ownership, causing a wave of public anger. And while it's not uncommon for lobbyists to have a hand in writing legislation on the Hill, the Bush administration has sometimes shifted the locus of executive policy making so far towards K Street that Bush's own appointees are cut out of the process. While environmental groups complained loudly about being excluded from meetings of Dick Cheney's energy task force, Bush's own energy secretary, Spencer Abraham, was barely involved. As Public Citizen pointed out in a February 2003 letter to Congress, Joseph Kelliher, a senior advisor to Abraham and his point man on the task force, didn't write white papers or propose ideas of his own, but merely solicited suggestions from a cross-section of energy lobbyists and passed them on to the White House, where they were added to the task force's recommendations nearly verbatim. Top administration officials then handed the package down to the House, where it was approved almost unaltered.
But the flip side of the deal is that trade associations and corporations are expected to back the party's initiatives even on occasions when doing so is not in their own best interest. When Bush's recently passed dividends tax cut proposal was first announced, the life insurance industry complained that the bill would sharply reduce the tax advantage of annuities sold by insurance companies, potentially costing them hundreds of millions of dollars. The industry's lobbyists were told to get behind the president's proposal anyway--or lose any chance to plead their case. So they did. In mid-March, Frank Keating, the head of the industry's trade group and a close friend of Bush's, hand-delivered a letter to the White House co-signed by nearly 50 CEOs, endorsing the president's proposal while meekly raising the hope that taxes on dividends from annuities would also be included in the final repeal (which they weren't). Those firms that didn't play ball on Bush's pan paid the price. The Electronic Industries Alliance was one of the few big business lobbies that declined to back the tax cut, in large part because the high-tech companies that make up a good portion of its membership don't even issue dividends. As a result, the trade group was frozen out of all tax discussions at the White House. The final bill reflected the ability of the GOP machine to pass legislation largely on its own terms: Whereas Reagan's 1981 tax bill was a Christmas tree of special breaks, Bush's was relatively clean, mainly benefiting wealthy individuals and small businesses, as the administration had intended.
Positively K Street
If you read The Washington Post last spring, you might have come across what seemed, on the surface, to be just another small beer scandal. This one involved Rep. Michael Oxley (R-Ohio), who heads the House Committee on Financial Services. Late last year, Oxley was set to launch an investigation of pricing practices in the mutual fund industry. But in December, one of his staffers allegedly let it be known that Oxley might go easy on the mutual funds if their trade group, the Investment Company Institute (ICI), pushed out its Democratic chief lobbyist, Julie Domenick. The Post's reporting caused a minor uproar; the House Ethics Committee briefly considered an investigation. The press coverage, however, never made clear why a powerful committee chairman like Oxley would risk his career over one job on K Street.
What explains Oxley's decision is the same thing that explains why the Bush administration would risk angering voters by attempting to privatize Medicare: The GOP needs K Street's muscle for long-term ideological projects to remake the national government. For years, conservatives have been pushing to divert part of Social Security into private investment accounts. Such a move, GOP operatives argued, would provide millions of new customers and potentially trillions of dollars to the mutual fund industry that would manage the private accounts. The profits earned would, of course, be shared with the GOP in the form of campaign contributions. In other words, by sluicing the funds collected by the federal government's largest social insurance program through businesses loyal to the GOP, the party would instantly convert the crown jewels of Democratic governance into a pillar of the new Republican machine. But to make the plan a reality, the GOP needed groups like the ICI to get behind the idea--by funding pro-privatization think tanks, running issue ads attacking anti-privatization Democrats, and so on. The ICI, however, had always been lukewarm to privatization, for which conservatives blamed Domenick. Hence, the GOP machine decided she had to go. In the end, to quell the Oxley scandal, Domenick was allowed to keep her job. But ICI hired a former general counsel to Newt Gingrich to work alongside her, and the GOP's campaign to get K Street behind Social Security privatization continues.
If the GOP is willing to be aggressive enough, even the federal payroll can become a source of patronage. Recently, as part of Bush's "competitive sourcing" initiative, the Interior Department announced that over half of the Park Service's 20,000 jobs could be performed by private contractors; according to the Post, administration officials have already told the service's senior managers to plan on about one-third of their jobs being outsourced. (Stay tuned for "Yosemite: A division of Halliburton Corporation.") But the Park Service is only the beginning. Bush has proposed opening up 850,000 federal jobs--about half of the total--to private contractors. And while doing so may or may not save taxpayers much money, it will divert taxpayer money out of the public sector and into private sector firms, where the GOP has a chance to steer contracts towards politically connected firms.
Anyone who doubts this eventuality need look no further than Florida. There, as New York Times columnist Paul Krugman pointed out last year, Gov. Jeb Bush, the president's brother, has outsourced millions of dollars worth of work formerly performed by government employees to private contractors. There's little evidence that doing so has improved state services, as the governor's own staff admits. But it has vastly improved the financial state of the Florida Republican Party. According to an investigation by The Miami Herald last fall, "[t]he policy has spawned a network of contractors who have given [Bush], other Republican politicians, and the Florida GOP millions of dollars in campaign donations."
The New Spoils System
The Bush brothers would not be the first political family to turn government contracts into a source of political power. When the current mayor of Chicago, Richard M. Daley, won his father's old job 14 years ago, civil service reform had already wrecked the old system of bureaucratic patronage. So the new mayor began to farm out government services to private contractors, many of which returned the favor by donating generously to Daley's reelection campaigns. Today, Daley dominates Chicago politics almost as thoroughly as did his father. Like his father, Daley has used his power, in part, to improve city services voters care about, from better schools to the flower beds lining Lake Shore Drive. By contrast, the fruits of today's Republican machine--tax cuts and deregulation--have been enjoyed mainly by corporations and upper-income voters, while federal services, from college aid to environmental protection, are getting scaled back.
Indeed, it's striking how openly and unapologetically Bush and his party have allied themselves with corporations and the wealthy. The rhetoric of compassion aside, no one who pays attention to what goes on in Washington could have much doubt as to where the Bush administration's priorities lie. If the economy doesn't improve or unemployment continues to get worse, the GOP may find it's not such an advantage to be seen catering so enthusiastically to monied interests. But most Republicans seem confident that the strength they gain by harnessing K Street will be enough to muscle through the next election--so confident, in fact, that Bush, breaking with conventional electoral wisdom, has eschewed tacking to the political center late in his term. And if the GOP can prevail at the polls in the short term, its nascent political machine could usher in a new era of one-party government in Washington. As Republicans control more and more K Street jobs, they will reap more and more K Street money, which will help them win larger and larger majorities on the Hill. The larger the Republican majority, the less reason K Street has to hire Democratic lobbyists or contribute to the campaigns of Democratic politicians, slowly starving them of the means by which to challenge GOP rule. Already during this cycle, the Republicans' campaign committees have raised about twice as much as their Democratic counterparts. So far, the gamble appears to be paying off.
It wouldn't be the first time. A little over a century ago, William McKinley--Karl Rove's favorite president--positioned the Republican Party as a bulwark of the industrial revolution against the growing backlash from agrarian populists, led by Democratic presidential candidate William Jennings Bryan. The new business titans flocked to McKinley's side, providing him with an extraordinary financial advantage over Bryan. McKinley's victory in 1896 ushered in a long period of government largely by and for industry (interrupted briefly, and impermanently, by the Progressive Era). But with vast power came, inevitably, arrogance and insularity. By the 1920s, Republican rule had degenerated into corruption and open larceny--and a government that, in the face of rapidly growing inequality and fantastic concentration of wealth and opportunity among the fortunate few, resisted public pressure for reform. It took a few more years, and the Great Depression, for the other shoe to drop. But in 1932 came the landslide election of Franklin Delano Roosevelt, and the founding of the very structure of governance today's Republicans hope to dismantle. Who knows? History may yet repeat itself.
washingtonmonthly.com |
