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The Boston Globe

Not Much Done on Agenda of Change

Lobbyists stymie regulatory push

Christopher Rowland

At his inauguration, Barack Obama pledged to harness the powers of Washington for the common good, saying the critical issue was whether government works. (Damon Winter/The New York Times)

WASHINGTON - Despite being portrayed as responsible for myriad national ills, Wall Street bankers, oil and coal companies, and health industry executives bounced back in Congress this year with remarkable success, stalling or weakening the biggest regulatory threats on President Obama's domestic agenda.

The success is fueled in part by a $1 billion combined lobbying blitz through the first 10 months of the year, as the industries fought off the changes that many thought were coming with Obama's election.

A year after the worst economic crisis in 75 years, a crackdown on lending abuses and risky trading practices has barely received a hearing in the Senate. The Senate has temporarily shelved legislation in tended to combat global warming. And while Obama's cornerstone health care proposal still has momentum, the insurance industry scored a major victory this week when Democratic leaders scuttled a government insurance option.

The 2009 lobbying scorecard reflects a turnaround for these industries. They were squarely in the crosshairs of a reform-minded White House in January, after Obama swept into office promising to crack down on what he described as financial fat cats and polluters. Now business leaders are rounding the corner into 2010 - an election year - having thus far escaped new, major regulations.

The lobbying came amid anxieties in Congress about the recession; ideological divisions among congressional Democrats; and a packed legislative agenda. Arguments against greater regulation gained traction throughout the year as Obama's popularity waned and deficits soared, specialists said.

"There has been much more opposition to regulation than a lot of people expected,'' said James Gattuso, a senior fellow at the Heritage Foundation, a conservative think tank in Washington.

The opposition and slow pace of change, he said, demonstrates that mistrust of government intervention in the US economy remains a strong force in national politics.

The House has heeded Obama's calls for action and passed, along party lines, a slate of White House priorities. But the Senate has proved a far tougher battleground.

The Senate does appear likely to join the House and pass a bill to expand health coverage and prevent insurers from denying claims for preexisting conditions. But in the face of fierce opposition from Republicans and moderate Democrats, Senate leaders abandoned the government insurance plan, which was designed to compete and pressure private insurance companies to reduce premiums. Drug manufacturers and health care providers thus far have staved off the most serious challenges to their profits, such as government negotiation of prescription prices and sweeping changes to the payment systems for physicians and hospitals.

The lack of concrete results has been a major disappointment for some self-styled reformers, who were thrilled after Obama swept into office on a message of change.

"It's a terrible situation. So far, nothing has changed for the better,'' said Heather Booth, executive director of Americans for Financial Reform, a nonprofit coalition representing 200 organizations nationwide. She applauded House approval of the financial overhaul but said her member organizations are still anxiously waiting for progress in the Senate.

The atmosphere in Washington is far different from when Obama arrived. Repudiating Reagan-era doctrine that portrayed government as a negative force, the new president promised in his Jan. 20 inaugural address to harness the powers of Washington for the common good: "The question we ask today is not whether our government is too big or too small, but whether it works.''

Obama's first tasks, however, were crisis control, as he confronted the worst economic decline since the Great Depression. He won passage of a $787 billion stimulus package in what many economists regarded as a crucial bid to stem unemployment. He engineered an auto industry bailout. His new administration also worked mightily to manage the $700 billion financial sector bailout that had been approved by Congress in 2008, including weathering controversies over large executive pay packages.

In June, Obama's approval ratings in polls slipped below 55 percent and have continued to fall. In Congress, Democrats fought among themselves, struggling to muster the power of their majorities.

"It is in the nature of Congress not to act swiftly,'' said Ross K. Baker, a political science professor at Rutgers University. "A lot of it has to do with Congress's accessibility. It's easy to get to members of Congress. It's an open institution, and it's not open to just citizens - it's also open to interest groups.''

Asked about the slow pace of change on financial market rules, air pollution, and health care, the White House pointed to key accomplishments elsewhere. In addition to the stimulus package and cash-for-clunkers program, Obama won passage of an expansion of health benefits for low-income children, a credit-cardholders bill of rights, and the Lilly Ledbetter Fair Pay Act, which gave women greater rights to challenge discriminatory pay.

Obama spokeswoman Moira Mack said the White House has made significant progress toward the bigger goals.

"The president is proud of the historic changes he has brought to Washington and the great strides we've made toward reforming health insurance to cut costs for families, fixing the financial policies that brought us this crisis, and establishing comprehensive energy reform that Americans have sought for decades,'' she said in an e-mail.

Democratic leaders in Congress say they remain committed to approving Obama's big agenda items, even as Republican opponents say they are trying to block some of the proposals in order to protect the economy and stem rising deficits.

But next year presents additional problems for Obama and his allies: Members of Congress are worried about how the sluggish economy and unemployment rates will affect their mid-term reelection prospects.

"The number one issue next year is jobs, and these issues that do not create jobs are not going to matter to members of Congress who are looking at polls now,'' said Ron Bonjean, a Washington lobbyist and former staffer for GOP leaders in Congress.

The fuel industry will continue to argue that proposed caps on greenhouse gases would devastate the economies of oil and coal-producing states - including states with Democrats in their congressional delegations like West Virginia, Louisiana, and New Mexico - and would raise energy costs for consumers across America.

Equally tough fights remain on financial regulations. Democrats managed to push new financial rules through the House by a narrow margin, but in an ominous sign for the White House, 27 Democrats joined Republicans in voting against the package. Opponents echoed warnings from Wall Street and banks: that new financial rules would hamper an economic rebound and tighten credit.

Business groups have been especially opposed to creation of a new Consumer Financial Protection Agency, which would have the power to prohibit the abusive lending practices that helped plunge the nation into recession.

"Our effort this entire year has been to educate members of Congress to recognize the potential impact on access to affordable consumer credit of all these regulations, with particular interest on the CFPA, because it has the greatest potential impact,'' said Bill Himpler, executive vice president of a key industry lobbying group, the American Financial Services Association. "Lenders tend to be a conservative bunch. You add more uncertainty to the mix, they tend to get even more conservative in their lending.''

The Senate unveiled its own package of financial rules, introduced by Senate Banking Committee chairman Christopher Dodd of Connecticut, in November. Dodd and other lawmakers, like US Representative Barney Frank of Massachusetts, chairman of the House Financial Services Committee, are still pressing for tougher financial rules.

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