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The US Chamber of Commerce's Multimillion-Dollar Attack Plan

“Obamacare will be a nightmare for Florida seniors,” a grim voiceover announces. “Did Bill Nelson consider the consequences when he cast a deciding vote for Obamacare?”President of the US Chamber of Commerce Tom Donohue.

“Tell Jon Tester: the Washington way isn’t the solution,” another intones. “We need less government and lower taxes.”

“Sherrod,” a third asks, referring to Ohio Senator Sherrod Brown, “what planet are you on?”

If you live in a state where a competitive race could help tip the balance in the Senate this fall, you’ve almost certainly seen ads like these, laden with menacing theme music, light on the facts and funded by the US Chamber of Commerce. The nation’s largest business lobby is showcasing bold ambitions this year in an effort to build on gains made in the 2010 midterms, when at least $33 million of Chamber advertising helped push the nation dramatically rightward. The group began placing ads in swing districts as early as November 2011. Since then, it has rolled out a campaign aimed at influencing at least fifty House and eight Senate races, and according to Politico it has set a goal of $100 million in spending for this electoral cycle.

Watchdog groups believe the strategy in 2012 is similar to that of 2010: the Chamber goes into a district, blitzes it with attack ads to soften up the opposition and then steps back to let other deep-pocket groups come in. The intent is to force Democrats to play defense across the board, thus spreading their resources thin. According to the liberal online publication ThinkProgress, twenty of the twenty-one ads the Chamber released in May were hostile to Democratic candidates.

“The Chamber has spent about $600,000 attacking me,” Tester, the farmer turned Democratic Montana senator, told me in April. “I’ve got a great small-business record. I’ve carried bills the US Chamber has advocated for in the past. [But] they see Montana as a state that they can pick up. They’re dishonest, painting me as something I’m not. They’re trying to paint me as Wall Street, as somebody who’s ‘gone DC.’ It’s about as crazy as anybody can get.”

The organization is maintaining its longstanding policy of not officially taking sides in presidential elections. But even though it has not directly funded anti-Obama or pro-Romney ads, that doesn’t mean its leaders wouldn’t dearly love to oust Obama. Robert Weissman, president of the consumer advocacy group Public Citizen, says the Chamber hopes to influence the presidential election indirectly—by shaping the contours of the public debate in the months leading up to election day and by bringing conservative voters to the polls.

It is also reportedly coordinating with the top conservative Super PACs to craft a unified message and spending strategy. US Chamber Watch has documented a series of meetings between the Chamber’s counsel and GOP strategists dating back to 2009, when they conceived the notion of creating American Crossroads, the Super PAC headed by Karl Rove. Since then, the watchdog group believes, the Chamber has been holding regular meetings with Crossroads, which claims that it will be able to bring $300 million to the 2012 election fight, and with Koch brothers–backed organizations (including Americans for Prosperity), which have bandied about the figure of $400 million as their target. Further evidence of cross-pollination: Chamber strategist Scott Reed previously worked for the GOP, and former Chamber counsel Steven Law is president of Crossroads GPS, the Rove-affiliated 501(c)(4) “social welfare organization.”

According to the Washington Post, the key players in this alliance have been meeting every couple of weeks to strategize. In May, Mike Allen and Jim Vandehei reported in Politico that the Chamber, Crossroads, Americans for Prosperity and the conservative Congressional Leadership Fund had joined together in a pledge to raise an unprecedented $1 billion to influence the upcoming elections.

Compared to these figures, the $100 million that the Chamber hopes to spend could seem almost paltry. But to view it as such would be a huge mistake—for if recent years have proven anything about the role of money in the country’s politics, it’s that a group with a sizable budget for carefully targeted advertising can exert outsize influence on election day.

All of this adds up to a ton of bad news for the country’s democratic system. Pay-to-play makes it that much harder for ordinary people to get a fair hearing. It wrecks the notion of good governance, and it undermines the idea that the public interest can be well represented by the state and its elected officials.

And yet there are signs that the Chamber has overplayed its hand. Historically, the organization has been careful to camouflage its right-wing economic agenda, claiming it simply champions a “common sense” approach to the country’s problems. But these days the Chamber is struggling to tame the Tea Party beast it helped to unleash, whose destabilizing extremism was on display during last year’s debt ceiling debate. And the Chamber is facing increased scrutiny into its questionable spending of charitable funds for political purposes as well as its alleged misuse of money ponied up by anonymous donors. The Citizens United ruling gave corporations a free pass to influence elections, but with the flood of money has come heightened attention to the organizations that are bundling and spending it, often playing fast and loose with established federal election requirements. That puts the Chamber in an unwelcome—and possibly damaging—spotlight.

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The Chamber has been developing a carefully structured political strategy since the early 1970s, when Lewis Powell (who would later become a US Supreme Court justice) penned a famous memo advising the group on how to tackle what he believed to be the growing anti-business environment in the United States. To reclaim influence over the political and regulatory processes, and to shape public opinion in corporate America’s favor, he urged a more aggressive lobbying effort and called for the creation of a network of think tanks and research groups that could promote pro-business messages.

In recent years, as Powell’s suggestions have taken root, the Chamber has served as a sort of clearinghouse for megacorporations that want to shape policy without leaving any fingerprints. During the debate over the Affordable Care Act, for example, AHIP (the industry group representing health insurance companies) donated more than $100 million to the Chamber of Commerce, according to National Journal. The anonymity of the process allowed insurers to claim they were cooperating with the Obama administration’s attempts to improve efficiency, rein in costs and expand access, while in reality their dollars were hard at work drumming up opposition to reform.

Other donors have contributed money with the understanding that it would be used to push for their own priorities: an extension of the Bush-era tax cuts, approval of the Keystone XL pipeline, rollback of any number of environmental or financial regulations. Alan Grayson, a progressive Florida Congressman defeated in his 2010 re-election bid, says the general consensus among his Democratic colleagues is that the Chamber has become “a means for individual corporate entities to launder their sewer money,” giving donations in exchange for verbal commitments to advance favored policies.

The Chamber has been particularly tough on the markedly mild Dodd-Frank financial reforms. In early 2012, the group issued a “report card” for the bill, handing out a C- for its impact on US competitiveness and a C for its attempts to regulate the notorious derivatives markets. The report also expressed concern that the Consumer Financial Protection Bureau, established as part of Dodd-Frank, “could limit access to credit in the marketplace for consumers and small businesses.”

So rigid have the Chamber’s positions become that last year it backed the Regulatory Accountability Act, a House bill that would impose an endless series of reviews before any new regulations could kick in. It also supported the REINS Act (for “Regulations from the Executive in Need of Scrutiny”), which aims to prevent new regulations from being enacted unless they’re passed by both houses of Congress with no amendments—“which means never,” as Weissman dryly notes. It even opposes aggressive enforcement of the Foreign Corrupt Practices Act, which allows companies that engage in bribery overseas to be prosecuted in the United States.

To advance its far-right agenda, the Chamber relies on a language of doublespeak, one that preaches American-as-apple-pie values while advocating policies that are anything but commonsensical and fair. Healthcare reform is thus mislabeled as a “job killer,” while the evisceration of safety-net programs like Social Security and Medicare becomes “entitlement reform.” In the aftermath of a fiscal collapse largely caused by lax regulations and obscene risk-taking by too-big-to-fail banks, such measures as strengthening regulations and restoring progressive taxation ought to be considered common-sense proposals. Yet the Chamber has repeatedly stymied such reforms, claiming they’re harmful to America’s economic well-being and arguing that cutting taxes and regulations even further is the way to restore the country’s fiscal health. The implicit assumption behind its language—analyzed by Occidental College politics professor Peter Dreier in his Cry Wolf Project—is that any attempt to make businesses pay their fair share is by definition “anti-business” and therefore “anti-American.”

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The US Chamber of Commerce has been a dominant partisan player in Washington for years, with hundreds of state and local chapters reinforcing its message around the country. But the national group has noticeably stepped up its political game since 2008. In the two years following Obama’s election, the Chamber spent about $300 million lobbying for conservative legislation and against the regulatory, social welfare and tax reforms proposed by Democrats. When the 2010 midterms came around, it played a decisive role. According to several reports, the organization pumped $32.1 million into Congressional elections that year. The Chamber-backed candidate won in thirty-eight of fifty-nine races (64 percent), helping to secure the GOP House majority and significantly weakening the Democrats’ hold over the Senate. Chamber campaigns targeting judicial figures who opposed tort reform were also instrumental in defeating several progressive judges in their re-election efforts that year.

US Chamber Watch estimates that 93 percent of the money the Chamber spent on the 2010 midterm elections went to help elect Republican candidates, including major GOP Senate candidates such as Marco Rubio (Florida), Rand Paul (Kentucky) and Mark Kirk (Illinois). All told, election watchdog groups estimate the Chamber spent more in its lobbying efforts throughout 2010 than the next five largest lobbying outlays combined.

“In terms of political gamesmanship, they were strategic and effective in how they deployed their money,” says Weissman. “I view the Chamber as really a third party.”

Grayson, who is running to recapture the seat he lost two years ago, is convinced that he was brought down by ads funded by the Chamber and like-minded Super PACs. He has researched the amount of money local television stations received during the 2010 elections and estimates that more than $5 million worth of attack ads (calling him a “dog,” a “clown,” a “liar” and various other epithets) were launched against him that year. Post–Citizens United, he argues, “a lobbyist can now walk into a Congressman’s office and say, ‘I have $4 million to spend, and I can spend it for you or against you. Which would you prefer?’ They can spend a staggering, unlimited amount of money to drag you and your name through the mud until you are destroyed.”

Chamber president Tom Donohue, who earned $4.7 million in 2010, streamlined the pay-to-play process by which corporate donors shape the group’s lobbying agenda and reportedly keeps a plaque on his desk that reads “Show ME the Money.” When the midterm results came in, Donohue wasn’t exactly humble in acknowledging his organization’s influence. Shortly after the polls closed—when it became clear that liberal icons such as Senator Russ Feingold had been defeated and that Congress, many statehouses and a number of key judicial positions had shifted to the right—Donohue made a one-and-a-half-minute address to the nation about the message voters had sent. Americans, he declared, were rejecting the climate of “crippling uncertainty for business,” saying no to “more government spending, higher taxes and more burdensome regulations.”

Two months later, on January 11, 2011, Donohue again addressed his audience of business leaders and media observers from the Chamber’s plush DC offices, a stone’s throw from the White House. On one side of the podium was a large US flag; on the other, a Chamber flag. Dressed in a dark blue suit with a Stars and Stripes flag pin on his left lapel, his white hair carefully parted to one side, the then-72-year-old—who has never run for public office in his life—was keen once again to take credit for changing the country’s political direction.

“In 2011, the Chamber’s top priority will be to turn an economic recovery into a jobs recovery,” he announced. At first it sounded like standard boilerplate, the kind of stuff no right-minded voter could disagree with. But then came the kicker: the Chamber and its Congressional allies would seek to clear away “impediments” to private-sector job growth, such as excessive government spending, regulations (a “tsunami” of which, Donohue claimed, “cost Americans $1.7 trillion a year”) and the large national deficit. They would fight to scrap the healthcare reform bill “and go back to the drawing board” on the individual mandate. And they would take on “special-interest shareholders such as unions” that had been “pushing an extreme agenda…using their position as a powerful political force to sabotage the nation’s trade agenda.” They would also challenge the EPA’s authority to regulate greenhouse gas emissions. And they would fight to lower the corporate tax rate.

All of this they did. But soon the Chamber had to grapple with an adversary from a surprising corner. In the summer of 2011, when the Tea Party–dominated House GOP launched a reckless game of chicken over the national debt ceiling, Chamber spokespeople intervened in the debate several times and urged Congress to pass a measure to avoid defaulting. If America had defaulted on its debts, the impact would have been catastrophic—and, to a business organization craving stability, utterly counterproductive. At a Rotary Club meeting in Atlanta that summer, Donohue reportedly warned Tea Party legislators that if they screwed up on the debt ceiling, the Chamber would “get rid of you.”

In the wake of that manufactured crisis, the Chamber began rallying the GOP establishment to rein in the ideologues. By early 2012, Donohue had clearly concluded that his party needed a goodly dose of business sense. And so, while several GOP primary contenders launched pseudo-populist attacks on Mitt Romney for his venture-capitalist practices of buying firms and then stripping them of their assets, Donohue was quoted as saying that Romney’s record was “extraordinary,” and that his opponents needed to tone down their attacks.

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The Chamber’s troubles don’t stop with the Tea Party’s recklessness, however. It has also found itself in hot water over how it spends anonymously donated dollars. Unlike political action committees, outside spending groups registered as tax-exempt 501(c) nonprofits are not required to disclose their donors as long as political campaigning does not constitute their primary activity. The FEC has interpreted election law to allow these groups to preserve donor anonymity if they explicitly endorse candidates. The rationale is similar to that of the secret ballot: whichever candidate a person supports is his or her own business. But if these groups want to campaign on issues instead of personalities, any ads they launch within thirty days of a primary or sixty days of a general election have to identify the donors sponsoring those ads.

As a result of increased media and legal attention, the Chamber, which is registered as a 501(c)(6) trade association, has been given a stark choice: either preserve the anonymity of its donors by explicitly endorsing candidates or reveal the donors’ names in order to continue running issue ads. It has chosen the former route. In recent weeks, the Chamber has endorsed a slew of GOP candidates, including Senate hopefuls Charlie Summers in Maine and George Allen in Virginia. More will undoubtedly follow once the elections are within the sixty-day window. Those endorsements are important, says US Chamber Watch spokeswoman Christy Setzer, because they strip away the veneer of nonpartisanship that the Chamber has carefully cultivated over the years. In seeing the Chamber endorse one GOP candidate after another, voters are finally learning the true nature of the organization.

According to critics, the Chamber has abused the process that preserves donors’ anonymity and has crossed a number of other legal lines in its effort to gain political influence. Most notably, it has allegedly been using improper “loans” that closely resemble gifts from the 501(c)(3) charity the Starr Foundation, funneled through the Chamber’s “charitable” branch, the National Chamber Foundation (NCF), for political purposes. In 2010, DC-based attorney Cyrus Mehri, counsel for US Chamber Watch, filed a complaint with the IRS about the loan. US Chamber Watch is still waiting for an IRS response to the complaint. This spring, New York Attorney General Eric Schneiderman also launched an investigation. In late June, his team issued a number of subpoenas, and as a result it’s likely that much of the Chamber’s dirty laundry will increasingly be on public display in the run-up to the election. (When asked for comment, a Chamber spokesperson said that Schneiderman’s subpoenas were “curiously timed” and noted that the allegations were a “very old story.” He did not, however, explicitly deny their accuracy.)

Important questions will have to be answered. For example, from 2003 to 2005, why did the Starr Foundation give $19 million to the NCF, which then “loaned” most of the money in three $6 million installments to the US Chamber of Commerce? If it was truly a loan, it seems to have been an unusual one: the Chamber allegedly paid no interest on it until at least 2005 and made no effort to pay down the principal until at least 2009. But if it was really a gift funneled through the NCF, as watchdogs argue, then it broke a variety of IRS rules on how charitable donations can be spent. “There’s a sacredness to charitable law,” argues Mehri. “It’s serious. That’s an area where, as a nation, we’ve said it really matters that people can donate money used for charitable purposes and not for a specific political agenda.”

In the years when the money was changing hands, current Starr Foundation chair Maurice “Hank” Greenberg was CEO of the mega–insurance company AIG. Could the foundation’s gift to the NCF have had something to do with the fact that Greenberg was also on the Chamber’s board, and that he was desperately keen to secure federal tort reform legislation, as well as to see judges hostile to class-action lawsuits elected around the country? If so, he was well rewarded: in 2004 the Chamber invested in campaigns backing Congressmen and judicial figures who supported tort reform, and it helped defeat politicians like South Dakota Senator Tom Daschle who opposed it. In 2005, Congress passed, and President Bush signed, the Class Action Fairness Act, making it easier for courts to dismiss class-action lawsuits.

Schneiderman’s investigation may expose the web of financial relationships connecting the Chamber with an array of conservative but allegedly nonpartisan “charitable” foundations. And in so doing, it could show exactly how political influence can be purchased in the post–Citizens United world and what sorts of reforms are needed to ensure that elections can’t be bought lock, stock and barrel by large lobbying interests.

“As the chief regulator of charities and nonprofits in the State of New York, I am committed to restoring accountability and transparency by shining a light on the new role that these organizations are now playing in our political process,” Schneiderman explains.

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Despite the glare of negative publicity, it’s unlikely that lawsuits and investigations alone will be able to neutralize the Chamber’s large and growing influence. After all, the Chamber is playing hardball, and it’s playing to win.

The 2012 elections in many ways represent a crossing-the-Rubicon moment. Can the democratic system survive being swamped by hundreds of millions of dollars of Super PAC money? Can it endure the rise of superfunders like Sheldon Adelson (Newt Gingrich’s backer in the primaries, who has since thrown his financial muscle behind Romney’s campaign), Foster Friess (Rick Santorum’s sugar daddy), Texas billionaire Harold Simmons and the powerful Koch brothers, as well as the overwhelming clout of organizations like the Chamber of Commerce? Will citizens rally around investigations such as the one launched by Schneiderman, and will they demand limits to independent expenditures during elections as well as the disclosure of those who seek to buy the country’s elections and legislative process? Or will ever more politicians who oppose the Chamber’s values simply suffer the fate that befell Alan Grayson in 2010?

“They’ll be effective” in November, Weissman warns. “They run overwhelmingly negative ads. And ads work.” The Chamber, he concludes, “will invest heavily and effectively. They’re the trade association for big business. That’s their purpose, and that’s what they do.”