Chamber of Commerce draws fire after a risky bet on Democrats
The U.S. Chamber of Commerce, the nation's biggest business lobby, is encountering challenges on multiple fronts as it seeks warmer relations with Democrats after years of lockstep loyalty to Republicans - a strategic shift that is souring relations with some GOP allies on Capitol Hill and alarming some members and state affiliates.
The blowback from Republicans threatens to further upend the Chamber's longtime status as the most potent corporate lobby in Washington, just as the Biden administration pushes a sweeping agenda that includes significant tax hikes on big businesses and a raft of new regulations. And it comes amid a broader rift between corporate leaders, who have become more outspoken advocates of some progressive causes, and a Republican Party that increasingly sees political advantage in attacking business executives.
In recent months, the Chamber has been the object of sharp attacks by leading conservatives. Arkansas Sen. Tom Cotton called it a "front service for woke corporations." Senate Minority Leader Mitch McConnell of Kentucky called it "confused." House Minority Leader Kevin McCarthy of California was so irked by the Chamber's decision to endorse 23 freshman House Democrats for reelection last fall that he said he doesn't even want its endorsement anymore.
The U.S. Chamber's new strategy, forged years ago by top executives and implemented in earnest during last fall's frenzied election season, calls for closer relationships with members of both parties as opposed to lockstep support for Republicans. The decision to endorse so many freshman Democrats, rather than give them time for their voting records to take shape, was a dramatic break from past procedure.
Tom Wilson, former chair of the U.S. Chamber board and chief executive of the insurance giant Allstate, said the Chamber makes no apologies for its decision.
"Sure, there are some people who don't like what we're doing, because they signed on thinking it was a wing of the Republican Party," Wilson said in an interview. "And we're like, 'That's OK. If you want to join something that's a wing of the Republican Party, go for it. And if we don't fit your needs, that's fine.'"
Even so, the conservative backlash has led to alarm even among some of the organization's closest allies. A veteran U.S. Chamber board member, speaking on the condition of anonymity to avoid reprisal, said: "It is a legitimate question how well-thought out this strategy is. People are concerned, and they're discussing where else they can send revenues to support free enterprise."
A U.S. Chamber spokesman emphasized that the organization has overwhelming support from its board regarding its strategy and direction. The spokesman refused to be quoted by name.
"We expect criticism when we work with Republicans who are aligned with us on key issues, and when we work with Democrats for the same reason," the spokesman said. "No member of Congress has a right to our support - they have to earn it and re-earn it. We focus on the issues, not the parties, and we won't back down."
This account is based on more than two dozen interviews with current and former Chamber staff members, board members, lawmakers, lobbyists and others with direct knowledge of the organization's strategy and finances. Many of them spoke on the condition of anonymity because they were discussing internal Chamber issues.
The Chamber's new direction is, in part, the result of a leadership change. Suzanne Clark became chief executive in February following the retirement of Tom Donohue, a key architect of the Chamber's alliance with Republicans who led the organization for 24 years.
But the shift also reflects dramatic changes within the Republican Party. Over the past five years - as Trump-led Republicans embraced trade protectionism, a hard line against immigration and an incendiary style out of step with increasingly progressive C-suites - top U.S. Chamber executives called for a bipartisan approach, with the aim of rebuilding a vanishing core of moderate lawmakers who view big business as partners rather than boogeymen.
The falling-out with conservatives reflects a broader realignment in the relationship between Washington and corporate America. Corporate chiefs are rethinking their decades-old alliance with the Republican Party in light of its populist transformation over the past five years. Elected Republicans are launching broadsides at the executive class.
The U.S. Chamber finds itself caught in the middle. While losing friends on the Republican side, it's unclear how the Chamber's bet on Democrats will work out.
House Democrats approved a bill in early February, known as the PRO Act, aimed at making it easier for workers to unionize. The Chamber blasted it as "a litany of almost every failed idea from the past 30 years of labor policy."
But all of the 14 Chamber-endorsed Democrats who won reelection backed the measure. Seeing Chamber-endorsed Democrats support pro-union legislation "is like the national right to life organization saying they now support some abortions," said a former U.S. Chamber executive, who spoke on the condition of anonymity because the person feared reprisal.
Neil Bradley, the U.S. Chamber's top lobbyist, said any lawmakers who voted for the PRO Act will pay a political price.
"All of them just lowered their score with us," Bradley said about the Democrats who voted for the measure. "And that's going to be a problem for them."
Glenn Hamer, who is CEO of the Texas Association of Business, said the U.S. Chamber and its state affiliates are fully aligned in opposition to the PRO Act.
Hamer also pointed to the passage of the U.S.-Mexico-Canada Agreement, a trade pact known as USMCA that was signed into law in last year as a replacement for NAFTA, as evidence of how the Chamber's bipartisan approach has yielded results for its members. The deal received support from both parties by wide margins.
"As always we seek to achieve bipartisan victories with the model being the USMCA passage last year that required both Republican and Democratic support," Hamer said in a statement provided by a U.S. Chamber spokesman. "No organization played a greater role in that landmark victory than the U.S. Chamber."
The Chamber's strategic shift, executives say, has been in the works for years.
At a leadership retreat in Florida several years ago, top U.S. Chamber executives discussed the need to spell out the group's long-term purpose and goals, in part because Donohue was approaching retirement. The resulting document, called "Shared Purpose," outlined broad Chamber priorities and listed partnership as a key value.
"As a nation, we succeed when we work together - businesses, communities and government," the document read.
"I started talking about how we should not be single-sourcing our politics," said Wilson, the board chairman, pointing to the group's inability to reach Democrats. "We're in this bad system, where we're not listening and they're not listening. So we need to broaden our political base."
So in 2019, the organization changed the formula it uses to rate members of Congress, a metric that determines the organization's endorsements. In addition to its traditional method of tabulating how lawmakers voted on measures the Chamber identified as important, it added categories that awarded credit for "bipartisanship" and "leadership."
The revamped scorecard cleared the way for the Chamber to endorse the raft of Democrats. And it infuriated some in the GOP.
Rep. Kevin Brady, R-Texas, the top Republican on the tax-writing Ways and Means Committee, noted to colleagues that he now scored below Rep. Lizzie Fletcher, D-Texas, a freshman from a neighboring Houston district, according to two people with knowledge of the matter. This is despite his work as the architect of the 2017 tax-cut package that slashed the corporate rate from 35% to 21%.
A Brady spokesman said the congressman, who announced his retirement last month, "hasn't hesitated to speak up about the Chamber's drift - but that hasn't sullied the relationship he has."
Some high-profile staff members have left the Chamber in recent months. It wasn't clear if the Chamber's shift factored into most of these moves.
Caroline Harris, the group's chief tax lobbyist, left earlier this month for a job at the lobbying firm Capitol Tax Partners, just as Washington gears up for a fight over raising corporate taxes to fund infrastructure projects. She joined a roster of recent departures that includes Rob Engstrom, a senior political strategist whose work with the U.S. Chamber ended in December; Stan Harrell, the group's longtime chief financial officer; and Scott Reed, its political director. Harris, Engstrom, Harrell and Reed declined or did not respond to requests for comment for this story.
Reed, who had helped lead the Chamber's political program for more than a decade, previously told The Post he was already planning to quit at the end of the year and had been handcuffed by the group's leaders from spending on behalf of Senate Republicans locked in tight reelection contests.
A Chamber of Commerce spokesman said that the organization is experiencing "historic low turnover" and has made new hires to replace the recent high-level departures. The organization recently hired Stefan Freiberg from the International Council of Shopping Centers to replace Harrell as chief financial officer; former House parliamentarian Tom Wickham to lead a new initiative focused on state and local policy; Kasper Zeuthen vice president of communications; and two new regional managers focused on grass-roots lobbying, among others.
The new strategy has been accompanied by a dramatic drop in the Chamber's political spending, according to a Washington Post analysis of publicly disclosed spending data.
Between 2010 and 2016, when the Chamber could often be counted on as a steadfast ally in the Republican Party's attempts to resist Obama-administration initiatives on health care and corporate regulation, the Chamber's independent political expenditures fluctuated between $29 million and $37 million for each two-year election cycle. In 2018 ― as the Chamber's board was considering how to change its strategy after Donohue's impending retirement ― political spending dropped to $10.9 million. In 2020, it dropped to $5.7 million.
The recent political upheaval has complicated the Chamber's relationships with some longtime members and allies.
The U.S. Chamber's recent Democratic endorsements were approved by a group of executives called the Political Advocacy Committee, which includes representatives of corporate members and state chambers. The endorsements faced resistance from some members, and an August 19, 2020 vote to table the matter came up with a 15-15 tie, according to three people with direct knowledge of the vote.
A later vote fell in favor of moving forward with all 23 of the Democratic endorsements, which were made public in early September. A person familiar with the vote said the margin was 38-2.
But the chair and vice-chair of that committee ― former Devon Energy vice president Allen Wright and Charles Schwab vice president Pamela Brewster ― both resigned their committee posts. Wright had raised concerns that the proper process for obtaining input from members and state allies had not been followed, according to people familiar with his resignation.
Wright declined to comment. Brewster did not respond to requests for comment. A U.S. Chamber spokesman said the committee "followed the normal procedures in approving the endorsements and that is reflected in the overwhelming vote given by the committee members."
Schwab later quit its membership with the U.S. Chamber, although a company spokesman said that decision was "unrelated to [the Chamber's] activity." The company has been reevaluating its political giving in the wake of the Jan. 6 riots at the U.S. Capitol. Schwab's decision to drop out was reported earlier by CNBC.
The embrace of Democrats has been met with resistance at the state and local level. Two state chamber executives contacted by The Post said they were blindsided by the national Chamber's endorsement of Democrats last September. The Kansas Chamber, pointing to the Washington group's endorsement of incumbent Rep. Sharice Davids, D-Kan., over Republican challenger Amanda Adkins, has decided against renewing its membership next year, according to president and chief executive Alan Cobb.
"I would love to be a state partner, but if that's the case, they need to treat us like a partner," Cobb said. He added that he is skeptical that the national organization would be able to grow beyond its Republican roots at a time when both parties appear to be drifting apart ideologically. "They are trying to find a pathway that does not exist," he said.
A U.S. Chamber spokesman declined to comment on the Kansas Chamber's membership, but added that the number of state and local chambers who are members has grown by over a dozen in the past year. Hamer said in a statement that the relationship between state Chambers and the U.S. Chamber "is very strong and getting stronger by the day."
Rep. Tom Cole, R-Okla., a former political consultant who counted the Chamber as a client, said he is counseling the Oklahoma Chamber not to follow the Kansas group's lead, despite frustration over the Chamber's endorsement of former Rep. Kendra Horn, D-Okla. "I think you work these things through as a family," Cole said. The Oklahoma Chamber declined to comment.
And Republican animus toward the business lobby has filtered down to congressional staff. At a recent meeting of Senate Republican committee staff directors, one suggested freezing out Chamber experts from testifying at hearings, two people familiar with the session said, speaking on the condition of anonymity because they weren't authorized to disclose private conversations. "Once you taint yourself on a political issue taking a position in support of Democrats, we're not going to call your staff and listen to them as nonpartisan experts," one Senate Republican staffer said. "There are a lot of people in the country to listen to."
A Chamber of Commerce spokesman said the organization's leaders were invited to and participated in five congressional hearings last year and one so far in 2021.
Wilson said he thinks the Chamber's bipartisan approach will ultimately prove "member-growth positive. And that's in part from keeping the existing members happier. And it will also bring more people into the tent, who did have the perception, quite honestly, that it was a wing of the Republican Party."
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