POLITICS
03/18/2010 05:12 am ET | Updated May 25, 2011

White House Turns Its Guns On The Chamber Of Commerce

Several weeks into office, as it pushed its wide-reaching stimulus package through Congress, the Obama administration found itself the beneficiary of an unlikely ally. The U.S. Chamber of Commerce declared that the $800 billion proposal was a necessary "defibrillator" for a struggling economy and in doing so, gave the president a needed bit of political capital on his signature piece of legislation.

The endorsement also produced a strange-bedfellows partnership between a White House whose remaining domestic priorities ruffled big business and the world's largest lobbying entity for those same businesses. The detente seemed both unusual and limited. It was.

Nine months after the Chamber helped the White House pass the stimulus and then the bank bailout, the relationship between the two has grown -- as one business insider put it -- "frosty." The Chamber has come out forcefully against several key planks of the Obama agenda and promised to throw hefty resources behind their opposition.

The frustration is mutual. Inside the administration there is a growing distrust of the Chamber's standing and motives. The defection of several major Chamber members over the group's position on climate change legislation has, as one Obama adviser put it, "given us pause." As has their new $100 million "free enterprise" campaign, which is being pitched as a way to create jobs but is aiming mainly to defeat regulatory reform. More than anything else, there is a widespread belief among White House officials that the Chamber is becoming a relic of the past -- too tied to antiquated policy proposals and removed from the apex of political power it has historically enjoyed.

"I do think that the Chamber's approach is somewhat old school," Valerie Jarrett, a senior Obama adviser and the president's liaison to the business community, told the Huffington Post. "I think that the strategy of running a negative ad campaign instead of having constructive dialogue seems wasteful, wasteful of an opportunity and wasteful of money."

"We were hoping to have a constructive dialogue with the Chamber," Jarrett added, "and it is regrettable that they decided to spend a huge amount of money launching this campaign."

Such words shouldn't be taken lightly. Over its 90-year history, the Chamber has proven to be a scale-tipping player in many major legislative battles. Widely regarded as a entryway to the business community, it is the object of intense courtship or fear, depending on the administration.

The Obama administration has been different. While the president gladly accepted the Chamber's help on the stimulus and TARP, both he and his advisers have developed a business community outreach strategy that circumvents the organization. Since this summer, senior administration officials have held at least 11 meetings with CEOs and executives from more than 55 companies, according to data provided by the White House. The sessions usually involve half-a-dozen attendees representing companies in all different fields, from finance to pharmaceutical, soft drinks and real estate. Among the topics discussed: job creation, tax policy, climate change and health care reform.

"The intent there is simply to make sure we are getting accurate, timely feedback from the wide cross-section of the private sector and that we aren't going to therefore rely solely on the Chamber or any other group," explained Jarrett. "[These CEOs] are like ambassadors to other businesses."

Instead of letting the Chamber serve as the gateway to business leaders, the administration is building its own bridges. It is a potentially huge structural shift for the nexus of politics and business.

The Chamber, naturally, sees the administration's gambit as more bluster than bite. In an interview with the Huffington Post, the group's executive vice president of government affairs, Bruce Josten, argued that -- far from forging its own alliances with major businesses -- the Obama administration was really a wolf amid the sheep.

"If they are trying to do things constructively, then why don't they reach out to the many, many organizations in this town instead of to small groups of very prominent CEOs, who, interestingly, they vilify regularly," Josten said. "I can't believe, for instance, that they get better feedback on trade. I doubt there are any groups they have spoken to that are telling the administration to do what it is doing..."

Josten pointed to several other legislative debates (tax policy and climate change among them) to make the case that the White House and the business community were not seeing eye-to-eye. He also pushed back forcefully on Jarrett's comments about the "free enterprise" campaign.

"She finds it regrettable that we decided to launch a campaign to remind the American public of free enterprise, which has led to the highest standard of living in the world?" he asked with incredulity. "It is fairly incredible that any White House would find that regrettable. And then to suggest it is not being constructive, I'm almost at a loss of words for an appropriate response."

"Why," he asked finally, "is everyone writing about us if we are so irrelevant?"

Indeed, even those who work closely with the White House say they remain concerned about the power the Chamber wields. "I think their fanning the flames on health care and energy had an effect on stalling it," said one Obama ally. "They have a lot of huge revenue sources. They aren't close to dissolving and the hardcore members will make sure they are funded forever."

But the Chamber's recent round of publicity has been mostly bad. Over the summer, Wal-Mart, Target and Kelly Services Inc. all expressed concern with the Chamber's position on health care reform. Months later, Apple, Nike, Pacific Gas & Electric and Exelon quit the organization over its opposition to climate change legislation. Chamber defenders brushed off the defections as partisan melodrama, noting that the group has three million members. But even the defense was weak -- in a series of short investigative pieces, the progressive magazine Mother Jones got the organization to admit that its supposed "three million members" was actually closer to 300,000.

Even when the Chamber won victories against Obama, they have not come without a cost. The group got Congress to water down the president's proposal for a Consumer Financial Protection Agency but found itself at odds with a deity of free-market philosophers. Former Fed Chairman Alan Greenspan himself admitted that the proposal was "probably the right decision."

The context, in the end, remains that the Chamber is either too extreme or out of touch -- certainly for a economy where health care costs are crippling companies, CEOs have environmental consciences, and the president remains resoundingly more popular than the titans of Wall Street. Recounting a conversation she had with the Chamber's president, Tom Donohue, when he first mentioned the organization's free enterprise campaign several months ago, Jarrett summed up the friction succinctly.

"He came in and we chatted and he said, 'I think that, for example, your financial regulatory reform might have a chilling effect on business growth.' So I said well you supported the Recovery Act, yes. You support the federal taxpayer subsidy going to the banks, yes. You supported the subsidy going to the auto industry, yes. So now suddenly you want the free market system? I couldn't reconcile those two positions."

"He said, 'Well, I don't think we need those checks and balances.' And I said, 'Yes you do, we have concrete evidence that you do because without them the taxpayers ended up carrying the burden.'"

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