After Bailout, Business Groups Now Turning On Former Allies
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WASHINGTON — During the worst of the economic crisis, the nation's most powerful business lobby pleaded with Congress to prop up financial institutions and stimulate the economy with hundreds of billions of dollars in borrowed money.
"Make no mistake: When the aftermath of congressional inaction becomes clear, Americans will not tolerate those who stood by and let the calamity happen," wrote Bruce Josten, the U.S. Chamber of Commerce's vice president in September 2008, who at the time pressed lawmakers before their vote on a $700 billion bailout for Wall Street.
A few months later, Congress faced a similar reckoning – whether to pass an $814 billion economic stimulus package consisting of about one-third tax breaks and two-thirds additional government spending. Again, Josten wrote to lawmakers: "The global economy is in uncharted and dangerous waters and inaction from Washington is not an option."
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EDITOR'S NOTE – An occasional look behind the rhetoric of political campaigns.
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Fast forward to the present. The chamber is now spending millions of dollars on ads trying to elect candidates whose campaigns are based on opposing the very bank rescue and stimulus law it once supported.
Lawmakers who voted with the chamber on the two crisis-era measures are now getting the back of its hand: Sen. Barbara Boxer in California, and Reps. Joe Sestak in Pennsylvania, Paul Hodes in New Hampshire and Brad Ellsworth in Indiana.
"What they want is one of their own," said Sestak, now running for the Senate against former Rep. Pat Toomey, who denounced bank rescue and the economic stimulus as ill-advised government interventions. "So back when we were salvaging the nation, that was then."
The chamber's strategy underscores an all-or-nothing approach to lobbying, where partial support of their agenda is not sufficient and where recent clashes trump past agreements.
Since the bank bailout and stimulus program, the four Democrats have taken stances contrary to what the business lobby wanted. They voted for President Barack Obama's health care initiative and a consumer financial protection bureau. They supported reducing greenhouse gases and backed bills to make organizations like the chamber disclose donors who help pay for political ads.
"The chamber looks at an endorsement on a broad range of issues, certainly not just one or two issues alone," said J.P. Fielder, a chamber spokesman. "Looking at this so narrowly is like looking at the wrong end of a telescope. We need to consider all the factors that impact businesses."
The bank rescue initiated by former President George W. Bush and Obama's recovery program aimed at stimulating economic growth have become two of the most popular Republican targets this election season, cited by some candidates as examples of misguided policies.
One Senate candidate backed by the chamber, Republican Rand Paul in Kentucky, so opposed the bank bailout that he refused during the primary to accept financial backing from senators who voted for it.
Another critic is Carly Fiorina, the California Republican Senate candidate who is challenging Boxer. The stimulus spending is one of Fiorina's main avenues of attack against the three-term incumbent, saying it has not led to promised job growth while sticking taxpayers with a huge tab.
"When the stimulus was passed, the California unemployment rate was 10.2 percent. It is now 12.4 percent. The stimulus was a failure," Fiorina said in a recent telephone interview. The chamber has endorsed Fiorina and spent more than $2 million on TV ads criticizing Boxer.
"I think it's hypocritical with a capital H," Eric Schultz, spokesman for the Democratic Senatorial Campaign Committee, said of the chamber's campaign effort.
Boxer's campaign manager, Rose Kapolczynksi, said that the senator considered the business community's views when voting for the two bills, but no one in the campaign was surprised when the chamber supported the Republican in the race.
"I can only conclude they have different people making their policy decisions than their political decisions," Kapolczynski said.
Fielder, the chamber's spokesman, said the group scored Boxer favorably on three of the seven votes it used to rank lawmakers on how friendly they were toward business. All votes get equal weight, so votes on the stimulus bill and health care overhaul are measured equally with less momentous legislation, such as a bill to promote the U.S. travel industry.
But the effects of the bills are not equal, as the chamber seemed to recognize in an Oct. 1, 2008, letter to lawmakers about the financial bailout: "Failure to approve this legislation will wreak intolerable hardship on average Americans. The chamber urges you not to stand by and let this happen but to make a courageous stand to preserve the flow of credit to the economy. The American people will recognize your act of courage."
Not one of the political ads the chamber has rolled out across the country this year commends a lawmaker for voting for the stimulus bill and the bailout.
The chamber's $75 million planned for campaign ads in this year's elections will go, in part, to criticize candidates who voted for one or both measures.
For example, Hodes, who is running for the Senate in New Hampshire, voted for the stimulus bill and is now being attacked by the chamber as someone whose "out-of-control spending helped push America's debt to $13 trillion." Hodes voted against the bailout.
Ellsworth, who is running for the Senate in Indiana, is accused in the chamber's latest ad of voting for trillions of dollars in government spending. The ad asks viewers to "tell Ellsworth Hoosiers can't afford his big-government agenda." Ellsworth voted for both bills.
Both ads directly refer to the candidates' votes for a Democratic-led overhaul of health care, a bill the chamber strongly opposed. But they also tap into voters' concerns about growing federal budget deficits.
Fielder said the ads highlight the federal budget and support for that budget by Hodes and Ellsworth.
"When we look race by race, we have to say which candidate has a policy platform that's going to address where the economy is right now and help businesses create jobs," Fielder said.
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Associated Press writer Jim Kuhnhenn contributed to this report.
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KEVIN FREKING 10/ 4/10 12:59 PM ET Associated Press