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Business Influence onGovernment and Public Policy

Professor Craig Diamond

BA 385

November 4, 2009

Chapter 12

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Outline of Topics

Corporate Political Participation Lobbying (focus on federal) Coalition Building Political Action Committees Strategies for Political Activism

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Introduction

Business is one of many groups which try to influence government.

Business must obey the law and behave ethically in its response to government’s expectations and mandates.

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Corporate Political Participation

PoliticalInvolvement

Participation in the formulation and execution of public policy at various levels of government

“Success in Washington is just as important as success

in the marketplace.”

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Corporate Political Participation

Lobbying

PACs

CoalitionBuilding

PoliticalStrategy

Influencing public officials to promoteor secure passage or defeat oflegislation; also influence elections

Instruments through which business uses financial resources to influence election results

Business and other groups joining forces to achieve common goals

To secure position of advantage regarding a given regulation or piece of legislation

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Purposes of Lobbying

Gain legislative support or institutional approval for some objective

• Influence pending legislation

• Support existing policy

• Influence a perceived coming policy shift

• Target the election or defeat of national, state, and local legislators.

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Organizational Levels of Lobbying

Umbrella Organizations

Umbrella Organizations

TradeAssociations

TradeAssociations

Company-LevelLobbying

Company-LevelLobbying

BroadBroad

MidrangeMidrange

Narrow/Specific

Narrow/Specific

Representation

• Chamber of Commerce of the US• National Association of

Manufacturers

• Chamber of Commerce of the US• National Association of

Manufacturers

• National Automobile Dealers Assn• National Association of Realtors• National Automobile Dealers Assn• National Association of Realtors

• Washington and State Capital Offices• Law firms• Public affairs specialists• PACs• Grassroots lobbying

• Washington and State Capital Offices• Law firms• Public affairs specialists• PACs• Grassroots lobbying

Examples

Figure 12-1

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Lobbyists

Lobbyists can work for trade associations, individual companies, law firms, or consulting firms.

Often they are former government officials (one year rule)

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What Business Lobbyists Do for Clients

Get access to key legislators – this is key

Monitor legislation

Establish communication channels with regulatory bodies

Draft legislation, slick ad campaigns, direct-mail campaigns

Provide issue papers on anticipated effects of legislative activity

Influence outcome of legislation

Assist companies in coalition building around issues

Help members of Congress get reelected

Organize grassroots efforts

Figure 12-3

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Grassroots Lobbying

Grassroots Lobbying

Mobilizing the “grassroots”—individual citizens who might be most directly affected by legislative activity—to political action

Cyberadvocacy

Using the Internet to amass grassroots support, and enable grassroots supporters to contact their legislators

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Lobbying Power

Business power and money often drowns out other interests that are less funded and have less focused efforts

• Example: Pharmaceutical Research and Manufacturers of America (PhMRA) and individual companies spent $29 million to defeat legislation that would have allowed the importing of lower prices drugs.

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Coalition Building

Groups of companies or associations working together to influence legislative outcomes

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Umbrella Organizations

U.S. Chamber of Commerce

• Membership: local chambers of commerce, associations, companies, individual members

National Association of Manufacturers (NAM)

• Manufacturing industries

Business Roundtable

• CEOs of largest companies – focus on high level policy issues

National Federation of Independent Businesses (NFIB)

• Small businesses, but very powerful

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Golden Rule of Politics: “He who has the gold, rules.”

Golden Rule of Politics: “He who has the gold, rules.”

Political Action Committees (PACs) are groups, including businesses, that use financial resources to influence elections.

Political Action Committees

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National Association of Realtors

National Beer Wholesalers Association

National Association of Home Builders

National Automobile Dealers Association

International Brotherhood of Electrical Workers

Operating Engineers Union

American Bankers Association

Laborers Union

American Association for Justice

Credit Union National Association

Top 10 PAC Contributors to Federal Candidates (2005-2006)

Figure 12-4

These 10 contributed total of about $30 million

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PACs expect something in return other than good

government and this can lead to differing treatment for

those who give and those who cannot,

such as the poor.

PACs are a reasonable means that business may use to organize their contributions to candidates for office.

Arguments For PACsArguments For PACs Arguments Against PACsArguments Against PACs

Political Action Committees

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Political Action Committees

Does PAC funding buy votes?

• Studies show a strong correlation between legislators receiving PAC funding and how they vote on issues supported by the PACs which funded them.

• Often favors incumbents, which impedes political change.

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Soft Money

Soft money: a contribution made to political parties instead of political candidates

The Bipartisan Campaign Reform Act of 2002 (McCain-Feingold) was a sweeping change of U.S. campaign finance• The BCRA removed the influence of soft

money on candidates running for national office.

• But, created “527” groups

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Money in Politics Watchdog Groups

The Center for Responsive Politics

Common Cause

The Center for Public Integrity

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Strategies for Political Activism

Contingency Approach:

1. Identify the important issues in a legislative district

2. Determine the information a legislator possesses concerning voter preferences

3. Determine the importance of the issues to the legislator’s constituency

4. Identify the expected position of voters on the issues

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Strategies for Political Activism

Modes of Corporate Response

Defensive (adversarial, act alone)

Form coalitions, persuade others

Active leadership role, help bring about social change