Incoming House Speaker Nancy Pelosi terrified the oil industry late last year when she outlined her priorities for the new Democratic majorities in Congress. Within the first 100 hours, she promised, they would “roll back the multibillion-dollar subsidies for Big Oil.”
Last week, however, when Pelosi (D-San Francisco) won House approval of the much-touted bill socking it to the oil companies, it turned out to be considerably less drastic than many in the industry originally feared. Out of an estimated $32 billion in subsidies and tax breaks that the oil companies are scheduled to receive over the next five years, the final House bill cut $5.5 billion.
It’s not just oil: From one end of the House Democrats’ “first 100 hours” agenda to the other, businesspeople and their lobbyists have found success amid the fear in dealing with the new Congress.
Surprising as it might seem in view of the Democrats’ public rhetoric, business groups are getting their telephone calls returned. And they’re getting plenty of face time with the new House and Senate leaders.
Thanks to this access, the oil industry fended off many features it considered most objectionable in the proposed energy bill, and the big pharmaceutical companies had success keeping some provisions out of the new House Medicare drug bill.
And, while the House was passing its minimum-wage bill, small-business lobbyists were working the Senate to win tax breaks for their clients in the Senate’s version of the bill.
“There was a lot more anxiety initially because of not knowing what was going to transpire,” said Stuart Roy, a member of the prominent Washington lobby shop DCI Group and once an aide to Tom DeLay when DeLay (R-Texas) was House majority leader. Now, Roy said, “the anxiety level is down.”
Democrats are quick to say that even if the high-profile bills contain concessions to business, they still go further than anything passed by the old Republican majorities. Instead of trimming back oil subsidies, for example, the GOP and President Bush expanded tax credits for oil companies, saying they were necessary to encourage domestic production.
Still, as the opening round ended, many business lobbyists expressed relief.
In part, the business community’s early influence reflects its status as a constituency Democrats can’t afford to ignore. As party candidates prepare for the 2008 election, in which they hope to hold and extend their congressional majorities and also take over the White House, they will need substantial business support in the form of campaign contributions.
In addition, business groups and their lobbyists have moved quickly to adapt to the new Capitol Hill equation, developing new tactics in Washington and at the grass roots, as well as dusting off some time-honored ways of dealing with the opposition.
Many lobby shops have been adding knowledgeable and well-connected Democrats to their rosters, turning away from the so-called K Street Project in which DeLay and other GOP leaders pressured such firms to hire conservatives and dump Democrats.
“One of the lessons is that good lobbying is always bipartisan,” said Scott Segal of Bracewell & Giuliani, a lobbying firm that maintained bipartisan credentials despite the GOP pressure.
On the oil bill, Segal represented a leading oil refinery and an industry trade association. His team included former Rep. Jim Chapman (D-Texas), along with Mike Pate, who was legislative director to the late Sen. Lloyd Bentsen (D-Texas). All three reached out to moderate Democrats in the new Congress.
The moderates in turn had ready access to Pelosi and paved the way in adjusting the final bill. Two Texans took the lead: Reps. Gene Green, who represents the Houston area, and Chet Edwards of Waco.
Green said the process worked because Pelosi took the unusual step of calling on “energy state legislators to tell her what we could agree to.” Green particularly was a point of contact for the industry and for staff. On Jan. 9, he held a private meeting of about a dozen Congress members and 20 to 30 lobbyists -- including those representing every major oil company -- to go through the legislation.
The meeting followed sessions in Pelosi’s office on the bill, often led by her top energy aide, Amy Fuerstenau.
In late November, Pelosi’s conference room was filled with representatives of a coalition of environmental and consumer groups who presented a list of oil industry subsidies totaling $32 billion over five years.
The list, according to one participant, included subsidies that Democratic lawmakers had previously tried to eliminate, including several that the oil industry considered particularly important.
One conferred favorable tax treatment on U.S. refineries that expanded and upgraded plants. Another allowed industry accounting methods that dramatically reduced taxes. A third included a tax credit that helped manufacturers compete with imports.
Charles Drevna, a top executive of the National Petrochemical & Refiners Assn., communicated separately with Pelosi’s staff opposing all three changes. The concerns were also represented separately by other lobbyists, and by Green and other members of Congress.
In the end, the industry was able to preserve the first two tax breaks, but lost the manufacturers credit.
Still, Drevna was not happy with the final bill.
He and other lobbyists said the environment on the Hill was clearly less favorable for business now that Democrats were in control.
But he acknowledged that his arguments were heard. “The speaker didn’t lie to us. She told us what she was going to do and went ahead and did it.”
Steve Elmendorf, a lobbyist who was a top aide to Sen. John F. Kerry’s 2004 Democratic presidential campaign, said: “The biggest change for the business community is that in dealing with Democrats, they are not the only people at the table. Labor unions, trial lawyers, consumer advocates are also part of the discussions. That wasn’t true with the Republicans.”
That was cause for celebration for some last week like Tyson Slocum, who handles energy issues for the left-leaning Public Citizen consumer advocacy organization. “In the past, the oil industry had exclusive jurisdiction over the U.S. Congress, but that’s not the case anymore. Now they have an equal seat with the rest of us.”
Slocum said “the House could have been far more aggressive” in the energy bill. Still, he called it “a fantastic start, especially in light of what recent Congresses have done.”
The minimum-wage debate two weeks ago was also evidence of the continuing clout of the business lobby, particularly small business. As the House overwhelmingly voted to increase the minimum wage to $7.25 from $5.15 with the support of scores of Republicans, the lobbyists found success in the Senate, where the GOP still has considerable leverage. Democrats, including Senate Finance Committee Chairman Max Baucus of Montana, declared they could not pass the wage increase without including tax breaks for small businesses and restaurants seen as hardest-hit.
Meanwhile, the pharmaceutical industry, Washington’s most potent lobbying force, succeeded in blocking what it considered the most extreme proposals for reducing drug costs.
At one point Pelosi considered advocating a new government-run drug program, but dropped the idea and went with a less ambitious plan.
Like other industries, drug companies are hiring Democrats as lobbyists and ramping up Democratic campaign contributions. For example, lobbyist attendance at fundraisers for Ways and Means Chairman Charles B. Rangel (D-N.Y.) has skyrocketed. Organizers had to add tables at a breakfast fundraiser Thursday at the Phoenix Park Hotel because twice as many people as expected showed up.
Rangel was not previously close to the drug industry, whose lobbyists had battled his efforts on Medicare benefits in the past. Last week, however, a source close to Rangel said the industry’s leading trade group had offered to hold a fundraiser for him; Rangel had not decided whether to accept.
“I’ve got so many new friends these days,” he told one reporter.