Conquered American

How Corporate Lobbyists Conquered American Democracy

Business didn't always have so much power in Washington.

By Lee Drutman

Something is out of balance in Washington. Corporations now spend about $2.6 billion a year on reported lobbying expenditures—more than the $2 billion we spend to fund the House ($1.18 billion) and Senate ($860 million). It’s a gap that has been widening since corporate lobbying began to regularly exceed the combined House-Senate budget in the early 2000s.

Today, the biggest companies have upwards of 100 lobbyists representing them, allowing them to be everywhere, all the time. For every dollar spent on lobbying by labor unions and public-interest groups together, large corporations and their associations now spend $34. Of the 100 organizations that spend the most on lobbying, 95 consistently represent business.

One has to go back to the Gilded Age to find business in such a dominant political position in American politics. While it is true that even in the more pluralist 1950s and 1960s, political representation tilted towards the well-off, lobbying was almost balanced by today's standards. Labor unions were much more important, and the public-interest groups of the 1960s were much more significant actors. And very few companies had their own Washington lobbyists prior to the 1970s. To the extent that businesses did lobby in the 1950s and 1960s (typically through associations), they were clumsy and ineffective. “When we look at the typical lobby,” concluded three leading political scientists in their 1963 study, American Business and Public Policy, “we find its opportunities to maneuver are sharply limited, its staff mediocre, and its typical problem not the influencing of Congressional votes but finding the clients and contributors to enable it to survive at all.”

Things are quite different today. The evolution of business lobbying from a sparse reactive force into a ubiquitous and increasingly proactive one is among the most important transformations in American politics over the last 40 years.  Probing the history of this transformation reveals that there is no “normal” level of business lobbying in American democracy. Rather, business lobbying has built itself up over time, and the self-reinforcing quality of corporate lobbying has increasingly come to overwhelm every other potentially countervailing force. It has also fundamentally changed how corporations interact with government—rather than trying to keep government out of its business (as they did for a long time), companies are now increasingly bringing government in as a partner, looking to see what the country can do for them.

If we set our time machine back to 1971, we’d find a leading corporate lawyer earnestly writing that, “As every business executive knows, few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. If one doubts this, let him undertake the role of 'lobbyist' for the business point of view before Congressional committees.”

That lawyer was soon-to-be Supreme Court Justice Lewis F. Powell Jr., whose now-famous “Powell Memorandum” is a telling insight into the frustration that many business leaders felt by the early 1970s. Congress had gone on a regulatory binge in the 1960s—spurred on by a new wave of public-interest groups. Large corporations had largely sat by idly, unsure of what to do.

In 1972, against the backdrop of growing compliance costs, slowing economic growth and rising wages, a community of leading CEOs formed the Business Roundtable, an organization devoted explicitly to cultivating political influence. Alcoa CEO John Harper, one of the Roundtable’s founders, said at the time, “I think we all recognize that the time has come when we must stop talking about it, and get busy and do something about it.”

This sense of an existential threat motivated the leading corporations to engage in serious political activity. Many began by hiring their first lobbyists. And they started winning. They killed a major labor law reform, rolled back regulation, lowered their taxes, and helped to move public opinion in favor of less government intervention in the economy.

By the early 1980s, corporate leaders were “purring” (as a 1982 Harris Poll described it). Corporations could have declared victory and gone home, thus saving on the costs of political engagement. Instead, they stuck around and kept at it. Many deepened their commitments to politics. After all, they now had lobbyists to help them see all that was at stake in Washington, and all the ways in which staying politically active could help their businesses.

Those lobbyists would go on to spend the 1980s teaching companies about the importance of political engagement. But it would take time for them to become fully convinced. As one company lobbyist I interviewed for my new book, The Business of America Is Lobbying, told me, “When I started [in 1983], people didn’t really understand government affairs. They questioned why you would need a Washington office, what does a Washington office do? I think they saw it as a necessary evil. All of our competitors had Washington offices, so it was more, well we need to have a presence there and it’s just something we had to do.”

To make the sell, lobbyists had to go against the long-entrenched notion in corporate boardrooms that politics was a necessary evil to be avoided if possible. To get corporations to invest fully in politics, lobbyists had to convince companies that Washington could be a profit center. They had to convince them that lobbying was not just about keeping the government far away—it could also be about drawing government close.

As one lobbyist told me (in 2007), “Twenty­-five years ago… it was ‘just keep the government out of our business, we want to do what we want to,’ and gradually that’s changed to ‘how can we make the government our partners?’ It’s gone from ‘leave us alone’ to ‘let’s work on this together.’” Another corporate lobbyist recalled,“When they started, [management] thought government relations did something else. They thought it was to manage public relations crises, hearing inquiries... My boss told me, you’ve taught us to do things we didn’t know could ever be done.”

As companies became more politically active and comfortable during the late 1980s and the 1990s, their lobbyists became more politically visionary. For example, pharmaceutical companies had long opposed the idea of government adding a prescription drug benefit to Medicare, on the theory that this would give government bargaining power through bulk purchasing, thereby reducing drug industry profits. But sometime around 2000, industry lobbyists dreamed up the bold idea of proposing and supporting what became Medicare Part D—a prescription drug benefit, but one which explicitly forbade bulk purchasing—an estimated $205 billion benefit to companies over a 10-year period.

What makes today so very different from the 1970s is that corporations now have the resources to play offense and defense simultaneously on almost any top-priority issue. When I surveyed corporate lobbyists on the reasons why their companies maintained a Washington office, the top reason was “to protect the company against changes in government policy.” On a one-to-seven scale, lobbyists ranked this reason at 6.2 (on average). But closely behind, at 5.7, was “Need to improve ability to compete by seeking favorable changes in government policy.”

While reversing history is obviously impossible, there is value in appreciating how much things have changed. And there are ways to bring back some balance: Investing more in the government, especially Congress, would give leading policymakers resources to hire and retain the most experienced and expert staff, and reduce their reliance on lobbyists. Also, organizations that advocate for less well-resourced positions could use more support. If history teaches anything, it's that the world does not need to look as it does today.