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Firms still spending heavily to sway votes

October 24, 2008|Tom Hamburger and Jim Puzzanghera | Hamburger and Puzzanghera are Times staff writers.

WASHINGTON — Although American corporations have been under intense financial strain in recent months, there is one category of spending they haven't cut back on: lobbying and campaign contributions to influence government policy. Even Wall Street interests appealing for government help have spent millions lobbying Congress -- some of them ranking among this year's biggest campaign donors.

The U.S. Chamber of Commerce, the strongest voice in Washington for the business community, spent $30 million on lobbying in the third quarter of this year, more than twice as much as it spent for the same purpose in the previous quarter. The spending is part of the most aggressive election-year effort the chamber has ever made, a spokesman for the organization said.

The chamber has for years led other business groups in lobbying and campaign spending, mixing the two seamlessly. At the beginning of this election cycle, chamber President Tom Donohue promised to punish anti-business candidates by building a grass-roots business organization so strong that "when it bites you in the butt, you bleed."

Since then, an international credit crisis has changed the economic and political landscape. But Donohue's organization and many of its members have continued to spend heavily and act aggressively.

This month nearly two dozen chamber lobbyists blanketed Capitol Hill, leading a business coalition that argued for swift passage of a financial rescue measure. Among other things, the chamber opposed any amendments that would make it easier to file lawsuits against banks and other firms receiving federal aid through the rescue package.

To maintain its influence after the election, the chamber plans to deploy nearly 1,000 organizers in battleground states this weekend, a larger grass-roots effort than has been made before on behalf of "pro-business" candidates.

The chamber is concentrating on Senate races, including those in Minnesota, Mississippi and other states that have become more competitive as the campaign nears its end. One of the chamber's top concerns is that a big Democratic win in November might lead to legislation that makes it easier for unions to organize workers.

The chamber's lobbying and campaign expenditures come from corporate contributions and from pro-business philanthropies, including some connected to American International Group Inc., the multinational insurer that recently received billions of dollars in federal funds to keep it from going under.

The chamber gives most of its contributions to Republicans.

Some members of Congress are increasingly unsettled that companies are taking in vast amounts of federal money with one hand to offset financial losses caused in part by lax government oversight -- and then paying money out to lobbyists and political campaigns with the other hand to fight new regulations aimed at averting similar problems.

During the 2008 cycle, two banks that have agreed to accept federal aid, JPMorgan Chase & Co. and Citigroup Inc., were among the top donors to campaigns, each giving nearly $4 million as of mid-October, according to the Center for Responsive Politics, a nonpartisan watchdog organization. The top corporate contributor from Wall Street was Goldman Sachs Group, which has many former executives involved in the Treasury Department rescue effort.

Goldman employees provided $4.96 million, with nearly three-quarters of it going to Democratic candidates or party committees. Lehman Bros. gave $2.4 million before it succumbed to the financial crisis, with about 61% of its donations going to Democrats.

The American Bankers Assn. tilted the other direction, sending 61% of its $2.3 million in contributions to Republicans.

Even before the current crisis hit, many members of Congress were concerned about the huge lobbying expenditures of mortgage giants Fannie Mae and Freddie Mac, which were stockholder-owned but government-sponsored. When the government took them over to assure their financial stability, the rescue came with a proviso forbidding future lobbying.

This week Sen. Dianne Feinstein (D-San Francisco) announced plans to introduce legislation to "ensure that government loans or federal funds granted to ailing companies as part of the recent economic rescue package are not used for lobbying."

She also wants to limit use of the money for extravagant perks, such as the $440,000 weeklong event at the St. Regis Resort in Dana Point attended by senior executives and salespeople of AIG just days after the federal government lent the company billions.

"The day should be over for these kinds of things, particularly for the public company that is using taxpayer money because they've done bad things or made poor decisions," Feinstein said.

She and Sen. Mel Martinez (R-Fla.) blasted AIG for recently lobbying state regulators to delay or weaken new rules for mortgage lending.

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