Leader on Bush Tax Cuts Wins Allies to Keep Provisions in Place

A decade ago, Dirk Van Dongen sat across from President George W. Bush in the Indian Treaty Room in the White House complex, mapping out plans to pass tax cuts. Now, Van Dongen, who heads the nation’s top wholesalers’ group, is leading a lobbying blitz to ensure they survive.

He helps run a 1,000-member coalition of companies and trade groups opposing President Barack Obama’s proposal to discontinue tax cuts for the highest-earning Americans, saying that job-generating small businesses will be hit hardest.

Lawmakers “can’t ignore these groups because their members blanket congressional districts, are easily mobilized and could play a significant role in the midterm elections,” said David Primo, a political science professor at the University of Rochester in New York.

The fight, coming at the height of the election campaign, is forcing lawmakers to weigh public anxiety over the budget deficit against concern that the recovery may be weakening. It centers on tax cuts on income, dividends and capital gains scheduled to expire in 2011. Democrats want to continue the relief for families earning less than $250,000; Republicans want extensions for higher earners, too.

“This has to be a discussion about job creation,” said Van Dongen, whose National Association of Wholesaler- Distributors is one of seven groups, including the U.S. Chamber of Commerce, managing the Tax Relief Coalition, with members ranging from Wal-Mart Stores Inc. to Lockheed Martin Corp.

Democrats Want Fight

Democrats say it’s a fight they want to have, arguing that they’re keeping current rates for some 98 percent of Americans while addressing the deficit by letting the rich pay more.

With Congress planning to take up the issue in September, the business coalition went into action this month.

The National Federation of Independent Business brought in small-company owners to make their case that Obama’s plan was a potential job killer at an Aug. 4 press conference called by Senate Republican leader Mitch McConnell.

Both the Nashville, Tennessee-based federation and Washington-based Chamber of Commerce issued “alerts,” with website links to suggested language for e-mails. Chamber members have sent more than 52,000 e-mails and letters.

Small-business owners in Illinois, Ohio and Texas planned forums in part to help frame the debate for lawmakers. In Nebraska, Democratic Senator Ben Nelson and other lawmakers fielded questions from business leaders yesterday.

‘No New Taxes?’

“The Obama administration has a lot of work to do to convince people that it’s only the very, very rich that are going to be affected,” said Jeffrey Berry, a politics professor at Tufts University in Medford, Massachusetts. “‘No new taxes?’ is the question that’s going to be posed to every congressional candidate at every forum.”

The business groups played a central role in passing the tax reductions in 2001 and 2003. Van Dongen planned lobbying efforts from the executive office building near the White House, earning the nickname “Dirkus” and public praise from Bush.

This time, they’re shoring up Republican allies while trying to sway more Democrats. The National Association of Manufacturers is telling members of the Senate Finance and House Ways and Means committees this isn’t the time to raise taxes, said spokesman Jeff Ostermayer.

Lobbyists plan to get to all 100 senators in part to push for the legislation to go through committee, where the groups could influence the process, rather than allow a quick floor vote, said Van Dongen, 67.

Bringing the Money

The Tax Relief Coalition brings money to the fight. The management committee groups have spent $3.8 million since Jan. 1, 2009, on candidates and advertising. The Chamber alone plans to spend $75 million on the Nov. 2 elections.

Democrats say most Americans will be on their side, and party leaders dare Republicans to try to vote against the bill.

“What you’re seeing is the Republicans wanting to hold middle-class tax relief hostage until they get tax breaks for the top 2 percent,” said Representative Chris Van Hollen of Maryland, chairman of the House Democratic campaign committee.

Coalition members are determined to keep Republicans from accepting an extension of only the lower-income reductions, even as they acknowledge deficit concerns. Treasury Secretary Timothy Geithner says extending the cuts to wealthier people would cost $700 billion over 10 years.

Not Just Obama

“The deficit equation is just so radically different and it’s salient in the minds of voters,” said Linda Fowler, a government professor at Dartmouth College in Hanover, New Hampshire.

The U.S. Congressional Budget Office yesterday predicted the fiscal 2011 deficit will be $1.066 trillion, up from a $996 billion estimate in March.

The deficit is “going to be the hardest issue,” said Van Dongen’s top lobbyist, Jade West, who manages the coalition.

The independent business federation planned events with Republican Representatives Pete Sessions, Michael Burgess and Lamar Smith of Texas, Jim Jordan of Ohio, and Aaron Schock and John Shimkus of Illinois. Nebraska Republican Senator Mike Johanns just wrapped up two weeks of town-hall meetings, and the tax issue came up at every one, said spokesman Chris Hunt.

The Nebraska Chamber of Commerce and Industry’s legislative summit yesterday included about 600 business leaders. Nelson reaffirmed his position against tax increases, said spokesman Jim Fagin. Some fellow Democrats, including Senators Kent Conrad of North Dakota and Evan Bayh of Indiana, accept that argument.

“You don’t cut spending or raise taxes at a time of economic slowdown,” Conrad, the budget committee chairman, said in an Aug. 3 interview with Bloomberg Television.

To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Jonathan D. Salant in Washington at jsalant@bloomberg.net

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