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Why the Chamber of Commerce Shills for Tobacco

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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There may have been a day when the heads of big trade associations in Washington resembled statesmen. It ended sometime before 1997, when Tom Donohue took over as president of the U.S. Chamber of Commerce. In the modern era, people with jobs such as Donohue's are expected to operate as political entrepreneurs -- identifying opportunities, squeezing out competitors and relentlessly raising money.

Witness the efforts Donohue's chamber has been making lately on behalf of American tobacco companies. As Danny Hakim reported Tuesday in the New York Times:

From Ukraine to Uruguay, Moldova to the Philippines, the U.S. Chamber of Commerce and its foreign affiliates have become the hammer for the tobacco industry, engaging in a worldwide effort to fight antismoking laws of all kinds, according to interviews with government ministers, lobbyists, lawmakers and public health groups in Asia, Europe, Latin America and the United States.

This revelation won't go over super well with all of the chamber's members. Big American companies that aren't in the tobacco business tend to be hostile toward smoking -- not surprisingly, given its cost in medical bills and lost productivity. I would not be shocked if a few prominent corporations leave the organization over this, as several did in 2009 in response to Donohue's denialist stance on climate change. Who knows: Maybe the chamber will even decide to tone down its global tobacco efforts. Do not, however, expect a retreat from the combative, mercenary approach the organization has followed for the past 18 years. This is a business, people, and that approach brings in lots of money.

It didn't always work this way. The U.S. Chamber, founded in 1912 at the behest of then-President William Howard Taft as a counterpoint to the growing labor movement, was from the beginning a political organization, and usually an ally of the Republican Party. During the 1930s, it was a fierce opponent of Franklin Delano Roosevelt's New Deal. In the 1970s it joined other business groups in mobilizing against the onslaught of safety, environmental and other regulations approved during the Kennedy, Johnson and Nixon years.

But the chamber also built a reputation over the decades as a part of the centrist establishment. It played a key role in the war effort in the 1940s after some initial reticence, and it embraced such postwar internationalist endeavors as the Marshall Plan and the United Nations. President Dwight D. Eisenhower, speaking at the chamber's 1960 annual meeting, said it had developed "a very enviable reputation" for taking stands "that are based upon principle and not expedience." In 1993, when a newly elected Democratic president came into office with reformist plans for education, job creation and health care, the chamber's leaders were all ears. For a time, they even appeared to be on board with Bill and Hillary Clinton's proposals for universal health insurance coverage.

That ended badly, of course, and not just for the health care legislation. The rival National Federation of Independent Business, which opposed Hillarycare from the get-go, gained members and clout at the chamber's expense. Disgruntled chamber members and Republican lawmakers succeeded in ousting the chamber official who had led its health-care efforts. The 1994 election swept a new set of Republican leaders into office on Capitol Hill who saw the chamber as insufficiently committed to the cause, and the organization limped along, losing members and relevance.

Then, in 1997, Donohue took over. He'd done a stint as the chamber's head of membership in the late 1970s and early 1980s, before being appointed president of the American Trucking Association, a backwater trade group that he transformed into a combative Washington powerhouse during his 13 years in charge. He came back to the chamber pledging to revitalize an organization that, he said at the time, "has lost some of its starch."

At a Bloomberg Forum in Washington D.C. that year, Donohue predicted that the road to success would be paved with pragmatism. "We are interested in winning," he said. "And winning requires both sides of the aisle, and we intend to get them." Donohue did revitalize the chamber, but not by following that approach at all. He has steered the chamber away from bipartisanship, not toward it, and he's generally been less interested in winning than in fighting. This is from a 2010 Washington Monthly profile by James Verini:

"The worst thing to happen to Tom is to have an issue resolved, even to his own favor, because then he can't raise any more funds on it," says John Schulz, a former editor at the trade journal Traffic World, who's covered Donohue for twenty-five years. "There's nothing he can't make a dollar on."

Sure enough, the chamber's legislative performance during the Obama years has been less than impressive -- the Affordable Care Act and the Dodd-Frank financial reform legislation were passed by Democrats over its vocal opposition, while House Republicans have stubbornly ignored its calls for immigration reform. Its fundraising and spending, on the other hand, have gone swimmingly. It raised $205 million in 2009 and $189 million in 2010, at the height of its battles with President Barack Obama, and it has been the No. 1 lobbying spender in Washington every year since 2001, according to the Center for Responsive Politics (Its spending in 2014 was $124 million, more than twice what No. 2, the National Association of Realtors, spent). As a leader charged with making his organization grow and prosper, Donohue has been a spectacular success.

And maybe I'm shortchanging his political impact. Journalist Alyssa Katz, in a new book on the chamber titled "The Influence Machine," argues that the group's most important constituents these days are companies from old-economy industries "whose prosperity is threatened not only by intense global competition but by emerging trends in human history -- by the evolution of our values, technology, scientific knowledge and notions of environmental stewardship." Just slowing down the pace of change on their behalf, then, would have to count as a major political victory.

The chamber's tobacco effort appears to fit Katz's description perfectly. It's just Tom Donohue, doing his job yet again. Fighting tobacco regulation is clearly at odds with the public interest, both overseas and in the U.S., and not in the interest of any chamber members other than a few tobacco companies. It's also, well, despicable. Maybe this will be the issue that finally puts a halt to the almost purely mercenary turn the organization has taken under Donohue. But I wouldn’t count on that.

  1. This account is taken mainly from Jacob S. Hacker and Paul Pierson's "Winner-Take-All Politics."

  2. These quotes are from a 1997 Bloomberg News article that I cannot find on the non-paywalled Internet.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor on this story:
Paula Dwyer at pdwyer11@bloomberg.net