CHAPTER 8

Every Man His Own Lobbyist

Congress shall make no law … abridging … the right of the people … to petition the government for a redress of grievances.

—Amendment I, Constitution of the United States of America (1791)

FOR CHARLS E. WALKER, by many accounts the most influential corporate lobbyist in the nation’s capital, the Tax Reform Act of 1986 was a major failure. For more than a decade, the balding and bejowled economist had flexed his political muscles on behalf of industrial clients that included Ford, U.S. Steel, and Proctor & Gamble. A former deputy secretary of treasury under Nixon, Walker served on the frontlines of industry’s campaign for accelerated depreciation, largely through his corporate-funded think tank, the American Council for Capital Formation. In 1978 he helped organize the “Carlton Group,” a cohort of corporate lobbyists that met each Tuesday morning in the Sheraton-Carlton hotel in Washington to strategize collectively about ways to attain industry-specific tax breaks. Reginald Jones, then CEO of General Electric and chairman of the Business Roundtable’s Tax Reform Task Force, relied on the smooth-talking Texan to ensure that Ronald Reagan’s 1981 tax cut included the 10-5-3 plan. Yet in the wake of TEFRA and DEFRA, which reversed many of those gains in 1982 and 1984, a bipartisan movement to completely overhaul the tax code took shape and convinced many business leaders that their hard-won capital-forming tax benefits faced a renewed threat. Rather than work to cut deals on specific provisions, the Roundtable dug in its heels and charged its chief lobbyist with stopping the bill completely. “Tax reform,” the group’s Policy Committee declared incontrovertibly, “is diverting attention from … crucial economic issues” and “should be set aside.” Returning to its roots in reactive, rather than proactive, lobbying, the organized business community took a firm stand against the Tax Reform Act.¹

Yet despite their lobbying clout, industrial giants like General Electric, the Business Roundtable, and Charls Walker, not to mention the NAM, the Chamber of Commerce, and myriad other trade associations, failed to stop the Tax Reform Act of 1986. On a sunny morning in October, President Reagan hosted a lavish ceremony on the White House’s South Lawn and signed the sweeping legislation. Designed to simplify the tax code, the law replaced the existing fourteen marginal tax brackets with a two-bracket system that taxed individual income at 15 and 28 percent, beginning in 1988. Moreover, since the bipartisan reform effort hinged on “revenue neutrality”—that is, all tax reductions would be offset by tax increases—the law both reduced taxes on low-income households and broadened the tax base significantly. It increased the personal exemption and standard deductions while expanding and indexing to inflation the Earned Income Tax Credit for low-income families with children, even as it eliminated tax shelters and many deductions, including those for state and local taxes, and imposed taxes on unemployment insurance benefits. To the chagrin of business lobbyists, the reform dramatically scaled back investment and capital accumulation incentives, including the investment tax credit and the accelerated depreciation for equipment. And although the corporate tax rate declined from 46 to 34 percent, the law closed approximately $500 billion worth of loopholes and exemptions over its first five years. Although some corporate executives supported the reform, the overwhelming consensus among organized business interests saw the reform as a loss for business, a sentiment especially pronounced among lobbyists like Charls Walker and the leaders of the Business Roundtable.²

The Tax Reform Act of 1986, given all the policy and lobbying drama it entailed, has become a standard case study for political scientists who seek to understand how the legislative sausage is made in modern America and how various interest groups succeed and fail to advance their causes. From the beginning, the tax reform movement had placed business leaders on the defensive. In 1984, the public learned that 128 of the country’s largest 250 corporations managed to escape paying any federal income tax at all for at least one year between 1981 and 1983. Scrambling, business groups tapped their public relations networks to confront what the Business Roundtable called the “common but incorrect perception that the tax burden on the U.S. business community is unfairly low.” Although most business leaders agreed that the proposed reform would cut individual taxes at the expense of corporate taxes, the mind-numbing complexity of the details at play prevented employers’ associations from rallying around a simple public message, and strategic divisions beset the business community. Hedging their bets in the hope of retaining specific tax preferences, lobbyists for the NAM and the Chamber endorsed eleventh-hour compromise measures. Even more unsettling for the bill’s opponents, General Motors CEO Roger Smith—who became the Roundtable’s chairman in mid-1986 in the thick of the fight—publicly dissented from his group’s opposition, claiming that lower individual taxes would put more money in his customers’ pockets and thus help automobile sales. According to Wall Street Journal reporters Jeffrey Birnbaum and

Alan Murray, who tracked the process thoroughly, individual firms and trade associations became bogged down negotiating the details of the bill, but corporate America “never joined forces to defeat it.” The legislation passed, and as a result, American corporations contributed approximately the same portion of federal tax revenue—12.5 percent—at the end of the 1980s as they had at the beginning of the decade.³

To some tax scholars, the Tax Reform Act of 1986 marked a victory for progressive reformers working in the name of the public good over the parochial demands of well-funded special interests. Such an interpretation directly challenges the tenets of public choice theory, which would predict that a minority set of interests with a great deal at stake would in fact triumph over the public good. According to tax historian Elliot Brownlee, the legislation “advanced a process of restoring to federal taxation the sense of balance sought by the founders of the republic. The Act represented a major step in the elimination of tax-based privilege, while reaffirming the duties of citizenship.” Political scientist Eric Patashnik, on the other hand, has compellingly illustrated the law’s limitations. Changes to the tax code since 1986, Patashnik argues, “have narrowed the tax base and created new opportunities for sheltering taxable income,” belying the bill’s promise to distribute the tax burden more equitably. Moreover, lobbyists continued to exercise tremendous power over the arcane details of tax-writing procedures, minimizing the reform’s influence in the long term.⁴

Both scholarly assessments of the role of corporate lobbyists in the Tax Reform Act of 1986 are accurate, illustrating the central irony of the politics of business in the 1980s. Although organized business associations saw their collective unity wane, corporate lobbying itself boomed. Indeed, the fracture of the once-unified community of business associations created new opportunities for firm- and industry-specific lobbyists to negotiate for special tax benefits and government appropriations for their clients. Unlike the collective lobbying efforts on broad-based issues like regulatory reform or labor law, these parochial special interest negotiations proved tremendously profitable for corporate lobbyists like Charls Walker, win or lose. “A lot of oxen were being gored” during the fights over corporate taxes in the early 1980s, Walker reflected, “and, well, we just made a lot of money.”⁵

Lobbyists like Walker straddled two worlds during the tempestuous political battles of the Reagan administration. On one hand, his clients were old-guard industrial firms struggling to cope with a new political and economic order. As the United States recovered from its long battle with inflation, stagnation, and energy crisis, leaders of its traditional industries—what some observers derisively called “smokestack America”—found the landscape of global capitalism irrevocably altered. At the same time, Walker deftly navigated the treacherous shoals of American politics, moving seamlessly from think tanks to corporate boardrooms to the offices of political power, a member of a new breed of corporate lobbyist—part ideological crusader, part entrepreneur. During the 1988 presidential campaign, for example, he helped the Republican nominee, Vice President George Bush, develop proposals to reduce the capital gains tax for all investors; at the same time, his American Council for Capital Formation, which blurred the line between a think tank and professional lobbying firm, parlayed its access to Washington insiders into lucrative contracts for specific corporate clients. As part of the expanding community of “hired-gun” lobbyists, Walker reflected the changing dynamics of influence peddling as the pan-industry policy campaigns led by employers’ associations quickly became relics of a bygone era.⁶

This chapter places the transformation of the politics of business during the 1980s at the intersection of two interrelated trends: the realignment of global capitalism, particularly the rise of finance and the decline of industrial manufacturing in the United States, and the political and cultural changes that spawned a new power structure and the proliferation of professional lobbying firms. As the last two chapters demonstrated, the collective influence of employers’ associations began to wane along several important fronts during the Reagan administration, even as their ideological perspective became increasingly integral to political discourse. Neoliberal doctrine about the supremacy of the market and the debilitating effects of government “intervention” in the economy came to dominate policy deliberations not only among conservatives and Republicans but, increasingly, among liberals and Democrats. Nonetheless, by the end of the Reagan administration, practically nothing remained of the coherent and organized “business movement” that so dominated policy debates in the 1970s. Individual corporations certainly achieved both influence and self-serving policy benefits, but on such major issues as taxation, deficits, and international competiveness and trade, the business community found itself disparate and ineffectual. The intellectual and organizational disunion that Daniel Rodgers has recently characterized as an “Age of Fracture” in the late twentieth century manifested among right-leaning business leaders as well as the political left. Business’s political mobilization devolved, to riff on historian Carl Becker, to a state of “every man his own lobbyist.”⁷

FRACTURE AND FINANCIALIZATION

Business groups’ headline policy victories in the late 1970s and the advent of the avowedly pro-business and antiregulatory Reagan administration in 1981 prompted a groundswell of business political activity as corporate executives, Washington Representatives, and industrial associations flocked to the nation’s capital. Accompanying this boom in trade association and direct lobbying, approximately a dozen corporate-backed policy institutes, created or expanded in the 1970s during the height of business’s crisis of confidence, established themselves as mainstream members of the policy establishment during the 1980s. But this proliferation of political activity brought with it a downside, particularly for the “Big Three” employers’ groups that had galvanized business lobbying in the previous decade. “More lobbyists doesn’t equal more influence,” said economist Jerry Jasinowski, vice president of the NAM. “You get to the point where you trip over each other … a point of diminishing returns.”⁸

A new generation of leaders at the Business Roundtable likewise recognized the changing landscape of corporate lobbying as they transitioned through the retirement of the powerful and charismatic industrial executives who had spearheaded the Roundtable’s rise a decade earlier. In the early 1980s, Irving Shapiro of DuPont, Reginald Jones of GE, Thomas Murphy of GM, and John Harper of Alcoa all stepped aside, leaving a major hole in the group’s leadership. “You don’t have the same perception now of there being some central figures, and that is because there really aren’t,” said new Roundtable chairman Ruben Mettler, head of the high-tech conglomerate TRW. Although the Chamber of Commerce did not experience a comparable change in leadership—Richard Lesher remained atop that organization until 1997—its directors likewise faced greater competition for attention and political access, exacerbated by the high-profile schism between Lesher and many members over TEFRA in 1982. That year, in the face of mounting budget deficits, the Chamber laid off approximately 5 percent of its employees, the first staff reduction in years.⁹

The arrival of a new pan-industry employers’ association, dedicated to the interests of midsized firms and known as the American Business Conference (ABC), exemplified those shifting dynamics. In 1979, American Stock Exchange (AMEX) chairman Arthur Levitt Jr. detected a desire among executives in the financial services industry to unite their political clout in the same way that manufacturing and construction powerhouses mobilized through the Business Roundtable. The son of a powerful New York City politician, Levitt made his career in investment banking before assuming the helm of the stock exchange company in 1978 (and would later serve as chairman of the Securities and Exchange Commission throughout the Clinton administration). Just weeks after Ronald Reagan took the oath of office in the winter of 1981, Levitt announced the creation of the ABC, a consortium of one hundred CEOs from Wall Street brokerages, investment houses, and banks, as well as other fast-growing industries, particularly high-tech ventures, pharmaceuticals, and expanding service-sector companies. The old-guard corporate behemoths, Levitt believed, were as antiquated in their politics as in their business models. “I decided that if there was going to be a more meaningful government-business dialogue,” he explained, “it would have to be with the more risk-oriented, upstart firms.”¹⁰

At first, the ABC made a notably small splash in national politics. The longstanding giants of the organized business community paid the group little mind, and Chamber president Richard Lesher dismissed the effort entirely. “One man, a secretary and an answering service are just not going to make a hell of a lot of difference,” he said. Yet in short order, the ABC distinguished itself as a major contact point for the young Reagan administration, mobilizing its small army of CEOs to advocate for lower capital gains taxes and the continued weakening of banking regulations. Unlike the industrial legends of the Business Roundtable—General Motors, DuPont, U.S. Steel, and so on—the ABC’s membership included less venerable but nonetheless important companies, ranging from accounting firms like Arthur Andersen, to midsized manufacturers like bicycle maker Huffy, to expanding regional retailers like Massachusetts-based Dunkin’ Donuts. Conservatives in the Reagan White House found the group’s fixation on growth and innovation particularly appealing. According to business liaison Wayne Vallis, the ABC was “at the heart of the whole Reagan philosophy, the entrepreneurial code.”¹¹

Under the leadership of its president, former economics professor and Capitol Hill aide John Albertine, the ABC quickly established itself as a major force for business politics in Washington. It bolstered its bona fides with Reagan by supporting both the ERTA tax cuts and the far more controversial increases to corporate taxes that followed. In fact, Albertine’s support for TEFRA put him at odds with his fellow corporate lobbyists at the Roundtable and the Chamber, with whom he shared fellowship at Charls Walker’s weekly Carlton Group meetings. By joining Reagan’s side early and forcefully in the TEFRA fight, however, Albertine’s ABC skillfully solidified its place in the lobbying hierarchy. As one journalist noticed, a political scene previously ruled by the Big Three business groups—some added the National Federation of Independent Business as the fourth—had by 1983 expanded into a “Big Five.”¹²

As the mouthpiece of midsized, growth- and investment-oriented firms disproportionately from the service sector, the ABC not only contributed to the overcrowding of the lobbying field but also typified the new face of business itself. Although industrial giants like General Motors and Alcoa remained important engines of employment and production, their economic, political, and cultural hegemony over what was increasingly known as “corporate America” declined steadily with each passing year. In 1950, more than 35 percent of the American workforce worked in manufacturing, while the service sector employed only 15 percent, according to the U.S. Bureau of Economic Analysis. That gap closed steadily over the next thirty years, and by the early 1980s service industries employed more people than manufacturers did; by 2000, their relative shares were the precise inverse of those of 1950. In addition, the share of total profits shifted remarkably between manufacturing and services in the last three decades of the twentieth century. Through the 1960s, profits from the financial sector, including investment and commercial banks, insurance companies, and real estate investors, represented between 10 and 15 percent of total profits in the American economy. But by the late 1980s, financial profits made up more than 30 percent, and the figure reached 40 percent by 2000.¹³

Even the Business Roundtable, stalwart defender of industrial capitalism, did not find itself immune from these secular economic changes, as the shifting composition of its leadership structure testified. When the Labor Law Study Group, the Construction Users’ Anti-Inflation Roundtable, and the March Group combined forces in 1973, the men who orchestrated the merger selected a Policy Committee to set their agenda, designate heads of the task forces and committees, and determine the group’s policy positions. Of the thirty-four original members, two were CEOs of national retailers (Macy’s and Sears), one ran a food producer (Campbell’s), and one led a technology company (Hewlett-Packard). The rest represented manufacturing and production industries: chemicals and petroleum, automotive, mining, railroads, construction, and utilities. FIRE firms (finance, insurance, and real estate), as well as pharmaceutical companies, were nowhere to be seen. (See appendix 3.2.) As the group matured institutionally, its leaders developed a system of rotating Policy Committee seats among interested members, generating greater diversity that reflected the changes in the corporate landscape. Heavy industry and manufacturing firms remained dominant, but by the late 1970s, the forty-plus member committee also included up to a dozen CEOs from nonmanufacturing firms, usually divided evenly among pharmaceuticals, insurance, and finance. In 1988, the Roundtable’s executive board—a chairman and two or three co-chairmen—for the first time drew its membership exclusively from “new” industries. In the seats formerly held by DuPont and Alcoa now sat the heads of Pfizer (pharmaceuticals), Aetna (insurance), American Express (banking), and IBM, which, while seventy-five years old, nonetheless represented the vanguard of personal computing.¹⁴ (See appendix 8.1.)

But the rise of financial, insurance, and health care companies to the top rungs of the Roundtable tells only part of the story. In the last half of the twentieth century, the relative share of the American economy controlled by manufacturing, service, and FIRE industries shifted dramatically. After accounting for approximately one-third of GDP, manufacturing declined—most precipitously after 1970—to around 15 percent by century’s end. At the same time, FIRE rose from just above 10 percent in 1950 to 23 percent in 2000, and services shot from below 10 percent to more than 25 percent of GDP; in all cases, the most rapid changes occurred during the Reagan administration. Whether measured in terms of employment, profits, or share of GDP, financial companies and service industries notably eclipsed industrial manufacturing by the end of the 1980s.¹⁵

This process, which scholars describe as the “financialization” of the American economy, entailed not only a power shift among industries but also a fundamental change in corporate strategy and economic activity within industries. During the 1980s, many nonfinancial companies diversified substantially into financial services, even as they continued to convey a traditional image to the public. Venerable corporations like General Electric, Ford Motor Company, and General Motors, the pride of the industrial revolution and, in the mid-twentieth century, the most influential corporate voices within organized business groups, drew an ever increasing share of their revenue from investments, securities trading, and personal financing. As early as the 1960s, consultants had advised executives at General Electric that a modern, successful firm “behaved as an investor, not as an operator,” and executives like Fred Borch, Reginald Jones, and particularly Jack Welch took that philosophy to great lengths. By 2002, twenty years after Welch succeeded Jones as CEO, 41 percent of the company’s revenue came from GE Capital Services, whose businesses included insurance, financing for equipment, and real estate. GE had spent most of its history manufacturing appliances, heavy machinery, and electrical infrastructure, but those business units increasingly came to serve as conduits for its credit services. By the twenty-first century, the company originally founded to make lightbulbs now mostly made loans.¹⁶

One of the most visible hallmarks of the rise of finance and the decline of industrial manufacturing was the massive wave of merger and acquisition activity. During the 1980s, approximately 28 percent of the country’s five hundred largest manufacturing firms received takeover bids, mostly unsolicited, or “hostile,” and the majority led to mergers. Indeed, by the end of the decade, one-third of America’s largest firms had been absorbed by other entities. According to corporate theorists, this merger wave marked the transition from managerial capitalism, in which corporate control was rooted in professional managers, to shareholder capitalism, where institutional investors from the financial services community exercised far greater influence over the destinies of firms.¹⁷

Industrial leaders greeted the rise of forced mergers and the growing power of institutional investors like mutual funds, insurance companies, and private equity partnerships with unchecked alarm. “Hostile takeovers,” Roundtable spokesman Andrew Sigler told an open meeting of the Securities and Exchange Commission in 1984, “threaten the well-being of the country by causing corporations to react to intense pressures for short-term results.” As chairman of the Roundtable’s task force on corporate responsibility and CEO of the diversified paper and packaging corporation Champion International, Sigler offered the perspective of both traditional management and the manufacturing community, which were most at odds with the new world of Wall Street investing. The 1980s, Sigler argued, brought “dramatic change in corporate ownership” away from individuals and toward financial institutions that were “looking for quick gains,” not stability. “Today’s shareholder,” he insisted, “doesn’t fit the classic description of someone who has a long-term interest in the development of the company.”¹⁸

Such a fundamental transformation in the structure of American capitalism undermined business unity by straining relations between manufacturing companies and the financial firms that reaped tremendous profits by underwriting corporate mergers and acquisitions. Oil tycoon T. Boone Pickens, who gained national renown through several highly publicized hostile takeover efforts in the mid-1980s, attacked Andrew Sigler and the Business Roundtable for embodying the very worst of business elitism: “regimentation, stifling of the entrepreneurial spirit, disregard for stockholders, and obsessions with perquisites and power.” The Roundtable’s complaints about “unacceptable abuses” from takeovers “orchestrated by professional raiders” represented, to Pickens, an ideologically disingenuous ploy to look out for their own. “For years, the Business Roundtable wanted Congress to keep hands off all takeovers because the big companies were gobbling up the little ones…. But now that some of the big ones have been brought down, the Business Roundtable wants Congress to step in and protect them,” Pickens protested. Sounding a populist and anticorporate note that echoed the cries of public interest and labor activists, the billionaire corporate raider declared: “We must reduce the influence of big business in Washington.”¹⁹

These shifts in corporate capitalism also frayed personal and professional relationships at the heart of the organized business movement. In 1987, a subset of Roundtable companies—but not the entire organization—joined the Coalition to Stop the Raid on America, a bipartisan group of state and local politicians and representatives from labor and business groups that urged greater transparency for and stricter regulation of corporate takeovers. At the same time, lobbyists for Wall Street firms worked, with support from the Treasury Department, to prevent Congress from using provisions of the tax code to limit takeover activity. Such conflicting goals put onetime allies on opposite sides of a philosophical line. In 1987, for example, the Business Roundtable declined to renew its retainer with all-star corporate lobbyist Charls Walker, who had, according to Alcoa CEO Charles Parry, “taken a leadership role on publicly proposing specific tax policies that have not been adopted by the Roundtable.” As Roundtable executives like Sigler denounced shareholder activism and hostile takeovers, the group’s erstwhile lobbyist Walker declared, to the contrary, that “[m]erger and acquisition strength is part of the market strength, and making that more difficult will weaken the market.” The split between Walker and the Roundtable, while not as dramatic as some contemporary media accounts suggested, typified the growing rift between different constituencies in the world of organized corporate lobbying.²⁰

A RESPONSE TO POSTINDUSTRIALISM: THE REVITALIZATION CAMPAIGNS

The rise of finance and the declining unity among corporate lobbyists brought to fruition a historical process that had begun to shake the foundations of American capitalism as early as the 1960s. Ironically, the same uncertainties that inspired political mobilization by the industrial community ultimately led to its fracture, as the firms and industries most galvanized by inflation, social regulation, and fears of a cultural “attack on free enterprise” in the early 1970s found themselves most unsettled by globalization and financialization. Their ultimate fissure unfolded against the backdrop of major policy debates about the state of the industrial economy and what could, or should, be done about it. Industrial corporations had observed their slipping competitive position for years, as national imports outpaced exports and the profitability of manufacturing firms declined both absolutely and relative to financial services. Representatives of the steel and auto industries, for example, had long railed against unfair foreign competition, including the dumping of European steel onto the American markets and Japanese government subsidies to its automobile makers.²¹ Yet the task of constructing and promoting a policy agenda to confront those challenges, given the growing ideological and organizational divisions within the business community, proved especially acute during the short but severe economic recession of 1980.

“The buzz words of Washington are now ‘supply side economics’, ‘re-industrialization,’ ‘rebuilding America’, or our particular favorite, ‘revitalization of American industry,’ ” wrote Alexander “Sandy” Trowbridge to Goldman Sachs partner Henry “Joe” Fowler in the summer of 1980. As the president of the NAM, Trowbridge oversaw his organization’s newly launched “Program to Revitalize American Industry,” a six-point initiative to shift economic policy, as he put it, “from excessive stimulus of consumption and demand to strong encouragement of investment and savings.” He wrote to applaud his former colleague—both men had served on Lyndon Johnson’s cabinet, Trowbridge at Commerce and Fowler at Treasury—for helping inaugurate a similar effort through a bipartisan group of political luminaries that called itself the Committee to Fight Inflation. That self-described “committee of private citizens with extensive experience in government” drew on members like former Federal Reserve chairman Arthur Burns, former Democratic Ways and Means chairman Wilbur Mills, and several alumni of the Nixon, Ford, and Carter economic teams to “marshal and maintain broad support for effective anti-inflation policies.” From his office at the NAM’s headquarters, boasting the patriotic address 1776 F Street, Trowbridge both commended his fellow Democrat’s efforts and expressed his hope that the two organizations might work together in common cause.²²

Just six months into what would be a ten-year stint as head of the NAM, Sandy Trowbridge believed that industrial revival would be the defining issue of his tenure. Writing to his friend Art Nielsen, chairman of market research firm A. C. Nielsen, he hopefully predicted that “NAM will become recognized as an affirmative advocate for legislation and policies which will foster fiscal responsibility, increased productivity, capital formation, regulatory reform, technological innovation and international competiveness.” In many ways, Trowbridge was an ideal leader to take the NAM on the final leg of its decade-long journey away from knee-jerk obstructionism and radical antilabor politics and toward a more ecumenical posture as champion of America’s suffering manufacturers. More privileged in upbringing than most owners of manufacturing firms or heads of business associations, the Andover- and Princeton-educated retired Marine officer and Korean War veteran straddled universes, equally at home among business leaders and the Washington policy elite. In addition to his time running the Commerce Department in the 1960s, his résumé before taking the helm of the NAM included experience as an oil executive for Esso Standard Oil in Puerto Rico, the presidency of the Conference Board, and the vice chairmanship of Allied Chemical. Ensconced in what he playfully described as “a de-bugged apartment at The Watergate,” the fifty-year-old recent divorcé relished his chance to distinguish the NAM as the paramount voice for the revival of American industry.²³

He was far from alone in that ambition. While few business leaders dared utter the dreaded “D word”—deindustrialization—Trowbridge’s correspondence demonstrated the many “R words”—rebuild, revitalize, reindustrialize—that riddled the conversations of executives, association leaders, policymakers, and journalists, reaching a fever pitch in the summer of 1980. In June, a special edition of Business Week sounded a clarion call for “The Reindustrialization of America” by drawing its readers’ attention to the flatlining productivity and rising foreign competition that spawned increasing numbers of plant closings as American firms moved their facilities abroad. Across town on H Street, Trowbridge’s counterparts at the Chamber of Commerce rolled out their public relations strategy, “Let’s Rebuild, America.” Despite their unity of purpose, the joint appearance of those similar policy programs stoked competitive tensions between the two old employers’ associations. Embarrassed to realize that the Chamber articulated its specific policy proposals more clearly than the NAM did, Trowbridge berated his subordinates for what he called the “failure in our organization to really work out our top priority” and “put together the details of the program that has credibility” for “broad usage among average citizenry” and “among sophisticated reviewers” in policy circles.²⁴

The NAM and the Chamber poured tremendous energy and resources into their revive/rebuild programs, framing their longstanding goals of tight money, lower government spending, and looser and cheaper regulation in the context of America’s declining industrial clout. Hoping to shore up bipartisan support, the groups peddled their talking-point-laden programs to both major parties’ nominating conventions in the summer of 1980, stressing the specific policy recommendations they prescribed to revive ailing industries, including the 10-5-3 accelerated depreciation reform plan and an aggressive stance against what the Chamber called “predatory trade financing programs” by foreign governments, especially Japan. The GOP platform endorsed 10-5-3 explicitly, while the Democratic platform only vaguely gestured at tax incentives for capital formation. To the frustration of the employers’ associations, neither party took a hard line toward Japanese trade policies.²⁵

Although the promotional materials the NAM and the Chamber put together offered a handful of specific proposals, they largely trafficked in tired platitudes about reducing the regulatory hand of the state. Critics seized on that ambiguity, suggesting that “reindustrialization,” in the words of a Washington Post editorial that especially aroused Sandy Trowbridge’s wrath, really represented a desperate call for “turning back the calendar to a happier time” of “factories contentedly belching smoke” that appealed to “those industries whose great days were in the past.” Such a critique laid bare the often unspoken rivalry between traditional manufacturers and newer, more innovative industries like telecommunications and information technology. Lambasting the editors for their bias against industry, Trowbridge insisted that his “revitalization” philosophy was neither partisan, dismissive of environmental concerns, nor protectionist. To the contrary, he insisted, employers’ groups like the NAM and the Chamber advocated “investment and modernization by American industry” in order for “U.S. jobs [to] be saved and new jobs and, in fact, entire new industries created.”²⁶

The campaigns by the NAM and the Chamber to publicize the plight of industrial manufacturing coincided with the development of a larger national debate, both within and outside the business community, on whether the United States should join other modern nations in proclaiming a formal “industrial policy.” As historian Otis Graham has summarized, the central question of industrial policy concerned whether the government should commit to a “declared, official, total effort to influence sectoral development and, thus, national industrial portfolio.” During the 1980s, as popular fears grew that foreign competition, especially from Japan, threatened to dethrone the United States as the world’s economic superpower, debates over industrial policy dominated many political and business circles. Despite its critical importance, however, the tremendously complex and technical details involved meant that the issue failed to hold the attention of many voters (and most subsequent political historians). But in addition to being confusing and dry, industrial policy also proved intractable because it cleaved traditional political alliances and ideologies. At its heart, the debate revolved around the fact that the governments of countries like Japan intentionally structured tax, subsidy, regulatory, and tariff policies to promote specific industries, such as automobiles, which greatly improved Japanese firms’ position in the international market. The United States likewise favored some industries over others, but not according to any coherent or intentional plan. Rather, American policy emerged through the muddled give-and-take of parochial politics. A clear and deliberate industrial policy, according to its proponents, would rectify this imbalance. But what would such a program look like, and whom would it favor?

On the far left of the spectrum, some labor and public interest groups called for reciprocal tariffs, trade quotas, and other measures frequently demonized by opponents as “protectionist.” Moderate left-leaning policy theorists, most prominently the economist Robert Reich, eschewed overt barriers to trade but advocated closer collaboration between the private sector and the public sector to encourage innovations and new technologies where the United States had a clear competitive advantage. Rehearsing arguments that ultimately shaped the approach to economic growth and trade under Bill Clinton, whom he served as secretary of labor, Reich predicted that the future lay in high-technology production, not the “smokestack America” of old.²⁷

Politically conservative industrial leaders, including Democrats like Sandy Trowbridge as well as Republicans like Richard Lesher at the Chamber of Commerce, found themselves in a bind. While they concurred about the need for government programs to promote exports through tax incentives and easier financing, they differed over proposals to create a “national development bank” like the institutions in Japan and Great Britain that established clear national priorities for production, wage rates, export quotas, and tariffs. Some agreed with the labor groups and liberal economists who argued for a new institution along the lines of the Reconstruction Finance Corporation (RFC), created at Herbert Hoover’s behest during the Great Depression to provide emergency government loans to struggling businesses. Only through such a program, argued Ford chairman Philip Caldwell, could American carmakers deal with Japanese competition. America needed “a new, sensible national industrial policy” because “in the auto industry, individual U.S. companies are competing against Japan as a country.” The chairman of the Roundtable’s task force on trade and CEO of construction equipment manufacturer Caterpillar, Lee Morgan, concurred. “Your friends are about to desert you!” he berated Japanese business leaders at the Advisory Council of Japan-U.S. Economic Relations in Hawaii in February 1983, because the Japanese government continued to promote high tariffs, an undervalued currency, and import restrictions on American agricultural products.²⁸

Despite such widespread consternation, most business leaders could not bring themselves to support a new government agency designed to promote sector-specific industrial goals. An ad hoc Business Roundtable task force concluded in the fall of 1983 that an industrial development bank along the lines of the old RFC simply reeked of the very type of national economic planning the organization had strenuously opposed since its creation. Moreover, the task force concluded, persistent rumors of America’s deindustrialization had been greatly exaggerated, protests by manufacturers like Caldwell and Morgan to the contrary notwithstanding. “America is not and will not be deindustrializing,” the Roundtable reported. “Provided that there is growth in the U.S. economy, one can reasonably predict that automation and other sources of productivity growth will generate more output, higher living standards and more, not less, overall employment.”²⁹

Faith in the power of unregulated markets to generate prosperity thus trumped the concerns of struggling industries. Like the NAM and the Chamber, as well as the newer American Business Conference, the Roundtable rejected a transformative industrial policy. Instead organized business groups simply doubled down on their support for the same policy prescriptions they had advocated for decades: capital-forming tax incentives, lower barriers to trade, less costly regulation, and tight fiscal and monetary policy. A cohesive American industrial policy thus foundered on the shoals of ideological partisanship, as labor groups and left-leaning economists failed to reach common ground with those elements of the traditional manufacturing community that might have benefited most from such planning. By the middle of the 1980s, the American economy thus emerged from an acute downturn and into the finance- and consumption-led recovery without ever addressing the concerns that had animated the “reindustrialization” push in 1980.³⁰

FREE TRADERS TRIUMPHANT

Although problems of industrial decline did not disappear, as the Business Roundtable optimistically suggested, the end of the industrial policy debate shifted public focus to the far more contested terrain of international trade, where the battle lines between labor-liberals and organized business interests were easier to detect. Since its founding, the Roundtable consistently positioned itself as a strong advocate for “free trade,” urging its members—no matter their particular competitive position—to lobby for tariff reductions and lower taxes on companies that earned income through foreign subsidiaries. Many of its original members, for instance, participated in a successful effort in 1972 to defeat legislation known as the Burke-Hartke bill, a labor-backed proposal that would have restricted investment overseas by American multinational corporations and discouraged imports. Yet throughout most of the 1970s, trade policy occupied only a minor place in the Roundtable’s hierarchy of important issues. Although imports surpassed exports in all but two years after 1971, battles over social regulation, price controls, and labor law, as we have seen, dominated the group’s agenda.³¹

During the 1980s, however, trade reemerged as a dominant policy concern, as well as a major point of tension between organized business groups and the Reagan administration. “Trade is getting more attention,” Roundtable task force on trade chairman Lee Morgan proclaimed in 1983. “But I’m sorry to report that the commitment of this government to a ‘pro-U.S.’ trade policy has not yet been demonstrated.” Ronald Reagan, Roundtable members worried, did not feel the immediacy of foreign exchange rate imbalances or the budget deficits that, they insisted, fueled trade deficits. Moreover, many CEOs strongly criticized the president for using trade as an instrument of foreign policy, through both embargoes and preferential trade agreements. “U.S. industry,” Morgan maintained, “should not be forced to forego business in the international marketplace—and that often means in the USSR—when our international competitors are free to transact the business.” Despite their differences with Reagan, however, most Roundtable members agreed that by far the greatest threat to free trade came not from the militaristic conservative in the White House but the labor-oriented and left-leaning politicians who blamed the decline of low-skilled manufacturing jobs on the global economy. Instead of reinforcing “protectionist sentiments” by imposing restrictions on trade to benefit American manufacturers, Morgan insisted, the United States should negotiate free-trade agreements with partners around the world to promote American exports.³²

Corporate leaders’ renewed ideological commitment to free trade mirrored a growing movement by policy elites around the world to further institutionalize the forces of globalization, particularly through two crucial international developments: the Uruguay Round of negotiations that transformed the General Agreement on Tariffs and Trade (GATT) into the World Trade Organization, and the reduction of trade barriers between the United States, Canada, and Mexico that led to the North American Free Trade Agreement, or NAFTA. In 1987, the Business Roundtable joined with the Round Table of European Industrialists, which represented twenty-five industrial manufacturers from several countries, to lobby the trade ministers and other public officials then engaged in the second year of the renewed GATT talks. “In view of mounting trade tensions among the U.S., Europe, and Japan,” said the CEO of Volvo and chairman of the European Round Table, “we believe our combined efforts will encourage concrete trade agreements.” The year before, representatives of the Business Roundtable and its Canadian counterpart, the Business Council on National Issues, had jointly supported a bilateral free-trade zone between their two nations. Summarizing the Roundtable’s central arguments for the primacy of international free-trade agreements, Edson Spencer, CEO of defense conglomerate Honeywell, argued that an agreement “to expand trade and investment between Canada and the United States would stimulate U.S. industry and would serve as an example of what can be accomplished in the multilateral trade talks that have just gotten under way [in Uruguay].”³³

Business leaders’ call for a free-trade zone with Canada ultimately expanded into the NAFTA treaty, which abolished trade and capital flow restrictions not only with America’s northern neighbor but also with Mexico when it took effect in 1994. Negotiations began in the summer of 1990 when Mexican president Carlos Salinas formally proposed a continental free-trade zone to his American counterpart, President George H. W. Bush. For three years, trade representatives from the three countries worked to iron out myriad details amid intense lobbying, particularly by labor and environmental groups who feared that the treaty would encourage American companies to relocate their factories to Mexico in search of cheaper workers and more lax environmental regulations. In the summer of 1993, negotiators concluded their work with a final treaty that largely appeased the environmentalists, but American labor groups remained opposed. In response, the AFL-CIO spearheaded a major lobbying effort to block ratification of the treaty in the U.S. Senate, which American law required before it could take effect.

Although many business leaders, especially from Roundtable firms, had loudly clamored for free trade for years, corporate lobbyists responded more slowly than their labor counterparts during the NAFTA negotiations. In 1988, Congress reauthorized “fast-track” rules for trade negotiations, requiring the Senate to take an up-or-down vote, with no amendments or 60-vote cloture motions, on any trade pact negotiated by the president; such authority would run until 1991 and then automatically renew for two years unless Congress voted to revoke it. In the spring of 1991, when President Bush announced his intent to use fast track to negotiate NAFTA, a coalition of Democrats from agricultural and manufacturing regions defied their party leadership and worked to block the extension. Such was their strength that House Ways and Means chairman Dan Rostenkowski, a member of the Democratic leadership who supported NAFTA, told corporate lobbyists: “If you want to win this thing, move your ass.” In response, business leaders created the Coalition for Trade Expansion, which evolved into the USA-NAFTA Coalition during the ratification fight in 1993. Comprising 2,300 firms and business associations, this umbrella group organized a state-by-state public information blitz, designating thirty-five corporations as “captains” to promote the virtues of continental free trade. Most of the active firms, such as General Electric, DuPont, IBM, and AT&T, were prominent Roundtable members who had sent representatives to the original negotiations and thus knew the details of the treaty intimately.³⁴

While nearly all prominent business associations joined USA-NAFTA, from the CEOs at the Roundtable to the NAM and the Chamber to the American Business Conference, large manufacturers did the heaviest lifting during the public relations blitz. In fact, some smaller and less powerful business groups even lobbied against the treaty, and media reports suggested that many small and midsized business owners remained as ambivalent about NAFTA as the general public was—on the eve of its ratification, less than 40 percent of Americans supported the agreement. Such reluctance to face the harsh forces of unfettered trade reflected a long tradition, particularly among small manufacturers. Indeed, the NAM had been founded upon exactly that sentiment in the 1890s as local producers sought governmental protection to ensure their viability. Nonetheless, a hundred years later, the NAM’s guiding philosophy mirrored the preferences of big industry for whom NAFTA provided the ultimate solution to America’s declining industrial competitiveness. A common North American market for goods and services, Roundtable spokesman Walter Elisha told a Senate committee, would yield “products of higher quality,” “more jobs,” and “a better quality of life.” Free trade, he claimed, promised to make “the businesses of all three of these nations more competitive.”³⁵

Critics of the treaty, however, rejected such optimistic projections and accused large American corporations—particularly textile manufacturers like Elisha’s Springs Industries—of more sinister motives. Freed of border tariffs, labor leaders and public interest activists argued, American manufacturers would surely move their factories south. Billionaire Texas businessman Ross Perot, who had achieved tremendous success in the oil and gas industry with minimal connections to pan-industry lobbying associations in Washington, launched a high-profile attack on NAFTA as part of his third-party bid for the presidency in 1992. Famously claiming that the free-trade zone would generate a “giant sucking sound” as well-paying manufacturing jobs fled to Mexico, Perot combined the labor-left’s critique of corporate offshoring with culturally conservative isolationist politics. In addition, right-wing opposition to NAFTA coalesced around former Nixon aide Patrick Buchanan, whose surprisingly strong showing in the 1992 New Hampshire Republican primary exposed George Bush’s weakness among social and cultural conservatives. Attacking NAFTA as yet another manifestation of the “New World Order” that begat illegal immigration, foreign military entanglements, and “world government,” Buchanan’s neonativism (not to say neo-McCarthyism) cast into sharp relief the persistent tension between business leaders and their putative allies in conservative politics.³⁶

While Buchanan’s challenge shined a spotlight on Bush’s vulnerability, Perot’s populist independent campaign ultimately cost the president his job. Running on a platform that opposed NAFTA, called for a balanced budget at all costs (even tax increases), and condemned both parties for their recalcitrance and self-serving policies, Perot won 19 percent of the popular vote. That tally proved sufficient to swing victory to Arkansas governor Bill Clinton. As a centrist and self-described “New Democrat,” Clinton claimed to be unbound by traditional partisan loyalties, but he nonetheless preached skepticism about NAFTA during the primary campaign so as not to alienate organized labor and the left. In the fall of 1992, after winning his party’s nomination, Clinton announced his qualified support for the treaty, so long as negotiators concluded several sidebar agreements to protect labor and environmental rights. Once in power, the Clinton administration worked furiously to achieve Senate ratification, angering many allies in the labor, public interest, and environmental movements. And in the end, Clinton’s personal lobbying proved far more important than business groups’ public information campaigns in convincing fence-sitting members of Congress to support the free-trade agreement. In November 1993, a few weeks before the House voted, Vice President Al Gore debated Ross Perot on the Larry King Live television program, anchoring the administration’s case and persuading some thirty members of Congress to vote Clinton’s way. Last-minute wheeling and dealing by the new president finished the job; the House voted 234 to 200 in favor on November 17, 1993, and the Senate followed suit three days later, 73 to 26. In the House, two-thirds of Democrats and three-fourths of Republicans supported the treaty, while the “nay” votes among the senators split roughly evenly.³⁷

The NAFTA debate thus unfolded at the climax of a powerful political realignment wrought by changes in global commerce and the power structure of American corporations. The populist backlash by right-wingers like Buchanan signaled the limits of the business community’s intellectual influence over conservative politics. And yet, although the debate pitted traditional antagonists like General Electric against Ralph Nader and the AFL-CIO, NAFTA’s real legacy was to finalize a longstanding schism in the Democratic Party. Organized labor emerged as the clear loser, while the centrist, pro-globalization “New Democrats” of the Clinton administration claimed a policy victory. For the organized business community, however, the Democrats’ embrace of free trade produced mixed results. The logic of free-market capitalism had triumphed and secured its hegemony in policy circles, even though business lobbyists had played only a bit role themselves. At the same time, the turn to free trade diverted policymakers’ and business leaders’ attention away from any real effort to boost the competitive status of American manufacturing through a coherent industrial policy. NAFTA thus joined the ranks of regulatory reform and budget policy as a political hot topic that ultimately distracted the industrial community from its underlying structural problems.

THE CHANGING FACE OF LOBBYING

By the end of the 1980s, much of the luster of business’s political mobilization appeared to have worn off. Policy battles over taxes, deficits, trade, and regulation exposed the tensions not only among various business constituencies but also between business interests and other conservatives. “We’ve entered a period where economic forces are producing tremendous strains on business,” tax lobbyist Lawrence O’Brien told a reporter in 1987, so “you can no longer come up with an effective consensus.” Looking to the 1988 election and beyond, many business lobbying organizations adopted a defensive position quite at odds with the ebullient optimism for reform they had embraced in the late 1970s.³⁸ In addition, firm- and industry-specific priorities frequently outweighed pan-business unity, and as multinational firms came to dominate the landscape of big business, a clear sense of American identity within the capitalist class became harder to discern. As intellectual historians and social theorists have commented, the intellectual power of neoliberal notions of free trade and deregulation often trumped parochial loyalties at the highest levels of the corporate world. Changes to corporate capitalism and the shifts in policy debates weakened the overarching unity of the managerial elite, so even when their side triumphed, as in the struggle to ratify NAFTA, employers’ associations that claimed to speak for a united business community no longer held the same sway over the policy process as they had a decade earlier.³⁹

Ironically, the relative clout of organized business associations like the Roundtable and the Chamber of Commerce declined even as the absolute level of corporate lobbying continued its skyward trajectory. Since the 1970s, a combination of structural, ideological, and political factors had spurred activism by organized interest groups. In Congress, the diminished importance of seniority, the proliferation of subcommittees, and the greater professionalization of congressional staffs increased the number of points of contact for anyone wishing to shape legislation. Rising partisan polarization in the wake of the civil rights struggles and ever-costlier campaigns after the legalization of PACs in the mid-1970s also created new opportunities for coalitions and alliances, particularly when ideologically oriented lobbyists doubled as vehicles for raising campaign cash around issues they or their clients supported. Although all interest groups took advantage of this new environment, corporations and trade associations increased their presence the most in real terms. In 1960, according to the Congressional Quarterly Almanac, 83 corporations employed Washington Representatives and 214 trade associations set up shop in the nation’s capital. In 1980, 3,000 corporations retained lobbyists and 1,153 trade associations worked for business interests.⁴⁰

During the twenty years that followed the economic crisis of the 1970s, the trend continued. Between 1981 and 1987, the number of registered lobbyists increased from 5,500 to 7,200; the number peaked at close to 15,000 in 2007 and declined to 12,389 in 2012. Moreover, the number of attorneys registered with the District of Columbia Bar Association doubled from 16,000 to 32,000 between 1972 and 1984, and reached approximately 80,000 in the 2000s.⁴¹ To be sure, these figures merely suggest a pattern—not all lawyers in Washington, D.C., work in politics, and many lawyers and lobbyists represent noncorporate interests, such as labor unions or environmental groups. Moreover, determining the exact number of “corporate lobbyists” with any precision is impossible. First, many lobbyists represent corporate clients as well as other entities, including unions, colleges, and civic organizations. Second, federal disclosure requirements—both under the Federal Regulation of Lobbying Act of 1946, which governed during the events examined in this book, and the 1995 Lobbying Disclosure Act—have historically been ambiguous. One journalist in 1982, for example, estimated that while 5,500 lobbyists registered with the government, more than 16,000 actually worked the halls of Congress. Counting lobbyists, in the past no less than in the present, is as fraught as determining their direct effect on policymakers.⁴²

Nonetheless, corporate lobbyists have always outnumbered those from other interest groups, and that gap grew wider in the years of business’s political mobilization. Beginning in 1977, a publishing company called Columbia Books and Information began compiling a comprehensive directory of all individual people who represented either themselves or someone else in national politics, including registered lobbyists as well as other influence peddlers. In addition to documenting the swelling ranks of lobbyists in general, this directory documents the growing importance of independent lobbying firms during the 1980s. In 1979, the editors counted approximately 500 law offices and public relations firms whose primary business could be characterized as lobbying. By 1990, 2,000 public relations consultants and another 2,000 attorneys represented corporate clients.⁴³

The rise of independent lobbying firms, particularly as trade associations and national business groups fractured and lost their collective clout, fundamentally reshaped corporate lobbying in the 1980s. Some of these “hired guns,” such as Charls Walker’s American Council for Capital Formation and its successor, Charls E. Walker Associates, adhered to an ideological agenda, taking on clients whose politics and goals matched those of its founders. Others represented all comers, from oil industry executives to the Girl Scouts. As such lobbying firms proliferated, so too did the “revolving door” through which former government officials either opened political consultancies on their own—as did Nixon/Ford veteran William Timmons and Carter policy advisor Stu Eizenstat—or went to work for others, trading on their years of experience with the personalities and peculiarities of Capitol Hill.⁴⁴

As with lobbyists in general, counting such firms is complicated by the fact that many euphemistically referred to themselves as public relations consultants or law firms, since the business of lobbying carried such a stigma. “My mother has never introduced me to her friends as ‘my son, the lobbyist,’ ” one lobbyist reportedly commented. “I can’t say I blame her. Being a lobbyist has long been synonymous in the minds of many Americans with being a glorified pimp.” Pimps or no, independent government relations firms embodied the new spirit of corporate lobbying by the end of the 1980s, outnumbering those lobbyists directly employed by specific companies and casting a long shadow over public impressions of lobbying itself.⁴⁵

In part, the rapid rise of professional lobbying outfits grew from structural changes in the operation of Congress, especially campaign financing. Between 1974 and 1982, the total amount of money spent by all candidates running for seats in the House and Senate increased fourfold, from $77 million to $343 million. The increased use of television ads and the growing number of hotly contested races, caused in large part by partisan realignment, explain a portion of the cost hike, but the most important reason was the massive influx of campaign contributions inaugurated by newly legal political action committees. With more money to spend, candidates—both incumbents and challengers—increasingly engaged in a type of arms race, where each election cycle seemed to cost more to win than the previous one. Although most large organizations, particularly pan-industry employers’ associations, concentrated on lobbying in lieu of campaign donations, entrepreneurial lobbyists discovered that they could prevail on their clients to increase donations to a variety of candidates, earning legislators’ gratitude and, with luck, cooperation in the process. Although social scientists argue about the actual effectiveness of this tactic, its logical appeal certainly encouraged large numbers of influence peddlers to give it a try.⁴⁶

At the same time, the eclipse of business groups by professional lobbyists also reflected the changing policy debates of the 1980s. Although a financial services company like American Express may have supported the Business Roundtable’s drive to reduce the national deficit, it hired Washington insider Robert Gray, a Harvard MBA holder and veteran of the Eisenhower administration, to reduce government surcharges on credit cards. The American Tobacco Institute may have agreed with Chamber of Commerce president Richard Lesher about the need to lower personal income tax rates, but it hired a specialist to help keep taxes on cigarettes down.⁴⁷ In an anxious world of fractured interests, conflicting policy visions, and high political stakes, looking out for one’s own proved a more appealing strategy than working collectively for a broader goal.

LOBBYING AMERICA

The politics of business certainly did not come to an end as Ronald Reagan’s presidency drew to a close, but the political terrain on which national employers’ groups had mobilized, united, and lobbied collectively during the economic crisis of the 1970s had shifted beyond recognition. The social, intellectual, and cultural dislocations of this “age of fracture” mirrored the anxieties that the new globalized and financialized world of modern capitalism stoked among corporate leaders. Moreover, many of the most galvanizing issues that had rallied the business community in the 1960s and 1970s had been settled. In some cases, the “business view” had triumphed. Full employment planning, price controls, and an active “industrial policy” all moldered in their graves. Meanwhile, organized labor staggered on, a shadow of its past self, and a deregulatory “market ethos” appeared to permeate political discourse. In other cases, the victory was incomplete: the national debt still appeared insurmountable at the end of the Reagan years, and business conservatives had accepted a negotiated peace on regulatory reform and the persistence of social regulations. Win or lose, though, by the early 1990s, such big-ticket ideological issues no longer dominated Washington politics. Instead, corporate lobbyists worked on small details and short-term benefits, finding that their most lucrative path lay in locating obscure tax code provisions and spending appropriations, where a tiny line of legislative text could have enormous repercussions for an individual company’s bottom line.

The shifting center of political gravity signaled the limitations of collective action by organized business groups, but their legacy loomed large. The economic travails of the 1970s affected the entire industrialized world, and the mobilization of American business groups provided a model for similar experiments in capitalist-class political action in many other countries. Japan, for example, experienced tremendous economic growth in the 1970s, despite relatively minor hiccups during the 1973 and 1979 oil crises. To the chagrin of Detroit-based automobile makers and other American manufacturers, Japan’s trade surplus with the United States widened steadily through the 1980s. Although the strength of Japan’s exports reflected the active support of its government, many Japanese business leaders saw the low-tax, antiregulatory policies of the Reagan years as an enviable model. In the 1980s and 1990s, its powerful business associations—especially the Keidanren (Federation of Economic Organizations)—began to supplant government agencies as the essential conduits of economic information between industry and policymakers and embrace a sharply conservative economic position on issues from taxes to regulation to the national budget. As Japanese business historian Miles Fletcher has argued, such rigid and well-organized insistence on that economic vision in fact inhibited a vigorous response to Japan’s severe economic recession and “lost decade” of the 1990s.⁴⁸

The mobilization of American corporate leaders also provided a model for European employers’ associations, which became increasingly engaged in a market-oriented political project in the 1980s and 1990s and often drew on the rhetorical and organizational strategies that American business leaders and their lobbyists pioneered. First founded in 1965, the Confederation of British Industry grew to include some 13,000 member companies and 200 trade associations by the mid-1980s—approximately the same size as the NAM—and distinguished itself as the unquestioned “voice of business” in negotiations with British government ministers. In 1983, the CEO of Swedish carmaker Volvo spearheaded the creation of the European Round Table of Industrialists, explicitly modeled on the Business Roundtable, which united European manufacturing executives to lobby various European governments on innovation and pro-competitive policies.⁴⁹

But the most significant legacy of the political mobilization of America’s business community played out at home. As the history of this movement illustrates, global responses to economic dislocations are inherently idiosyncratic. How the United States, Europe, and Japan responded to the crisis of the 1970s varied based on individual countries’ political traditions, institutions, and often the skills and motivations of leaders from its public, private, and intellectual sectors. In the United States, that response bore the clear stamp of the employers’ associations and large corporations whose leaders, often in tense collaboration with other conservative activists, pushed their economic vision on policymakers and the public. This historically unique level of coordination and collective action unfolded at a key juncture in the history of American and international political economy in which traditional alliances, priorities, and social visions all found themselves in a state of flux and the outcome was uncertain. The history of this movement belies the notion that the crisis of capitalistic growth in the late twentieth century would naturally lead to the triumph of market fundamentalism. Indeed, the ultimate fracture of the business coalition and the persistence of liberal institutions and ideas in the United States, however weakened, suggest that the triumph of neoliberalism has been exaggerated. Nonetheless, corporate leaders’ sustained campaign to “lobby America” reformulated the way Americans debate economic issues from taxes to workers’ rights and significantly reshaped the range of politically feasible policy options. So although their acute moment of coordinated activism has passed, business’s persistent political clout testifies to their lasting legacy.

APPENDIX 8.1: LEADERSHIP OF THE BUSINESS ROUNDTABLE, 1988

Source: Business Roundtable Report, June 1988.

Executive Committee

Chairman: Edmund Pratt, Pfizer

Co-Chairman: John Akers, IBM

Co-Chairman: James Lynn, Aetna

Co-Chairman: James Robinson, American Express

Policy Committee

Edward Addison, Southern Company

Howard Allen, Southern California Edison

Robert Allen, AT&T

Rand Araskog, IT&T

H. Brewster Atwater, General Mills

Norman Augustine, Lockheed Martin

Stephen Bechtel, Bechtel

William Boeschenstein, Owens-Corning Fiberglass

Edward Brennan, Sears

James Burke, Johnson & Johnson

Wayne Calloway, PepsiCo

Colby Chandler, Eastman Kodak

John Clendenin, Bell South

John Creedon, Met Life

Robert Daniell, United Technologies

Richard Gelb, Bristol-Myers

John Georges, International Paper

Marshall Hahn, Georgia Pacific

Robert Hanson, Deere

Philip Hawley, Hawley Carter Hale

Richard Heckert, DuPont

William Howell, J. C. Penney

Jerry Junkins, Texas Instruments

David Kearns, Xerox

Robert Kilpatrick, Cigna

Drew Lewis, Union Pacific

Richard Mahoney, Monsanto

Robert Malott, FMC

Hamish Maxwell, Philip Morris

John McGillicuddy, Manufacturers Hanover

Ruben Mettler, TRW

Richard Morrow, Amoco

Allen Murray, Mobil

Paul H. O’Neill, Alcoa

John Ong, BFGoodrich

Donald Petersen, Ford Motor Company

Lewis Preston, JP Morgan

Lawrence G. Rawl, Exxon

John S. Reed, Citi

David M. Roderick, U.S. Steel

Vincent Sarni, PPG

George Schaefer, Caterpillar

Frank Shrontz, Boeing

John Smale, Proctor and Gamble

Roger Smith, General Motors

Roy Vagelos, Merck

William Weiss, Ameritech

Jack Welch, General Electric

Henry Wendt, SmithKline

Walter Williams, Bethlehem Steel

Robert Winters, Prudential

John Young, Hewlett-Packard