Obama's Risky Fight Against the Chamber of Commerce

Hoping to stir his Democratic base, President Obama picks a fight with the Chamber of Commerce over its massive advertising campaign ahead of the midterm elections

By Michael Crowley Thursday, Oct. 14, 2010
    • From left: Charles Dharapak / AP; Jeremy Piper / Bloomberg / Getty Images

    President Obama, left, and U.S. Chamber of Commerce president Tom Donohue

    It's no great mystery what Barack Obama was doing when he accused the U.S. Chamber of Commerce of directing funds collected from overseas to a massive advertising campaign designed to shape the fall congressional elections. He wanted to remind voters that a powerful arm of corporate America is determined to derail some of the biggest elements of his domestic agenda. But he was also desperate to find some issue — even a contrived one — to inspire his cranky liberal base and avert a wipeout that could wreck the remainder of his term.

    The battle over supposed foreign money began Oct. 7, when Obama railed in public against the independent conservative groups that are spending hundreds of millions of dollars on advertising to defeat Democratic candidates this fall. "Just this week, we learned that one of the largest groups paying for these ads regularly takes in money from foreign corporations," Obama said. He named his source: the blog of a liberal think tank, which charged that funds collected by the chamber from foreign sources, including overseas chapters in places like Bahrain and India, flow into its political-action account, which will lay out up to $75 million opposing Democrats this season.

    And with that, the liberal-Democratic machine sprang into action. The Democratic National Committee quickly produced an advertisement attacking the chamber as "shills for Big Business" who, "it appears," have "taken secret foreign money." Congressional Democrats piled on in public statements, and the grass-roots network MoveOn.org urged the Justice Department to investigate.

    So are the real forces behind the 2010 midterms Middle Eastern oil companies and communist cash? Not quite. The chamber categorically denies the accusation, saying it spends "zero ... not a single cent" of foreign funds on its U.S. political activities. And media organizations found no evidence to the contrary: the nonpartisan FactCheck.org , for instance, called it "an unproven claim." When CBS News' Bob Schieffer pressed White House aide David Axelrod on whether he had evidence the chamber was spending significant amounts of foreign money on campaigns, Axelrod replied, "Do you have any evidence that it's not?" Schieffer then asked if a shaky charge of foreign influence three weeks before the election was the best he could do.

    It was, apparently, and so the White House quickly revised its argument. The real issue, Obama officials said, wasn't the question of foreign money per se — but anonymity. (The chamber claims 300,000 members nationwide, including a "handful" of non-U.S.-based companies, but does not disclose their names.) "The larger discussion is on disclosing who these donors are," White House press secretary Robert Gibbs said on Oct. 12. But the White House is well aware that the chamber — which as a tax-exempt advocacy organization does not have to reveal its donors — will never do so voluntarily. Such calls, says the chamber's executive vice president for government affairs, R. Bruce Josten, amount to an attempt to intimidate donors with the implicit threat of boycotts and harassment. And that defeats the chamber's political purpose, according to one of its former lobbyists. "Businesses don't want to be in political squabbles," he says. "The chamber will throw the punches and take the heat [for them]."

    So what's the White House really after? Payback. Last year the chamber spent $144 million on lobbying, much of it focused on blocking Obama's core agenda. The chamber opposed Obama's health care plan in Congress (and also ran thousands of ads against it, according to Josten). It opposed Obama's Wall Street regulatory-reform plan so intensely — saying it "will silence the heartbeat of our economy" — that it has vowed to challenge the law in the courts. And the chamber strongly opposed a House version of the Administration's plan to slow climate change, another top Obama priority. One chamber executive even called for a "Scopes monkey trial of the 21st century" to re-examine the science behind climate change (a position the chamber later disavowed).

    It's also true that the chamber has grown more aggressive in recent years under its combative president, Tom Donohue, the former head of the powerful trucking industry's trade association. Over the past decade, Donohue has turned the chamber from "a sleepy little association that focused on business development and dabbled in politics," in the words of the former chamber lobbyist, into a national political player. The chamber's campaign budget has soared from $25 million in 2006 to the $75 million it has allocated for 2010.

    That has allowed the chamber to barrage mostly Democratic candidates from coast to coast — particularly in several key Senate races. It has run at least $1 million worth of ads against Florida Governor Charlie Crist, including one ridiculing his recent shift from Republican to independent. In Pennsylvania the chamber has bashed Democrat Joe Sestak for supporting "a Washington takeover of health care" in Congress and having "voted with [Nancy] Pelosi 100% of the time." In Colorado a chamber ad slams Democrat Michael Bennet for being the "critical" vote in health care's passage and claims that the law will limit patient access to doctors. And California Democratic Senator Barbara Boxer is "making America less competitive and driving away California jobs." There are also major ad buys in Kentucky and New Hampshire — plus the more than $1 million the chamber spent helping elect the GOP's Scott Brown of Massachusetts to the Senate in January.

    The ads are particularly effective, Democrats say, because most voters associate the chamber with the mom-and-pop Main Street businesses in their hometowns. A chamber endorsement "is like the Good Housekeeping seal of approval," says one senior House Democratic aide. That sets it apart from the slew of new and blandly named conservative groups (Crossroads GPS, American Action Network) that have sprung up this election season in the wake of the Supreme Court's Citizens United decision in January, which struck down laws restricting corporate and union expenditures on political advertising and, according to campaign-finance experts, made corporations more comfortable about political spending.

    Compounding Democrats' frustration is that several of the chamber's ads have flunked fact-checking tests. Voters might be less swayed by the chamber's message if they knew that those ads were being funded by big donations from corporations with special interests on Capitol Hill. (A Los Angeles Times examination of tax records found that one-third of the chamber's 2008 revenue came from just 19 companies or individuals who gave between $1 million and $15 million each.)

    But what's really inspiring the White House assault may be less obvious: turning out the Democratic base. For weeks, Obama has been warning disaffected Democrats that not voting on Nov. 2 will ensure Republican gains likely to squelch the liberal agenda. Obama's 2008 campaign manager, David Plouffe, says Democrats are showing signs of an enthusiasm surge. Others are more skeptical of the chamber bashing. "It's pretty thin stuff," says one Democratic strategist. But with few popular achievements to brag about before the election, invoking the specter of secret corporate money might be Obama's last, best hope of showing liberals that he's made the right enemies — maybe not abroad but certainly at home.