The Chamber of Litigation – part 2
Examining the U.S. Chamber of Commerce’s involvement in
some of the most notorious civil cases of the last decade.
The Chamber of Litigation – part 1
Despite condemning civil lawsuits, the U.S. Chamber of Commerce is
itself a prodigious litigator.
The Gilded Chamber
Bigger, Richer, and (Still) Undisclosed.
Sacrificing the Pawns
How the U.S. Chamber of Commerce Recruits Small
Business Owners to Lobby Against Their Own Self-Interest.
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In our first update on the U.S. Chamber of Commerce’s elections spending in late March, we issued a Chamber of Commerce weather forecast for Capitol Hill: make it rain. Well three weeks later, its flood of campaign spending has continued unabated.
In a mere three weeks, the Chamber dropped an additional $1.7 million on elections spending, bringing its total so far for the 2016 election cycle to more than $5.4 million. This total has pushed it up one place on the list of largest outside spenders to the number eleven spot. It remains the largest outside spender on congressional races and remains the largest outside spender that does not disclose any information about its donors. That’s right, voters have no way of knowing who is behind the deluge of Chamber-funded ads supporting or opposing House and Senate candidates in the nine states in which it has so far been active.
So where has the Chamber been making it rain since we last checked in? The Chamber has flooded the Indiana airwaves with $1 million on behalf of Republican Senate candidate Todd Young. And the Chamber has continued to drown the Ohio airwaves with another $700,000 in spending against Democratic Senate candidate Ted Strickland, bringing the total amount the Chamber has spent against Strickland to just shy of $1.3 million.
The Chamber’s latest shower of money follows its already established pattern of hyper-partisanship. It has still not spent a single cent opposing a Republican candidate or supporting a Democratic candidate. Now some might be tempted to interject that it’s only logical that the Chamber would support Republican candidates since the Republican Party supposedly represents the best interests of business and the Democratic Party doesn’t. This of course would be wrong.
A recent summary of opinion polling reveals that business leaders actually support many Democratic policy proposals, including raising the minimum wage, paid sick leave, and predictive scheduling for employees. And contrary to what the Chamber would have you believe, replacing the Affordable Care Act (ACA) was not as high on business leaders’ list of priorities as was simply keeping healthcare costs low for families. So if business leaders themselves hold nuanced views about policy and indeed support many progressive policy proposals, why then does the Chamber only spend money to help Republican candidates get elected?
The Chamber’s one-sided, overly partisan election spending suggest that instead of representing all American businesses as it claims, the Chamber actually represents the narrow interests of a few industries. Its unwavering opposition to the ACA does not reflect a business consensus to this effect but rather reflects the priorities of the health insurance industry, which reportedly has given the Chamber more than $86 million to oppose the ACA. Similarly, its opposition to an increase in the minimum wage may reflect the opposition of the fast food and retail industries, both of which employ millions of low wage workers. And of course the Chamber’s opposition to legislative and regulatory efforts to fight climate change may be explained by the influence of the fossil fuel industry.
Lost in the Chamber’s flood of partisan political spending are the more nuanced views of the majority of business executives. Likewise, the Chamber’s hyper-partisan outlook also ignores the priorities of small business, green energy, sustainable business, and a whole host of other sectors.
One often hears that April showers bring May flowers, but unfortunately in this case, the Chamber’s torrent of election spending, should it succeed in getting its preferred candidates elected, will only bring about policies that not only hurt everyday Americans, but also run counter the policy priorities of a majority of business leaders. Unfortunately, the weather forecast for Capitol Hill is unlikely to change before the election; the Chamber will continue to make it rain, in the hope that it will be able to drown out the voices of average Americans, and even many of the business leaders it claims to represent.
Last time, I wrote about how the U.S. Chamber of Commerce’s arguments in favor of forced arbitration fell apart during a U.S. Senate Banking Committee hearing on the Consumer Financial Protection Bureau(CFPB). And this, despite the fact that the hearing was actually more akin to a show trial, stacked with witnesses opposed to the CFPB.
As I pointed out, there’s something very inconsistent and illogical about defending forced arbitration while simultaneously (and erroneously) claiming that arbitration provides better outcomes for consumers. But not only is the Chamber’s argument internally inconsistent, it’s also completely inconsistent with the “free market” economic theory that the Chamber claims to champion.
In order to better understand what I’m getting at here, let’s take a journey back to Economics 101. Free Market economic theory is based upon the assumption of individual rational actors, that is, consumers, workers, managers, and investors who each act in their own individual best interests. Indeed, Adam Smith, the founder of free market economic theory, relied on the concept of individual rational actors as the basis for his famous invisible hand metaphor, beloved by capitalists the world over.
If one accepts free market economic theory, as the Chamber claims to do, then consumers are rational actors, and as rational actors, they would therefore choose arbitration over the court system if arbitration were actually better for them. But the Chamber is defending forced arbitration, suggesting that it actually believes that either consumers aren’t rational or that arbitration isn’t actually a better option for them.
The Chamber’s defense of forced arbitration puts it in a tough spot. While the Chamber likes to think of itself as an avatar of American free market capitalism, its defense of forced arbitration runs counter to the foundations of the very free market economic theory it claims to cherish. In short, it finds itself confronted with the following dilemma: either commit heresy against the gospel of capitalism or admit that forced arbitration is in the best interests of Corporate America and the Big Banks and not of consumers whose power of choice it eliminates.
It is all too fitting that the Chamber appears to have strayed from its faith in free market economic theory at a show trial masquerading as a hearing. Show trials were of course one of the hallmarks of Soviet communist rule, so what better occasion to break from capitalist orthodoxy? As for which the Chamber ultimately renounces—capitalism or the Big Banks that have been pushing forced arbitration on their customers—the smart money says never bet against the banks.
On Tuesday, the Senate Banking Committee held a hearing that was ostensibly supposed to “assess the effects of consumer finance regulations.” Unfortunately, instead of actually attempting to assess the effects of these regulations, the committee’s Republican leadership seemed far more interested in conducting a show trial of the Consumer Financial Protection Bureau (CFPB), the agency created in the aftermath of the regulatory failures that allowed the 2008 financial crisis to occur.
Even a show trial needs a few witnesses, and the leadership obliged, putting together a panel of four witnesses, three of whom represented the interests of the financial services sector, whose predatory lending practices and rampant speculation caused the financial crisis and whose consumer credit activities are now regulated by the CFPB. Big banks, predatory payday lenders, credit card issuers, and mortgage lenders don’t particularly like the CFPB because it has drastically curtailed shady and dishonest practices in the industry, in the process saving consumers $20 billion in credit card fees alone.
True to form, the three banking industry witnesses all denounced the CFPB. First up was Leonard Chanin, once an official at the Federal Reserve and now a poster boy for the revolving door in his role as counsel to banks at a large corporate law firm. Mr. Chanin might best be qualified as a see no evil, hear no evil witness, since he claimed that the Federal Reserve had no warning of the subprime mortgage crisis. This prompted an incredulous Senator Elizabeth Warren (D-Mass.) to ask if he had his “eyes stitched shut.”
Last to testify was Todd Zywicki, a law professor at George Mason University which, quelle surprise, just happens to receive tens of millions of dollars from the Koch brothers. Even more troubling was Mr. Zywicki’s testimony that he doesn’t represent the banks’ interests, despite working as a director at a consultancy that has done major work for Visa, Bank of America, and Citigroup. Such a blatant conflict of interest does little to inspire confidence in the reliability of Mr. Zywicki’s testimony.
And then of course in the middle there was David Hirschmann, president of the U.S. Chamber of Commerce’s Center for Capital Market Competitiveness. The Chamber has a long history of doing the Big Banks’ dirty work for them, and indeed was central to the lobbying campaign to kill the Dodd-Frank Wall Street Reform Act. Six years may have passed since the passage of Dodd-Frank, but the Chamber still has it out for the CFPB, whose creation was a signature achievement of Dodd-Frank.
Central to Mr. Hirschmann’s testimony was an attack on an expected CFPB rulemaking seeking to limit the use of forced arbitration in contracts for consumer lending products. Forced arbitration is commonly found in contracts for credit cards, bank accounts, and other consumer financial products. If an individual becomes involved in a dispute with her bank, forced arbitration prevents her from being able to bring the dispute before our court system, where it would be heard by a neutral judge and jury. Instead, the dispute must be heard by an arbitrator, who is often chosen by the bank.
Interestingly, Mr. Hirschmann’s written testimony to the Banking Committee begins with a paean to choice. He writes, “Choice empowers consumers” and argues that consumers should be allowed “to make their own decisions, based on accurate, understandable information and free from government dictates.”
And yet providing consumers with choice is exactly what any CFPB rulemaking limiting the use of forced arbitration would likely do. Forced arbitration doesn’t provide consumers with choice; by definition, it denies them a choice. Forced arbitration is itself an industry dictate, it’s by definition forced. So what are we to make of Mr. Hirschmann’s testimony? That choice is good for consumers unless the Big Banks decide it isn’t? That dictates are bad if they come from government, but perfectly fine if they come from industry?
But wait—there’s more.
Mr. Hirschmann spent much of his testimony arguing that arbitration actually provides better outcomes for consumers than does the court system. But if this were true, then why would the Big Banks insist on forced arbitration? Why not let the consumer decide? Perhaps the Chamber is fearful that if consumers—who are both individuals and small businesses—actually did have a choice between the court system and arbitration, many would choose the court system because the court system often provides better outcomes for consumers than does arbitration, as found by a CFPB study comparing the two fora.
While show trials aren’t designed to uncover the truth, as the truth is rarely what interests those who hold them, yesterday’s show trial against the CFPB at least had the merit of exposing the serious logical flaws and internal inconsistencies in the Chamber’s defense of forced arbitration. The Republican leadership may have already determined that the CFPB is guilty; unfortunately for them, their show trial instead proved that the Chamber is incapable of coming up with a serious defense of forced arbitration.
With the presidential campaign dominating the airwaves, social media feeds, and dinner table conversations across America, it’s easy to forget that there’s another equally important election taking place this November: the race for control of Congress.
You can be sure that the United States Chamber of Commerce has not forgotten. On Wednesday, the Chamber’s chief political strategist told the Washington Post “We think early money sets the terms of the debate, and we’re gearing up” in reference to the Chamber’s plans to spend heavily on Senate races. The Chamber has already been showering hundreds of thousands of dollars on several Republican senate candidates. Mark Kirk (R-IL) and Pete Toomey (R-PA) have each benefited from over $500,000 in Chamber spending. And Rob Portman (R-OH) has benefited as the Chamber has spent more than $500,000 against his opponent, Ted Strickland (D-OH). Joe Heck, Republican candidate for Senate in Nevada has benefited from over $400,000 in Chamber spending while Senators John McCain (R-AZ) and Kelly Ayotte (R-NH) have seen the Chamber spend over $350,000 each to promote their reelection bids. Previous reports indicate that the Chamber may shell out a total of $100 million on elections spending in 2016.
With the first quarter of 2016 drawing to a close, Public Citizen’s Chamber Watch decided to look and see how much the Chamber had spent on election campaigns so far this year, and how it stacked up compared to other outside spending groups. Thus far, the Chamber has spent almost $3.7 million. That places it in twelfth place on the list of largest outside spenders, made up largely of Super PACs and 504(c)(4) organizations. These organizations may accept unlimited donations, but are technically not allowed to coordinate with the official campaigns of the candidates they support. However, the list is dominated by groups supporting or opposing specific presidential candidates, and if you remove these groups focused on the Presidential election, the Chamber rises to first place on the list.
The Chamber also stands out in that it is by far the largest outside spender that does not disclose any of its donors. In other words, the Chamber’s election spending is 100% secret money. Indeed, of the top 25 outside spenders, only one other group, the Koch brothers-affiliated and Orwellian-named Americans for Prosperity, does not disclose any of its donors.
When we take a look at the money going out the doors in term of the Chamber’s election spending (since we can’t look at what is coming in), it reveals a hyper partisanship, in contrast to claims to the contrary. Thus far this year, the Chamber has spent $2.9 million in support of Republican candidates, more than $500,000 against Democratic candidates, and precisely $0 in favor of Democratic candidates or against Republican candidates.
Such lopsided spending might surprise the millions of businesspeople who don’t see public policy in starkly partisan terms. But it shouldn’t come as a surprise to those who’ve studied the Chamber under its current president, Tom Donohue. Donohue has turned what was once a non-partisan organization into a fiercely partisan lobbying, litigation, and elections spending behemoth. While the Chamber might claim to represent the interests of all American businesses and indeed the American economy as a whole, the reality is that the Chamber is essentially a hired gun, lobbying for the interests of its biggest contributors. That’s likely one of the reasons why the Chamber has consistently opposed legislative and regulatory efforts to combat climate change. And that’s probably why the Chamber has fought tooth and nail against the passage and implementation of the Dodd-Frank Wall Street Reform Act, even after the financial crisis exposed the need for the reforms included in it.
The 2016 congressional races are just starting to heat up, and the vast majority of election spending for these races will come in the fall. The flow of undisclosed money through the Chamber is therefore likely to accelerate. While Washington’s heaviest downpours usually take place during summer thunderstorms, this year, as in past election years, the Chamber is likely to let loose torrents of secret money to elect its favorite senators and congresspeople this fall. The Chamber of Commerce weather forecast for Capitol Hill can be summed up in three words: make it rain.
By Rick Claypool, Research Director for Public Citizen’s President’s Office
Local elected officials across the U.S. are facing fierce opposition when the interests of their constituents come in conflict with the demands of ride-hailing corporations like Uber and Lyft.
In cities like Austin, Texas, and Boston, Mass., much of the conflict stems from efforts to require rideshare drivers and taxi drivers to follow the same background check requirements, especially fingerprinting. Since the deadly shootings by an Uber driver in Kalamazoo, Mich., these conflicts have sharpened. In New York City, the conflict is over traffic.
In Seattle, Wash., the point of contention is an ordinance passed unanimously by the city council in December last year recognizing drivers’ right to organize and form a union. Uber – a corporation with an estimated value of $50-70 billion – is engaging in aggressive tactics to stop drivers from forming a union.
Now the always chivalrous U.S. Chamber of Commerce has rushed in to assist this corporation in distress by suing the city of Seattle. The Chamber’s lawsuit seeks to block the ordinance from implementation and a declaration of the ordnance as unlawful, hence voiding any possible enforcement.
As an act of sabotage against local democracy by the biggest bully working on Big Business’ behalf in Washinton, D.C., it’s stunning. As an act of hypocrisy – considering the Chamber’s claims to represent the interests of small businesses – it’s absolutely breathtaking.
Ride-hailing companies, insist on classifying drivers as “independent contractors,” not employees. It’s a policy Uber has defended repeatedly before judges and regulators. It will have ample opportunity to keep making its case. Last year, it lost before the California Labor Commission – and it now faces a class action lawsuit from drivers seeking reclassification as employees.
Uber touts the “freedom” and “flexibility” it provides its drivers – who it calls “partners” – with significant exceptions, such as the company’s authority to set rates and “deactivate” (i.e., fire) drivers.
So Uber clearly prefers some freedoms to others. In Seattle, instead of embracing a policy such as the one passed by democratically elected lawmakers, which gives the drivers the right to choose whether to organize or not, the corporation would prefer that their “independent contractors” not have a choice.
The Chamber, meanwhile, is no stranger to lobbying against the interests of workers under the banner of “freedom.” What’s interesting in this instance is that Uber and the Chamber argue that the workers in question are independent contractors. If so, that makes them the smallest of small businesses. The Chamber lawsuit is based on the notion that these small businesses are impermissibly joining together to bargain with the giant company Uber.
If the drivers are independent contractors, the Chamber and Uber’s argument asserts that they should be in competition with each other, not working together to secure a better deal for themselves.
If the Chamber truly believes these drivers are independent contractors, than this is an instance of the Chamber taking action directly against the interests of the smallest of small businesses and on behalf of Uber, a multibillion-dollar goliath that one would expect to be able to fight its own battles.
The lawsuit makes it all too clear where the U.S. Chamber of Commerce and Uber stand when the perceived interests of powerful corporations are pitted against workers, small businesses and local governments. And it provides a case study of how Corporate America responds when faced with democratic action that prioritizes the freedom and wellbeing of real people over unchecked greed.
Despite the Chamber’s small business PR efforts, the Chamber siding with Big Business should not surprise anyone. After all, most of the Chamber’s funding comes from a handful of large corporations that have much more in common with Uber than its drivers.
Every day when news pundits discuss the election, they say the public is angry. With conflicts such as this between profits and people playing out across the country, no one should be wondering why.