Lobbying Behind the Auto Industry

Lobbying Behind the Auto Industry Financing and Restructuring Act

The objective of this work is to focus on the original bailout bill of the car companies America. The bill's name is the 'Auto Industry Financing and Restructuring Act' in what is an attempt to prove how the various interest groups, some that had been at odds with each other for most of their history came together in order to lobby congress in order to get this bill passed. Sources that will be examined include congressional testimony, campaign donations to political leaders and grass root efforts used to mobilize voters in order to get members of congress to support this bill. While some history and background of lobbying is needed a majority of this work will focus on the bill and the efforts to get this bill passed by these groups.

INTRODUCTION

The work of Thomas R. Dye entitled: "Interest Groups: Getting Their Share" states that interest groups are "organizations that seek to influence government policy. Where the electoral system is organized to represent geographically defined constituencies, the interest group system is organized to represent economic, professional, ideological, religious, racial, gender, and issue constituencies. Interest groups serve as a check on majoritarianism -- that is, they help counter the tendency of democratic governments to allow the faint preferences of the majority to prevail over the intense feelings of minorities. Interest groups seek special benefits for their members. The cost of these benefits is dispersed over all taxpayers, thereby concentrating benefits to the few while making the many pay for them. This process has the potential of leading to organizational sclerosis, which is when the burden of so many special benefits to interest groups lowers the general standard of living in society." (Dye, 2008)

Dye notes that it was noted by James Madison that the formation of interest groups began at the "outset of the republic" and that Madison made the observation that "the most common and durable source of factions have been the various and unequal distribution of property." (Dye, 2008)

In fact the major social movements in American history are stated to have all been "spawned by important interest groups" and that these include: "...the abolitionist movement prior to the Civil War, the formation of the NAACP in 1910, and the rise of large national trade unions in the 1930s. The women's suffrage movement led to the formation of the League of Women voters in the early twentieth century, and the feminist movement of the 1960s led to the formation of the National Organization for Women. Wars have also created interest groups, such as the American Legion and the Vietnam Veterans of America." (Dye, 2008)

I. OVERVIEW OF ORGANIZED INTEREST (PACS) IN WASHINGTON

Organized interests in Washington are stated to include those in the following categories: (1) Business and trade organizations; (2) professional associations; (3) organized labor; (4) Farm Organizations; (5) Women's Organizations; (6) religious groups; (7) Public interest groups; (8) single interest groups; (9) Ideological groups; and (10) government lobbies. (Dye, 2008)

The First Amendment to the U.S. Constitution guarantees the right to lobby in its citation which states that the right exists to "petition the government for a redress of grievances." (Dye, 2008)

The government however, can and does regulate lobbying. Lobbyists are required through the Regulation of Lobbying Act to "register and report what they spend" however, many of the lobbying groups have not ever registered.

The top ten rated lobbyists in terms of the power that they hold in Washington are stated by Dye to include those as follows: (1) American Association of Retired Persons; (2) American Israel Public Affairs Committee; (3) AFL-CIO; (4) National Federation of Independent Business; (5) Association of Trial Lawyers of America; (6) National Rifle Association of America; (7) Christian Coalition; (8) American Medical Association; (9) National Education Association; and (10) National Right to Life Committee. (Dye, 2008)

It is stated by Dye (2008) that lobbyists pursue a combination of the following seven general strategies as follows: (1) public relations; (2) access; (3) information; (4) Grass-roots mobilization; (5) protests and demonstration; (6) coalition building; and (7) campaign support. (Dye, 2008)

II. HR 7231 (2008)

HR 7321 was implemented by the 110th Congress 2D Session (2008) for the purpose of authorizing financial assistance to eligible automobile manufacturers, and for other purposes. This bill states that due to a "combination of factors, including errors in the business model of domestic automobile manufacturers, and emergency economic circumstances, has prevented the domestic automobile industry from securing credit from other sources, and has led to the possibility of the failure of the domestic automobile industry, which failure would have systemic adverse effect on the economy." (HR7213, 2008)

Because of this reason this bill states that action is to be taken and "in the form of financial aid to the domestic automobile industry is necessary to stabilize the economy." (HR7213, 2008)

The purpose of the bill includes those stated as follows: (1) to immediately provide authority and facilities to restore liquidity and stability to the domestic automobile industry in the United States; and; (2) to ensure that such authority and such facilities are used in a manner that (a) results in a viable and competitive domestic automobile industry that minimizes adverse effects on the environment; (b) enhances the ability and the capacity of the domestic automobile industry to pursue the timely and aggressive production of energy-efficient advanced technology vehicles; (c) preserves and promotes the jobs of American workers employed directly by the domestic automobile industry and in related industries; (d) safeguards the ability of the domestic automobile industry to provide retirement and health care benefits for the industry's retirees and their dependents; and (e) stimulates manufacturing and sales of automobiles produced by automobile manufacturers in the United States. It is related that the President would designated an individual who would be in charge and authorized to direct "the disbursement of bridge loans or enter into commitments for lines of credit to each automobile manufacturer that submitted a plan to the Congress on December 2, 2008. (HR7213, 2008)

II. INTEREST GROUP LOBBYING

Lobbyists gain access to policy makers through interest groups that develop ties with policy makers through making the provision of not only information and campaign funds but also votes and publicity as well as public research and education. Interest group advantages over individuals in terms of exerting influence includes having more time in which they can pursue special interests as well as the money and expertise to back their efforts which are of an ongoing nature. Interest groups additional are able to gain access to policy makers through areas such as entertainment use for support buildings among the constituents of policy makers and as well through hiring of lobbyists. The interest groups form political action committees (PACs) for the purpose of providing contributions for political campaigns.

Contributions of interest groups are stated by Dye (2008) to be channeled through political action committees (PACs) which are stated to have "originated in the labor movement as a way around laws prohibiting unions from contributing to elections." (Dye, 2008)

Corporations were encouraged to create their own PACs through the Federal Election Campaign Act of 1974 and since this time the PACS are stated to have "proliferated and now business PACs far outnumber labor PACS." (Dye, 2008)

The Federal Election Commission (FED) is charged with regulating PACs and therefore makes it a requirement that the PACs "register and report their finances and political contributions." (Dye, 2008)

Interest groups not only lobby congress but as well these groups attempt to exert influence upon governmental departments and agencies." (Dye, 2008)

There is a large level of competition among interest groups and this is stated to many times lead to "policy networks, in which influence is associated with a complex and sometimes countervailing interaction in a common policy areas among lobbyists, elected officials, staff personnel, bureaucrats, journalists and private-sector experts." (Dye, 2008)

Dye states that there is a "pattern of revolving doors by which members of a policy network switch jobs among federal agencies, legislative staff and private industry interest groups in a practice which raises conflict-of-interest issues." (Dye, 2008)

Interest groups also seek to exert influence upon the judicial system which can be accomplished through filing of amicus curia (friend of the court) briefs which serve to "help bolster court cases in which a group is interested." (Dye, 2008)

The work of Tripathi, Ansolabehere and Snyder (2002) entitled: "Are PACT Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act" reports having conducted a study using the 1995 Lobby Disclosure Act data for assessing the argument "that PAC contributions are used to gain access to legislators" and states that findings show that there is a "much stronger connection between lobbying and campaign contributions than previous statistical research has revealed -- groups that have both a lobbyist and a PAC account for 70% of all interest group expenditures and 86% of all PAC contributions." (Tripathi, Ansolabehere, and Snyder, 2002)

Findings also show that "groups that engage in relatively large amounts of lobbying -- and therefore presumably have a high demand for access -- allocate their campaign contributions differently than groups who do not." (Tripathi, Ansolabehere, and Snyder, 2002)

Additionally, groups that place emphasis on lobbying tend to may more attention to the position of power that members hold inside Congress and pay less attention to the electoral circumstances of member than do other groups and as well groups that place emphasis on lobbying "also appear to be more bipartisan and less ideological than other groups, giving more equally to both parties and more broadly across the ideological spectrum." (Tripathi, Ansolabehere, and Snyder, 2002)

It was reported on December 11th 2008 in the work entitled: "Auto Industry Bailout: House Members Voting 'Yes' Received 65% More from Auto Industry Interest Groups than those Voting 'No'" that research had revealed that "over the past five years (January 2003-October 2008) auto manufacturers, auto dealers and labor unions gave an average of $74,100 in campaign contributions to each Representative voting in favor of the auto bailout, compared with an average of $45, 015 to each Representative voting against the bailout -- 65% more money, on average, given to those who voted Yes." (MapLight, 2008)

This analysis is state to have been inclusive of contributions provided by auto manufacturers and dealers, auto-related industries and labor unions, all groups that have expressed their support for this bill passing.

The executive director of MapLight, Daniel Newman, is noted as having stated "Big-money interest groups investing in political influence see sky-high returns while 'we the people' foot the bill. Votes in Congress once again align with the river of money that flows through our broken political system." (MapLight, 2008)

It is related that House Democrats "voting overwhelming in favor of this bill, 205 voting 'Yes' and 20 voting 'No'" while 11 did not vote. According to MapLight's report the Democrats that voted 'Yes' were on the receiving end of $74,846 each and this is approximately 19% more than those who voted 'No' had received which was stated an approximately $63,140. MapLight additionally reports that House Republicans were "more divided on this bill, 32 voting Yes and 150 voting No (16 not voting)." (2008) Republicans voting Yes are reported to have received approximately $69,323 each which is approximately 63% more received than those who voted No and who received approximately $42,598 each.

Figure 1

Average $ Give to Each Legislator and How Votes Total

House Members (All)

voted Yes

74,100

voted No

45,015

House Democrats

voted Yes

74,846

voted No

63,140

House Republicans

voted Yes

69,323

voted No

42,598

Source: MapLight (2008)

Figure 2

Average $ Give to Each Member

Voting Yes

Voting No

All interests in support

74,100

45,015

Labor unions

48,193

6,607

Auto dealers

15,297

30,243

Auto manufacturers

7,417

4,321

Truck/auto parts

2,673

2,813

Manufacturing trade groups

Source: MapLight (2008)

Over the past two years the largest three auto firms are stated to have spent $48,338,099 on lobbying according to the Center for Responsive Politics.

Figure 3

Money Spent on Lobbying

Lobbying $

General Motors

24,061,000

Ford

12,894,000

Daimler/Chrysler

12,383,0000

Source: MapLight (2008)

Figure 4

Top Ten Recipients Funded by Manufacturing Unions

Recipient

Amount

John Kerry

$39,400

Nancy Pelosi

$28,500

Christopher Van Hollen

$23,700

Ciro Rodriguez

$22,500

Steny Hoyer

$22,500

Baron Hill

$22,300

John Barrow

$21,500

R. Miller

$20,000

Thomas Edwards

$19,000

Stephanie Herseth Sandlin

Source: MapLight (2008)

Figure 5

Top Ten Recipients Funded by Auto Manufacturers

Recipient

Amount

John Dingell

$276,600

Carl Levin

$123,499

Debbie Ann Stabenow

$83,950

Frederick Upton

$80,300

John McCain

$79,282

Michael Rogers

$75,850

Sander Levin

$69,550

Carolyn Kilpatrick

$66,150

David Camp

$64,250

John Kerry

$62,500

Source: MapLight (2008)

Figure 6

Top Ten Recipients Funded by Truck/Automotive Parts and Accessories

Recipient

Amount

John McCain

$117,371

Bob Corker

$47,960

George Voinovich

$44,150

John Dingell

$41,050

Christopher Bond

$39,950

Debbie Ann Stabenow

$37,250

Mike Pence

$35,910

Frank Pallone

$33,600

Michael Turner

$30,200

Lamar Alexander

$28,500

Source: MapLight (2008)

Figure 7

Top Ten Recipients Funded by Auto Dealers (New & Used)

Recipient

Amount

John McCain

$601,633

Vern Buchanan

$190,500

Mel Martinez

$152,350

John Cornyn

$132,091

John Kerry

$112,184

Bob Corker

$111,650

Jon Kyl

$101,050

John Thune

$97,948

Eric Cantor

$92,600

Kay Hutchison

$91,993

Source: MapLight (2008)

Figure 8

Top Ten Recipients Funded -- Fiscal and Tax Policy

Recipient

Amount

Michele Bachmann

$21,200

Erik Paulsen

$20,700

John Kerry

$6,750

John Ensign

$6,000

John Kline

$5,600

Jon Kyl

$5,400

Mike Pence

$5,000

Adam Smith

$5,000

Saxby Chambliss

$5,000

Bob Corker

$5,000

Source: MapLight (2008)

The work of Kenneth M. Goldstein entitled: "Interest Groups, Lobbying and Participation in America" (1999) relates that legislation was introduced in 1982 by Senator Bob Dole and Representative Dan Rostenkowski for withholding taxes on interest from bank accounts and dividends from securities however those who support this bill stated that the majority of other types of income were subject to withholding already and that the effect of this specific legislation would be to place a major tax loophole and "tap a notorious source of unreported income." (Goldstein, 1999)

This bill was passed easily in the Senate, which was Republican-controlled and the House which was controlled by Democrats and was to take place within a year's time. However, the banking industry fearing the cost of enforcing this particular law is stated to have "dropped the hydrogen bomb of modern day lobbying, an effort whose firepower was awesome, whose carnage was staggering. In one fell swoop down went the chairman of the Senate Finance Committee, down went the chairman of the House Ways and Means Committee, down went the Secretary of the Treasury, down went the present of the United States. Led by the American Bankers Association (ABA) and the U.S. League of Savings, the banking industry used newspaper advertisements, posters in branches, and most importantly, inserts in the monthly statements typically sent to all customers to encourage people to contact Congress in opposition to the new law. The effort, orchestrated by the Chicago advertising and public relations firm of Leo Burnett and Company, deluged Congress with more than twenty-two million constituent communications. Weeks later the House (382 to 41) and the Senate (94 to 5) reversed themselves and overwhelming repealed the withholding on interest and dividend income earned by individuals." (Goldstein, 1999)

This case is stated to illustrate how it is that "grass roots lobbying can be an effective tool for lobbyist to convey information." (Goldstein, 1999) Moreover, this case illustrates how legislators are signaled on the "electoral consequences of their actions and provides information to constituents that may reframe and issue and possibly change a mass opinion." (Goldstein, 1999)

The work entitled: "Biggest PAC Contributors Boost Spending" (2009) states that the "...corporations, unions and trade associations that represented the top 20 PAC contributors to federal candidates from both major parties last year poured a combined $22 million into lobbying efforts from January through March -- an increase of nearly 20% over the same period in 2008." (National Journal, 2009)

It is related that high-stakes legislation with the intent to "calm the roiling American economy and a proposed change to labor laws prompted the nation's most generous political contributors to redouble efforts to lobby the lawmakers whose elections they helped to finance" according to a CongressDaily analysis of the lobbying disclosure filings of the first quarter of 2009. This information is shown in the following chart.