CAN BUSINESS WIN IN WASHINGTON? Yes, but it's increasingly on the defensive against environmentalists, consumer advocates, and resurgent regulators. Its main weapon: high-tech grass-roots lobbying.
By Robert E. Norton REPORTER ASSOCIATE Suneel Ratan

(FORTUNE Magazine) – WHY IS THIS MAN smiling? Well, one reason is that taxes are going up and the federal budget deficit is going down. As the new head of the Business Roundtable, Union Pacific CEO Drew Lewis, 59, lobbied Congress energetically and effectively on behalf of the recent budget deal. Joining Lewis were more than 50 of the 200 big company CEOs who make up the Roundtable's membership -- among them Jack Welch of GE, James Lynn of Aetna, and John Akers of IBM. Says Lewis: ''Even though everyone's ox got gored a little bit, we felt that deficit reduction, which we think will bring about increased capital investment and lower interest rates, is more important than any single issue.'' Score one, then, for a group that after establishing itself as the voice of business in Washington in the 1970s, found itself pushed to the sidelines during much of the past decade. But where Ronald Reagan relied instinctively on markets, George Bush looks to government for solutions. Where Reagan often stood his ideological ground and refused to deal, Bush's impulse is to compromise. In this political climate, no wonder the moderates of the Business Roundtable have reemerged as a force to be reckoned with. Among the business organizations that were ascendant in the 1980s, however, the mood is decidedly glum. The U.S. Chamber of Commerce, which played the part of a shock troop regiment for the Reagan revolution, opposed the deficit deal from the start, calling it a prescription for ''lost job opportunities and human misery.'' The powerful National Association of Wholesaler- Distributors, which helped lead the fight for tax reform in 1986, was willing to live with the original budget package that the Bush team negotiated at Andrews Air Force Base. But once Congress killed that plan and Bush's lips moved in favor of higher income tax rates for the wealthy, this band of taxophobic entrepreneurs fought the deal too. What both sides of business's ideological divide agree on is that even tougher times lie ahead. After a dozen years in the wilderness, the traditional foes of business -- environmentalists, labor groups, and Naderite consumer advocates -- are dusting off their legislative agendas. Emboldened by their recent electoral gains, the Democrats in Congress are on the march as well. In the 1990s, Washington will echo with calls for tougher environmental laws, more regulation, new mandated employee benefits, and still more taxes, including higher corporate taxes. Says Dirk Van Dongen, 47, president of the wholesalers' group: ''Having tasted blood in the budget deal, the Democrats are going to come back for more.'' How will business fare in this more hostile environment? Perhaps not as badly as the pessimists think. For over a dozen years, industry groups, trade associations, and corporations have been steadily perfecting and upgrading their lobbying technology and strategy. That up-to-date arsenal, which contributed mightily to some of Ronald Reagan's policy offensives in the early 1980s, should prove no less powerful in future policy battles that are likely to be more defensive in nature. THE STEREOTYPICAL lobbyist of yesteryear -- the pinkie-ringed purveyor of booze, broads, and bribes -- wouldn't know what to make of today's technocrats. Oh, sure, now as then, big names still scoop up bucketloads of fees and retainers. Among them: Tommy Boggs of the law firm Patton Boggs & Blow; Tom Korologos, president of Timmons & Co.; tax lobbyist Charls Walker; and Robert Strauss, the former chairman of the Democratic National Committee and a partner with the law firm Akin Gump Strauss Hauer & Feld. Of the capital's roughly 12,500 professional lobbyists, these are the top guns. Most are former legislators or White House staff members who, as one Administration official puts it, ''have been around, tell it like it is, and have proved they're not going to burn anyone.'' But what really matters, legislators and lobbyists agree, is support from what the folks inside the Beltway like to call ''the grass roots.'' For businesses, the technique of enlisting corporate employees, suppliers, customers, and other friendly citizens to lobby their Congressmen -- through the mail, on the telephone, or in person -- has evolved since the late 1970s from blunt instrument to finely calibrated machine. Like Dorothy in The Wizard of Oz, who wore the ruby slippers but didn't understand their magic, corporations didn't discover their grass-roots power until the late 1970s. Tired of getting battered by labor, consumer, and environmental groups that were built on grass-roots support, business began adopting their tactics. The most dramatic early display of this grass-roots strength came in 1983, when the banking industry enlisted its customers to repeal a law requiring banks to withhold taxes on savings-account interest, much as income tax is withheld by employers. That campaign generated a tidal wave of mail -- some 22 million post cards and letters. A shaken Congress repealed the law before it went into effect. More recently, small business groups used a grass-roots campaign last year to win repeal of a section of the 1986 tax reform that imposed what many felt were overly complex and unworkable restrictions on company benefit plans. Today Congress gets 300 million pieces of mail a year, double the volume of ten years ago, and the first question congressional aides ask is, Is it grass roots or Astroturf? Post cards are not read or even counted -- they are weighed. Preprinted letters are viewed with suspicion. Sometimes an aide will call the signers of such letters, to see if they genuinely understand or care about the issue. Faced with a more discriminating Congress, lobbyists have become more sophisticated. In 1988, the last time the American Bankers Association -- the rainmaker in the withholding tax deluge -- cranked up a mass-mail campaign, it sent a computer disk to member banks dubbed ''The Congressional Letter Generator.'' This allowed users to pick and mix paragraphs from several different letters, print the result on the bank's or individual's stationery, and address it to the correct Congressman and Senators. More recent letter campaigns of the ABA and other trade associations are slicker still. Van Dongen of the Wholesaler-Distributors explains how these work: ''Every member of Congress went to school with somebody, or played on the football team with somebody, or dated somebody's sister. We do nothing more than focus and organize those people at an important point in time.'' Mention a member of Congress, and Van Dongen can pick from a list of 10,000 of his association's members who have connections, ranked from ''slight'' to ''very close.'' He plans to deploy these up-close-and-personal epistlers against anyone who tries to lower the deficit by raising corporate tax rates. The latest wrinkle in grass-roots lobbying is to enlist the support of influential people in a Congressman's community who have no connection with the company or industry that is lobbying. Rounding up these ''white hats'' is Jack Bonner's specialty. Bonner, 42, runs one of Washington's hottest lobbying boutiques. Unlike its competitors, which normally bill by the hour and prefer monthly retainers, Bonner & Associates bases fees on the number of documented contacts it generates -- letters, phone calls, or meetings with Congressmen. Aptly for a man dubbed ''bombs-away Bonner'' during an earlier tour of duty as a congressional aide, Bonner reaches for a military metaphor to describe his role: ''If Hitler's moving Panzer divisions at you on the European plain, you'd better have some Sherman tanks.'' U.S. carmakers called in the tanks earlier this year after they learned that some environmentalists wanted to include provisions in the Clean Air Act that would clamp down extra hard on automobile tailpipe emissions. The plan would have forced the Big Three to achieve average fuel efficiency of about 40 miles per gallon in ten years, up from the present required average of 27.5. That's a level so stringent, carmakers say, that the average car would be no bigger than a Honda CRX by the year 2000. Big cars, not incidentally, are where Detroit has maintained its lead over imports, and where its profit margins are most Mercedes-like. The automakers knew that pushing even a mildly sophisticated cost-benefit analysis would sound like an argument for dirty air. They aimed instead to sell a simpler message: The extreme environmental position would endanger big cars. So they built support among employees and suppliers, and then enlisted Bonner to find other allies. He first analyzed which groups would lose most if Detroit stopped making big cars, and then urged them to call or write their Senators. Among those who - wrote Washington passionately were old people and the handicapped, who have trouble getting in and out of small cars and worry about safety. Volunteer groups that ferry members around, such as Big Brothers/Big Sisters and the Boy Scouts, also lent support. So did policemen, who like their cruisers fast and big. The president of a Nebraska farm bureau, an Alabama sheriff, and the head of a Florida senior citizen organization were among the star witnesses flown by Bonner to the capital for a press conference. Industry lobbyists say these efforts helped. Two attempts to include tougher tailpipe standards in the Clean Air Act were defeated. The other tactic that transformed business lobbying in the 1980s was the rise of the single-issue coalition, in which companies, trade associations, and increasingly non-business groups join forces. To contain the economic damage from clean air legislation, for example, some 2,000 companies and associations -- virtually all of U.S. business -- joined the Clean Air Working Group. Standing alongside them were unions representing the auto workers, plumbers, carpenters, and electrical engineers, among others. ''Clean Air was one of the most successful coalitions I've seen in the past 20 years,'' says A. John Adams, head of the lobbying firm John Adams Associates. ''It was speaking for 99% of American business, and that gets more attention on Capitol Hill than if you go up there on behalf of a particular industry.'' Coalitions can be important in far narrower battles. Two years ago the insurance industry wanted regulators to stop banks from offering a deposit account that competed with an insurance contract, and lobbied to have the ban dropped into the original savings and loan bailout bill. Insurance agents, more numerous even than bankers, were well organized, and the bankers at the time had a dozen other lobbying problems. ''You can get picked off that way,'' says Edward L. Yingling, 41, chief lobbyist for the American Bankers Association. ''Our only chance, I thought, was to go out and get the pension groups interested.'' Pension lobbyists, who wanted to maintain competition between the two industries, joined with the bankers, as did labor unions, keen to protect their pension funds. The coalition got the proposal killed. To help sustain President Bush's veto of Amtrak reauthorization legislation last summer, Wayne Valis, head of public liaison in the Reagan White House and now a lobbyist, formed an overnight coalition of people who opposed the law. His recruits included the bus industry, freight railroads that objected to some reregulatory language, and conservative citizens groups that hanker to limit government spending. HOW WILL LOBBYING change in the 1990s? Many lobbyists feel that, more and more, the side with the best public policy argument will stand the greatest chance of winning. ''Improving the quality of the debate is coming back into vogue because people are getting a little tired of the big grass-roots, coalition, Battle-of-the-Bulge approach,'' says Jerry Jasinowski, 51, president of the National Association of Manufacturers. Already, what Washingtonians like to call emerging issues are nearly always accompanied by econometric studies and white papers from high-priced universities and higher-priced consultants. Says Anne Wexler, 60, a former Carter aide whose successful lobbying firm recently merged with industry giant Hill & Knowlton: ''It's hard to make a case to a member unless you have a good public policy argument. On the really big issues, that's how they make their judgments.'' Nearly all business lobbyists agree they need to get better at identifying potentially troublesome issues earlier, and at making their particular take on those issues part of the debate. For example, rather than letting environmentalists frame an issue as a simple question -- Do you want clean lakes or dirty lakes? -- business ought to ensure that the question gets divided into two parts: How clean do you want your lakes, and how much are you, as a taxpayer, prepared to spend for that? The stakes are also rising at the state and local level, where the Reagan revolution -- by tightening the federal spigot -- has fed the growth of government. The result: Spending on state lobbying has lately been increasing 20% a year, by some counts, with taxes, environmental issues, product liability, and corporate takeovers where most of the action is. Hill & Knowlton, which generated only 1% of its revenues from state and local lobbying in 1980, expects that share to rise to 10% this year and to 50% by the mid-1990s. Bonner & Associates already does more than half its lobbying outside Washington. Says Thomas Hoog, 51, Hill & Knowlton's vice chairman of public affairs: ''Corporate executives ought to be sure their companies don't become experiments in these so-called laboratories of democracy.'' Hoog spends most of his time in an office in Denver and is opening branches this year in ; Boston; Tallahassee, Florida; Albany, New York; Austin, Texas; Sacramento, California; and Springfield, Illinois. The other part of the business that's sure to grow is lobbying by foreign companies in the U.S. Some observers see this as a nefarious trend -- notably Washington policy maven Pat Choate, whose recent book, Agents of Influence, portrays foreign lobbying, especially by Japanese companies, as a sort of fifth column subverting American sovereignty. The real reason is less sinister. The U.S. economy is steadily becoming more international, with more foreign companies selling goods and running factories here, and more U.S. companies operating abroad. Indeed, what's surprising, given the fivefold growth in the value of foreign direct investment in the U.S. since 1980, is that there aren't even more Washington lobbyists for governments or companies based overseas. The latest number registered with the Justice Department is just 784, not even double the 452 registered in 1970. Which brings us to a final question. Granted that the ever more sophisticated way business plays the lobbying game is good for business, is it good for the nation? Exhibit A for anyone wishing to argue the negative has to be the savings and loan mess. The S&L lobby was one of the most powerful in Washington. But what made it so, contrary to the conventional view, wasn't the money that it scattered about so liberally -- though it scattered plenty. Rather, its clout resided in the fact that more than 3,000 S&Ls were sprinkled throughout the nation's congressional districts, each with officers and directors who tended to be prominent, wealthy businessmen, well connected to their political representatives. The only legislative checks against such grass-roots power are either a countervailing popular force -- or that all-too-rare congressional quality, judgment. Says John Adams, one of the pioneers of grass-roots business lobbying: ''Of course Congressmen need to listen to their constituents, but we didn't just elect them to listen. We also expect them to have a brain, and to put the interests of the country in there somewhere.'' ULTIMATELY, one's view of lobbying may hinge upon one's view of democracy itself. Many lobbyists would agree with Robert Keith Gray, chairman of Hill & Knowlton U.S. operations, who claims: ''Grass-roots lobbying is the best application of democratic principles. It says that the power is with the people, and if you can't move the people, don't bother me.'' - Labor has always had its rank and file. Consumer groups have volunteers. Environmentalists have passion. Until a decade or so ago, business mainly had money. But its adoption of modern techniques has allowed the business lobby to move from a position of relative weakness to something like parity today. Looking ahead, an optimist can take comfort from the certainty that as each of these constituencies strives to make its members' voices felt in Washington, legislators will have to continue listening hard to all sides of important issues. And sometimes the best argument might just win.