Free Power Game by Hedrick Smith Page A

was fired by fear of new regulatory pressures in the environment and the workplace, as well as by Democratic control of government under Carter. Corporate CEOs such as Irving Shapiro of Du Pont, Reginald Jones of General Electric, Thomas Murphy of General Motors, and Walter Wriston of Citibank, long critical of Washington but leery of too close contact, set up the Business Roundtable to represent corporate leaders in the new Washington.
    A real breakthrough for business came in March 1977, when business lobbying helped mobilize the House to defeat organized labor’s highest priority, the common-site-picketing bill. A year later, business lobbies helped kill President Carter’s legislation for a consumer protection agency, a pet Nader project, and helped push through a reduction in capital gains taxes. The tax turnaround was typical of the new, wide-open power game. It sprang from a completely unexpected—and successful—revolt against President Carter’s tax bill led by William Steiger, a mid-rank Republican congressman from Wisconsin. That surprise victory had an electrifying effect on business.
    “The Steiger amendment marked a turning point for the business community in Washington,” commented Arthur Levitt, president of the American Stock Exchange. “After that, business began to see they could get some of the things they wanted, and within a couple of years, you saw Carter’s attitudes turn around.” 15
    Success brought more bees after the honey. Back in 1968, for instance, only 100 corporations had offices in Washington; by 1978 that figure had jumped to 500. One business directory listed 1,300 corporations in 1986. By the early 1980s, Washington had surpassed New York as the trade association capital of America and is now far ahead. By 1986, it had 3,500 trade associations’ headquarters, more than triple the number in 1960, with a work force of roughly 80,000.
    But the most stunning indicator of business activism was the sky-rocketing growth of corporate political action committees (PACs) to raise money and make contributions to the election campaigns of candidates friendly to corporate interests. In 1974, there were eighty-nine corporate PACs; a decade later, the number had shot up to 1,682.
    Paradoxically, the drive to reform campaign funding was what gave business the green light to become more aggressively involved in financing political campaigns. Reform went astray, as often happens in Washington—high-minded reforms have unintended consequences. In this case, the reformers wanted “public financing” of political campaigns—that is, public subsidies from the government to major candidates to eliminate private financing by individuals, corporations, unions, or interest groups. The reformers achieved public financing for the general election campaign for the presidency in 1974, but Congress blocked such taxpayer subsidies for congressional races—leaving that arena open to individual contributions and to PACs. About the same time, court decisions made it legal for government contractors to have PACs (a practice previously barred for fear that the PACs of government contractors would be used to buy influence). The court decision making corporate PACs legal was a watershed.
    “It opened the door for the creation of PACs and institutionalized the role of PAC money to buy influence,” asserted Fred Wertheimer, president of Common Cause, the public-interest lobby. Any organization or group of people can form a PAC, but Wertheimer pointed out that “the biggest increase [in recent years] was the corporate PACs, because they came from practically nothing and there are so many corporations.” 16
    Not only PAC donations but the overall hard cash pumped into congressional campaigns rocketed steeply from 1974 onward. In the campaigns of 1974, for example, a total of $72 million was spent on House and Senate races; by 1986, the figure had multiplied more than six times, to $450 million. 17 At the national