George Bush's favours to big business -
All the president's businessmen

The Republican election campaign was the most expensive in history and required big donations from big business. Since moving into the White House, George Bush has had only one concern - returning the favours. Julian Borger on how corporate America bought itself a president

Special report: George Bush's America

Friday April 27, 2001 -- The Guardian,. UK

Buried in the Bush administration's first budget was a routine-looking salaries estimate for the justice department. But one particular group of government lawyers saw it immediately for what it was - a signpost to a new era. The lawyers were a specialised team, put together in the Clinton years to take on the big tobacco companies for lying about the safety of their product for five decades. They had worked out that the sprawling, groundbreaking case would cost about $57m (£41m). They were allocated less than $2m.

In desperation, the lawyers leaked a memo earlier this week, in which they pointed out that the budget would kill their prosecution. In response, the attorney general, John Ashcroft, counter-leaked his plans to replace the litigation team on the grounds that it had done a shoddy job. The message could not be clearer if it was a neon sign on the White House roof: the war on Big Tobacco is over.

The list of defendants who now appear to have escaped federal prosecution is also a list of big donors to the George Bush election campaign. At the top is Philip Morris, which gave $2.8m to the new president's war chest, his inauguration and his party. Big Tobacco as a whole gave $7m to Bush and the Republicans, 83% of the industry's total election spending. If the federal lawsuit against them is allowed to die, which now seems almost certain, the cigarette companies will have saved themselves up to $100bn in damages and compensation - an impressive rate of return by any standards. Philip Morris would argue, of course, that there is no direct connection between its donation and the apparent demise of the government lawsuit - and that its support for the president is entirely down to his policies.

In Washington, this is not some isolated, government-rocking case of support for corporate interests. In his first 100 days in office (the milestone passes on Sunday) Bush has made this straightforward form of corporate payback the defining trait of his administration. This simple fact has been obscured by the snickering over his frequent and clunky gaffes.

For Bush, the first US president with an MBA, the election was a straightforward business proposition in which American corporations acted as venture capitalists. They were invited to take a moderate risk and put the bulk of their political funds behind the Republican dauphin in the most expensive campaign in history. The returns, in the form of abandoned lawsuits, relaxed federal regulations and the scrapping of at least one major international treaty, are heavily loaded with short-term profit. Whatever the economic climate in the world outside, for big business it is truly springtime in Washington.

Naturally, the Democrats have lined up to declare that they are shocked to discover that business wields such influence in politics. The corporate world did not do too badly in the Clinton years, but it was one of many voices echoing around the Oval Office. In the Bush administration, business is the only voice.

Thus, whereas Clinton devoted much of the energy of his first 100 days to a messy fight over gays in the military, the Bush administration has briskly run through a veritable corporate shopping list of swift anti-regulatory measures.

In his first few days, Bush scrapped a raft of work-safety measures, which had been negotiated between the federal government and the unions for much of the past decade, in an attempt to address the new work injuries of the computer age, such as repetitive strain injury, affecting an estimated 1.8m employees.

The scrapping of the new rules was a triumph for the US Chamber of Commerce and a crushing defeat for the AFL-CIO union federation, which had of course overwhelmingly backed Al Gore and the Democrats. At the same time, Bush lifted regulations on federally funded works which gave preference to contractors who used union labour.

Next on the list was a bankruptcy bill, long demanded by the banks and credit card companies (who sponsored Bush and his party to the tune of over $25m). Its effect will be to strip Americans who have declared themselves bankrupt of some of the legal protection they have from their financial creditors.

The bill's proponents portrayed the targets of the bill as scam artists and irresponsible spendthrifts, but subsequent press reports and surveys suggested that the majority of the victims will be poor families who have lost jobs and fallen foul of the rapacious US health system. Clinton had vetoed a similar bill on the grounds that the poor should be allowed to pay their rent and hospital bills before their credit card charges.

The impact of the Bush era has fallen heaviest, however, on the environment, where the legal constraints on business had been the most expensive. In short order after his inauguration, Bush lifted rules which would have made mining companies (who donated $2.6m to his campaign) pay for the clean-up costs if they contaminated the public water supply, and then scrapped safety limits on arsenic levels in drinking water imposed by the outgoing Clinton White House.

Meanwhile, another Clinton-era regulation aimed at protecting 60m acres of national forests from logging and road building is also about to be scuttled, according to justice department sources quoted in yesterday's Washington Post. The ban had been one of the last acts of the outgoing administration, but it had been a consequence of more than a year of open hearings held by the Forest Service in which the views of 1.6m members of the public had been taken into account. For its part, the timber industry contributed $3.2m to the Bush campaign in the 2000 elections. The money, it seems, is talking louder.

The most important environmental victories for US industry came in March, when the new president abandoned a campaign pledge to impose legal limits on carbon dioxide emissions. The obvious consequence of that decision arrived a few days later, when the administration let it be known that it considered the Kyoto protocol on global warming dead and buried, summarily ending five years of transatlantic efforts to agree on how the accord should be implemented.

The head of the environmental protection agency, Christine Todd Whitman, has promised that the US is ready to go back to the negotiating table and start again from scratch. But meanwhile, the cost of cutting emissions has been removed for the foreseeable future from the corporate balance sheets of the coal, electricity, oil and gas industries, all of them major Bush contributors. The oil sector alone put over $25m into Republican coffers for last year's election, compared to the $7m backing it provided to Democratic candidates.

It is hardly surprising that the mood on K Street, the home of Washington's industrial lobbyists, is triumphant these days. "We have come out of the cave, blinking in the sunlight, saying to one another, 'My God, now we can actually get something done,' " Richard Hohlt, a banking lobbyist, recently told the Wall Street Journal.

Paradoxically, the only major setback the industrial lobby has suffered under Bush so far has been the old-fashioned cold war exchange of sabre-rattling with China. It has been redolent of an older, more ideological strain of Republicanism, but it cuts against the interests of corporate leaders, who view China as a vast opportunity for expansion. Consequently, there were few protests from the usual cold warriors in the party ranks when Washington sent a delicately worded apology to Beijing over this month's spy plane standoff. On every other front, the K Street army has emerged from its trenches to find that there is hardly even token resistance to its relentless advance.

In his former role as Clinton's labour secretary, Robert Reich had frequently complained that corporate America seemed to gain the upper hand more often than not in the corridors of power. Now, he says, there is not even a fight. "There's no longer any countervailing power in Washington. Business is in complete control of the machinery of government," he wrote in the New York Times. "It's payback time, and every industry and trade association is busily cashing in."

The transaction has not been so much a purchase as a corporate merger. The distinction between business and government has simply been blurred to near invisibility. The White House has made much of the fact that the new MBA-equipped president is running the administration along sleek corporate lines. Key officials, meanwhile, are being recruited straight from the nation's boardrooms.

The treasury secretary, Paul O'Neill, came from the giant aluminium manufacturer Alcoa. Dick Cheney was headhunted from the oil services company Haliburton. Karl Rove, Bush's chief political strategist, performed the same function for Philip Morris from 1991 to 1996. The new "regulations czar", John Graham, charged with overseeing the further dismantling of government controls on industry, has arrived from John Hopkins University, where he once oversaw a study concluding that there were no health risks from secondhand cigarette smoke. At the same time, according to the watchdog group Public Citizen, Graham was soliciting $25,000 in funding from Philip Morris.

The list of business alunmi is endless. Mitchell Daniels, the head of the White House office of management and budget, is a former vice-president of the pharmaceutical company Eli Lilly. He represents an industry which contributed $18m to the Bush electoral effort and now expects the administration to distance itself from its predecessor's plans to impose price caps on prescription medicine.

The only risk to the mega-corporations' control over Washington appears to come from within - the danger of overreaching and provoking an electoral backlash against their greed and environmental damage. "At some point - perhaps as soon as the 2002 midterm elections, surely no later than the next presidential election - the public will be aghast at what is happening," Reich argues. "The backlash against business may be thunderous."

There are already signs that Bush and his advisors realise the danger, and there have been attempts to soften the president's image, particularly on the environment. He has signalled his readiness to sign a treaty on curbing the industrial release of particularly noxious chemicals and may think again on arsenic limits in drinking water. After all, Bush will need people's votes as well as corporate money if he is to win re-election in 2004. But all the signs from the first 100 days suggest that the moderating non-corporate influences on the administration are likely to be kept to a minimum. This is as close as it is possible to get in a democracy to a government of business, by business and for business.

Funding for favours: Bush's paybacks

Table shows amount paid (in millions of dollars) to the Republican election campaign and that amount as a percentage of each industry's election spending.

Industry | $m | % | The payback

Tobacco | 7.0 | 83% | Killing off federal lawsuits against cigarette manufacturers

Timber | 3.2 | 82% | Restrictions on logging roads scrapped

Oil and gas | 25.4 | 78% | Restrictions on CO2 emissions abandoned; Kyoto scrapped; moves to open Arctic refuge to drilling

Mining | 2.6 | 77% | Scrapping of environmental clean-up rules; arsenic limits in water supply

Banks and credit card companies | 25.6 | 60% | Bankruptcy bill making it easier for credit card companies to collect debts from bankrupt customers

Pharmaceuticals | 17.8 | 68% | Medicare reform without price controls

Airlines | 4.2 | 61% | Federal barriers to strikes; backpedalling on antitrust legislation

http://www.guardian.co.uk/bush/story/0,7369,479212,00

 

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