No Deal: Chamber Chief Battles Obama

By STEPHEN POWER
WASHINGTON -- With President Barack Obama bidding to overhaul the health-care system, tighten bank oversight and make industries pay for their greenhouse-gas emissions, some trade-association chiefs have decided to compromise with the party in power.
Not Thomas Donohue. On many of Mr. Obama's priorities, the president and chief executive of the U.S. Chamber of Commerce is working to defeat the administration—delighting some members, causing some to quit and sparking a furious reaction from the White House and left-wing activists. In the process, he has made the Chamber one of Mr. Obama's most visible opponents.

On climate change, Mr. Donohue's group says warmer temperatures could help by reducing deaths related to cold weather.
On health care, a Chamber ad says Democrats' approach will kill jobs and slow growth.
On financial regulation, one ad says the administration's plan will hurt small businesses, "even the small butcher"—a line that prompted Mr. Obama to denounce the Chamber from the presidential podium this month.
Now, Mr. Donohue aims to spend $20 million annually for several years advocating free-market policies such as open trade and less regulation, taking aim at much of the Democrats' agenda. The public-relations campaign is the biggest undertaking in the Chamber's 100-year history.
A question hanging over all this is whether Mr. Donohue's aggressive stance will work better than compromise. The Chamber, which says it has 300,000 dues-paying members, has become a political target in Washington's partisan atmosphere. Though Mr. Donohue has strong supporters, a vocal minority of companies, including Apple Inc. and Nike Inc., have recently quit the Chamber or its board.
"They've put Main Street businesses in a precarious place by taking a position that's not credible and doesn't allow them to shape legislation to their members' benefit," said James Rogers, chief executive of Duke Energy Corp.
He says he has cut the electric utility's contributions to the Chamber over two years to protest the group's stance on climate change. Duke is one of the biggest owners of nuclear reactors in the U.S. but also the country's third biggest emitter of carbon dioxide because of its reliance on coal. It has said it favors legislation putting a price on carbon partly out of a desire for regulatory certainty in making investment decisions.
Through a spokesman, Mr. Donohue declined to be interviewed for this article. In an interview with The Wall Street Journal and other news organizations this month, the 71-year-old said "the great preponderance of our members believe in our position [on climate change] and support it."
Watch a December 2007 ad, paid for by the Chamber of Commerce, attacking a proposal then making its way through the Senate that called for cutting U.S. emissions roughly 70% from 2005 levels by 2050.
Watch a confrontation from Oct. 19 at the National Press Club in Washington between a spokesman for the U.S. Chamber of Commerce and pranksters falsely claiming to represent the Chamber of Commerce and "announcing" that the Chamber was dropping its lobbying efforts against climate legislation in Congress.
On the Chamber's general approach, he said: "We work very hard to be inclusive, to give people a fair hearing, to ask for their input, and go back and forth with them." In a response to written questions, Mr. Donohue said Duke's Mr. Rogers "remains a good strong member whose counsel we greatly value."
Though it has attacked the leading proposals in Congress to make companies pay for their greenhouse-gas emissions, the Chamber says it accepts the idea that man-made emissions contribute to climate change and supports reducing them.
Some supporters of Mr. Donohue say if anything, he has been too accommodating to companies that support climate-change legislation. "You can never herd all companies in the same direction. He's doing as good a job as anyone I've seen heading one of these organizations," said Don Blankenship, CEO of coal producer Massey Energy Co., and a Chamber board member.
But, he added, "I don't like to see trade associations refer to global warming as "an issue" because it supports the idea something needs to be done about it." He said he has pressed Mr. Donohue to take an even tougher stand against proposals in Congress to require companies to pay for their emissions. He said high emissions "mean you've got a better, more productive economy."
Some other trade groups have moved to compromise with Democrats. Drug makers have offered $80 billion in savings to help fund a health-care overhaul. The Alliance of Automobile Manufacturers not only endorsed the administration's plan to raise national fuel-economy standards but helped it thwart a proposal by Senate Republicans to weaken the Environmental Protection Agency's authority to regulate emissions.
The Chamber is in the unusual position of quarreling publicly with major corporations. In recent weeks, Apple, PG&E Corp., PNM Resources Inc. and Exelon Corp. have quit the association, citing its position on climate change, while Nike quit its board. Exelon, a big generator of nuclear energy, says it expects an annual revenue boost of about $1.1 billion if climate legislation approved by the House in June is enacted.
Energy Secretary Steven Chu recently called the resignations "wonderful." The senior Republican on the House Select Committee on Energy Independence and Global Warming, Rep. James Sensenbrenner of Wisconsin, said it was "disingenuous" for Nike and Apple to criticize the Chamber "while manufacturing their products in countries that consistently refuse mandatory emission impacts." Representatives of both companies declined to comment.
With environmentalists and activist shareholders pressuring some firms to quit the Chamber, it sent members a memo two weeks ago apologizing for "any annoyance and inconvenience these efforts against us might cause you."
The Chamber recently disclosed it spent $34.7 million to lobby the government in the third quarter. That was up 68% from the same period last year.
A former Postal Service executive and trucking lobbyist, Mr. Donohue has tripled the Chamber's revenue over 12 years, helped beat back tougher air-quality rules and helped pass legislation that makes it harder to bring class-action lawsuits. The Chamber's board has rewarded him with a chauffeured car, $3.1 million in annual pay and the use of corporate aircraft often stocked with oatmeal-raisin cookies, his favorite snack.
Shortly after taking over in 1997, he pledged to dispel what he said was the Chamber's image as "a sleeping giant, missing in action from many important battles." He publicly expressed hope someone would punch the then-president of the AFL-CIO, John Sweeney, "in the mouth."
To bolster firepower, Mr. Donohue hired a new team, including William L. Kovacs as senior vice president for environment, technology and regulatory affairs. The Chamber then launched a series of attacks on climate-related bills.
Democrats in Congress want to bring down emissions by requiring companies to have permits to emit the gases. Over time, the U.S. would issue fewer permits, with the aim of reducing emissions.
In December 2007, the Chamber produced a TV and Internet ad depicting a family wearing coats indoors, cooking over candles and walking to work. Legislation in the Senate "could make it more expensive to heat our homes, power our lives and drive our cars," it said. "Is this really how Americans want to live?"
The ads surprised the U.S. unit of Germany's Siemens AG, which could see more demand for its wind-power and nuclear-services businesses if the U.S. adopts carbon caps. "We told [Mr. Donohue] we didn't agree with the ads and that we'd like a heads-up when a decision is made on how to represent the Chamber's position on climate change," a Siemens spokeswoman said at the time.
The ads also got the attention of Gen. James L. Jones, a retired Marine Corps commandant and then president of the Institute for 21st Century Energy, a unit of the Chamber that makes recommendations to policy makers. According to a person familiar with the matter, Gen. Jones complained to Mr. Donohue that the ads put him in an awkward spot because the general was seeking a United Nations foundation's support for Chamber energy initiatives.
Two months later, the Chamber released another Internet video, on the eve of a U.N. climate conference in Monaco, accusing U.N. diplomats of hypocrisy for staging summits in locations requiring jet travel.
"Jones's concern was that it would make the Chamber look like bullies," said the person familiar with the matter.
Gen. Jones, now Mr. Obama's national security adviser, didn't respond to requests for comment left with his office. Mr. Donohue, through a spokesman, declined to comment on his discussions with Gen. Jones except to say the two "have had literally thousands of conversations over a full range of topics." He said the general is a "great friend" and was "an absolutely superb president of our Institute for 21st Century Energy."
Some Chamber members who support tougher regulation see it as just one of many important issues and praise other positions taken by the group. George Nolen, a retired CEO of Siemens's U.S. unit, cites the Chamber's support of free-trade policies. "They can't possibly have every member company in agreement on how to attack the problem in the same way," he said.
But as a House panel prepared for hearings on emissions restrictions in April, Johnson & Johnson's vice president for government affairs, Clifford Holland, urged the Chamber to express its members' "full range of views" on the issue. He expressed hope "a consensus can be reached that reflects the views of the range of Chamber members."
Until this past summer, the Chamber's uneasy balance on climate change was holding. Then in June, the group petitioned the EPA to hold a hearing on the agency's declaration that greenhouse gases endanger public health—the basis for regulating them under the Clean Air Act.
The Chamber accused the EPA of ignoring analyses that "show that a warming of even 3 degrees Celsius in the next 100 years would, on balance, be beneficial to humans' because the reduction of wintertime deaths would be "several times larger than the increase in summertime heat stress-related" deaths.
In interviews with reporters, Mr. Kovacs, the Chamber's environment chief, spoke of its desire for a hearing that would be the "Scopes monkey trial of the 21st century," referring to the 1925 trial that pitted evolutionism against creationism.
Environmentalists and some Chamber members pounced. In a letter to Mr. Donohue dated Sept. 18, PG&E CEO Peter Darbee said his company would leave the Chamber as a result of "deep concern" over "extreme rhetoric and obstructionist tactics."
Mr. Donohue said the Chamber continues to support federal investments and incentives for power that can be produced without emitting carbon dioxide, while "standing firm" in its opposition to the legislation passed by the House. "If people want to attack us, bring 'em on," Mr. Donohue told reporters.
They are. Last week, a group claiming to represent the Chamber staged a phony press conference in Washington to announce the Chamber would suspend all lobbying against climate legislation. A real Chamber spokesman interrupted the fake announcement, but not before several news organizations reported it.
The Chamber called the hoax "a foolish distraction from the serious effort by our nation to reduce greenhouse gases." This week, it sued the group that organized the stunt, alleging in federal court that it had violated trademark law by using the Chamber's emblem.
Write to Stephen Power at stephen.power@wsj.com