Business and the Rise of K Street
excerpted from the book
The Paradox of American Democracy
by John B. Judis
Routledge Press, 2001, paper
Business and the Rise of K Street
In the decades after World War II, many businessmen and -women
steered clear of politics. They voted, and sometimes contributed
to candidates, but they rarely participated in political movements
or policy groups. Among those that did, the small businessman
and the head of a family-owned enterprise were most likely to
join the Chamber of Commerce and to oppose most kinds of government
economic intervention. Some corporate executives and investment
bankers joined the NAM or the Liberty League, but others worked
with policy groups such as the Committee on Economic Development,
which saw the government as having a role in tempering the business
cycle and in limiting the inequities or addressing the externalities
of unregulated capitalism. They were an important group within
the American elite.
These business leaders initially acquiesced in and in some
cases actively supported the consumer and environmental movements
of the sixties. They served on the boards of the Ford Foundation
and the Brookings Institution. They looked kindly on collective
bargaining and were comfortable serving with labor leaders on
policy groups and commissions. Some of them, like Ford CEO Robert
McNamara and investment bankers Douglas Dillon and George Ball,
were appointed to cabinet positions. But in the I9705, many of
these corporate leaders and bankers abandoned their commitment
to disinterested public service and to a politics that transcended
class. They turned against union organizers, environmentalists,
and consumer activists with the same resolve that an older generation
of business leaders had turned against the AFL, the IWW, and the
Socialist Party. They set up lobbies in Washington. They ran "advertorials"
attacking their political opponents. They established political
action committees that bankrolled hundreds of candidates. And
in the process, they turned American politics decisively away
from democratic reform.
What precipitated this momentous change was the economic downturn
that began in the late I9605 and that foreshadowed a protracted
slowdown that persisted well into the I9905. That slump altered
business leaders' views of themselves and their enterprises as
profoundly as it changed students' views of the future. In the
sixties, Ralph Nader had been a thorn to General Motors, but a
hero to many other Americans, including businessmen. In the seventies,
business leaders demonized him. Businesses had acquiesced in wage
demands from labor unions, while labor unions had not conducted
a major strike since I959. Now they vigorously resisted, setting
off a new class struggle. Labor relations became as parlous as
they had been forty years before.
The Business Roundtable
During the I9205, businesses sought to win political power
and to quash union drives, but most of their organization took
place on a local or regional level. The National Metal Trades
Association, one of the main groups promoting the "American
plan," was primarily an Eastern and Midwestern group confined
to one kind of industry. The NAM, based in New York, did not work
closely with the Chamber of Commerce, which was based in Washington.
Businesses and banks hired publicists and public relations firms,
but they didn't band together to influence public opinion through
think tanks or policy groups or through funding joint political
action committees. From the I9305 through the I9605, businesses
were deeply divided in their approach to government. While organizations
like the NAM and the Liberty League had advocated intransigence,
many corporate CEOs looked toward more moderate and conciliatory
voices like that of the CED and the Business Advisory Council
(later renamed the Business Council) for leadership. But all that
changed in the I 970s.
The CEOs of large banks and corporations helped to create
during that decade a powerful network of national organizations,
think tanks, trade associations, policy groups, and lobbies, headquartered
in Washington. Blue-chip corporations like General Motors and
banks like Chase Manhattan began contributing to conservative
political groups. Bankers like Citicorp's Walter Wriston, who
had backed President Johnson earlier, gravitated to the Republican
right. Of course, there were still sharp conflicts among industries
and business organizations, and between large and small business,
over specific provisions and bills. But businesses, believing
that they faced common organized adversaries, created overlapping
and interlocking organizations, which, when directed toward a
single end, such as the revision of the tax code or the reduction
of labor's influence on Capitol Hill, were irrepressible.
The first efforts at reviving business's influences took place
at the NAM and the Chamber. Both organizations had become irrelevant
during the I9605, but in I973 the NAM's new chairman, Bert Raynes,
decided to move the NAM's headquarters from New York to Washington.
Explained Raynes, "The thing that affects business most today
is government. The interrelationship of business with business
is no longer so important as the interrelationship of business
with government." Raynes converted the NAM's twenty-eight-person
policy staff in Washington to lobbyists on Capitol Hill, and established
a full-time liaison with other corporate lobbyists in Washington.
The NAM and the Chamber also discussed merging. It didn't happen,
but they did establish a joint political action committee and
began to work together for the first time on specific issues.
By the late seventies both groups were being credited with helping
to turn Congress around. The Chamber itself enjoyed a revival
in the last half of the seventies. Its membership grew 30 percent
a year; it went from a $20 million budget and 50,000 members
to $65 million and 2I5,000 members by I983, with a staff of I,000.
But the main thrust of business lobbying came from an entirely
new organization. Two of the industries that first experienced
the slump of the late 19605 were construction and steel. Construction
companies found their profits eroded by the high wages they had
to pay for hard-to-find skilled workers. Steel companies worried
not only about a slowdown in construction but also about foreign
competition. Foreign imports controlled less than 2 percent in
1958; by I968, they accounted for almost I8 percent of American
steel consumption. Steel company profits plummeted from I968 to
I970. At the instigation of former U.S. Steel president Roger
Blough, one hundred steel and construction companies formed the
Construction Users Anti-Inflation Roundtable in I969 to pressure
unions to hold down their wage demands.
Then, in I972, Fred Borch, the chairman of GE, and John Harper,
the chairman of Alcoa and a member of Blough's group, went to
Washington to meet with Secretary of the Treasury John Connally,
Deputy Treasury Secretary Charls Walker, and Federal Reserve Board
Chairman Arthur Burns about the growing hostility toward business.
Connally, Walker, and Burns urged the executives to found a new
organization that would be confined to CEOs and that would lobby
Congress and the White House directly. With Bryce Harlow also
advising them, Borch and Harper organized the March Group, which
they intended to be a small, select body. But growing interest
among CEOs persuaded them to merge with Blough's group to form
the Business Roundtable in I973. Within five years, the Business
Roundtable boasted I92 member companies, including 113 of the
top Fortune 200. Together, the Roundtable's companies accounted
for nearly half of the country's GNP.
The Roundtable was different from past business organizations
in several important respects. Unlike the Chamber of Commerce
and the NAM, it was strictly limited to major corporations and
to their CEOs.
John Harper was the first president, followed by Thomas Murphy
of General Motors, Irving Shapiro of Dupont, and Borch's successor
at GE, Reginald Jones. These CEOs actually did much of the lobbying.
Writing in Harvard Business Review in I98I, Albro Martin commented:
The Business Roundtable almost seems a belated recognition
of the frequently demonstrated historical principle that royalty
always commands more attention, respect and awe than the lesser
nobility. Neither the National Association of Manufacturers nor
the U.S. Chamber of Commerce can do what a uniquely conceived
and specially powered lobby of the largest and most responsible
economic interests in the country can achieve.
The Business Roundtable differed from the Committee on Economic
Development (CED), an organization that had also attracted Fortune
500 CEOs. The CED was not a lobby, but a research organization
that publicized its results in order to promote policies and directions.
The Roundtable lobbied for and against specific initiatives. In
its initial decades, the CED's businessmen and social scientists
did not see themselves as members of an interest group. Business
leaders like Paul Hoffman and
Beardsley Ruml and economists like Herbert Stein attempted
to be above both party and class. They framed their proposals
in terms of the national interest and argued for their worth on
the objective grounds of social science. The CED occupied a gray
area between an interest group and an elite policy organization.
The Business Roundtable was purely an interest group led by CEOs
looking out for their own companies' balance sheets. It didn't
employ intellectuals like Stein, but publicists and press flacks.
Unlike the CED, it also didn't respect the parameters of countervailing
power. It had been founded by men who wanted to quash government
regulation of corporations. That remained its thrust, even while,
on purely social matters that didn't threaten the power or profitability
of their institutions, a few of the Roundtable's leaders might
embrace the cause of the downtrodden.
The New Think Tanks
Kristol, Powell, and Simon convinced many corporate leaders
that it was important to wage a battle for public opinion. Businessmen
and corporate foundations began steering their money to opponents
of corporate regulation. They endowed university chairs for free
enterprise studies, financed special business institutions, and
gave money to new kinds of think tanks. These think tanks bore
roughly the same relationship to Brookings that the Business Roundtable
bore to the CED. They were not, in Robert Brookings's words, "free
from any political or pecuniary interest," but were expressions
of political and economic interests. Yet their experts and spokesmen
sought and often enjoyed the same exalted status as the social
scientist from Brookings.
The two most important new think tanks were the American Enterprise
Institute (AEI) and the Heritage Foundation. The AEI had begun
as an ideological trade association, founded as the American Enterprise
Association in I943 by Lewis H. Brown, the president of Johns-Manville,
and a group of like-minded businessmen. Brown had been a tentative
supporter of the New Deal, but had become uneasy about Keynesian
economics and public works spending, which he believed would undermine
the work ethic. Other early association backers were much more
stridently anti-New Deal. With a budget of only $80,000, the association
hired academics to write reports that were indistinguishable from
those of the NAM. In I954, General Electric executive A. D. Marshall,
who had become the association's president after Brown's death
in I95I, was ready to shut the association down. But as a last
resort he appointed a Chamber of Commerce economist, William Baroody,
to be its executive vice president.
Baroody, like Nader, was the son of Lebanese Christian immigrants.
Born in Manchester, New Hampshire, in I9I6, he worked in New Hampshire's
Unemployment Compensation Agency in the I9305 and in the Veterans
Administration after World War II before joining the Chamber of
Commerce, where he met and impressed Marshall. Baroody was not
himself an intellectual, but he had a deep appreciation for the
role of ideas. He wanted to convert Brown's association into a
Roosevelt-esque "brain trust" for a future conservative
administration. He recruited two little-known economists, Milton
Friedman from the University of Chicago and Paul McCracken from
the University of Michigan, as academic advisors. He also persuaded
the trustees to change the name to the American Enterprise Institute
to distinguish it clearly from a trade association. (Baroody himself
wanted the even more neutral name, the Institute for Public Policy
In I964, Baroody organized a "brain trust" for Goldwater's
presidential campaign. But this proved to be a thankless task
in more ways than one. After the election, Representative Wright
Patman's House Subcommittee on Small Business subpoenaed AEI's
tax records, and the IRS began a two-year investigation of whether
Baroody, by his participation in the Goldwater campaign, had violated
AEI's tax-exempt status. Baroody became very guarded in how he
characterized AEI, and he recruited token liberals and Democrats
to justify his claim that the institute was nonpartisan. Baroody
also got his staff to produce torturously even-handed and often
out-of-date legislative analyses of Congressional bills.
But Baroody retained his older vision of a conservative brain
trust. He argued that policy research was monopolized by liberals
and liberal institutions, among which he included Brookings, even
though Brookings for most of its history had been seen as probusiness.
He claimed that by funding AEI, businesses and foundations would
be preventing a monopoly of ideas. His favorite line, borrowed
from McCracken, was that "a free society can tolerate some
degree of concentration in the manufacture of widgets, but it
will have trouble surviving a monopoly or near-monopoly of ideas
as they affect public policy."
Under Baroody, the AEI's funding rose steadily-from $230,000
in I960 to $600,000 in I965 to $900,000 in I970-but it was still
considerably less than the $5.5 million Brookings spent annually.
Then, in 1971, Harlow and Laird, who was an old friend of Baroody
and for whom Baroody's son, William, Jr., served as press secretary,
kicked off a $25 million fund-raising dinner for the AEI at Laird's
private Pentagon dining room. Over the next decade, AEI's annual
budget climbed to 54.I million in I975 and to S9.7 million in
I980, $500,000 more than Brookings. AEI became the favorite cause
of corporations that were worried about government regulation
and the power of Nader and the AFL-CIO. By 198I, more than 600
corporations were contributing 4o percent of their annual budget.
Baroody was now able to recruit the top CEOs to fund-raising posts,
including Walter Wriston of Citibank, Willard Butcher of Chase
Manhattan, David Packard of Hewlett-Packard, Thomas Murphy of
General Motors, and Reginald Jones of General Electric. The AEI
also enjoyed the support of corporate foundations, which, heeding
the advice of Kristol and Simon, began to concentrate their donations
on organizations like AEI. These included Olin, the Sarah Mellon
Scaife Foundation, the Smith Richardson Foundation, and the J.
Howard Pew Freedom Trust. The Pew Foundation alone (based on Sun
Oil stock) gave X6 million to AEI between I976 and I98I.
Baroody continued to insist publicly that AEI was above politics,
but beginning in November I976, it became the government-in-exile
for Ford and Nixon administration officials. Gerald Ford himself
joined AEI, as did Robert Bork, Arthur Burns, and Simon. Its fellows
and scholars produced hundreds of studies decrying government
regulation of business and attacking legislation offered by the
consumer, environmental, and labor movements. Many of its studies
on regulation were written by James C. Miller III, who would become
head of the Federal Trade Commission in the Reagan administration,
and Murray Weidenbaum, who also edited the AEI journal Regulation.
Simon chaired its program on tax policy; former CEA chairman Herbert
Stein put out the AEI Economist; Jude Wanniski wrote his primer
of supply-side economics, The Way the World Works, as an AEI fellow;
former Secretary of the Treasury George Shultz served on the board
of advisors for regulatory policy; and Kristol and Michael Novak
developed the political outlook that would be labeled neoconservative.
The Economist magazine characterized AEI as "always unapologetically
conservative." When Reagan won the election in I980, he would
call on more than thirty AEI fellows to join his administration.
The Heritage Foundation, which opened its doors in I973, sought
to influence Congress and the White House not simply over the
long term, but on a daily basis. Except in the strictest legal
sense, it was a lobby. It did not produce scholarship, but quick
takes on policy and op-ed pieces. And it was the coordinated expression
of a political faction within the Republican Party. Yet, like
Brookings, it sought to present itself as a think tank. Instead
of presenting its experts as being above politics, it marketed
them as a counterbalance to the views of Brookings and to prevailing
"liberal" opinion in Washington.
Heritage was the invention of two Capitol Hill political aides,
Paul Weyrich and Edward Feulner. In the spring of I97I, two days
after the Senate had defeated the Nixon administration's plan
to fund a supersonic transport plane (SST), Weyrich, who was working
for Colorado Republican Senator Gordon Allott, received an analysis
of the SST plan from the AEI. When Weyrich called AEI to find
out why the report had arrived late, he was told that Baroody,
still fearful of the IRS, didn't want to be seen as influencing
the actual vote. At breakfast the next day, Weyrich expressed
his frustration to Feulner, and the two men decided the Republicans
needed a research organization that would have what Feulner later
called "quick response capability."
That fall, Weyrich heard from Allott that beer magnate Joseph
Coors wanted to help stem the tide of antibusiness sentiment in
the country. Coors had been "stirred," he explained
later, by Lewis Powell's call to arms against the critics of free
enterprise and had become convinced that business was "ignoring"
a crisis. Weyrich persuaded Coors to give $250,000 to begin an
Analysis and Research Association on Capitol Hill. After a year
of squabbling at the new association, Coors told Weyrich to find
a new venue, and Weyrich and Feulner turned to the Schuchman Foundation,
named after a young conservative who had died at age twenty-seven.
Heritage was started as part of this foundation and then, when
it received tax-exempt status, broke off on its own. In the process,
Weyrich and Feulner also recruited a new financial angel: Richard
Scaife, an heir to the Mellon fortune, had been a financial
backer of Barry Goldwater and of AEI during the I9605. After his
mother, Sarah Mellon Scaife, died in I965, he and his sister inherited
control over the Sarah Mellon Scaife Foundation, the Carthage
Foundation, and the Allegheny Foundation. From I965 to I973, he
fought with his sister, who wanted to spend the foundations' money
on art and population control, but in I973, Scaife became chairman
of the Sarah Mellon Scaife Foundation and won control over the
family funds, which he then used to back new right, conservative,
and business organizations and publications. Scaife initially
put up $900,000 for Heritage-more than triple Coors's contribution-and
over the next eight years contributed at least $3.8 million.
In I973, Heritage was incorporated with Weyrich as its director
and Forrest Rettgers of the NAM as its chairman. Weyrich only
lasted a year. In I977, Feulner was persuaded to leave the House
Republican Study Group, of which he was the director, to become
the president of Heritage. Edward Feulner was like William Baroody:
an extraordinary promoter and fund-raiser who appreciated the
power of ideas. In his first eighteen months at Heritage, he raised
its annual budget from less than one million dollars to 82.8 million.
Feulner was not only able to lure foundations like Smith Richardson
and Olin, but also Fortune 500 corporations and banks, including
General Motors, Chase Manhattan, Pfizer, Mobil, and Sears. One
of Feulner's biggest catches was oilman Edward Noble and his Samuel
Robert Noble Foundation. (When Noble later became the head of
the Synthetic Fuels Corporation in the Reagan administration,
Heritage suddenly fell silent about the waste generated by this
Feulner also established Heritage's political style. Unlike
the AEI, it defined itself openly as a "conservative"
organization. With few exceptions, Heritage did not hire recognized
scholars, but Ph.D. candidates and aspiring journalists and publicists
to produce "backgrounders" on current legislative battles
and foreign policy issues, which were then mailed (and later faxed)
to politicians, public officials, and journalists. The backgrounders
were article-length. Heritage vice president Herb Berkowitz later
explained that Feulner "wanted products to meet a briefcase
test, so a busy executive can throw it into his briefcase and
read it in an hour or less." Unlike the AEI legislative analyses,
Heritage's backgrounders took sides and recommended action. Journalist
Burton Pines, whom Feulner made director of research and later
vice president, said, "We're not here to be some kind of
Ph.D. committee giving equal time. Our role is to provide conservative
public-policy makers with arguments to bolster our side."
In Feulner's first years, Heritage was probably more successful
at marketing itself than marketing its recommendations. It was
less important than AEI in altering the debate over business and
the economy in Washington. Other organizations, such as Paul Nitze's
Committee on the Present Danger, played a more decisive role in
attacking the Carter administration's foreign policy toward the
Soviet Union. But when the Reagan administration and Senate Republicans
took power in I980, Heritage, with its backlog of backgrounders,
which it synthesized into a large volume, Mandate for Leadership
1980, was best positioned of all the new institutions to play
a decisive role in Congress and the White House. By I985, its
annual budget would equal that of AEI and Brookings.
Besides Heritage and AEI, business funded scores of other
think tanks and policy groups inside and outside of Washington-from
the Capital Legal Foundation (an anti-Nader outfit) and the Center
for Strategic and International Studies to the Institute for Contemporary
Studies in San Francisco and Murray Weidenbaum's Center for the
Study of American Business at Washington University in St. Louis.
It also subsidized sympathetic economists, including Milton Friedman,
Karl Brunner, and James Buchanan. Together, these think tanks,
policy groups, and academics inundated the pages of magazines
and newspapers and filled up the mailboxes of journalists and
Congressional staff with their own version of economic and social
The New Ideology
This version of reality pivoted on a simple formula: government
rather than business was responsible for America's ills-from inflation
and high energy prices to the slowdown in growth and the rise
in unemployment. It was a reassertion of Jacksonian economics
and an attempt to undermine the basis of democratic reform in
the twentieth century. AEI economist Warren Nutter put it this
way: "The serious economic pains now being experienced are
symptoms of political ills, not of flaws in the economic system.
The basic problem is too much government, not too little."
Inflation was caused by government deficits rather than by
corporate greed or OPEC. Slow growth was caused not by overcapacity
and a lack of demand, but by government regulations, which increased
business costs, government spending, and taxes, which deprived
the private sector of funds, and by rising wages. Faster growth
could be achieved by eliminating costly environmental, workplace,
and product regulations, reducing government welfare spending,
cutting taxes, and easing wage growth. These measures would increase
growth by increasing the "supply" of capital for investment.
Wrote General Electric CEO Reginald Jones in Harvard Business
Review in I975, "Business must convince an indifferent public
and skeptical Congress that this country is facing a severe capital
This analysis was presented in articles in the AEI's Regulation
and Kristol's The Public Interest and in books and studies published
by AEI, the Institute for Contemporary Studies, and other think
tanks and policy groups. It reached America's business and professional
classes through the editorial page of the Wall Street Journal,
Fortune, Forbes, and other business publications. It reached the
general public through the Reader's Digest and the business and
editorial pages of many newspapers, including the Washington Post.
Said Weidenbaum of his critique of regulation and big business,
"We helped business get interested in the thing. We knew
we scored when we got into comic strips. You change public understanding
that way. Broom Hilda did five comic strips in a row showing OSHA
penalizing her for her broom."
Business won the public to its view of reality. Americans'
distrust of government regulation and intervention began about
I973-at the same time when simultaneous unemployment and inflation,
or "stagflation," was taking hold and when the think
tanks, policy experts, and CEOs were beginning to make their opinions
known. Distrust of government economic intervention then rose
steadily through the decade. By the early 19805, it had begun
to surpass the distrust of big business or corporate power...
That change in attitude was rooted in a change in economic reality,
but it was reality as interpreted by Herb Stein, Murray Weidenbaum,
and the AEI.
By challenging the public perception of stagflation, these
policy experts made it easier to defeat proposals aimed at strengthening
regulation and prepared the public for the effort in the early
I980s to weaken regulations and regulatory agencies.
The Rise of K Street
To counter environmental and consumer movements and to influence
Congress and the new regulatory agencies, the CEOs also hired
thousands of lawyers and public relations specialists to lobby
on their behalf. Together, these hires created a new political
culture in Washington dominated by the Gucci-shod lobbyist. They
gave business an enormous advantage in the policy and political
arena over its adversaries.
In I97I, only I75 businesses had registered lobbyists in Washington.
By I982, 2,445 had. The number of corporate offices increased
from 50 in I96I to 500 in 1978 and to I,300 by I986. By I978,
I,800 trade associations were headquartered in Washington, with
40,000 employees; by 1986, there were 3,500 associations employing
80,000.47 From I973 to I983, the number of lawyers grew more than
threefold from II,000 to 37,000. By I988, I,634 out of every I00,000
Washingtonians was a lawyer, the highest proportion of any American
city. A few of these were public interest lawyers and lobbyists
for women's, consumer, and environmental groups, but the great
majority worked for businesses. By I978, businesses were spending
about XT billion on lobbying in Washington and $1 billion on politics
and public relations.
Many of the new lawyers and lobbyists specialized in regulatory
issues. From I887 to I963, fourteen new federal agencies and commissions
had been established. From 1964 to I975 alone, fifteen new federal
agencies and commissions were added (see table). As a result of
the I946 Administrative Procedure Act, these agencies were highly
susceptible to pressure and review from lobbyists. Regulators
from these agencies had to involve affected parties at every phase
in the determination of rules; and almost every step in rule-making
could be subject to court challenge. Decisions were finally made
not by an authoritative bureaucracy-the entirely misleading stereotype
promulgated by the enemies of regulation-but through what political
scientist Hugh Heclo called "issue networks" that linked
government officials, regulatory agencies, and cabinet depart
These new lobbyists not only had to possess some technical
expertise, they also had to master the complexities of the post-Watergate
Congress. In the Eisenhower years, for instance, lobbyists had
primarily relied on their connections to House speaker Sam Rayburn,
Senate majoriq leader Lyndon Johnson, and a handful of committee
heads to make political deals. The speaker and majoriq leader
would also tell a lobbyist whose campaigns to fund. But the political
reforms of the I9705 made things more difficult. Partly in response
to Watergate but largely as a result of the civil rights struggles
of the I9605, Democrats did away with the seniority system, which
had vested power automatically in aged Southern House members
and senators who inherited control over key committees. After
I974, committee chairs had to be elected by the Democratic Caucus,
and could no longer command the automatic loyalty of junior members.
The House and Senate leadership could still control the appointment
to committees, but the committees began to spawn scores of subcommittees,
so that almost every politician who was reelected could command
a position of authority. In I945, there were I35 committees and
subcommittees in Congress; by I975, there were 3T3. Each House
member and senator had to develop his or her own position, which
might often be at odds with leadership. The lobbyist could no
longer simply rely on a connection to the majoriq leader or the
speaker; he or she had to establish connections with hundreds
of legislators and be prepared to help, cajole, and if necessary
pressure them from within their districts or states.
In 1974, Congress, in response to Watergate, passed campaign
finance reform. It limited the amount of money that a candidate
could receive from any contributor while authorizing corporations
and unions to form political action committees to donate money
to candidates. The legislation made it less likely that a candidate
would become the ward of a single large contributor. But after
the Supreme Court in 1976 threw out the limits on candidate expenditures,
while retaining the limits on campaign contributions, candidates
had a much harder time raising enough money. Fund-raising became
a major part of their job. And they looked for lobbyists for help-not
so much for their own contributions, but for organizing fund-raising
events and bundling donations. Thomas Boggs, one of Washington's
most successful lobbyists, became known for hosting events for
as many as 125 politicians during each election season.
Few lobbyists could contact several hundred House members
and a score of senators, draft complicated amendments, organize
grassroots pressure in multiple districts, and raise money. So
companies now hired teams of lobbyists, policy experts, public
relations flacks, and pollsters. And the law firms themselves
diversified. Arnold & Porter, one of the city's largest law
firms, started its own lobbying firm, APCO Associates, which included
non-lawyers in its management. Washington law firms also routinely
hired economists, and in I990 the District of Columbia Bar ruled
that non-lawyers could become partners in law firms. Several law
firms, including Robert Strauss's Akin, Gump, Strauss, Hauer &
Feld, started their own political action committee.
There was an intimate relationship between the lawyers, lobbyists,
policy specialists, and PR men of K Street and the new business
think tanks and policy groups. They worked together to counter
the consumer, environmental, and labor movements and to thwart
or subvert the new regulatory agencies. No lobbyist better symbolized
the breadth of this relationship than Charls Walker, a voluble
Texan who would later be credited with alchemizing Carter's efforts
at tax reform into a business tax cut and with securing the bountiful
business provisions of Reagan's 1981 tax cut. In 1973, frustrated
that he would never become Secretary of the Treasury, he left
the government to form a lobbying firm of his own, Charls Walker
Associates. He immediately attracted high-profile corporate clients,
including Harlow's Proctor and Gamble, AT&T, General Electric,
and the Business Roundtable itself, which he had helped to found.
Walker understood that lobbying could not be confined to buttonholing
legislators. In 1975 he took over a faltering organization called
the American Council for Estate and Gift Taxation and converted
it into a coalition aimed at winning new tax breaks for business.
Renamed the American Council for Capital Formation and housed
initially on 1425 K Street, it stood for the view that American
business's problems were due to a lack of capital to invest and
could be solved by granting a range of very generous tax breaks,
from a reduction in capital gains tax rates to accelerated depreciation
on investment. Walker was the chairman; Robert Keith Gray, a Nixon
White House official turned public relations expert, was the president.
Walker quickly recruited a raft of Fortune 500 members who contributed
$200,000 the first year to its operation. Walker also recruited
powerful Democrats like Clark Clifford, former Secretary of the
Treasury Henry Fowler, and super-lawyer Edward Bennett Williams
to serve on the board of directors.
The American Council adopted a coalition strategy. Instead
of trying to win individual concessions for companies, Walker
got a group of them to back a common position. (The NAM and the
Chamber of Commerce were also coalitions, but they were so large
that they could usually only reach agreement on what to oppose.)
The council engaged in influence-peddling (Walker numbered among
his friends Senate Finance Committee chairman Russell Long), along
with grassroots lobbying in the districts of members who resisted
his entreaties. Walker pioneered the tactic of getting local company
officials, armed with local job loss and gain figures, to meet
directly with their House or Senate member.
Most important of all, Walker used the fiction of the "council"-a
name suggesting an ordinary policy group or administrative body-to
present self-interested lobbying in the guise of social science.
He appointed a board of scholars that included three future chairs
of the Council of Economic Advisors-Murray Weidenbaum, Harvard's
Martin Feldstein, and Stanford's Michael Boskin. The council's
scholars issued studies-many of them subsidized by the council-that
purported to show that business tax breaks would benefit all Americans.
Walker himself wrote op-eds in which he was identified not as
a lobbyist, but as the chairman of the council or simply a former
Treasury official. The ploy allowed the public to believe that
the council's positions were based entirely on disinterested social
science and on the knowledge and expertise gained from public
Walker's council summed up the multidimensional strategy of
the business counteroffensive of the 19705 that Lewis Powell and
Irving Kristol had helped to inspire. He understood that it wouldn't
be enough just to grab legislators in the Capitol cloakrooms.
Lobbyists had to organize political campaigns, raise money for
candidates, and hire academics and other policy professionals
to lend legitimacy to their positions. This strategy would eventually
corrode the public's faith in elite opinion and encourage a perception
of K Street as a vipers' nest of corruption. But in the late 19705
it worked brilliantly.
of American Democracy