Inside the Chamber

The Chamber also counts the passage of the Class Action Fairness Act, which moves most large multistate class-action lawsuits out of state courts and into federal courts, as a victory. (Many business groups believe the federal courts will be less sympathetic to such suits.) Perhaps more suggestive of its growing political clout, the Chamber last year waged a quiet but insistent campaign to undermine SEC chairman William H. Donaldson, who resigned last summer after two years in the post. Some of the organization's members had viewed him as having overreacted to a wave of corporate scandals with heavy-handed enforcement and policy-making at the agency. It's an open question as to what role, if any, the organization ultimately played in his departure. Donaldson declined to comment.

Many members welcome the changes at the Chamber. "Business didn't have a seat at the table of power in Washington until Tom took over," says Raymond Burns, president and chief executive of The Rogers-Lowell Chamber of Commerce in Rogers, Arkansas. Win Hallett, president of the Mobile, Alabama, Chamber of Commerce and chairman of the Chamber of Commerce Committee, which represents 100 large or influential chambers in the United States, recalls: "Before Tom, the U.S. Chamber was a cold, lifeless, and unresponsive place. You'd go to Washington and they'd tell you to pay your dues, sit down, shut up, and we'll tell you what matters. You'd leave with a couple of lousy brochures. Tom's Chamber cares about the customers. That's us. We tell him what matters."

As a port city with large aerospace, maritime, and biomedical interests, Mobile is keenly concerned with several national public-policy issues, including health care, the shortage of skilled workers, tort reform, immigration, and transportation. In March, Hallett led an 18-member delegation of local business leaders from Mobile to Washington to visit legislators and meet with specialists at the Chamber. "The Chamber had policy experts in the room to address every single issue we had," recalls Hallett. "They had done their homework."

Douglas Kinsinger, president and CEO of the Greater Topeka, Kansas, Chamber of Commerce, concurs. "Tom has brought the grass-roots businesspeople of this nation back into the fold. We pay the U.S. Chamber 10 times what we used to pay, but my members believe we're getting our money's worth." Although he won't disclose exactly how much his Chamber sends to Washington, he says his members are particularly pleased with the organization's victories in creating health savings accounts for workers and with its efforts to open up international markets to trade.

But the Chamber has also ruffled the feathers of local businesses. In 2004 in the state of Washington, the Chamber's Institute for Legal Reform poured $1.5 million into a television-advertising campaign to defeat a candidate for state attorney general who it regarded as antibusiness, apparently without alerting or seeking the approval of the local chambers. In a sharply worded letter to Donohue, five local chambers and the Association of Washington Business protested the intrusion into local politics. "We want to register our strong dissatisfaction with the campaign itself as well as the complete lack of consultation and communications with us," the group said in its letter.

The manner in which the Chamber pursued its agenda also angered the local chambers. The Chamber had funneled the $1.5 million through a local voter-education organization, and only after state election authorities filed suit did that group disclose that the Chamber was the source of the money. This "presented serious credibility problems for those of us who...are working very hard to brand the chamber name as a positive force in our communities," the group said. Donohue maintains that the Chamber acted appropriately in that race. The Democratic candidate opposed by the Chamber was defeated.

Secrets of Fund-raising
Victorious or not, the new and more aggressive Chamber troubles more than a few in the business community. "I am very disappointed," says Richard Schonberger, president of Schonberger & Associates, in Bellevue, Washington. "It seems to me that the Chamber is going off in a direction that isn't serving the business community. How far will it go?"

Costco Wholesale Corp. decided several years ago not to join the organization after reviewing its political agenda. "I was appalled to find the Chamber is funneling millions and millions under a cloak of secrecy to support predominantly Republican candidates," says chief legal officer and senior vice president Joel Benoliel. "We are strenuously against involving our company and our shareholders in partisan politics."

Donohue has stirred concerns among more-moderate members of the business community that he has taken some fights too far and tarnished the reputation of the U.S. Chamber. Many business executives decline to speak publicly for fear of inciting his ire, but they worry that he will further inflame antibusiness sentiments among the public in the wake of corporate scandals.

Business Roundtable is among the groups that have been careful not to align themselves too closely with Donohue and the Chamber on some issues. The two organizations differ sharply over Reg FD, for example, which bars companies from selectively disclosing key information to investors or analysts. Although the Chamber initially supported its 2001 passage, it opposes the SEC's interpretation and implementation of Reg FD, while Business Roundtable has told the SEC as recently as last year that it continues to support it. John J. Castellani, president of the Roundtable, which represents chief executives of the nation's largest corporations, says his group feels it has an obligation to be "more measured, less antagonistic, and less confrontational than other groups, including the Chamber."

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