Powell Memo Blueprint: Impact on Political Action

Page - September 2, 2011
The Powell Memo emphasized the importance of political leverage in its objectives. With particular focus on the role of the U.S. Chamber of Commerce, Lewis Powell detailed a long-term political strategy that has been implemented and expanded over the last four decades.

The Powell Memo on Political Influence:

"Yet, as every business executive knows, few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. If one doubts this, let him undertake the role of "lobbyist" for the business point of view before Congressional committees. The same situation obtains in the legislative halls of most states and major cities. One does not exaggerate to say that, in terms of political influence with respect to the course of legislation and government action, the American business executive is truly the 'forgotten man'..."

(Direct link to quote in the Powell Memo)

The business community answered Powell's political call to arms with gusto, as evidenced by the explosive growth of corporate political action committees and lobbying operations.

Registered corporate PACs grew from 89 (out of a total 608) in 1974 to 1,262 by 1980 (out of a total 2,551). In 2008, there were 1,578 corporate committees out of a total 4,292 registered PACs. Corporate PACs have consistently outnumbered other registered PACs since the mid-seventies. Corporate campaign contributions have remained a steady strategic point of influence for elections and legislation, although continued increases in federal lobbying expenditures greatly outweigh corporate investments in candidates.

Corporations reported spending over $3.5 billion to lobby Congress and various federal agencies in 2010, according to the Center for Responsive Politics. A total of over 11,000 registered corporate lobbyists swarm the halls of government each year, not counting the many corporate lawyers, executives and public relations consultants who work behind the scenes. The corporate capture of Congress is reinforced by the members who themselves turn to more lucrative lobbying posts once they retire or are turned out of office. "Once considered a distasteful post-government vocation, big-bucks lobbying is luring nearly half of all lawmakers who return to the private sector when they leave Congress," the Washington Post reported in 2005, citing a study by Public Citizen. The going rate to hire a veteran Hill staffer as a full-time lobbyist was about $300,000 a year -- a price that few, apart from big business, can afford.

Immediately after the Supreme Court's Citizens United decision, corporate groups began raising and channeling enormous amounts of cash and channeling it through trade associations and Super PACs. Roger Nicholson, senior vice president and general counsel at International Coal Group wrote other coal industry executives to solicit their participation in creating a new group "with the purpose of attempting to defeat anti-coal incumbents in selected races."

The Powell Memo on the U.S. Chamber's Role:

"As unwelcome as it may be to the Chamber, it should consider assuming a broader and more vigorous role in the political arena."

(Direct link to quote in the Powell Memo)

The U.S. Chamber of Commerce does not disclose its members and donors, thus serving as a conduit for corporate executives who wish to secretly spend their company's money on candidates that support the Chamber's pro-corporate agenda. Trends in lobbying expenditures provide a crude indication of how the U.S. Chamber has embraced Powell's call for increased influence in government.

Lobbying expenditures reported by the Chamber, not adjusted for inflation, increased from $17 million in 1998 (the year Tom Donohue became CEO) to a 2009 peak of over $144 million, followed by over $132 million in 2010, almost three times that of the next highest lobbying spender. In fact, the immense expenditures of the U.S. Chamber since 1998—over $770 million—vastly overshadow all other lobbying organizations. General Electric ranks a distant second place--252.9 million--in lobbying expenditures over the same time frame. The number of lobbyists representing the U.S. Chamber has swelled from 44 in 1998 to about 180 lobbyists each year from 2007-2010.

The Chamber's position as one of the nation's top lobbying forces gives it direct influence on the Hill and before virtually any federal regulatory agency. Yet its power and ability to shape the nation's political agenda stems not only from its size and tremendous resources, but also as a result of its position as the leading corporate trade association, which empowers the Chamber to mobilize other large institutional networks around top priorities. And while the Chamber is more clearly aligned with Republicans on many specific issues, its ability to distribute information across many layers of government and society (including small business members across the country whose interests are often undermined) allows the Chamber to rally bi-partisan support for key legislation and regulations. Its enduring presence and consistency on the issues has effectively made the Chamber a key member of a 'permanent government' in Washington that has managed to ring-fence the limits of acceptable debate and shrink the differences between the two major political parties on most key issues.

Corporations utilize the U.S. Chamber of Commerce as a central point to aggregate money for increased political influence. Although it claims to represent all types of business, large and small, the Chamber appears to have drastically exaggerated its membership statistics, jumping from 200,000 to three million business members as Tom Donohue became CEO. The U.S. Chamber's 2008 income amounted to $140 million, half of which came from just 45 large donors. Similarly, the Chamber's income in 2009 exceeded $214 million, 83% of which came from donors who contributed at least $100,000. One grant to fight health care reform was worth $86 million, 42% of the U.S. Chamber's total revenue.

Although corporations that belong to the Chamber agree on most of its agenda, several members have split from the Chamber over its virulent opposition to certain proposals to address climate change, including regulation of greenhouse gas emissions by the EPA. General Electric and several other companies have publicly stated that the Chamber did not represent all the viewpoints of its members in the climate change debate, while Exelon, Pacific Gas and Electric, Apple and others left the Chamber in 2009 because of significant disagreement with the Chamber's extremist climate-denialism. Similarly, Nike resigned from the Chamber's board even though it remains a member.

In recent years the Chamber has assembled a sizeable astroturf political network called Friends of the U.S. Chamber, an operation that rivals the size and reach of those managed by the two major political parties. The Chamber's lobbying and astroturf organizing operation was fueled by a $144 million budget in 2009, largely aimed at opposing the Democratic healthcare plan.

Recently, the U.S. Chamber's "Institute for 21st Century Energy" has pushed the Obama administration to approve construction permits for the Keystone XL pipeline, a project of the Canadian pipeline company TransCanada. The Keystone XL pipeline has been the focus of mass protests and arrests at the White House due to the detrimental ecological impacts and human rights abuses inherent to tar sands extraction, the source of crude oil that would be shipped from Alberta, Canada to Texas through Keystone XL.

The Powell Memo on U.S. Chamber Governance:

"It is possible that the organization of the Chamber itself would benefit from restructuring. For example, as suggested by union experience, the office of President of the Chamber might well be a full-time career position. To assure maximum effectiveness and continuity, the chief executive officer of the Chamber should not be changed each year."

(Direct link to quote in the Powell Memo)

This suggestion was taken very seriously by the Chamber, which radically altered its internal hierarchy soon after the memo was released. In 1973, Edward B. Rust, president and CEO of State Farm Insurance Companies, was chosen as U.S. Chamber president from 1973–1974. This was the last time the chief elected officer of the Chamber was limited to a one-year term. The next president, Richard Lesher, served from 1975 to 1997 and became the first President and CEO to rule the Chamber as his sole occupation. Lesher preceded Tom Donohue, who has been president and CEO of the chamber from 1998 to present.

The Chamber's restructuring corresponds to Powell's hierarchical corporate model, which allows for swift action under the control of a dominant ideologue.

The Powell Memo on Uniting Corporate Power:

"But independent and uncoordinated activity by individual corporations, as important as this is, will not be sufficient. Strength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations."

(Direct link to quote in the Powell Memo)

An established network of ideological grant making foundations, including the Bradley Foundation, the Smith Richardson Foundation, the John M. Olin foundation, and foundations associated with the Scaife and Koch families, have leveraged private fortunes in order to influence public policy (Krehely et al., "Axis of Ideology," 2004). Corporate think tanks, like the Cato Institute, the American Enterprise Institute and dozens of other groups were created or redesigned to directly advocate for legislation that prioritizes big business profit over public safeguards and programs. The Heritage Foundation was established with $250,000 in 1973 from Joseph Coors in direct response to the suggestions of Lewis Powell's memorandum (Lewis H. Lapham, "Tentacles of Rage," 2004; Jerry Landay, "The Powell Manifesto," 2002).

As the public's ability to recognize corporate interest groups has become keener, these front groups have evolved to make their objectives less transparent. Notable examples include the Koch brothers' Citizens for a Sound Economy (CSE), which directed an environmental project that had "no citizen membership," and Americans for Prosperity, an astroturf group that rose from the ashes of CSE to advance the Koch Brothers' libertarian ideology under Koch funding and governance.

Evidence that Lewis Powell's ideas have extended beyond his explicit instructions is apparent in the role of trade associations. Today's industry-specific trade associations ally among themselves and in cooperation with the broader business mission of the U.S. Chamber to magnify their influence. The American Petroleum Institute is one such trade group and has coordinated fake grassroots efforts against climate legislation. A leaked memo written by API CEO Jack Gerard in August, 2009 revealed that API, in cooperation with the U.S. Chamber of Commerce, the National Association of Manufacturers, and other trade associations, coordinated "Energy Citizens" rallies in key Congressional districts as a way to increase political pressure against climate and energy legislation. This effort to create a network of seemingly pro-oil and gas grassroots activists was directly funded and organized by API and member companies. Oil lobbyists coordinated local rallies, while oil companies like Chevron provided support by bussing their employees to the events. In addition to these newer tactics, API has announced it will also begin using its financial weight to increase its direct influence on political elections

Lewis Powell's political vision has been further propelled by the U.S. Supreme Court's decision in Citizens United v. Federal Election Commission, which radically changed electioneering advertisement restrictions. Because of the Citizens United decision, groups like Karl Rove's American Crossroads and the U.S. Chamber of Commerce can spend and coordinate unlimited amounts of money on political ads that support corporate-approved candidates. Voters in key districts are now bombarded with campaign ads that support industry apologists and attack the Chamber's political opponents.

References and More Information:

Lewis H. Lapham, "Tentacles of Rage: The Republican propaganda mill, a brief history," Harpers Magazine, Vol. 309, No. 1852, September, 2004. Available at: http://www.mindfully.org/Reform/2004/Republican-Propaganda1sep04.htm.

Jeff Krehely et al., "Axis of Ideology: Conservative Foundations and Public Policy," National Committee for Responsive Philanthropy, March 2004. Available for purchase at: http://www.ncrp.org/publications?p=product&id=3.

Jean Stefancic and Richard Delgado, No Mercy: How Conservative Think Tanks and Foundations Changed America's Social Agenda. Philadelphia: Temple University Press, 1996. More information available at: http://books.google.com/books/about/No_mercy.html?id=ZYZiQgAACAAJ.

Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan. New York: Norton, 2009. More information available at: http://books.google.com/books/about/Invisible_hands.html?id=CcU7z9jLqXcC.

Jerry Landay, "The Powell Manifesto: How A Prominent Lawyer's Attack Memo Changed America," Media Transparency, August 20, 2002. Available at: http://old.mediatransparency.org/story.php?storyID=21.

"The Strategic Philanthropy of Conservative Foundations: Moving a Public Policy Agenda," Media Transparency, reprinted from a 1997 report by the National Committee on Responsive Philanthropy. Available at: http://old.mediatransparency.org/conservativephilanthropy.php.

Jeffrey H. Birnbaum, "The Road to Riches is Called K Street," Washington Post, June 22, 2005. Available at: http://www.washingtonpost.com/wp-dyn/content/article/2005/06/21/AR2005062101632_pf.html.

Marc Ambinder, "The Corporations Already Outspend the Parties," Atlantic Monthly, February 1, 2010. Available at: http://www.theatlantic.com/politics/archive/2010/02/the-corporations-already-outspend-the-parties/35113/.

John J. Miller, A Gift of Freedom: How the John M. Olin Foundation Changed America. San Francisco: Encounter Books, 2006. More information available at: http://www.amazon.com/Gift-Freedom-Foundation-Changed-America/dp/1594031177.

U.S. Chamber Institute for Legal Reform: http://www.instituteforlegalreform.com/

Emily Gottlieb, "Chamber of Horrors: The U.S. Chamber of Commerce Leads the Campaign to Eviscerate Victims' Right to Sue," Multinational Monitor, Mar/April 2005. Available at: http://www.multinationalmonitor.org/mm2005/032005/gottlieb.html.

James Verini, "Show Him the Money," Washington Monthly, July/August, 2010. Available at: http://www.washingtonmonthly.com/features/2010/1007.verini.html.

People for the American Way, "Buying a Movement: Right-Wing Foundations and American Politics," 1996. Available at: http://www.pfaw.org/media-center/publications/buying-movement.

People for the American Way, "Citizens Blindsided: Secret Corporate Money in the 2010 Elections and America's New Shadow Democracy," 2010. Available at: 
http://www.pfaw.org/media-center/publications/citizens-blindsided-secret-corporate-money-the-2010-elections-and-america-.

People for the American Way, "After Citizens United: A Look Into the Pro-Corporate Players in American Politics," 2010. Available at:
http://www.pfaw.org/media-center/publications/after-citizens-united-look-into-the-pro-corporate-players-american-politic.