Wednesday, May 16, 2007
WHAT'S NEW IN PUBLIC AFFAIRS
House Democrats finally unveiled their lobbying bill, but they'll likely face challenges from the rank and file members about three contentious provisions ... public opinion researcher Daniel Yankelovich discusses changes in business's social contract and new study shows an increase in Americans' willingness to trust business ... trade association CEOs are stressing the bipartisan nature of their groups ... while the costs of complying with the Sarbanes-Oxley Act may be high, they reduce reputational risk and boost investor confidence and free executives to focus on business strategy. These stories and more in the latest issue of the Public Affairs Council's Public Affairs News Monitor.
HEADLINES AT A GLANCE
"House Unveils Lobbying Bill"
"Exploring Business's Social Contract: An Interview With Daniel Yankelovich"
"Business Is Back"
"Still Alive and Kicking?"
"A Labor Union's Power: Blocking Takeover Bids"
"Peering Into the Fog: The Emerging Consequences of Sarbanes-Oxley"
"Healthcare Reform's Unlikely Ally: Big Business"
"Climate Change: A Hot Play for Lobbyists"
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Public Affairs News Monitor may be reproduced in hard copy form or electronically for internal circulation to Public Affairs Council member companies and associations.
"House Unveils Lobbying Bill"
Roll Call (05/16/07); Newmyer, Tory
Leading House Democrats say they will move forward with an aggressive schedule to clear a lobbying bill through committee Thursday for a floor vote next week, despite concerns registered by rank and file members regarding contentious provisions. The House draft would not require lobbyists to disclose "bundling" practices, party leaders said. Democratic lawmakers spent more than an hour Tuesday in what was reportedly a heated closed-door discussion about the reform proposals, with some lawmakers lodging strong objections to matching a requirement in the Senate-passed reform bill that lobbyists offer on a quarterly basis their best guess of how much campaign money they have bundled for each federal candidate, even if through informal efforts. Reform groups say the measure is key to the success of the overall effort. "In the end, House Democrats are not going to be able to argue that they have provided effective lobbying reform unless they have in that legislation the bundling provision, which is the essence of necessary lobbying disclosure reform legislation," said Fred Wertheimer, president of Democracy 21. The House Judiciary Committee will begin its Thursday session by marking up a bundling reform bill offered earlier this year. Once the lobbying package is on the floor, Democrats plan to allow the bundling proposal as an amendment. The grass-roots lobbying disclosure will reportedly be addressed in the committee markup this week; a coalition of outside lobbying groups is mobilizing to defeat that provision. The third contentious provision involves the cooling off period required for lobbyists coming from Capitol Hill.(www.rollcall.com)
"Exploring Business's Social Contract: An Interview With Daniel Yankelovich"
McKinsey Quarterly (05/07) No. 2,; Mendonca, Lenny T.; Miller, Matt
Author and public-opinion research pioneer Daniel Yankelovich explains in an interview that business is undergoing an shift in its social contract, one that places more emphasis on public engagement than short-term shareholder value. Balancing these two forces lies at the heart of the current struggle business faces, and Yankelovich points out that the public is focusing a lot of distrust on business and government in the wake of Enron and other business scandals, gatekeeper systems' failure, and a general erosion of social morality. "The current mistrust of business reflects higher public expectations of morality," Yankelovich contends. "The pressure on executives is to rediscover and redefine enlightened self-interest for our own era." Yankelovich projects that a new, engagement-conscious business philosophy will be spearheaded by CEOs and boards, in response to Americans' demands that companies' directly link their profitability to initiatives that serve the public good as well as themselves. For this to happen requires a redefinition of business doctrines, and Yankelovich believes an improvement of business' ethical standards will help dissolve public mistrust. He maintains that business' traditional methods of engagement--such as lobbying, advertising, and public relations--are losing legitimacy, and the corporate culture must be repaired so that truly benevolent business leaders are supported.(www.mckinseyquarterly.com)
"Business Is Back"
CNNMoney (04/30/07); Colvin, Geoff
Corporate America is showing signs of recovery from the bursting tech bubble and scores of Enron-level scandals, evidenced by the willingness of more executives to attract media attention. General Electric CEO Jeff Immelt has publicly discussed environmental issues, while high-level executives at Starbucks, FedEx, and DuPont discuss such topics as employee benefits, energy security, and renewable resources. Opinion polls also show an increase in Americans' willingness to trust business, with 57 percent of those recently surveyed by Edelman PR indicating a belief that business will "do what is right"--a higher level than recorded during the pre-Enron days. Other evidence that business is back includes an increase in business-school applications and Internet start-ups making their way to the stock market.(www.money.cnn.com)
"Still Alive and Kicking?"
Roll Call (05/14/07); Ackley, Kate
With Democrats running Congress and the White House up for grabs in 2008, many GOP trade association CEOs are now stressing the bipartisan nature of their associations and the need to work both parties. Jack Gerard, a former mining industry lobbyist who took over the American Chemistry Council in 2005, says "It's important to always be bipartisan and not to drive your association or group into one political camp or the other." Gerard, whose ACC political action committee gave more than 80 percent to Republicans in the 2006 cycle, notes that "Everybody in this town has a political stripe, but if you are honest and have integrity and are a reliable source of good information, then the political stripe goes away." Republicans have been chosen to run the largest trade associations over the past several years of total GOP control. Veteran association executives say the key to running a lobbying group is at least as much about managing the internal politics of the association and maintaining a strong relationship with its board and members than one's political connections on Capitol Hill. Former RNC Chairman Marc Racicot said that when the search committee for the American Insurance Association interviewed him, they stressed the nonpartisan nature of the job. In fact, one of the insurance industry's toughest critics is Senate Minority Whip Trent Lott (R), whose Mississippi home was destroyed in a hurricane. Lott has since taken up a fight for more coverage of hurricane damage. Despite all this, many observers do expect there to be more Democrats at the helm of lobbying associations, especially if Democrats retain control of the Congress and win the White House in 2008. "When one party is in charge of all the bodies, and for a long period of time, there tends to be a leaning towards that one party," said Charles Ingersoll, senior client partner in the association practice of search firm Korn Ferry International.(www.rollcall.com)
"A Labor Union's Power: Blocking Takeover Bids"
Wall Street Journal (05/09/07) P. A1; Wysocki Jr., Bernard; Maher, Kris; Glader, Paul
The 850,000-member United Steelworkers (USW) union wields an impressive amount of power through its ability to block takeovers, take sides in bidding wars, and fight for board seats. The union also muscles its way to the negotiating table in bankruptcies, billing itself as a "creditor" whose claims are workers' lost wages and benefits. In its most sophisticated tactic, it cuts deals with private-equity players and other financiers. The USW's tactics may become more common as unions recognize they must deal with the Wall Street crowd, which as a result of investments now indirectly controls thousands of union jobs. USW had reservations about Brazilian steel firm CSN's bid to take over the Wheeling-Pittsburgh company, and it vetoed the bid by signing off on Esmark, a small Chicago company that promised its acquisition would not result in any union layoffs. Esmark's reputation for good labor relations and USW leaders' familiarity with the company's financial backers helped its case. Once it had USW's support, Esmark ousted Wheeling-Pitt's board of directors through a proxy battle. USW draws its power from its successorship clauses, which require that a successor company and the union reach consensus on a labor contract before a steel plant is sold, effectively granting the union the right to approve a plant sale. In some cases, USW has waived this right in return for benefits for its members.(www.wsj.com)
"Peering Into the Fog: The Emerging Consequences of Sarbanes-Oxley"
Pennsylvania CPA Journal (06/07) Vol. 78, No. 1, P. 36; Boodoo, Maria F.; Boodoo, Crystal F.
Operational costs engendered by the corporate governance provisions of the Sarbanes-Oxley Act (SOX) are well documented, but the complete picture of SOX's intended and unintended benefits as well as costs remain to be understood. It will take additional time before the full impact of SOX is seen, recorded, and understood, especially considering that the social benefits of SOX are harder to calibrate than, for instance, annual corporate implementation costs. In 2006 the average SOX implementation at a large company cost $3.8 million. Meanwhile, SOX costs are deterring smaller cap companies, and to a lesser extent, non-U.S. companies, from listing on U.S. stock exchanges. Small-cap companies with revenues of $25 million or less represented 70 percent of all IPOs in 1999, but 46 percent in 2005, reports the Government Accountability Office. In terms of the positives, SOX may reduce reputational risk and boost investor confidence, and SOX may also lead to a decrease of regulatory actions and shareholder lawsuits, thereby reducing corporate costs and freeing executives to focus on business strategy. SOX's tighter accounting standards may help government officials expose shell-company transactions and halt other illicit financial activities.(www.picpa.org)
"Healthcare Reform's Unlikely Ally: Big Business"
Los Angeles Times (05/07/07); Rau, Jordan
The Coalition to Advance Healthcare Reform is a group of 36 major companies campaigning for universal medical insurance supported by California Gov. Arnold Schwarzenegger. Members of the coalition include PepsiCo, Pacific Gas & Electric, General Mills, Wrigley, The Kroger Company, Bumble Bee Seafoods, Eli Lilly, PacifiCare, Aetna, Blue Shield of California, and Cigna HealthCare; these firms already offer their employees medical coverage; and they are pushing for a retooling of health care laws as they grow frustrated with rising premiums. Coalition founder and Safeway Chairman Steve Burd warns that health care costs will consume 22 percent of the U.S. gross domestic product by 2015 and hinder corporate competitiveness on a global scale. In addition to universal medical coverage, the group supports Schwarzenegger's plan to have hospitals and doctors provide financial aid to the poor so that they can purchase coverage. These two requirements are the platform of a bill sponsored by Sen. Ron Wyden (D-Ore.), although his measure does not detail the precise methodology for subsidy payment or requirements that may need to be imposed on U.S. employers. Other features of Schwarzenegger's proposal include a requirement that companies with 10 or more workers offer insurance or pay into a state fund. AARP and a coalition of unions, insurers, and health care providers have launched their own reform-minded campaigns. Republican leaders say universal coverage is an unrealistic goal, and prefer to concentrate on improved access to medical care. Meanwhile, small and mid-sized companies have long opposed comprehensive health care law reforms.(www.latimes.com)
"Climate Change: A Hot Play for Lobbyists"
The Hill (05/09/07); Robertson, Peter D.
Lobbyists, lawmakers, corporations, and the public are on the climate change bandwagon, and congressional members are seeking legislation to curb emissions and address environmental deterioration by the summer. While headlines continually harp on the climate change issue--from Supreme Court decisions to the latest voluntary emissions caps adopted by corporations--an environmentally friendly agenda is gaining steam. Coalitions between corporations, environmentalists, and lobbying groups continue to flourish, but experts caution that these partnerships are fragile and have to maintain a broad perspective on climate change remedies in order to be successful. Analysts indicate that many groups will likely become fragmented in their solutions, and they encourage groups to find common ground that does not address regional concerns only.(http://www.thehill.com/)
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