Doggett Shines a Light On Stealth Coalitions
Rep. Lloyd Doggett (D-Texas) was new to the Ways and Means Committee in 2000 when he began to notice a pattern that troubled him: Many of the groups lobbying the panel for tax breaks had seemingly innocuous names but would not disclose who was funding them.
Over the next two years, one such group, the Section 877 Coalition, shelled out $940,000 to protect tax breaks for wealthy people who give up their U.S. citizenship. Another, the Council for Energy Independence, worked to preserve a synthetic fuel credit worth billions of dollars to a select group of manufacturers.
In committee hearings and in an exchange of letters, Doggett locked horns with lobbyists from PriceWaterhouseCoopers, which was representing both coalitions.
“We saw in the Ways and Means Committee this tactic to disguise who was behind some really egregious pieces of legislation,” Doggett said.
In 2002, by leaning on a Treasury official who had worked at the lobbying firm, Doggett learned the Section 877 Coalition was funded by a single family: the Arisons, who made a mint by founding Carnival Cruise Lines. Family patriarch Ted Arison saved millions in taxes by giving up his U.S. citizenship and moving to Israel. To push for the tax break anonymously, the family trust took advantage of a loophole in the 1995 Lobbying Disclosure Act that allows firms to set up “coalitions” that exist only on paper while their funders remain in the shadows.
Now, the practice is getting fresh scrutiny as Congress seeks to tighten ethics rules after a rash of lobbying scandals.
Democratic lawmakers already are moving to impose new transparency requirements on the groups. A little-noticed provision in the ethics reform measure Senators approved last month would require any source exerting substantial control over a coalition to be identified.
Doggett, meanwhile, has reintroduced a bill to tackle the issue that he has been pushing since 2002. It has gathered 49 co-sponsors this year and aides say it likely will be included in a broader legislative package Democratic leadership will unveil as soon as this week.
In the decade since Congress last approved an overhaul of lobbying laws, coalitions have proved an increasingly popular method for corporate interests to streamline single-issue campaigns and, in some cases, sidestep transparency rules. The causes range from the mundane — the Coalition of American Decorative Mirror Importers, for example — to the global, with energy companies using the tactic as they gear up lobbying in the debate over climate change.
Over the previous five years alone, at least 791 such groups have formed, according to a 2006 report produced by the Congressional Research Service. CRS was able to assemble complete membership information for less than 19 percent of those groups. For nearly 53 percent, the researchers were unable to identify any members.
Congressional watchdog groups are campaigning for greater disclosure from the groups. Celia Wexler of Common Cause called it a “no-brainer.”
“If you are going to form a coalition, then the members of that coalition should be identified. Who the heck are we talking about? The public has a right to know,” she said. “And elected officials, if they are making decisions, have a need to know.”
During the last Congress, some of the biggest-ticket lobbying campaigns were launched by coalitions whose public membership rolls were incomplete at best.
The loudest voices in the debate over a proposed trust fund to compensate victims of asbestos-related illnesses formed front groups to organize their efforts. Companies such as Viacom, Pfizer and General Electric in 2005 alone pumped $10 million into the Asbestos Study Group, housed at the firm then known as Swidler Berlin, to help push a bill. They got backing from old-line manufacturers and insurers, who created the Asbestos Alliance, a group created by the National Association of Manufacturers. Companies opposed to the bill contributed to a group called the Coalition for Asbestos Reform, which existed only on paper as a creation of the firm Sonnenschein Nath & Rosenthal.
In the debate that year over President Bush’s drive to overhaul Social Security, NAM jumped in again, forging the Alliance for Worker Retirement Security to push the plan. The group initially posted its membership list on its Web site, but later removed it when labor groups and other activists began staging protests outside the offices of financial services firms that had joined up.
Even this year, as lawmakers have signaled they want to shed new light on the groups, several coalitions have sprung up. The Climate Policy Group, for example, recently formed to represent public power and utility companies in the climate change debate. Robert Talley, the lobbyist behind the effort, declined to disclose its membership when Roll Call reported on its creation.
Under Doggett’s bill, interests intent on keeping their involvement in a coalition private could simply organize as a 501(c) group. The lawmaker said the move would at least force the groups to become legal entities. There is some evidence informal lobbying coalitions already are headed in that direction. The Coalition for Fair and Affordable Housing, a collective of sub-prime mortgage lenders, this year organized as a 501(c)6 — the tax code designation for a trade association. “It just makes us a little more formal and gives us a little more permanence,” said Wright Andrews, a lobbyist at Butera & Andrews and executive director of the group.
Several lobbyists who have assembled the coalitions said more than anonymity, the tactic provides a way to coordinate what would otherwise be disparate interests in support of a common goal. “When you have a trade association, you have a lot of different members, and a lot of different issues, and you’ve got to boil it down to the lowest common denominator,” said Howard Feldman, whose firm Van Ness Feldman honchos the Geothermal Tax Group, the Clean Coal Coalition and the Rail Equity Coalition. “With a single-issue coalition, you don’t have those problems, so it’s more workable.”
Kenneth Kies, a senior tax lobbyist at Clark Consulting Federal Policy Group who lobbied for both the 877 Coalition and the Council for Energy Independence, said he doesn’t keep the membership of his coalitions under wraps when he is in meetings with Members and staff. “I’ve never represented anybody where I wouldn’t tell the Hill who it was,” he said.
Nevertheless, for his work on behalf of at least 13 such groups, he has earned particular attention from Doggett, who said “it was probably coincidental that Ken has been such an effective fundraiser for Republicans and that, while in the majority, they didn’t want to look at this abuse.”
Kies makes no apologies. “The rules are what the rules are, and if they change, we’ll follow them,” he said.