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U.S. Chamber's Donohue Shrugs Off Defections

The U.S. Chamber of Commerce has been under fire in recent weeks, as five companies—the most prominent among them tech maven Apple (AAPL)—have resigned or reduced their roles at the organization to protest its staunch opposition to current legislative and regulatory proposals aimed at reining in global warming. But Thomas J. Donohue, the Chamber's combative, long-time president and CEO isn't backing down. He says the resignations are insignificant and argues that the majority of the Chamber's members back its hard-line stance on climate solutions.

BusinessWeek Washington Bureau Chief Jane Sasseen spoke with Donohue about the controversy, the Chamber's growing opposition to key parts of the Democratic agenda, and the risks to the Chamber's broader role as the voice of business in Washington. Here is an edited version of their conversation.

BW: You have vehemently fought the legislation now in Congress that would set up a "cap-and-trade" system to cut back greenhouse-gas emissions. Just to be clear: You say you want legislation, but not this particular legislation. Are you opposed to cap-and-trade, per se?

Donohue: Not per se—there are cap-and-trade systems that would work and I would be happy to listen to them. I am very concerned about this legislation, in terms of three or four parts of it. We'd like to see a bill that's more workable, more immediate, and more beneficial to our economy at a time that we're in a very serious recession.

For the longest period of time, we have supported every proposal for legislation and regulation which would make it more feasible and more possible and more economic to do all the alternate fuels businesses. We've been there, we've supported it. Now, we have a problem—there are at least a hundred alternate fuels projects, not to mention all the nuclear power things we ought to be doing—that others are holding up. But whether it's environmentalists, whether it's labor unions, we are ready to do them.

But do you object to the basic principle of putting a price on carbon and controlling emissions by making them more expensive, whether that is done through a cap-and-trade program or other methods?

Or even a carbon tax might be worth looking into if the money were put into building America's infrastructure. But I don't think we could get that done.

And not I'm saying that's what we should do; it's what some people are suggesting. But I'm not opposed to dealing with the matter. I am opposed to the current bill.

[Editor's note: The Chamber has also been criticized for challenging the U.S. Environmental Protection Agency's plans to regulate carbon; the agency contends that it has the authority to do so under the Clean Air Act because such emissions endanger the public's health. The Chamber has called for public hearings to examine the EPA's plans and its right to regulate in this area.]

Let me explain why we did that. The first reason is the endangerment business was never put together to deal with a finding on C02. It was put together to deal with specific pollutants—asbestos and other things—for which an endangerment finding would be more narrow and more easily corrected.

If you were to have an endangerment finding on C02—in our opinion, and we could be wrong—we believe the EPA would then be in a position to regulate, control, limit, and constrict every construction and reconstruction project of any size throughout this country, and with a bureaucracy the size of the national military. So we're saying if this is something that is being threatened, as a way to push towards a federal bill, then we ought to sit down and have a conversation and say "What data and what arguments would [the EPA] bring to make that finding?" And could we see the numbers so that perhaps we could participate in that discussion? And I don't expect they are going to let us do that. I don't find three or four or five people leaving the Chamber extraordinary. I don't find it surprising what's going on, I just find it interesting that when five members decide to quit, they all call up the press and tell them, and all of a sudden the press thinks it's a really huge deal at the Chamber. It's something I'm concerned about, because you don't ever want people feeling like they haven't been heard. I will just give you this quote: I have never heard from these companies in a specific manner on these subjects.

Both Nike and PG&E have said they did discuss these issues within the Chamber.

I'm sure they did discuss it with some of our folks. I will say this; I've always known that Nike was very concerned about environmental issues. Their representative on our board never brought this to the board, never brought this to us, and now they want to talk about how we set policy? Nah, I don't think so.

P&GE also says they tried to discuss this internally for months and bring about change within the Chamber.

In fairness to PG&E, they are a company that is very, very engaged on an environmental side, and we had discussed this and I thought it—you know, with others —when I originally talked to some of their people, I made it very clear that we were interested in a bill. They have some particular interests in their forms of energy generation and if they feel that the Chamber is doing something that's holding back what they need to get for their company and that we didn't respond well, then they have every reason to resign. But that's not what they did. They resigned and did it in a very public way because they were trying to make a point in conjunction with others.

The utilities who've left argue that they, like many others, want to see standards for carbon emissions fixed so they can make investment plans. You all seem to be implying they want this legislation because they're going to make a lot of money with this solution while other companies won't. Explain that to me.

This is probably not the answer you want to hear, but if I were running one of those companies, I would do whatever is good for my shareholders. That would be my job. If I belonged to an organization that was impeding my ability to meet the needs of my shareholders on a broad basis, I might well resign. I don't know that I would do it the way they did it, but then I'm not in their situation. But fair is fair.

Having said that, I think there is a third party in the room [that is] talking to a very receptive group of people who feels strongly about what we're doing. I think it's also important to understand there are lots and lots of people that feel strongly on other sides of what we're doing—and by the way, this is not indigenous just to climate.

I want to go back to the argument over the EPA and its authority in regulating carbon. The resignations started because of a story in the Los Angeles Times in late August in which Bill Kovacs, the Chamber's lead person on environmental issues, called for something along the lines of a new "Scopes Monkey Trial" to examine the EPA's role and look at whether human activities are actually causing global warming and the damage attributed to them. Let me be very clear about that. And if you don't listen to anything else with a careful ear, listen to this. That is probably the dumbest thing that Kovacs has said in a very distinguished, very accomplished, and helpful career at the Chamber and other places. His enthusiasm caught up with his mouth. If he had a moment to rethink it, he would never say it, and we have disowned that quote.

We do not choose to have not a public debate on the science of CO2 and global warming. We are interested in public debate on how we deal with the phenomena.

The distinction being?

The distinction being [that] the science as defined by government, or whomever, we don't argue that. We now want to say, we know [the science]; how do we resolve it? Do we do it in a way that is helpful and productive in terms of dealing with global warming and at the same time in terms of keeps our economy going and our people employed and our budgets in some sort of order? Or do we act in a way that while well intended, does not achieve those objectives while trying to do something about CO2? [That] is a legitimate discussion.

You all now have taken a leading role in this area, in the health-care fight, in some of the financial services reforms—you have taken a lead role in opposing much of the Democratic agenda put forth by the Administration and Congress.

Would you say also that we took a lead role in helping on the TARP funds? On the stimulus—which large numbers of our members were very angry that we did that, but it was the right thing to do, we could have slipped into a depression? We took a lead role in trying to help the Administration in dealing with the auto industry, when others could have found that not a thing we should have done? And on and on?

And if you would agree with that, then I would agree in certain other areas such as card check, and some of the capital market issues, then you might be right. On the health-care side, we've said we want a health-care bill, we want to immediately go ahead and cover the 45 million people who are not covered. We're looking for a bill right now. We just have a couple of things in it that most people have found difficult. That doesn't make us an obstruction.

I would agree that early on you backed some of these measures meant to stimulate the economy and I think people in the Administration and the Congress would agree wholeheartedly with that as well. That said, there is a growing view that you are now moving much more aggressively against many of the policy proposals that they are trying to put forward. The argument I've heard from a number of people, from the White House on down and key people in Congress, is that you are becoming something of a "Dr. No." you're leading the opposition to all of these things.

Well, we're certainly not alone. If you look at the issues individually—if you look at card check, we don't control the votes on that, but the votes aren't there for that legislation. So are we the only "Dr. No?"

No, but you were very effective.

I would hope so. That's what we get paid for. Look, we don't do Presidential politics. Get that very clear. Whoever is the president is our guy. We want to keep them strong, dealing with all the global issues they have to deal with. But that doesn't mean we can't take issue with parts of the policy agenda they are trying to advance. If people want to say that we're becoming more aggressive, they are free to do that in this country. They may want to take a minute or two to wonder if there is something wrong with what they are proposing—not only with the people that are reacting to it.

And clearly understand one thing. The Chamber is a federation of companies and associations. It's not me standing there by myself. And it's not our staff standing there by ourselves. We're dealing with the issues that concern the American business community and we're doing it with the greatest amount of integrity that we can. And it is very predictable that if we are successful at some period of time—and we're not going to win them all—that will not make the proponents of that legislation or those regulation happy. But that's the American system. That's what we try to do.

Do you see a risk in that? As you are working against the broader things that are core to the Democratic agenda, is there a risk is that you lose your place at the table?

That's a very legitimate question. But a place at the table is not granted by a ticket from the Administration or the leaders of the Congress. A place at the table is granted by our ability to be heard by those who make decisions—in the Congress, in the regulatory agencies, in the White House, in the press, and everywhere else where people will listen. One last thing. You have been crisscrossing the country to raise up to $100 million to back a "Campaign for Free Enterprise," which you will launch on October 14th. Some people have seen it as something of a declaration of war on the Democratic priorities. Why do you feel such a campaign is needed, and what will it focus on?

First of all, it's not a declaration of war against anyone. The issue is very, very clear. This is going to be very positive program. We are going to remind, promote, educate and encourage in every way we can so that people remember, or learn, what made the greatest economy in the history of the world—[what] created more jobs, created more wealth, created more innovation, created more opportunity—was a free-enterprise economy with free and open trade with open capital markets, with the right to fail and fall right on your face and get up and try it over again, the right to make money, and the right to make it in a system with moderate regulation and taxes.

And we are doing this [because] we have just gone through the most significant recession since the Great Depression. As we as a society, business and labor and government and the private sector and the public sector, look for ways to assure that these problems don't happen again—although they will in some other context because that's the cycle of economies, We are trying to remind people that there is a way forward, based on our history.

For example, part of this is the trade material we put out a couple of weeks ago. And what did we say? We as a nation have to figure out a way to get out of the recession and create 20 million jobs in less than 10 years and deal with a growing deficit. And how do you do that? We are the largest exporter in the world. You double your exports every five years. And by the way, in the last five years, with one year of recession, exports went up 78%. And if you do that again and again over a number of years, you're going to create a hell of a lot of jobs. So this is a positive thing.

Much of it does seem to focused on wanting to limit regulation, limit government, limit taxation at a time when there is obviously a lot of discussion in Washington about whether more reforms or regulations are needed to prevent many of the excesses we've seen in the last year.

Well, if the shoe fits, whoever owns the shoe ought to wear it.

Where do you think that's a problem?

Come on. Read the headline on the book that you represent. We're going to do a whole redo of the capital markets. And there are good people to work with on that. But maybe while we're doing that, let's ask some fundamental questions, let's make sure that while we do this, we can still drive the capital markets and create wealth. Get the lending going. These are good things. We just have a style here, we say why don't we look at this—are we getting too far from it, too close to it? I think it will be helpful. But we're not going to attack anybody.

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