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The Importance of Not Underestimating Ernest


Just as business groups were getting used to a Senate Commerce Committee chairman who is quirky and headstrong, with a brash populist streak, Democrats took over the Senate. Now, Corporate America is adjusting to a Democratic chairman who is...quirky and headstrong, with a brash populist streak. But the similarity ends there. As Republican John McCain of Arizona steps aside, lobbyists are bracing for a collision with every deregulator's nightmare: South Carolina Democrat Ernest "Fritz" Hollings. Says one worried lobbyist: "There are a lot of folks who thought that John McCain was a wild man. They ain't seen nothing yet."

What spooks corporate interests? Hollings is in favor of regulating Big Business, opposes tort reform, and will "use the committee as a bully pulpit to challenge...[all those] who want to deregulate, deregulate, deregulate." Bucking a Senate tradition of support for free trade, the new Commerce Committee head is an unabashed protectionist. "Protecting your industrial base, that's what globalization is all about," he explains unapologetically. In fact, Hollings might be business' Public Enemy No. 1--if many lobbyists didn't dismiss the 79-year-old South Carolinian as a blustery yet harmless throwback.

TROUBLE SPOTS. Underestimating Hollings' backroom political skills, his interest in a wide range of issues affecting business, and his reach could be a mistake, though. As chairman of both the Commerce Committee and the Appropriations Committee panel that funds the U.S. Trade Representative's office, the Commerce Dept., and the Justice Dept., he can stall much of the Bush business agenda. From trade to telecom to antitrust policy, he is uniquely positioned to make trouble for some business sectors.

While Bush angles for expanded authority to cut deals with foreign countries, Hollings--a staunch defender of his state's import-sensitive textile industry--plans to hammer away at the shortcomings of past trade pacts. Coming soon: hearings on the dismal record of developing countries in protecting U.S. patents and copyrights. Meanwhile, in his other capacity, Hollings will examine the budget of U.S. Trade Representative Robert B. Zoellick. If Hollings doesn't think he's being heeded sufficiently at the White House, don't be surprised if Zoellick's numbers come up a bit short.

NEW TACK. Hollings will have a big impact on telecom issues, too, because of his authority over the Federal Communications Commission's policy and budget. That could spell trouble for FCC Chairman Michael K. Powell, a McCain ally with big deregulatory ambitions. If Powell doesn't force the Baby Bells, a favorite Hollings target, to open their lines to local competition, or tries to dismantle the ban on owning a TV station and newspaper in the same market, the senator could make life very unpleasant at the FCC. Powell will find this message "coming through loud and clear," promises Hollings.

Hollings has already caused the Bush Administration to shift tactics in one area: tobacco litigation. The Bushies never favored the far-reaching federal suit brought by the Clinton Administration. To avoid taking political heat, however, the White House strategy has been to starve the litigation quietly by withholding sufficient funds to continue the costly court battle. That plan went out the window when Hollings--a good friend to the trial lawyers--took over the panel that funds Justice. So on June 19, the Administration went to Plan B, initiating settlement talks.

Indeed, Hollings has never been shy about throwing his weight around. In 1996, while in the minority, he ran circles around Senate Republicans over a telecom reform act. His style: stake out an extreme position, then compromise as little as he has to. Before he was through, sections of the bill relaxing limits on media concentration and foreign ownership of broadcast stations were gutted. Says Hollings' former Commerce Committee staff director, Ivan Schlager: "Few people know how to work a bill as well as he does."

That's one reason the tech lobby is feeling a bit queasy. On the hot issue of Internet privacy, Hollings plans to reintroduce legislation that Silicon Valley considers too intrusive. He would require that online services get specific authorization from customers to collect data on them: In other words, they would have to "opt in," rather than prevent such scrutiny by "opting out." While lobbyists say his proposal won't pass unless it's watered down, they have their work cut out for them. "He's going to put the fear of God in a lot of high-tech companies," says Hewlett-Packard Co. lobbyist Scott Cooper.

Fritz Hollings may be a throwback to the days before "New Economy" and "globalization" became Washington buzzwords. But he knows how to maximize his influence--and that means keeping Corporate America and its congressional allies off-balance. It's enough to make them long for the good old days of Chairman McCain. By Dan Carney in Washington


Steve Ballmer, Power Forward
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