Corporate Donors Seek Return On Investment In Bush Campaign
Philip Morris has numerous ties to the Bush administration

By Tom Hamburger, Laurie McGinley and David S. Cloud  THE WALL STREET JOURNAL


For the businesses that invested more money  than ever  before in George W. Bush's costly campaign for the presidency, the  returns have  already begun. MBNA America Bank was one of the single largest  corporate donors  to the Bush campaign and other GOP electoral efforts last year.

THE BANK AND ITS EMPLOYEES gave a total of about $1.3 million,  according to the  Center for Responsive Politics, a non-partisan clearinghouse here.  Charles  Cawley, MBNA's president, was a member of the Bush pioneers,  wealthy  fund-raisers who each personally gathered at least $100,000 for the  presidential campaign.

Mr. Cawley hosted Bush fund-raising events at his home in  Wilmington,  Del., last year and, in 1999, at his summer home in Maine, north of  the Bush  family retreat in Kennebunkport. At the Maine affair, 200 guests  gathered in  the early evening on the large porch of the Cawley home, situated  on a hill  with a sweeping view of the Atlantic Ocean. Guests sipped cocktails  and heard a  brief talk by the candidate.

The money didn't stop on election day. Mr. Cawley and his  wife each gave  the maximum of $5,000 to help fund Mr. Bushís fight in the Florida  vote  recount. Mr. Cawley gave an additional $100,000 to the Bush-Cheney  inaugural  committee, the most the committee would take from a single donor.

Last week, MBNA's investment began paying off. The company,  one of the  nationís three largest credit-card issuers, has been pushing for  years to  tighten bankruptcy laws that allow certain consumers filing for  court  protection, in effect, to disregard obligations to credit-card  companies and  other unsecured lenders. On Wednesday, the White House announced  that President  Bush would sign a bill now moving through Congress that would make  it tougher  for consumers to escape such debts. If enacted, the measure could  translate  into an estimated tens of millions of dollars in additional annual  earnings for  each of the big credit companies.

MBNA's vice chair, David Spartin, says his firm has no way  to estimate  how the legislation would affect the company's bottom line. MBNA  has  backed the  bill for years because we think it is good for consumers,î as it  will ìreduce  the cost of credit for everyone, Mr. Spartin says. The donations  to President  Bush and other candidates were made because we think they would  make excellent  public officials,î he adds. No MBNA official ìhas ever spoken to President Bush about the bill, Mr. Spartin says.


Many corporations feel like a new day is dawning in  Washington. "We have  come out of the cave, blinking in the sunlight, saying to one  another, My God,  now we can actually get something done,"says Richard Hohlt,  Washington  lobbyist for several other major banks which, like MBNA, are  backing an  industry coalition whose members provided some $26 million to  Republicans  during the 1999-2000 campaign cycle.

President Clinton last year vetoed a similar bill that  would have  toughened bankruptcy law. Consumer groups argue that such  legislation would  weaken protection for working families, many of whom have been the  targets of  aggressive credit-card marketing.

Also in action last week were members of a large coalition  of Mr. Bushís  business backers who want to roll back new federal rules designed  to protect  workers from repetitive-motion injuries.

In a private meeting with congressional leaders last Tuesday, President Bush signed off on a plan to kill the ergonomic regulations, using  the powers  of the Congressional Review Act. That act, passed in 1996, gives Congress 60 days to reject regulations issued by federal agencies. But it was  never used  during Mr. Clintonís term because to take effect, a resolution  rejecting new  rules has to be approved by the president.

Repealing the ergonomic rules ranks high on the priority  lists of the U.S. Chamber of Commerce, the National Association of Manufacturers and the  National Association of Wholesaler-Distributors. The trade groups  technically  donít endorse candidates, but each of them mounted major  grass-roots and  advertising campaigns that benefited Mr. Bush and other Republicans  in the 2000  elections.

A repeal would be a particularly hard loss for organized  labor, which  has fought for enactment of the ergonomic rules for 10 years,  saying they are  needed to protect workers from wrist, back and other injuries.

On employee safety, consumer bankruptcy and a host of other  issues, Bush  administration officials maintain they are acting strictly on the  merits, not  the money. Proponents of the bankruptcy bill, for example, point  out that  personal bankruptcy filings reached a record 1.4 million in 1998.  The bill that  would toughen the bankruptcy law won strong bipartisan support in  the House  last week, passing 309-106.

Business advocates maintain that the ergonomics rules  include an overly  broad definition of ìmusculoskeletal disordersî and that the new  standards give  employees claiming to have such disorders overly generous  treatment: 90% of  their salary and benefits for up to three months.

But as strongly as they believe in their arguments,  business lobbyists  acknowledge itís no accident that, following their massive support  for the GOP,  Republicans are moving quickly to address some of their top issues.

Mr. Bush ran the most costly presidential campaign in  American history.  Donors to his campaign and the Republican National Committee  contributed a  total of $314 million. Of that, more than 80% came from  corporations or  individuals employed by them. Al Gore and the Democratic National  Committee  raised $213 million, receiving strong support from labor  organizations and  their members. But more than 70% of the Democratic total also came  from  businesses and their employees.

These totals can be seen as somewhat inflated because most  donors to  either party work for a business. But the amounts donít included  separate  contributions from trade associations or independent business  advertising. ìThe  role of business last year was huge, and it overwhelmingly  benefited  Republicans,î says Larry Makinson of the Center for Responsive  Politics.

As the bankruptcy and ergonomics bills move through the  Senate over the  next few days, business groups also will be looking for early  action on other  key issues. Hereís a preview.


With then-Vice President Al Gore and many Democratic  congressional  candidates railing against alleged profiteering by drug companies,  the industry  made its biggest-ever contributions to the GOP cause.

Drug companies contributed $14 million to Republican  campaigns over the  past two years and spent an additional $60 million to fund their  own  independent political-advertising campaign. Industry executives  will be  lobbying the new administration on a wide range of issues, such as  the proposal  to overhaul the Medicare program and include a prescription-drug  benefit for  senior citizens. The industry wants to make sure such a benefit  doesnít lead to  drug-price controls.

But that fight isnít likely to command center stage for  many months. In  the meantime, drug companies will press for a rewrite of federal  rules  protecting the privacy of patientsí medical records. The rules were  announced  with much fanfare in the final weeks of the Clinton administration.  The drug  companies recently got a sign that they, too, were making progress  with the new  administration.

Health and Human Services Secretary Tommy Thompson, in a

move that  infuriated consumer groups, invited additional public comments on  the rules  until the end of this month. The industry is hoping the move will  lead to more  delays and, ultimately, significant revisions.

Last December, Mr. Clinton heralded the rules as ìthe most  sweeping  privacy protections ever written.î For the first time, patients  would have  access to their medical files and could correct mistakes.  Providers, such as  hospitals and health plans, would be required to get written  permission from  patients to use or disclose patientsí health information. Providers  also would  have to create sophisticated record-keeping systems and privacy  policies to  document compliance with the rules.

Hailed by privacy advocates, the rules include provisions  anathema to  nearly every segment of the health-care industry. Drug makers,  HMOs, drugstore  chains and hospitals say that while they back the goal of increased  privacy,  the rules have a potential cumulative price tag in the tens of  billions of  dollars, much of it to overhaul data-collection and  information-technology  systems.

The companies warn that the new requirements mean that  pharmacies would  need signed customer consents on file before they could do  something as simple  as sending a prescription home with a neighbor. The drug industry  also says  that research critical to boosting corporate innovation and  tracking  the safety  of drugs would be inhibited. Academic researchers seeking personal  health  information from hospitals would have to get authorization from the  patient or  undergo a special privacy review by a hospital panel.

Privacy advocates such as Janlori Goldman of the Health

Privacy Project

at Georgetown University counter that such dire predictions are  inaccurate and  ìhysterical.î

Technically, the regulations apply to the use of  information by  hospitals, doctors, pharmacists and HMOs. But they have big  implications for  drug companies, which depend on access to that data for research  and  marketing.  Among the drug companies most concerned is Merck & Co., because of  its  Merck-Medco unit. Like other pharmacy-benefits managers, which  obtain contracts  from HMOs and employers to keep drug costs down, Merck-Medco fears  it would it  be hindered in its ability to track physician-prescribing patterns  and other  information.

Taking the lead on combating the rules is the  Confidentiality  Coalition,  an industry group that meets at the offices of the Healthcare  Leadership  Council, overlooking Farragut Square, a few blocks from the WhiteHouse. Dubbed the Anti-confidentiality Coalitionî by privacy advocates, the  alliance has 120  members, including Merck, Eli Lilly & Co., Cigna Corp. and Medtronic Inc., the big medical-device maker. A core group of 20 to 30 lobbyists shows  up regularly  for strategy sessions.

During the second week in February, an industry contingent  met with  Sally Canfield, a senior counselor to Mr. Thompson of HHS. The  industry team  included Laurie Michel, a lobbyist for Merck, and Laura Gogal, vice  president  and chief counsel of the Federation of American Hospitals, the  trade  association of for-profit hospitals. Ms. Canfield was well known to  the  industry group because of her own past posts as a lobbyist for  insurer Mutual  of Omaha Inc. and a staffer to GOP Rep. Jim McCrery of Louisiana,  who often  works on health issues.

Meanwhile, Craig Fuller, who served as chief of staff to  former  President George Bush and now heads the National Association of Chain Drug Stores, met recently with Mr. Thompson to make the case on privacy  and other  issues. Mr. Fullerís current constituents include such behemoths as CVS Corp. and Walgreen Co.

The drug industry provides a case study of how the ties  between the new  Bush administration and its business backers run much deeper than  money. There  is often a shared worldview among people who have been colleagues  and friends  in both the private sector and government.

Raymond Gilmartin, chairman and chief executive of Merck,  and Anne Marie Lynch and Bill Walters, top officials at the Pharmaceutical Research and Manufacturers of America, the industryís main trade group, all  served as  advisers to the Bush transition team on health issues.

Deborah Steelman, a prominent lobbyist whose clients  include  Bristol-Myers Squibb and the drug-industry trade group, was sounded  out for a  top job at the Department of Health and Human Services, but  declined. Mitch  Daniels, a Lilly executive, accepted the offer he got to be  director of the  White House Office of Management and Budget, which oversees both  budget and  regulatory issues.


When it comes to being well-connected with the new  administration, few  industries rival tobacco. Cigarette makers are hoping those ties  help  accomplish such goals as snuffing out a multibillion-dollar federal  lawsuit  against it.

Cigarette companies adopted a much lower profile in the  last election  than drug companies, in part because Republican strategists worried  that  featuring close ties to tobacco would anger many voters. But the  money flowed  liberally. Tobacco interests contributed roughly $90,000 to Mr.  Bushís  campaign, part of the $6.7 million they provided to the Republican

Party and its candidates in the last election cycle. Democrats received $1.4  million from  tobacco interests. Beyond the campaign, industry titan Philip Morris Cos. was one of  the most  generous contributors to Mr. Bushís inaugural, giving $100,000  itself and  another $100,000 through its subsidiary, Kraft Foods. Along with a  number of  inauguration tickets, these donations entitled company executives  to  two tables  at a candlelight supper attended by President Bush and Vice President Cheney the night before their swearing-in.

Philip Morris has numerous long-standing ties to the Bush  administration. Karl Rove, a senior White House adviser, worked as  a political  consultant for the company from 1991 to 1996. Kirk Blalock, a Philip Morris public-relations official, took a job in the White House in January  as a  liaison to the business community. Handling the inaugural donations  for Philip  Morris was Thomas Collamore, a vice president for public affairs  who  worked for  President Bushís father, both in the White House and the Commerce  Department.  Charles Black, an informal adviser to Mr. Bush during his campaign,  is also a  Philip Morris lobbyist in Washington.

Mr. Thompson of HHS, received more than $70,000 in Philip  Morris  campaign-related contributions during his years as Wisconsin  governor. He  disclosed before his Senate confirmation earlier this year that he  owned  between $15,000 and $50,000 in Philip Morris stock. An  administration spokesman  says that Mr. Thompson didnít realize he owned the companyís stock  because it  was in a blind trust and that he planned to sell it.

British American Tobacco PLCís Brown & Williamson unit and R.J. Reynolds Tobacco Holdings Inc. are also well-positioned. Both companies are  represented  by Barbour, Griffith & Rogers, a lobbying firm stocked with  Republican  operatives, including former GOP Chairman Haley Barbour and Lanny Griffith, a former White House aide to Mr. Bushís father.

The industryís first objective is to get rid of a massive  federal  lawsuit, launched by the Clinton administration, that accuses  cigarette makers  of ìracketeeringî and lying about the health risks of smoking for  50  years. The  case is pending in federal court in Washington.

Tobacco companies are so confident the Bush team will drop  the suit that  they claim to have no plans even to ask for it to be withdrawn. ìWe  are not  lobbying on this at all,î says Philip Morris spokeswoman Peggy

Roberts. Many in the industry say they think an aggressive push to kill the suit  would be  counterproductive, causing the Bush administration to worry about  the  perception that it is eager to do a huge favor for one of its  most-generous  donors.

One way to squelch the suit would be for Congress to cut or  eliminate  funding for it, which for the current fiscal year is budgeted at  $23 million.  Although skittish about approaching the Bush administration  directly, Philip  Morris officials say they have no qualms about lobbying this year  for such a  funding cut. Another possible scenario for terminating the suit is  for the  Justice Department to reach a settlement with the companies.

Mr. Bush has avoided making a definitive statement about  the tobacco  suit. But referring to the case in August, he said, ìI think weíve  had enough  suits,î adding, ìThe lawyers I talk to donít feel they [the Justice  Department]  have a case.î

Complicating the situation is the presence of one key  person  on the Bush  team who historically hasnít had an easy relationship with the big  tobacco  companies: Attorney General John Ashcroft, who now oversees the  federal suit.  Mr. Ashcroftís dim view of the industry arises from having seen  several friends  die from cancer, aides say.

At a get-acquainted meeting with tobacco lobbyists soon  after being  elected to the Senate in 1995, Mr. Ashcroft damped the atmosphere  with a  diatribe. ìLet me tell you up front that I believe you guys are the  merchants  of death, and I donít support your product or your industry,î Mr.

Ashcroft was quoted as saying by two people at the meeting. Yet three years later, as Mr. Ashcroft was considering  entering the race  for the presidency, he took a different position. When the Senate  Commerce  Committee considered legislation to restrict tobacco marketing and  raise  cigarette taxes, Mr. Ashcroft was the only vote against the bill on  the  20-member committee, even though he still denounced the industry.  His vote was  a surprise to industry lobbyists, who were even more pleased when  his  persistent attacks on the proposed $1.10-a-pack rise in cigarette  taxes helped  kill the measure on the Senate floor.

An aide to Mr. Ashcroft says that, while critical of the  tobacco  industry, Mr. Ashcroft concluded that the bill contained excessive  tax  increases and required too much bureaucracy to implement the  marketing  restrictions.

During his confirmation hearings in January, Mr. Ashcroft  said that he  had ìno predispositionî to dismiss the federal lawsuit. He promised  to consult  with career attorneys at the Justice Department and make a decision  based on a  ìcareful examination of the facts and the law.î


When George W. Bush became president-elect, American  Airlines  was ready.  On the Sunday after Al Gore conceded the bitterly contested  election, the  Dallas-based unit of AMR Corp. rolled a brand-new 737-800 onto the  tarmac at  the airport near Austin, the Texas capital. It had been specially  painted in  the airlineís distinctive 1960s colors ó a silver fuselage with a  bold red  lightning bolt.

The triumphant charter flight, paid for by the campaign,  ferried Mr.  Bush and his inner circle, including aides Andrew Card, Condoleezza Rice and Karen Hughes, from Austin to Dulles for their first round of  meetings here. The  president-elect and his staff were treated to a dinner of  Chateaubriand, shrimp  Caesar salads and hot chocolate-chip cookies, baked on board.

ìAs a Texas-based airline, it was an honor and a privilege  to carry Mr.  Bush,î Don Carty, the chief executive officer, said at the time.  ìAmerican  Airlines is proud to have the president-electís vote of  confidence.

Mr. Carty was an early booster, and, like Mr. Cawley of  MBNA,  one of Mr.  Bushís pioneer fund-raisers. He personally gave the maximum  donation of $5,000  to support Mr. Bushís legal fight following the contested Florida  vote. The  company also gave the maximum $100,000 gift to the Bush inaugural  committee.

What American and other big companies hope for is a change  in antitrust  policy. In the airlineís case that would mean the governmentís  backing off the  antitrust suit President Clintonís Justice Department brought  against it. The  suit, filed in 1998 and scheduled to go to trial in May in federal  court in  Wichita, Kan., alleges that American used illegal tactics to  squelch  competition at its Dallas hub. The case is being watched closely as  a sign of  the new administrationís approach to antitrust enforcement.

The Bush team must decide whether to proceed with the trial  as planned,  or settle. Charles James, the nominee for Justice Department  antitrust chief,  hasnít been confirmed, and career officials at the Justice  Department say they  expect the case to be pursued on its merits.

But there are already signs that the administration may  view the case  skeptically. Timothy Muris, who has been close to Mr. James since  the two  worked together at the Federal Trade Commission during the Reagan  years, has  openly questioned the wisdom of the Clinton suit because it relies  on an  expansive interpretation of antitrust law. A law professor at George Mason University in Arlington, Va., Mr. Muris helped shape antitrust  policy for the  Bush transition team and is expected to be named chairman of the  FTC, which  also enforces antitrust laws.

Mr. James wonít comment on Americanís case but has said he  generally  doesnít favor antitrust cases that ìmake new law.


Of all the business interests that backed Mr. Bush, oil  companies have  the clearest ties and strongest personal meaning to the new  president. He is a  former oil man who revels in his attachments to Texas, and his best  friends are  oil men, too. Promoting the industry is an instinctive impulse for  the  president that goes beyond campaign contributions.

When Mr. Bush announced Mr. Cheney, former chairman of Halliburton Inc. as his running mate, Hollywood director Rob Reiner joked that the  GOPís idea of  diversity is having ìtwo guys heading the ticket from two different  oil  companies.î

The personal connections were strengthened with money. The  oil industry  donated more than it ever has before: $32 million during the past  two years,  with 80% of it going to Republican causes. As a result, ìall the  stars are  aligned this year,î says Roger Herrera, who heads a lobbying effort  to allow  oil drilling in Alaskaís costal plain, known as the Arctic National  Wildlife  Refuge.

Mr. Herrera is a courtly, Oxford-educated oil company  geologist, who has  made more than 50 appearances before congressional committees,  taken hundreds  of politicians on guided tours of Alaska and built one of  Washingtonís most  innovative and influential lobbying operations, known as Arctic Power. Until now, his decade-long efforts to open up Alaskaís coastal plain for  oil and gas  development have been consistently frustrated. In 1989, there was  the Exxon  Valdez oil spill; in 1991, a Senate filibuster threat; and in 1995,  a veto by President Clinton.

Now, Mr. Herrera promises, things will be different. Heís  counting on  the combined power of the new president, who favors drilling in the  coastal  plain, and Alaskaís powerful congressional delegation, Senators Ted  Stevens,  Frank H. Murkowski and Rep. Don Young. All three of these veteran  Republicans  chair influential committees. In the White House, Mr. Cheneyís  energy-policy  task force is directed by Andrew D. Lundquist, former staff  director for Sen. Murkowskiís Senate Energy Committee.

To build support last week, Alaskaís Governor Tony Knowles,  in town for  a governors conference, took two days to discuss oil exploration  with skeptical  Democrats on Capitol Hill. ìI am going to be in contact with people  who have  expressed opposition but seem to be amenable to reason,î he told  reporters last  Tuesday. He went to the Hill that day carrying support and  strategic advice  from all corners of the new administration. He had met with

Interior Secretary  Gale Norton, Energy Secretary Spencer Abraham and Environmental Protection Agency Administrator Christine Todd Whitman. This powerful network of industry allies will face a  daunting alliance  of more than 400 environmental organizations determined to stop  Alaska drilling  in the interest of preserving the areaís pristine condition. But  this year, Mr.  Herrera says, the industry group feels up to the task.

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