Editor’s Note: Considering President Obama’s recent decision to tap GE CEO Jeffrey Immelt to head a new Council on Jobs and Competitiveness, we thought our readers might be interested to read a piece on General Electric’s cozy relationship with the Obama White House from the October 2009 issue of Townhall Magazine. To order Townhall Magazine, click here.
Barack Obama rose to office promising to take on the “special interests.” But there may be no “special interest” quite as special and quite as well connected as General Electric.
The company spends more on lobbying than any other corporation. GE’s CEO has a weekly phone call with a top economic policy official in Obama’s White House. GE, of course, also owns three television stations, including one -- MSNBC -- that has been famously supportive of Barack Obama.
And since Obama has entered the White House, it seems -- to adapt the children’s rhyme -- everywhere that Barry went, GE was sure to go:
• Obama pushes a cap-and-trade scheme for curbing greenhouse gasses -- GE invests in greenhouse gas credits.
• Obama advocates federal support for expanding high-speed rail across the country -- GE ramps up its investment in high-speed rail.
• Obama dedicates federal funding to embryonic stem-cell research that destroys human embryos -- GE partners with stem-cell giant Geron.
• Obama announces a federal push to curb health care expenses -- GE launches “healthymagination,” an initiative pitched as creating more affordable high-tech medical products.
The timing between the Obama pushes and the GE investments cuts both ways, as does the causality, it seems: GE is swaying the White House as well as following the White House closely.
GE’s political action committee (PAC) spent $1.56 million in the 2008 election, while employees and executives of the company gave another $1.69 million, according to the Center for Responsive Politics. Sixty-five percent of those donations went to Democrats -- reversing the pattern from the years when the GOP controlled Congress and 53 percent to 60 percent of GE money went to Republicans. So far this cycle, GE is leaning even more Democratic, giving 69 percent of its cash to Dems.
By far, the top recipient of GE money last election was Barack Obama. Obama received far more from GE last cycle -- $458,730 -- than any candidate in history. The company was in the top 15 of Obama’s fundraising sources. He raised nearly five times as much as McCain from GE, and more than the top 25 Republicans, combined.
Obama did not accept money from any PACs, including GE’s. But he did raise cash from top GE executives.
And for the 2010 election, GE apparently plans on ramping up its political giving. Steve Milloy, a conservative activist investor, got his hands on an e-mail from GE executive John Rice to employees, encouraging giving to GE’s PAC so that the PAC could support politicians “who share GE’s values and goals.”
By “shar[ing] GE’s values and goals,” the letter pretty clearly means “favors regulations and subsidies that will profit GE.”
No company spends as much on lobbying the federal government as does General Electric.
The Center for Responsive Politics has compiled data from federal lobbying filings going back more than a decade. From 1998 through the middle of 2009, GE had spent $183,895,000 on lobbying -- more than any other company. In a distant second place is AT&T, at $141 million. Other notorious special interests are well behind: GE has spent 50 percent more than Exxon or Blue Cross and twice as much as Altria, the parent company of Philip Morris.
The National Rifle Association? GE spent more on lobbying in 2008 -- $19.4 million -- than the NRA has spent every year, combined, since 1998.
So far in 2009, GE is in third place in lobbying spending, behind Exxon and Chevron, but in quarterly numbers, the company moved back into first place when the April-through-June figures came out this summer. The company spent $7.2 million in this year’s second quarter. That’s $79,120 per day, or $163,636.36 each day Congress was in session.
How does a company spend nearly $80,000 per day on lobbying?
First, there’s the company’s formidable in-house lobbying shop. Perched at the corner of 13th Street and Pennsylvania Avenue, two blocks from the White House, GE’s government affairs shop had 24 lobbyists on staff as of June. GE’s staff lobbyists include: Nancy Dorn, President George W. Bush’s former deputy budget director; Joshua Raymond, the former chief of staff to Rep. Chris Murphy, D-Conn., a member of the House Energy and Commerce Committee; Eric Pelletier, Bush’s former deputy assistant for legislative affairs; and other former congressional and administration officials.
But GE’s army of hired guns -- the K Street lobbyists the company retains -- is even more impressive. The company retains at least 20 lobbying firms, including some of the biggest names in Washington -- Gibson Dunn & Crutcher, Akin Gump Strauss Hauer & Feld, the Nickles Group, Sullivan & Cromwell, and Ernst & Young to name a few.
Outside lobbyists include former Senate Majority Whip Don Nickles, R-Okla., and Linda Hall Daschle, wife of former Senate Majority Leader Tom Daschle, D-S.D., an Obama confidant. Also former House Minority Leader Dick Gephardt, D-Mo., lobbies on behalf of NBC.
What is GE doing with all this clout?
If you study public comments, the lobbying disclosure forms and some internal communications, it becomes clear: GE is lobbying for bigger government that drives business and tax dollars their way. (“Subsidy-suckling” and “regulatory robbery” are the terms I like to use.)
THE INTERSECTION OF PROFIT AND POLICY
The aforementioned John Rice e-mail about GEPAC has some pretty telling language in it: “The intersection between GE’s interests and government action is clearer than ever.”
The letter lists a few specifics -- financial regulation, climate-change policy, renewable fuel subsidies and the F136 fighter. The executive makes it clear that the right policies spell profit for GE.
Isn’t this what all lobbying is about? Profitable policies?
No, not all. Many businesses lobby to be left alone so that they can pursue profit on the free market -- which, to some extent, is GE’s position on financial regulation. But for GE, free enterprise seems to be a bit old fashioned.
In a letter to shareholders two weeks after Obama’s inauguration, GE CEO Jeffrey Immelt showed the company’s hand: “The global economy, and capitalism, will be ‘reset’ in several important ways. The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.”
And for the Obama White House, the company has already proven to be quite a helpful partner.
GE AS THE NEW ENRON
General Electric wants to charge you for giving off carbon dioxide. Not quite your exhalations but GE wants you to pay them for the CO2 emissions resulting from the electricity you use, the gasoline you burn, the heat and air conditioning you use and the fuel that went into making and shipping the goods you buy.
How could they do this? Government, of course.
Going back to that August e-mail soliciting contributions to GEPAC: “On climate change, we were able to work closely with key authors of the Waxman-Markey climate and energy bill, recently passed by the House of Representatives. If this bill is enacted into law, it would benefit many GE businesses. We are continuing our efforts to make certain that a final bill includes provisions to ensure the United States maintains its leading position in the renewable energy industry, which is an industry sector of vital importance to the future of GE.”
Sure enough, GE’s lobbying disclosure forms show the company has lobbied on approximately a dozen bills to restrict greenhouse gas emissions. GE is the leading member of the U.S. Climate Action Partnership, a lobbying group that pushes for a cap-and-trade scheme such as that found in Waxman-Markey, under which certain businesses would need to spend a greenhouse credit in order to engage in activity that emits greenhouse gases.
GE profits in many ways from climate-change legislation -- and nearly every penny of those profits comes out of the pockets of regular consumers and taxpayers.
At the heart of GE’s climate profiteering is a joint venture GE launched with energy company AES. Called Greenhouse Gas Services (GHGS), the joint venture invests in greenhouse offsets -- activities such as tree planting or methane capture that remove greenhouse gasses from the atmosphere. This activity supposedly can reduce the greenhouse effect, which some say will lower the chances of catastrophic climate change, including flooding and species extinction.
What’s the value of these activities? Currently, nothing. But if the federal government were to regulate greenhouse gas emissions from manufacturers and power companies, these offsets could become valuable. Under the Waxman-Markey bill, there are two entities that can originate greenhouse gas credits: the government or an organization that earns an “offset.”
GHGS would be in the business of generating offsets, which they would then sell to businesses in need of a credit.
In short, GE would sell you the right to burn your own oil.
Of course, GE, AES, GHGS and USCAP are all lobbying for Waxman-Markey.
By positioning themselves as the top dealer of offsets, GE would also position itself as the prime broker of all emissions credits. If your company has more than enough credits, sell them to GE, who can then sell the credits to a needy manufacturer. GE hopes to become the carbon dealer for the U.S. economy.
GE isn’t the first multinational corporation to aspire to the role of carbon dealer. Enron fiercely lobbied for U.S. ratification of the Kyoto Protocol on climate change, in part with the aim of running the greenhouse gas trading floor. And there are other similarities between Enron and GHGS.
Just like Enron, AES is opening coal-fired power plants in Asia, South America and Africa at the same time the company is lobbying for climate change regulations here. That not only raises doubts about the green intentions of GE’s partner in carbon, but it also shows a tricky way U.S. regulation can profit global businesses: As Waxman-Markey forces U.S. companies to shutter their coal-fired plants, AES’s African plants will be able to buy its coal cheaper. Put another way, coal-fired power plants are the buyers for coal; killing U.S. coal-fired plants drives down demand for coal, thus driving down the price AES is paying for the coal it will burn in Africa.
GE, through its “ecomagination” initiative, is also investing in alternative sources of energy, such as wind and solar energy. These will get a boost from climate restrictions in addition to the subsidies they’re already raking in. Obama’s stimulus contained new special tax credits for wind.
In launching ecomagination -- launched, tellingly, in D.C., on Pennsylvania Avenue, rather than at the company’s Connecticut headquarters -- CEO Immelt said, “It’s no longer a zero-sum game -- things that are good for the environment are also good for business.” But he added that GE was going to turn green into green by “work[ing] in concert with government.
LIGHT BULB INVENTOR OUTLAWS LIGHT BULBS
Thomas Edison founded GE and invented the commercially usable light bulb. More than a century later, his company helped write the law that would, in effect, outlaw the light bulb.
The 2007 energy bill included a provision requiring all light bulbs to meet certain energy efficiency standards -- much higher than the efficiency of today’s standard incandescent bulb. That means that come January 2012, when the law kicks into effect, the bulb by which you are likely reading this article would be illegal to sell.
GE is the top light bulb seller in America, and so the light bulb law mostly outlaws GE products. But GE also makes -- and sells at a higher price -- compact fluorescent light bulbs, which meet the energy bill’s standards. More importantly, though, the company announced, during debate of the energy bill, that it would be selling a high-efficiency incandescent bulb by 2010.
Of course, the high-efficiency incandescent will cost nearly $5, while old-fashioned incandescents come as cheap as 31 cents. More efficient bulbs save money on electric bills, but that hasn’t been enough to convince consumers to switch. So GE, together with Sylvania, lobbied for the efficiency regulations. If customers didn’t want to buy high-efficiency lighting on their own, GE would get government to force them to buy it -- and in the process win praise for saving the planet.
But there are some catches. For one thing, GE makes the standard light bulbs here in the U.S., but it manufactures the high-efficiency bulbs in China and the Philippines. That means the light-bulb law could cost jobs, but it also means the environmental gains will be at least partly offset by the shipping costs and the inferior environmental performance of Chinese manufacturing.
DANCING TO OBAMA’S PIPER
A handful of Obama policy proposals correspond to GE business initiatives.
Obama’s stimulus plan contained funding for a “smart-grid,” an idea he had been boosting since the campaign -- using computers to improve the efficiency of electric transmission, thus reducing wasted electricity. GE, in April, announced it was selling “smart-meters” to Miami.
In April, Obama announced his plan to spend $13 billion building up the nation’s high-speed rail plan, with $8 billion coming from the stimulus bill and another $5 billion he would ask Congress to provide. A few weeks later, GE hired Linda Daschle to lobby on “Amtrak, high-speed rail,” and “freight rail,” according to a federal lobbying filing.
In March, Obama announced he was opening the floodgates of federal research spending to experiments involving the destruction of living, healthy, human embryos. In June, GE announced a joint venture with Geron, the leading embryonic-stem-cell company in the country. The joint venture would take stem cells harvested from embryonic humans and try to grow human organ tissue that could then be sold to drug companies for testing.
Also in March, Obama’s budget called for cutting Medicare spending on medical equipment. In May, GE launched its “healthymagination” business initiative, which the New York Times described this way: “General Electric is shifting the strategy in its $17 billion-a-year health equipment and technology business, seeking to broaden its reach with more lower-cost products.”
A DIRECT LINE INTO THE WHITE HOUSE
Lest anyone think these overlaps are coincidences, it’s worth noting the extraordinary access GE has to the White House.
Obama tapped GE CEO Jeff Immelt to sit on his Economic Recovery Advisory Board.
BusinessWeek reported in July that “White House economic adviser Austan Goolsbee … talks to GE’s Immelt every week on issues such as infrastructure and making the stimulus more effective.” And that fellow West Wingers “[Valerie] Jarrett and Chief of Staff Rahm Emanuel have begun holding ‘off-campus’ dinners with executives such as Immelt.”
In May, Obama hired Ignacia Moreno as assistant attorney general for the environment. Moreno’s former job was as environmental counsel for GE.
It hardly sounds like Obama is freezing out the special interests.
All this coziness between GE and government -- specifically between GE and the Obama administration -- is made that much more intriguing by the fact that GE is one of the world’s leading media companies and that its cable news network, MSNBC, was a blatant booster for Obama during the campaign and has retained much of that boosterism since Obama entered the White House.
DELIVERED UNTO GE?
“You know, I think there’s even something grander going on here, and I can never say that, of course, about America where race has always been our San Andreas Fault. The thing that does always threaten to divide us, in fact, too often does. But there’s something about Obama, where he comes from. He’s almost delivered to us through Indonesia, through a Kenyan father. He’s a man of the world.”
“Hardball” host Chris Matthews got some flack for this gushing monologue after Barack Obama won the Iowa caucuses. A month later, however, Matthews would say on MSNBC, “I felt this thrill go up my leg” listening to Obama talk.
The rap on Matthews was that he was letting his personal adoration of a politician shine through. But considering what Obama has meant for MSNBC’s parent company, GE, Matthews might have been speaking for his whole company.
MSNBC was notoriously pro-Obama during the campaign season, to the aggravation of Hillary Clinton supporters and, later, John McCain supporters. In addition to Matthews’ fawning, there was the strident partisanship of Keith Olbermann and the dedicated liberal host Rachel Maddow.
MSNBC had decided to become the mirror image of Fox News.
This continued once Obama was elected. “I want to do everything I can to make this thing work, this new presidency work,” Matthews said right after the election. He even called it “my job.” His job. As in, what his bosses pay him to do.
This is where we cross the line from a media outlet with a clear ideological perspective -- the counterweight to Fox, or the TV version of The Nation -- to an ethically questionable situation in which a media outlet could be functioning as a lobbyist and a campaigner for policies and politicians that will enrich the parent company.
MSNBC was good for Obama. Now Obama is good for MSNBC’s parent company, providing subsidies and regulations that drive GE profit.
Even before the presidential campaign, GE seemed to be using its TV stations to advance the parent company’s lobbying agenda. “Earth Week” and “Green Week” pushed messages about the dangers of climate change and the success of environmental regulations. These regulations, as discussed before, yield profit for GE.
During “Earth Week” 2009, CNBC interviewed GE CEO Immelt about the “smart grid.” Immelt bragged about creating jobs and helping the environment. Immelt also bragged that the company could make $5 billion off of the smart grid. “We’ve proven that green investing is good investing,” Immelt said.
“Squawk Box” host Joe Kernan never noted that Immelt was his boss or that GE was CNBC’s parent company.
THE ‘SPECIALEST’ INTEREST
So, despite Obama’s talk about crowding out the mega-corporations and the special interests, he has formed an alliance with one of the most power-cozy corporations in the world. The company has tentacles in every corner of the economy, as does the Obama administration. And those tentacles, we see, are holding hands.
To be fair, Obama hasn’t always given GE everything it wants. Obama pushed the Senate to kill funding for a GE-made engine on the joint strike fighter. His call for savings on medical equipment -- the call that helped shape GE’s healthymagination -- was a call on GE to tighten its belt.
But on the whole, Obama has spelled profits for GE. If you’re a shareholder, it’s enough to send a thrill up your leg.