On Social Security and CAFTA, Castellani pushes CEOs' agenda

As chairman of the Business Roundtable, John Castellani would like to see Congress pass legislation reforming Social Security, passing a free-trade agreement with Central America and reducing the cost of delivering healthcare. None of those goals is within easy reach.

President Bush has made the creation of private accounts within Social Security a central aim of his second term, but the idea has failed to garner public support. A New York Times/CBS News poll released this month showed that only a quarter of Americans approved of Bush’s handling of Social Security and that 62 percent disapproved of it.

Kristopher Connor
John Castellani: The economy is better than people think.

“We’ve told the White House to get more fully behind Social Security reform,” Castellani said when asked if the White House had pressured his organization of CEOs to press harder for Social Security reform, “The White House really does not have anything concrete. Now is the time to come forward with something concrete.”

Castellani added that lawmakers have not accepted the premise that candidates with plans to reform Social Security trump candidates who have no plan.

After Bush won reelection and Republicans expanded their majorities in Congress, the business community expected progress on its priorities. But, after two quick victories on class-action and bankruptcy reform earlier this year, the agenda has stalled. The White House dropped its plans to press for tax reform this year. The House and Senate have passed very different energy bills. The U.S. dollar remains weak, and gas prices remain high. And the healthcare costs of major companies, particularly General Motors, are rapidly increasing.

On Capitol Hill, the Business Roundtable’s biggest priority is passing CAFTA, the Central America Free Trade Agreement. The group has hired Kirsten Chadwick of Fierce Isakowitz & Blalock and Steve Champlin at the Duberstein Group to lobby lawmakers. Despite their efforts, the agreement is in jeopardy. New Democrats have voiced their opposition, and some Republicans oppose the provisions dealing with sugar.

What is more, the business community’s legislative agenda faces stiff competition for congressional attention from other high-profile issues such as the confirmation of federal judges and at least one further nomination if, as expected, there are imminent retirements from the Supreme Court; the John Bolton nomination to be ambassador to the United Nations; the treatment of prisoners at Guantanamo Bay, Cuba; and the reawakening controversy over the administration’s Iraq policy.

Unlike the Chamber of Commerce and the National Association of Manufacturers (NAM), the Business Roundtable does not get involved in partisan political disputes. It did not, for example, help raise money for the fight to confirm Bush’s judges, and the trade group is staying out of the debate over whether to reduce or eliminate the estate tax.

As an executive, Castellani paid dues to the Chamber of Commerce, NAM and the Business Roundtable even when the three were pitted against each other. He dismisses talk that the three associations bicker today.

Not that competition is viewed as harmful. “We want them to be fighting to be the most effective lobbyists,” said a leadership aide with close ties to K Street.

Sitting in a sleek, new, airy and well-appointed office, Castellani has the polished look of the Fortune 500 CEOs he represents. He is tall, graying and well-dressed. He lives on the coast of Maine and works in Washington. Baseball caps with Navy ships’ insignias, mementos from his years as a top executive with Tenneco Inc., a company that manufactured everything from warships to pistachios, rest atop a bookshelf behind his desk.

Castellani, 54, has traveled a long way from Union College in Schenectady, N.Y., and his first job at General Electric. Since the 1980s, Castellani has worked as a government-affairs executive at NAM, TRW Inc. and Burson-Marsteller. He joined the Business Roundtable in 2001.

The leadership aide said, “Castellani is an effective communicator with members. They know him. They like him.”

Even so, like other lobbyists and reporters, Castellani is not immune from lawmakers’ tempers; he recalls, without giving details, a recent meeting with Ways and Means Committee Chairman Bill Thomas (R-Calif.) in which the lawmaker was his blunt and acerbic self.

“No matter what my exalted status, he can lean into me just like anybody else,” Castellani said about the meeting.

As the public face in Washington of 160 CEOs, Castellani has raised his group’s profile by creating coalitions and task forces to propose and sell a policy agenda. But there are also frustrations. For example, his tenure has coincided with a recession and then an expansion in which, although economic data are largely positive, there is a wide perception that the economy is weak. “I am astounded about the disconnect,” Castellani said.

The public perception of the economy has become so bad that New York Times columnist Tom Friedman took a swing at the Business Roundtable’s members, America’s CEOs, writing in a column last month that they had “their heads in the clouds.” Castellani told Friedman in a letter that his argument “does not reflect reality,” citing corporate America’s efforts to pass CAFTA and reduce the cost of healthcare.

Economists are at a loss to explain the key trend of the current expansion, where corporate profits are rising while real wages and income have not kept up with inflation.

“Some economists think it’s an extraordinarily long lag, but the longer it goes on the less plausible it seems,” said Robert Shapiro, a former Commerce Department official and now an economic consultant. “The expansion has been very good for corporate profits and people who own capital, but it’s not been good for wage earners.”

Castellani rejects the view of some economic observers that the federal government has lost the ability to control economic fundamentals such as the budget deficit and the weak dollar.

“We have the ability to set policies,” said Castellani. “The question is do we have the political will?”