Lobbyists gain upper hand in Obama battle

Lobbying interests that President Obama campaigned against last year have gained the upper hand on the White House in recent weeks.

In stark contrast to Obama’s first few months in office, special interest groups this summer have aggressively opposed the president’s top domestic priorities. And they have succeeded in slowing legislation to revamp the nation’s healthcare system, won an essential change to climate change legislation and put off efforts to set up a consumer agency in the financial sector.

House Financial Services Committee Chairman Barney Frank (D-Mass.) initially planned to pass a financial regulatory reform bill through the lower chamber by the August recess. But unified financial-industry opposition to Obama’s proposal to set up a Consumer Financial Protection Agency caused Frank to delay his legislation until the fall.

When he proposed the agency in June, Obama said, “While I’m not spoiling for a fight, I’m ready for one.”

Industry groups note that they are winning this battle, especially with the White House focusing almost exclusively on recapturing momentum lost on healthcare reform.

An influential lobbyist who requested anonymity said Obama has “lost serious momentum and has really not played the expectations game well, especially with hard deadlines.”

A key facet of industry opposition is “creating delays” and, if negotiations break down, seizing the “opportunity to outright kill a proposal,” the lobbyist added.

In the spring, Obama trumped many financial-services groups by driving credit card reform through Congress. Obama set a deadline of signing the bill by Memorial Day and held a signing ceremony three days before the holiday.

Congress has fallen way short of meeting Obama’s deadlines on healthcare reform. The White House wanted both chambers of Congress to pass bills before the August recess, but Senate leaders now say that goal is not possible and there is uncertainty whether the House will act.

The White House did not comment for this article.

Terry Madonna, director of the Center for Politics and Public Affairs at Franklin and Marshall College, said lobbying groups were more willing to work with Obama earlier this year when the president’s poll numbers were higher.

In order to pass a healthcare bill, Madonna said, Obama is going to need the support of the groups “that weren’t on his Christmas card list.”

The largest legislative hurdle on healthcare has been how to pay for more than $1 trillion in new health benefits.

Democrats thought they had a big piece of the offset puzzle solved when Obama unveiled what he called a “historic” deal with the health sector that would yield a combined $2 trillion over 10 years in savings. The administration’s strategy to approach business groups during Obama’s honeymoon appeared wise at the time, as industry lobbyists were reticent to oppose a politically popular president.

Groups representing hospitals, doctors, health plans, medical device manufacturers and drug companies signed off on the accord. However, the pact lacked specifics, and months later, health groups are only willing to go so far.

As a result, Democrats have considered a variety of politically risky revenue-raisers, including raising taxes on individuals making more than $280,000. Some centrist Democrats are refusing to go along with that tax hike.

Health groups, such as the Pharmaceutical Research and Manufacturers of America (PhRMA), have struck favorable deals with the White House.

The Wall Street Journal reported last month that the White House assured PhRMA President Billy Tauzin that it would not pursue the reimportation of drugs from other countries as part of healthcare reform. Drug companies in June offered the Obama administration $80 billion in savings as part of the effort to close the so-called “doughnut hole” in seniors’ Medicare prescription drug costs.

Healthcare experts say that the industry would stand to lose much more than $80 billion if Congress passed reimportation legislation.

As a presidential candidate, Obama backed the reimportation of drugs. White House Chief of Staff Rahm Emanuel was one of the bill’s champions when he was a member of Congress, routinely criticizing drug companies for lobbying against it.

PhRMA recently issued a statement saying it could not support the House healthcare reform bill.

 America’s Health Insurance Plans (AHIP) has vowed to work with the Democratic-controlled Congress, but it recently has run televisions ads saying it backs “bipartisan” health reforms. Republicans have rejected in committees the House and Senate health bills that have been introduced thus far. AHIP’s ads suggest it will look very closely at the yet-to-be-released Senate Finance Committee bill, which is still being ironed out by panel members on both sides of the aisle.

On Friday, a slew of business groups wrote a letter to Congress opposing pending healthcare reform bills “as a step in the wrong direction,” raising concerns with the so-called public option as well as employer mandates. Groups that signed the letter include the U.S. Chamber of Commerce, Business Roundtable, National Association of Manufacturers and the National Retail Federation.

Meanwhile, the Obama administration — facing threatened legal actions — recently backed down on lobbyist restrictions it placed on the economic stimulus law.

On climate change legislation, electric utilities and other energy interests successfully lobbied lawmakers to give away emission allowances instead of distributing them through an auction, as the administration proposed.

With House Democratic leaders scrambling to find votes, business groups argued that distributing the allowances for free during an initial phase of the program would help lessen the possibility that energy prices would rise rapidly under the carbon cap.

But consumer groups fear businesses will use the value of the allowances, which can be traded in the marketplace, to fatten corporate wallets, not to offset rising consumer electric bills. Under Obama’s proposal, much of the revenue from the sale of the emission allowances would have been returned to taxpayers in the form of tax breaks.

Obama and Capitol Hill Democrats have enjoyed triumphs this summer against fierce lobbying blitzes. White House lobbying helped the administration win a showdown on the Senate floor last week on F-22 fighter jets. And the House Education and Labor Committee, with support from the administration, approved an education bill that would eliminate the Federal Family Education Loan Program (FFELP), a government-backed student loan program strongly supported by Sallie Mae.

But these victories have been overshadowed by the setbacks on healthcare reform.

Jim Snyder contributed to this article.