October 29, 2010


The New Democrats: The Coalition Pharma and Wall Street Lovey
by Sebastian Jones and Marcus Stern | ProPublica

(Oct. 25, 2010) As Congress entered the final weeks of its struggle to overhaul regulation of Wall Street in May, several hundred friends and colleagues slipped out of Washington for a private weekend on Maryland's Eastern Shore. Most were lobbyists for large banks, pharmaceutical firms, insurance companies, and big-ticket trade groups. However, 28 were members of Congress, and 29 were legislative staffers, all part of a coalition of House Democrats with a business-friendly agenda.

The retreat was held in honor of the New Democrat Coalition, a group of 69 lawmakers whose close relationship with several hundred Washington lobbyists has made their organization one of the most successful political money machines since the Republican K Street Project collapsed in 2007. In the past year and a half, New Democrats have pulled in more than $18 million in campaign contributions from their lobbyist fundraising network. The lobbyists, in turn, have mingled with lawmakers and their staffers at least 850 times during fundraising events and informal get-togethers.

When the Democrats took control of Congress in 2007 they promised to usher in a new era that would end the excesses of what they labeled a Republican "culture of corruption." One of their prime targets was the K Street Project, in which the Republican congressional leadership placed political operatives in lobbying jobs so they could direct money from big business to GOP campaigns in exchange for access to lawmakers for their clients. The project collapsed after Democrats assumed power and several Republican congressmen, staffers, and lobbyists were convicted on corruption charges.

Wisconsin Rep. Ron Kind, one of the New Democrats' vice-chairs, was among those who campaigned for ethics reform in 2006. "Pay-to-play politics have no place in Congress," he said at the time.

Today, however, many of the same techniques and tactics that formed the basis of the K Street Project are still in use, this time by Democrats. While Democratic House leaders haven't tried to place operatives in key positions at K Street firms or court business interests as openly as their predecessors, various coalitions within the party have stepped forward to fill the K Street Project vacuum. The Blue Dog Coalition, composed of 54 lawmakers from primarily rural areas, is the best known. But the New Democrat Coalition is larger and arguably as successful in courting the business community. Even if Republicans win big at the polls next month, the group is likely to retain its power, because both GOP leaders and the Obama administration will seek their votes in order to pass or block legislation.

Much has been written about the New Democrats in recent years, but the focus has mostly been on individual members or specific issues or events. Through dozens of interviews with congressional staffers, lobbyists, and political operatives and an extensive review of campaign-finance data and lobbying disclosures, ProPublica has pieced together the story of how the New Democrats rose to power and how, despite numerous attempts at reform, the work of lawmakers and lobbyists remains as intertwined as ever.

At first blush, the New Democrats seem unlikely heirs to the K Street Project. None of them chairs a committee or holds a prominent position in the House leadership. Most aren't known outside their own districts and tend to vote with their party caucus. Their power, instead, comes from their ability to tip the balance of close votes on the House floor, their numerous seats on key committees where major bills are shaped before the big votes are taken, and their business-friendly policies.

Over the past two years, their members have helped biotech companies win lucrative patent extensions during healthcare reform, fought to ensure that banks receiving TARP money didn't have to trim executive bonuses, and helped block a proposal to allow bankruptcy judges to adjust home mortgages — a step many experts believe would have reduced foreclosures. As they gathered for their May retreat, the New Democrats were working on what would become their biggest victory yet: weakening key components of financial-services reform legislation.

At a Saturday session at the retreat, Rep. Kind acknowledged what had brought the lobbyists and lawmakers together. In these busy legislative times, he said, the New Democrats had become a "powerful voice in policy making," and the business interests in the room were playing a crucial role in informing that voice.

"We're working hard with you to get the policy right," Kind told lobbyists for the U.S. Chamber of Commerce, JPMorgan, Goldman Sachs and others.

ProPublica contacted the offices of every New Democrat named in this story, but none would agree to an interview. Specifically, they refused to discuss how they separate their lawmaking from the fundraising activities conducted by the group's political action committee, the NewDemPAC, and also by their individual campaigns. The group's chairman, New York Rep. Joe Crowley, is currently being investigated by the Office of Congressional Ethics for collecting checks from financial-industry lobbyists in December, just hours before voting against several measures that Wall Street opposed.

In a review of data collected by the nonprofit Sunlight Foundation, ProPublica found that at least 16 other New Democrats also held fundraisers in the days leading up to the December vote on Wall Street reform. Several explicitly mentioned their membership in the New Democrat Coalition or their seat on the Financial Services Committee on invitations distributed to lobbyists.

Throughout their rise to power, the New Democrats have maintained that their pro-business positions are based not on the campaign contributions they receive but on their personal convictions, their experiences in the private sector, and on the politics of the affluent suburban districts many of them represent.

Staffers for the New Democrat Coalition refused to answer questions on the record, but the group's spokesperson, Natalie Thorpe, read a one-sentence statement over the phone: "The fundraising activities of the NewDemPAC are completely separate from the New Democrat Coalition and have no effect on the official work of the coalition or the positions taken by our members."

The New Democrats continued