Profiles in courage

This LA Times story shows just how extensive are the ties between big business and the Bush administration -- or at least, just how far Karl Rove is willing to go to demand CEOs' cooperation. It also shows to what extent the Republican National Committee is focused solely on Bush's domestic priorities. That should be thrilling news to Republican congressmen as they head into the '06 campaign: the RNC is putting most of its time and resources into a campaign for something deeply unpopular in their home districts.

As for business support for Social Security, though there may be an exception or two, most businesses have responded to Rove's arm twisting by joining trade associations (or associations of trade associations) to do their lobbying for them.

Each Friday, the RNC hosts representatives from the Business Roundtable — made up of chief executives from 160 of the country's best-known corporations — Compass and aligned organizations, along with staff from Rove's office.

At these meetings, RNC staff tally their efforts to build support for the president's plan in key congressional districts. Compass offers similar campaign-style reports. The group's executive director, Derrick Max, said in an interview that his organization had generated 300,000 telephone calls to voters in key states on Social Security, organized 150 town hall meetings on the topic and is active in 70 congressional districts. It plans to spend $18 million backing the president's initiative.

At the Business Roundtable, communications director Tita Freeman says her organization supports Bush's initiative not to side with the GOP but because "it is the right thing to do for future generations. We are joining with any and every group that believes that this needs to be addressed now," she said.

Nonetheless, the Republican tilt has caught the wary eye of Democratic Party leaders. Senate Minority Leader Harry Reid of Nevada and his staff have met with a few of the leading trade groups and questioned their close association with the White House campaign.

The trade group executives say they do not have a partisan bias and that their members are simply united behind a desire to fix Social Security. For example, today the National Assn. of Manufacturers plans to announce that "98% of board members surveyed said they favored personal accounts" as part of Social Security reform.

But there is also sense that, for the most part, the investment community is not so eager to sign on to private accounts, either publicly or behind the facade of a trade group.

But there are splits in the unified business front that the associations like to present.

Last week, one of the huge investment firms that makes up the Securities Industry Assn. asked that the trade group "cease all funding" of groups such as Compass because they are viewed by some as "politically motivated and polarizing" and do "not represent the collective views of the SIA constituents."

In a letter written to the association's directors, the chief executive of Sanford C. Bernstein & Co. asked that the trade association board "formally issue a statement of complete neutrality" on Social Security reform, including private accounts, when it meets this week.

"Given the divergence of views among the member firms and the complete lack of unanimity that we have, it seems inadvisable to maintain our recent posture," wrote the CEO, Lisa Shalett, who represents the company's parent firm, Alliance Capital Management, on the association board.

Her letter, provided to The Times by another leading financial services firm, says that Alliance Capital believes "we serve our clients by devoting our energies to reacting to and interpreting public policy, and not by aggressively attempting to shape the course of public debate."

Despite conventional wisdom that Wall Street embraces the plan for personal accounts because it would enrich its firms, many are uninterested. That is partly because it would directly benefit only a handful of brokerages that specialize in small investors — and because the issue is so laden with controversy and any financial crisis in the system is still years away.

When Treasury Secretary John W. Snow visited a prominent New York investment house recently to talk up Social Security, a top executive asked why the White House was putting Social Security, which does not face a crisis for years, ahead of more immediate worries such as the weak dollar and the swollen federal deficit.

Snow's only response, according to one person who was in the room, was to acknowledge the import of those issues but reiterate that Social Security was the president's priority.

Ah, John Snow. Wouldn't Alexander Hamilton be proud?