06.09.16

By:  Daniel Dudis and Bartlett Naylor
Source: New York Times

Taking a Hard Look at a Campaign Critical of a Fiduciary Rule

Last week, the United States Chamber of Commerce was among a number of groups that sued Secretary of Labor Thomas E. Perez to block a new fiduciary rule.

The fiduciary rule requires money managers who advise tax-advantaged plans like 401(k)’s to put client interests ahead of their own financial interests when recommending investment products. The White House Council of Economic Advisers estimates that as a result of this conflict of interest, workers saving for retirement lose $17 billion a year, much of which flows directly into Wall Street’s coffers.

As a component of its campaign against the rule, the chamber created a webpage featuring 25 small-business leaders and others “speaking out” against the rule. Nearly all argued that the new rule would harm small businesses.

We tried to contact each of the featured small-business leaders. Public Citizen is now publishing a report, “Sacrificing the Pawns,” revealing our findings. Highlights include:

- One Chicago nonprofit leader did not realize he was listed on the webpage as opposing it and asked us, “Who do I call to get this down?” He said he did not have a view on the rule. He subsequently called the chamber and his name was removed.

- One small-business owner argued for an even tougher rule.

- One California small-business owner, who argued on the chamber’s webpage that the current system helped her increase employment at her business over the last 12 years, acknowledged that she had only one employee.

- Eight people were not small-business owners but were officials at chambers of commerce, paid lobbyists or other officials. We presume their testimonials were added to the chamber’s webpage to pad the numbers.

In brief, we found the chamber’s portrayal of these small-business leaders’ opposition to the fiduciary rule to be misleading and in some cases downright false. Far from a groundswell of grass-roots organizing, the chamber’s list appears to be the product of an AstroTurf campaign.

Featuring small businesses as the public face of its lobbying is central to the chamber’s communications strategy on many issues. The chamber frequently uses small businesses and nonprofits to argue against rules that do not affect them or, as in the case of the fiduciary rule, are explicitly designed to protect them.

The president of the chamber, Thomas Donohue, has acknowledged his strategy of using small-business owners as “foot soldiers” to provide “political cover, for issues big companies want pursued.” As in chess, he is sacrificing the pawns.

In its lawsuit against the fiduciary rule, the chamber cites harms to small businesses. We hope that by exposing the chamber’s charade, courts reviewing the rule will understand that the alleged costs to small business are the imaginings of Washington’s largest and most powerful lobby.