General Electric Wages Never-Say-Die Campaign for Jet Engine Contract
CEO Immelt's push shows why GE is nation's top corporate spender on lobbying.
March 9, 2011 — -- In a never-say-die approach, General Electric's CEO Jeffrey Immelt has vowed to continue to fight for a high-priced military jet engine contract that President Obama, the Pentagon, the U.S. House of Representatives, and the U.S. Senate have all said they don't want.
"GE will continue to press our case in the U.S. Senate and elsewhere," Immelt wrote in a note to aviation workers after the recent House vote to eliminate funding for the company's controversial jet engine. The defeat in the House would not, he said, halt development of the Joint Strike Fighter engine, intended as an alternate for one already built for the futuristic fighter by rival firm Pratt & Whitney.
General Electric has already shelled out millions in relentless pursuit of the engine contract, and its vow to fight on is the latest evidence of the company's aggressive strategy for Washington influence. It is an approach that has helped GE become the nation's top corporate spender on lobbying, spending more than $238 million on lobbyists over the past 12 years, according to the Center for Responsive Politics -- money that has helped GE gain access to the corridors of power and some of the most remote crevices of the governing process.
"It shows what deep lobbying is all about in Washington," said Ellen Miller, a founder of the nonpartisan Sunlight Foundation, which monitors the influence industry. "It's lobbying members of Congress, it's being friendly to the administration, it's being all over the agencies."
While the U.S. Chamber of Commerce and the American Medical Association have spent more on lobbying over the past decade, GE sits high atop the list of corporate spenders. AT&T, the nearest competitor, spent $162 million, while Northrop Grumman and Exxon Mobil spent just over $150 million, according to the Center for Responsive Politics.
ABC News requested an interview with Immelt to talk about the company's lobbying strategy. Spokesman Rick Kennedy turned down that request, and did not respond to specific questions sent by email about the company's lobbying in general, and specifically about the effort to secure the lucrative jet engine contract. Last year, Kennedy told ABC News there was a reason Congress had agreed to fund the development of its engine for years, despite opposition from the Bush and Obama administrations.
"We have been reinstated year after year after year in the budget because the case for competition is simply too compelling for a program of this size," he said. "For this reason, we feel like we're standing on the side of the angels."
An ABC News review of General Electric lobbying found that the company has more than angels on its side -- it has an arsenal of former congressional leaders from both parties, including such well-known figures as former Sen. Trent Lott and former Rep. Dick Gephardt.
Last year, GE also hired Barack Obama's former campaign manager, David Plouffe, as a consultant, according to Plouffe's recently filed financial disclosure forms. It is unclear what Plouffe was hired to do, though his relationship with the president and senior White House staff is close to unparalleled. Plouffe is now back working as a senior advisor to Obama.
GE Chief Immelt Becomes Obama Advisor
In late January, Immelt took on his own elevated role with the Obama administration, accepting an appointment as chairman of the president's new Council on Jobs and Competitiveness. The announcement came as Obama and Immelt toured a GE factory in New York state.
GE has also had lobbyists pass through the so-called revolving door, hiring well-placed congressional staffers and seeing its own lobbyists return to Capitol Hill. One woman who had advised the Senate Finance Committee on tax policy, for instance, recently left that post to lobby her former colleagues on GE's behalf. And two former GE lobbyists took pay cuts to work in key committee staff posts on Capitol Hill, including one who now is handling aviation issues for the powerful Senate Defense Appropriations Subcommittee.
Unlike the executive branch, Congress has no rules limiting congressional staffers who move through the so-called revolving door from working on portfolios that could benefit their former employers. Both told ABC News they have assiduously avoided getting involved in discussions about GE's jet engine or other company matters.
GE has retained the services of more than three dozen outside firms, many of them smaller outfits with ties to specific committees or members of Congress. For instance, GE reported paying $170,000 to the firm Clark & Weinstock for James Dyer's efforts to help GE's position in the defense budget. Dyer is a former staff director of the House Appropriations Committee and served as a budget consultant for the U.S. Navy.
More unusual, Miller said, has been the movement of GE lobbyists back into key public-sector posts. Gary Reese left a $200,000-a-year job as a GE lobbyist in 2007 to take a staff position with the Senate's Defense Appropriations Subcommittee that paid him $150,000 annually. According to his financial disclosure forms, he received a $210,000 bonus in his final year with GE.
After having pushed GE's position on the alternate engine as a lobbyist, Reese was returning to the powerful appropriations subcommittee with a portfolio that included aircraft procurement. Reached by ABC News, Reese declined to comment for this story. But a committee spokesman, Rob Blumenthal, said in an email that he could "confirm that Gary Reese does not and has not, since his return to the Committee in 2007, worked on the alternate engine program."
William Hughes also left a career as a senate staffer to take a lobbying job with GE. He worked there from February 2009 to April 2010 and was paid $320,000, according to his financial disclosure report. He told ABC News the payments covered both his salary and a bonus, and said "the one year bonus I received … was paid before I had any discussions about a hill job." In April, Hughes returned to the Senate to be chief of staff to Sen. Kay Bailey Hutchison, a senior member of the Defense Appropriations Subcommittee. According to legislative records, he was paid $52,179 for his first five months work, putting his new annual salary at roughly $125,000.
Hughes acknowledged he took a pay cut to return to the senate, telling ABC News that GE was "not for me."
"The job satisfaction is worth the cut in pay," he said.
Upon his return, he sought advice from the Senate's Ethics Committee on how to properly handle his return. In a letter from the committee's chief counsel, he was advised that "no Senate rules would prohibit you from having official contact with GE." But the letter also urged him to "avoid even the appearance of impropriety."
"I have completely followed their guidance," Hughes told ABC News. "To avoid even the appearance of impropriety, I can further state that I have not allowed myself to be lobbied by any GE or GE-hired lobbyists, instead directing any inquiries or lobbying to the appropriate staff for Senator Hutchison. Upon my hiring, I immediately divested myself of any GE-related financial assets. In addition, I have not advised Senator Hutchison on GE matters, including the Joint Strike Fighter second engine."
GE Continues Fighting For Joint Strike Fighter Contract
Miller said there is always a concern when a company's lobbyists move into the public sector and are in a position to handle important legislative issues for their former employer. It was that exact concern that led President Obama to prohibit lobbyists from taking administration posts that allow them to work on the very issues they had previously lobbied.
Even without help from former members of its lobbying team, General Electric remains committed to fighting for the engine contract -- and few issues have more dominated the company's energies in Washington. GE has argued that the forces aligned against it -- led by rival contractor Pratt and Whitney -- are trying to preserve a monopoly that will wind up costing the American public more money in the long run. That argument, which is supported by an analysis by the Government Accountability Office, has become the backbone of both the company's lobbying effort and a glossy advertising campaign.
Kennedy, the company spokesman, in a recent email to ABC News said "a competing [Joint Strike Fighter] engine will more than pay for itself over time."
"We believe we can reduce this $100 billion buy by $20 billion over the next 30 years," he said in an earlier interview.
Kennedy also said that, while GE's critics have accused the company of capitalizing on the presence of an aviation facility just a few miles from the district of House Speaker John Boehner, parochial interests are also driving GE's opponents. He pointed to a recent report in the Palm Beach Post, where U.S. Rep Tom Rooney, a Florida Republican, boasted that the defeat of GE's alternate engine could bring back some 3,000 Pratt & Whitney jobs that have been lost in Palm Beach County over the past decade.
"I'm going to work very hard to try to bring those jobs back to Palm Beach County," he told the paper. "I'm not shying away from the fact that my allegiance to Pratt is just like [Boehner's] allegiance to GE."
The fate of the engine appears to be all but sealed. The House budget sliced funding, and senators working on the budget have likewise indicated that funding would not appear in their finished bill either. President Obama has maintained that he will veto any spending bill that includes money for the engine. Still, Kennedy, like Immelt, has remained defiant.
"It's not over," he told Reuters in an interview last week. "This is part of the budget process, but that process and the overall fate of the [engine] is just not over."