from Mother Jones magazine, January-February 1998
The Microsoft Network
Bill insists he wants to avoid politics. Meanwhile, he's waged a
quietly massive attack on the other Washington.
Plus: Washington Wide Web: Microsoft's lobbyists and their power ties.
by Ken Silverstein
[INLINE] Noticeably absent from White House guest rosters, nonexistent
on lists of big political contributors, and a man who rarely even
visits the other Washington, Microsoft CEO Bill Gates has managed to
keep an extraordinarily low political profile.
But Gates' absence from the Beltway belies Microsoft's vast influence
there. This past year, he scored a coup with the passage of the
Software Export Equity Act (SEEA). The House Ways and Means Committee
inserted the measure in the 1997 tax bill, rewarding software
exporters with a tax break worth an estimated $1.7 billion over the
next 10 years. The SEEA will benefit fewer than 100 companies-with
Microsoft by far the biggest beneficiary.
A small army of lobbyists from both political parties helped Microsoft
win the tax break. Chief among them: Grover Norquist, the high-profile
head of Americans for Tax Reform. Hired by the company in 1996,
Norquist earns a $120,000 yearly salary from Microsoft alone. He is
among the best-connected conservatives in Washington, and the
nonprofit ATR has been called a virtual adjunct of the Republican
Party. (The GOP is currently in trouble for funneling $4.6 million to
the group in 1996 for political agitprop.)
Norquist tells Mother Jones that he is merely an "adviser" to
Microsoft, dispensing "strategic advice on how to handle political
issues." Yet he offers much more than that. He has placed the
company's issues on the national conservative agenda and helped rally
groups such as the Christian Coalition and the National Rifle
Association around Microsoft's causes.
Norquist's ties to pro-family organizations, for example, helped him
win his first fight on behalf of Microsoft. Proposed immigration
legislation in 1996 would have jeopardized the status of the numerous
legal immigrants Microsoft employs. Norquist, despite ATR's reputation
as virulently anti-immigrant, helped cobble together a coalition of
high-tech libertarians, pro-immigrant conservative family groups, and
liberal organizations to successfully fight the changes. It's also
worth noting that the new lobbying firm Norquist founded in 1997 with
lawyer David Safavian, the Merritt Group, has taken on the American
Immigration Lawyers Association as a client. (Ira Rubenstein,
Microsoft's senior corporate attorney, is on the AILA's board.)
Such contacts demonstrate the breadth of Norquist's reach. For the
past few years, he has hosted a weekly Wednesday morning meeting for
leading conservatives at ATR's Dupont Circle office. These legendary
meetings are credited in part with creating the strategy for the 1994
GOP takeover of Congress.
In early 1996, according to insiders, Norquist began using the
meetings to broach a new legislative issue: opposing a proposed bill
limiting software encryption (scrambled coding that prevents copyright
infringement). The FBI wants access to encryption codes for national
security, but U.S. software companies, including Microsoft, argue that
such access would inhibit their ability to compete with foreign firms.
Norquist took great care to explain how the seemingly arcane (and
narrow) issue fits into the conservative platform. According to one
Wednesday morning regular, Norquist told the NRA that if the
government has access to encryption codes, it can get information
about gun owners. He also warned the Christian Coalition that its
privacy would be violated. Both groups, and dozens of other right-wing
organizations, subsequently endorsed Norquist's-and
Microsoft's-position. (The bill is currently pending in the House.)
Microsoft didn't open
an in-house lobbying office until 1995. Before, when Gates needed
help, he turned to the D.C. office of Preston, Gates, Ellis & Rouvelas
Meeds, whose law partners include his father, William Gates II. It was
Microsoft's run-ins with the Justice Department in 1995 over antitrust
law that led the company to step up its Beltway operation. Microsoft
now lobbies on everything from smut on the Internet to trade with
China. The company's total lobbying expenditures in 1996 came to $1.1
million, a fraction of that spent by powerhouses such as AT&T ($8.4
million) but almost twice the amount spent by computer giant
Hewlett-Packard ($594,000).
During the first half of 1997, Microsoft unbuckled another $660,000.
In addition to its own in-house lobby shop, Microsoft currently has 10
outside lobbying firms on retainer. Between mid-1995 and mid-1997, 72
lobbyists registered with Congress on Microsoft's behalf (see chart).
Of those, at least 55 have government experience. Four are retired
members of Congress; 41 are former Capitol Hill staffers, 14 of whom
worked for current members of Congress; at least six company lobbyists
worked for the Senate Judiciary Committee (which oversees antitrust,
immigration, and intellectual property policy); three have executive
branch experience; and two are conservative activists with links to
the highest tiers of the GOP. Norquist is especially tight with House
Speaker Newt Gingrich. ("Grover is the easiest line into the speaker's
office," says one conservative. "It's the most cost-effective way for
Microsoft to do business.") Other company lobbyists with high-level
connections include:
Former New York Rep. Thomas Downey, a Democrat who served for 13
years on the House Ways and Means Committee, greases the skids with
old colleagues by making campaign contributions-totaling $26,250
during the last election cycle. And thanks to his longtime friendship
with Al Gore, Downey has an open door at the White House.
Democrat Michael Lewan, a trustee on the Clinton/Gore National
Finance Council, worked for 14 years on Capitol Hill, first for
retired New York Rep. Stephen Solarz and then for Connecticut Sen. Joe
Lieberman. "Lewan has access all over the Hill," says one lobbyist.
"Staffers are below his radar screen; he deals with the members
directly."
Kathleen Clark Kies, a lobbyist with Collier, Shannon, Rill & Scott,
was hired jointly by Microsoft and Oracle, another big software
exporter, for the SEEA effort. She is married to Kenneth Kies, staff
director of the Congressional Joint Committee on Taxation and one of
the most powerful staffers on Capitol Hill. According to Fortune,
Kenneth "ghosted virtually every line" of the massive 1997 tax bill
that included Microsoft's tax break. His boss, Ways and Means Chairman
Rep. Bill Archer (R-Texas), was a prominent supporter of the SEEA.
(Kies told Mother Jones that he recused himself from all discussion of
Microsoft because of his wife's lobbying contract.)
Microsoft helped build support for the SEEA by forming an alliance
with Oracle. In addition to jointly hiring six lobbyists, they threw
their support behind the now-defunct American Alliance for Software
Exports, which mobilized state and regional software associations to
support the measure. Former AASE executive director Doug Larkin
wouldn't disclose the group's funders. But industry sources confirm
that Microsoft was a leading player in the alliance, and a visit to
AASE's Washington address reveals that the group operated from
Oracle's Beltway lobby shop.
The SEEA was introduced in the House by Rep. Jennifer Dunn (R-Wash.),
who once publicly declared that Microsoft's lobbyists are "on the
inside group of advisers that I turn to when I need to discuss
regulation issues." Rob Nichols, Dunn's spokesman, told Mother Jones
that her office has a "strong relationship" with Microsoft and that
the company played a "pivotal role" in mobilizing support for the SEEA
by "building grassroots support" for the measure in Washington state.
Ken Silverstein is co-editor of CounterPunch, a Washington, D.C.,
investigative newsletter. Mother Jones investigative reporter Rachel
Burstein contributed to this story.
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