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Welcome to Washington, Wal-Mart

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Welcome to Washington, Wal-Mart

Carney Op-Ed in The Washington Examiner

WASHINGTON - As liberal politicians, vocal unions and editorial pages argue that Wal-Mart underpays and mistreats its employees (The Boston Globe even implied that Wal-Mart workers are “patsies”), few Wal-Mart watchers have noticed a new addition to the retailer’s payroll: lifelong Democratic operative and lobbyist Leslie Dach.

Dach has kept a low public profile, but his roots run deep into the Democratic Party’s establishment. His hire by the nation’s largest retailer punctuates the new direction Wal-Mart is headed: East from Bentonville, Ark., to Washington.

Dach will pull in about $3 million over the next two years to manage a war room for Wal-Mart, responding to threats and slurs in government and in the media. Dach was an adviser to the Clinton White House and was a press secretary or communications consultant for the campaigns of John Kerry, Al Gore, Michael Dukakis and Geraldine Ferraro. He had been working for Wal-Mart from his perch at Edelman, a high-powered D.C. consulting firm run by Reagan alumnus Michael Deaver.

Wal-Mart’s hiring a Democrat is not a defensive measure. Nor is it primarily paying “protection money” to the company’s foes. Any good consultant will tell you: The best defense is a good offense. Dach and the company’s executives are going on the offensive and using government as their weapon. This turn to big government might reflect the recognition that, however much pure market forces favor the big guy, big government is the most powerful weapon for squashing competitors.

Last November, Wal-Mart Chief Executive Officer Lee Scott came to Washington to discuss the minimum wage. Scott said: “While it is unusual for us to take a public position on a public policy issue of this kind, we simply believe it is time for Congress to take a responsible look at the minimum wage and other legislation that may help working families.” This summer, as Capitol Hill considered the issue in earnest, Scott declared the current $5.15 per hour minimum wage “out of date with the times.”

Was Wal-Mart looking after the worker, or targeting its smaller competition? Proposed minimum-wage hikes on Capitol Hill would set it at $7.25, which is less than Wal-Mart pays its lowest-paid workers, but more than Mom and Pop pay their 17-year-old part-time help. A minimum-wage hike might just eliminate another competitor of Mom and Pop, while imposing no cost on the mega-retailer. Somehow, this earns kudos for Wal-Mart.

Wal-Mart has also won praise by pledging to be a bit greener: conserving fuel, recycling, and selling organic foods. Wal-Mart is uniquely positioned to make environmental improvements. Unlike smaller retailers, Wal-Mart controls and owns its entire distribution network, and so the company uses so much fuel that it can make a few tweaks that would dramatically cut its consumption, saving money, reducing pollution, and cutting carbon dioxide emissions. Also, Wal-Mart can use its legendary purchasing power to inexpensively equip its stores and distribution centers with energy-saving light bulbs, for example.

In Washington, however, the company has gone a step further. Called before Congress to testify about a federal law to limit carbon dioxide emissions, Andy Ruben, Wal-Mart’s vice president of corporate strategy and sustainability, said: “Because we see climate as a critical social issue and because we believe that greenhouse gases can be cost-effectively reduced throughout the economy, Wal-Mart would accept a mandatory cap-and-trade system to control greenhouse gas emissions.”

Wal-Mart, then, can afford to reduce its pollution and carbon dioxide, but it would be happier to do so if Congress also made these reductions mandatory (of course, imposing greater costs on its smaller rivals). In a cap-and-trade scheme, Wal-Mart could reduce emissions by forbidding its truckers to idle, turn the reductions into carbon dioxide credits, and sell the credits to companies who didn’t have so many ways to cut their carbon dioxide.

Any company coming to Washington needs to pay its dues, and Wal-Mart is increasing its political contributions. According to its August filings, Wal-Mart’s PAC had already spent more than $2.3 million in the 2006 cycle — nearly equaling its total spending in the 2004 cycle. (Before 2002, Wal-Mart’s PAC was spending less than $1 million per cycle.)

Democrats are benefiting from this largesse. From a lowly 8 percent in the 1996 cycle, the Democratic Party’s share of Wal-Mart PAC’s federal cash has climbed to 30 percent so far in the 2006 cycle, according to the Center for Responsive Politics.

Hiring a Democratic political strategist and sending its executives to Capitol Hill to call for more regulation shows Wal-Mart’s new strategy — and it’s a typical transformation for a big company. The free market may have helped carry Wal-Mart to the top of its industry, but they need big government and the right lobbyists to stay there.