Former House majority leader Dick Armey once likened Washington, D.C., to Hollywood without a tan: "They're both filled with overprivileged people who are driven to insanity by the notion that they might somehow lose their privilege." That may explain a lot about what goes on in Washington, but it provides absolutely no insight into how Dirk Van Dongen, the humble head of a little known trade group, has come to be one of the most influential movers and shakers inside the Beltway.
Possibly the most influential man you've never heard of, Van Dongen heads up the National Association of Wholesaler-Distributors (NAW)—a trade group whose members are mostly small and medium-sized owner-managed businesses like South Jersey Welding Supply, Penn State Seed Co. and Burns Veterinary Supply. But the trade group's size—it has just 20,000 members—belies its influence. The companies may be small, but collectively, these middlemen do business that's measured in the trillions of dollars annually.
But that alone doesn't account for NAW's political pull. To understand that, you need to look to the wholesaler-distributors' man in Washington, Van Dongen. During his two decades at the helm of NAW, he's cultivated an impressive list of contacts in high places. (He's rumored to be on the White House's speed dial.) And he's worked those connections for a range of small business causes to remarkable effect. If your business benefited from the first President Bush's tax cut, tort reform or OSHA deregulation, to name just a few, you're in Van Dongen's debt.
As for what he's up to today, Van Dongen says he's focusing his efforts on legislation to repeal the inheritance tax, product liability reform, health plans for small businesses and tax policy. He spoke recently with DC VELOCITY Editorial Director Mitch Mac Donald about NAW's role in Washington, why NAW's members enjoy unusually good access to members of Congress, and why you can't always believe what you read in lobbyists' press releases.
Q: Among Washington lobbying groups, NAW has earned a reputation for wielding far more clout than you would expect from a group of its size. How do you account for that?
A: It starts with our constituency, and I mean that very, very seriously. We don't happen to have deep pockets, but we have an absolutely superior constituency when it comes to impacting Washington. Wholesale distributors make up a very, very significant part of the economy. The way our constituency is shaped, we end up having the same relative numerical strength in a less populous state like Montana that we do in high-population states like New York or California. That allows us to have a great impact.
Q: There must be more to it?
A: Yes. As you know, the overwhelming majority of these businesses happen to be owned by the people who run them. And although there are a number of giants in this industry today, most of these players are small or medium sized. That's important because it means they are community rooted. Our members went to elementary or high school with the people who now represent them in the House and the Senate. They played on sports teams with them. They dated each other's brothers and sisters, and so forth. As a result, they've forged very substantial relationships with the members of Congress. We have a database of personal contacts that folks in this industry have with members of Congress. In fact, we've documented personal relationships between our members and 433 of the 435 representatives in the House and with every single member of the Senate.
Q: Powerful stuff.
A: That's a huge advantage, so when I say that whatever influence we have in this city starts with that resource, I'm quite serious. The overwhelming majority of our members own their companies, which means that if they care about an issue, they're free to take action. They don't have to go down to their lawyer's office and their marketing department and their PR people, and so on and so forth, as is the case—and, appropriately so—with your Fortune 100 corporations. They are action-oriented. All we do is inform, enable and focus that capacity.
Q: In other words, your role is making sure they're aware of the things they need to be aware of?
A: Yes, that and giving them an easy way to convey their views. We have always done that. Today we do it with Internet-based systems that make it very, very easy for members. They just go to our Web site and click on the button labeled "Tell Congress." The site lets you enter your ZIP code to get the names of your senators and representatives. It gives you talking points on various issues to help you write a letter in your own words—we don't provide standard forms or postcards people can mail to Congress. So, you create your message. You hit a button. You are identified in the e-mail, which is important because that lets the receiving software on the Hill identify you as a constituent (messages that don't come from the representative's district or state are filtered out). We get a copy of the message. It's a very effective system. We're not the only people in town with such a system. They're fairly universal these days, but what we've got, again, is that quality base of people.
Q: Sounds like a nice application of technology. It gives NAW members an effective way to be heard inside the Beltway. And it gives members of Congress and their staffs a way to pick out the messages that really matter to them—the ones from their voting constituents—from the tide of incoming messages.
A: Precisely. As a result, the communications flow in real time. A member of Congress can vote "yea" or "nay" on a piece of legislation as you and I are talking and within five minutes, we can notify everybody in the state who needs to know so they can express either their appreciation or their consternation. It's a far cry from the days not so long ago when communication was by snail mail or by telephone.
Q: Why is it important for your members to have representation in the nation's capital?
A: The business of Washington is producing legislation and regulation. That is the work product of this city. You've got just an absolutely gigantic machine here that spends every working day doing that. That legislation quite obviously has impact. It has impact on broad economic conditions. It has impact on companies. It has impact on how you can and cannot run your business. It has impact on how much of the profit you make you can keep and on and on and on. Those decisions are going to be made whether you stand up to be counted or not. It is really dangerous to simply ignore it until you get a chance to read what they have decided.
Q: Indeed. What are some of the legislative issues that you folks are watching for your members?
A: We basically track broad economic legislation that impacts all distributors as a class, irrespective of what products might go into their warehouses or through their DCs. We are always concerned with tax policy. We are concerned right now with initiatives that are part of the reconciliation process to extend the reduction in dividend capital gains taxes that was enacted a couple of years back. We are very deeply involved and have been for years in efforts to repeal the so-called death tax. In fact, there was to have been a Senate vote the Tuesday of the week after Katrina hit, which had to be postponed, but that is an extremely high priority of ours. The president's tax reform panel presented its vision for tax reform to him back in November. Should the president bring tax reform to center stage this year, we will be deeply involved in that. We are working very, very hard to secure enactment of legislation for small business health plans or association health plans in order to try to get at the really severe pressure that continually increases our members' health care insurance costs. So it is a full plate.
Q: Obviously, your members move a lot of stuff on the nation's highways and rails, and so forth. Do you also monitor legislation relating to the nation's transportation infrastructure, like the recent highway reauthorization bill?
A: Yes. We weren't deeply involved in the last reauthorization, but we were certainly supportive of finally getting some action on the highway bill. We believe that one of the things that keeps the country competitive is a healthy infrastructure, which raises a concern on our part with respect to federal spending. As you are probably well aware, the paradox with regard to highway funds is that they are collected via a specific tax and are supposed to be expended for that purpose. But those funds are held hostage by the U.S. Congress in a trust fund because it makes the budget look better. When they spend those trust fund dollars, it makes the budget look bad. It's a crazy way to do business.
Q: Do you find people surprised by the level of influence that NAW has in Washington?
A: Candidly, it is inappropriate, in my view, to brag on it. There are a number of organizations in this town that have a tendency to overstate their impact. You'll see it when a piece of legislation passes. As many as 40 or 50 associations may have been involved, but when you read their internal publications, each one of them will claim that it did it on its own. Figuring out how to tell the story can be a challenge, of course: on the one hand, you want to get the word out about what you're doing. You've got to advertise yourself in this business as in any other business. On the other hand, you don't want to be out there saying, "Look at me, we are just really, really important." You just hope the story gets out in different ways.
Q: There's a perception out there that groups like NAW today have more involvement and influence in helping to set legislative agendas than they might have in the past. Do you agree with that?
A: Qualitatively, I do agree that, yes, groups like NAW have more involvement and influence today, but it's impossible to put some sort of a metric on it. The reality of this town is that every decade, the agenda seems to get more complex than in the previous decade. You have a bigger government. It is interested in more things. It is doing more things. It is dealing with more complicated things. In terms of how you impact the process, organizing yourself to do that as opposed to everybody doing it on an ad hoc basis is really important to advancing your cause. That is why people came together in associations to begin with.
What you have seen mature over the past 20 years is the phenomenon of coalitions, where associations themselves join with other associations to form an entity to advocate for a specific cause. Congress likes it because that means it only has to deal with one entity, not with every member of the entity. There is an efficiency to it because the Congress will say, "Don't come to us until you all agree on something." We have to self arbitrate, if you will, rather than leave that for them to do. Coalitions have gotten extremely large in recent years. For example, one of the major coalitions created in the early days of the president's first term was something called the Tax Relief Coalition. TRC, which is administered out of our office, has over a thousand member organizations. Those thousand organizations represent somewhere around 1.8 million businesses. So it is huge.
Q: That's an impressive number by any measure.
A: When you add to that the real-time response and capabilities to communicate throughout that universe electronically, it is an immense efficiency. Think of it in terms of the supply chain. Instead of moving boxes around, you're moving information around.
Q: Off the top of your head, if you were to look back, say, 50 years, what is the biggest change or innovation that has affected U.S. business?
A: That is a fascinating question. It's kind of like asking: What's your favorite restaurant in New York City? You almost can't name one. There have been so many. It seems to me that through a variety of both challenges and opportunities, American business has this wonderful capacity to reinvent itself. It is the resiliency of the American business community in combination with a very, very strong entrepreneurial bent on the part of the American people.