POLI 100E, Interest Group Politics: Topics 5 and 7

Starbucks Goes to Washington

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1. Starbucks Coffee, Red Hat Inc., Monster.com, and
   Google Inc, are all very successful companies who made
   their mark in the last 15 years or so. They all have
   recently hired Washington, D.C. lobbyists.
   
   
2. "These Newcomers to Washington are caught in a bind:
   They have the same desires as every other company -- tax
   breaks and trade deals. But they find the horse-trading
   aspects of lobbying, including political donations and
   asking for favors, often conflict with their public image
   as idealists changing the way business is done."
   (WSJ, p. A1, 12 April 2005)
   
   
3. Starbucks Idealistic corporate culture includes:
   
   
   1. Employees -- even part-time workers -- receive full
      health care benefits.
      
      
   2. Shuns most advertising and has a very lean organizational
      structure.
      
      
   3. Issues a "corporate responsibility" report annually and
      requires its stores to donate to local causes and charities.
      
      
   4. Offers better pay to farmers who treat their workers
      and the environment decently.
      
      
4. Starbucks has expanded very rapidly -- "But it's clear
   that much of the company's future growth will come from
   overseas. That makes lowering trade barriers with Central
   America and even farflung places like Thailand critical issues
   for the coffee retailer." (WSJ, p. A1, 12 April 2005)
   
   
   
   
   
   
5. Other issues that face Starbucks are rapidly rising health
   care costs and its decision to form a partnership with Jim Beam
   brands to make a coffee liqueur.
   
   
6. These and other issues finally persuaded Howard Schultz
   to hire Kris Engskov, a former personal aide to President
   Clinton as head lobbyist.
   
   
   
   
7. "In early 2004, Mr. Engskov began planning Mr. Schultz's
   Washington debut. He immediately faced an obstacle. The
   price of access to meet lawmakers is often campaign
   contributions. Mr. Schultz has given money almost
   exclusively to Democrats, a big handicap in a city now
   run by Republicans." (WSJ, p. A10, 12 April 2005)
   
   
8. Starbucks hired a lobbying firm -- Preston Gates Ellis
   & Rouvelas Meeds LLP (founded by Bill Gates Sr.) -- to
   prepare the way for Mr. Schultz's visit to Washington.
   "One of the firm's principals, former Senator Slade
   Gorton, a Republican, made some calls to old friends on
   Capitol Hill. That paved the way for meetings with
   Bill Frist, the Senate majority leader, Chuck Grassley,
   chairman of the Senate Finance Committee, and
   Rick Santorum, chairman of the Republican conference."
   (WSJ, p. A10, 12 April 2005)
   
   
9. Mr. Schultz did not want to directly lobby members
   of Congress on his first visit so he decided to talk
   to them about health care issues in general. "The soft-
   sell approach, without a specific bill to tout or request
   for help, was disconcerting to some lawmakers more
   accustomed to direct appeals and others so over-
   scheduled there is little time to philosophize about
   the big picture." (WSJ, p. A10, 12 April 2005)
   
   
10. Although Howard Schultz's visit was not wildly
    successful, his chief lobbyist Kris Engskov along
    with the Preston Gates firm were able to put a tax
    break for the 4 coffee roasting plants that Starbucks
    has in the U.S. (technically, this restored a tax
    break they had that the WTO had ruled illegal).
    
    Senate staffers dubbed this the "Starbucks footnote"
    to the great consternation of Howard Schultz.
    
    
11. Starbucks plans on continuing lobbying efforts on
    trade, intellectual property laws overseas, and lower
    coffee tariffs overseas. It is also considering
    sponsoring congressional visits to its farmer-support
    operation in Costa Rica.