In American folklore, it is President Grant who coined the term “lobbyists” to designate those influence peddlers who attempted to pry him with whiskey and cigars during his jaunts to the Willard Hotel in exchange for political favors. The term, in fact, is much older – as is the practice itself. In 1792, for instance, veterans of the Continental Army from Virginia sent one William Hull to Washington, D.C. to petition for higher compensation.
A BRIEF HISTORY OF CONGRESSIONAL LOBBYING LEGISLATION
Lobbying went unregulated until 1946, when Congress passed Federal Regulation of Lobbying Act, requiring those who spent at least half of their time on the Hill in service of outside groups or individuals to become officially registered.
In 1995, President Clinton signed into law the Lobbying Disclosure Act (LDA), which expanded the definition of a lobbying to include anyone to spends at least 20 percent – rather than 50 percent – of her time engaged in lobbying activities.
Also, the LDA mandates that any entity that spends at least $10,000 annually on lobbying activity must report twice a year – with good faith estimates: the amount it spent in the previous 6 months; the names of its lobbyists; the issues it sought to influence; and which actors in government it lobbied. Since 1998, the government has disclosed this information to the public.
Lobbying underwent its third and most significant legal makeover following the Abramoff scandals.
Former lobbyist Jack Abramoff exploited his connections with congressional Republicans, especially former House Majority Leader Tom DeLay, in order to charge exorbitant rates to groups seeking insider influence. For instance, Abramoff charged various Indian tribes millions of dollars in consulting fees – some of which he illegally funneled to religious and anti-tax conservative groups – in order to either protect and shutter their casinos, depending on the needs of his clients.
Abramoff spoiled his congressional partners with lavish gifts. He flew Tom DeLay to the Northern Mariana Islands, for instance, before DeLay helped kill a bill in Congress raising labor standards and wages for workers on the American commonwealth. He also flew religious conservative Ralph Reed and Rep. Ney (R-OH) to Scotland to persuade Ney to re-open a Tigua-run casino in Texas that Abramoff had helped close a year earlier.
A year after Abramoff pled guilty to felony charges of conspiracy, fraud, and tax evasion, Congress passed the Honest Leadership and Open Government Act (HLOGA) in 2007. The law expanded the range of expenses that lobbyists must report to include contributions to federal candidates and leadership PACs. HLOGA also instituted “cooling-off” periods that require members of Congress and their staffers to wait 1 to 2 years before registering as lobbyists.
HOW EFFECTIVE ARE THESE REGULATIONS?
The effects of these measures are difficult to gage. Analysts from Open Secrets, a transparency watchdog group, fear that these measures have perversely encouraged lobbyists to go to underground. For instance, they note that between 2007 and 2012, the amount spent by the top 100 lobbying groups increased by 19 percent while the number of lobbyists representing them dropped 25 percent.
In other words, they may still engage in lobbying-like activity but – in order to shirk the burden of registering and reporting their activities – change their title to “special policy advisor,” as Tom Daschle (D-SD) did when he joined the law firm Alston & Bird following his failed 2004 Senate reelection bid.
Indeed, Daschle’s rapid re-entry recalls the stubborn persistence of the “revolving door” phenomenon that HLOGA attempted to curtail. While HLOGA requires a 1-year “cooling off” period for House staffers, the law includes an oft exploited “salary loophole.” A staffer can return immediately to the Hill as a lobbyist so long as her annual salary falls below $103,500. Since the passage of HLOGA, more than 1,650 congressional aides have utilized this loophole.
However, these figures – and the connotations of the term “lobbying” itself – misconstrue the real relationship between members of Congress and lobbyists.
LOBBYING THE LOBBYISTS
NPR correspondents Alex Blumberg and Andrea Seabrook reported in 2012 that members of Congress must raise $10,000 to $15,000 every day in order to have enough funds to finance the next election cycle. When the well runs dry after cold-calling past and prospective donors – sometimes for several hours per day – they turn to those who have money to throw around. As Alex Blumberg put it:
The way most of us generally think about it is absolutely backwards. We imagine the lobbyists stalking the halls of Congress, trying to influence members with cash. But more often than not, it’s the reverse– the member is stalking the lobbyists, saying, “Hey, can I have some of that money?”
On some occasions, members of Congress are able to convince a lobbyist to arrange an event – such as an impromptu fundraiser at some D.C. steakhouse – that brings numerous lobbyists bearing thousand-dollar checks together in exchange for some valuable face time.
Rep. Nancy Pelosi (D-CA), for instance, boasts that she attended roughly 400 such fundraisers in 2011.
Naturally, some industries are more inclined to lobby legislators than others. In 2013, the top 5 industries spent the following amounts to the nearest million: (1) pharmaceuticals and health products: $226 million; (2) insurance: $153 million; (3) oil and gas: $145 million; (4) computers and internet: $141 million; (5) electric utilities: $130 million.
Cash-hungry congresspeople respond accordingly. Party leaders in both houses place fundraising goals for fellow partisans based on their committee assignments, some of which are more lucrative than others.
For instance, members of the Ways and Means Committee – the one that controls the budget – pull in $250,000 more than the average member of Congress, and those who sit on the Financial Services and Energy and Commerce committees raise well over $100,000 above the mean.
However, these contributions are never a guarantee that a lobbyist will see his preferred version of the bill scheduled for a vote, or that his desired, niche carve-out or exemption will find its way into a bill’s final language.
What, then, do the more than 12,000 registered lobbyists get with the more than $3 billion they spend – to use 2013’s figures?
WHAT MONEY BUYS
Few quid pro quos are as apparent as when McDonald’s CEO Ray Kroc donated $250,000 to President Nixon in 1972 in return for an exemption from price control that allowed McDonald’s to raise the cost – and profits from – its quarter pounders with cheese.
Nevertheless, lobbying has its payoffs. A study from the University of Kansas released in 2009 showed that between 2003-2004, 93 firms seeking tax holidays – companies such as Pfizer, IBM, and Johnson & Johnson – saw a 22,000% return on investment for their lobbying expenses.
When President Obama took office, he vowed to curb the power of special interests and pledged not to bring lobbyists into his administration. Moreover, during his reelection bid, he swore not to raise money from lobbyists.
However, the president did accept over $500,000 in “bundled” contributions from Pfizer executive Sally Susman, for instance. Though Susman ran the company’s lobbying operations in 2011 and had visited the White House on several occasions, Obama accepted the cash because Susman herself was not officially registered as a lobbyist.
The president accepted millions in cash from similarly unregistered magnates.
The president’s hypocrisy is reminiscent of his ties to the Chicago bundler and convicted criminal Tony Rezko, with whom he engaged in a questionable home purchase deal in 2005. Indeed, housing deals seem especially prevalent among powerful Democratic senators.
Perhaps the most venal relationship of this sort was between former Senate Banking Committee Chairman Chris Dodd (D-CT) and former Countrywide Financial CEO Angelo Mozilo, who personally saved Dodd – one of many in the “Friends of Angelo” group – thousands on waived fees for two separate mortgages.
Countrywide was perhaps the greatest participant in the subprime mortgage lending scheme that generated the 2008 financial crisis.
Bank of America (BofA) – which received billions in the Dodd-approved TARP bailout and donated over $100,000 to Dodd since 1989 – purchased Countrywide in January 2008.
When BofA realized the extent of Countrywide’s abuses and the toxicity of its assets, it approached the Capitol months later and revealed a 28-page plan that put taxpayers on the hook for some of its newly acquired distressed mortgages. Dodd later proposed a bailout and mortgage-insurance bill that borrowed language from these lobbying proposals – a bill with an estimated $1.7 billion cost to the public.
One lobbyist told a Senate staffer, “the bailout is exactly what Bank of America and Countrywide wanted.”
Two months after Dodd left the Senate in 2011, he betrayed his promise not to become a lobbyist and became the head of the Motion Picture Association of America, joking, “I left one group of bad actors for another group of bad actors.”
Leading House Republicans have done the bidding of lobbyists and donors as well. In the 1990s, Golden Rule Insurance Co, with its lavish contributions to the GOP, nearly succeeded in getting former Speaker Newt Gingrich to reform Medicare by gradually replacing it with a medical savings account (MSA) scheme – one that would have secured the company millions of new customers.
And current House Speaker Boehner, who in 1996 once brazenly handed out checks from the tobacco industry to fellow Republicans on the assembly floor, is close to many powerful business lobbyists – including former members of the now disbanded “Thursday Group.”
However, not all lobbying is equivalent to throwing money at the right person. Lobbyists also seek to influence policy by targeting government agencies in the executive branch.
According to the Administrative Procedures Act of 1946, all federal agencies must follow a two-step process when creating regulatory policies, a procedure known as the “notice-and comment” process.
First, the agency – say as the EPA – will create a “draft rule” listing its guidelines thus far, which it will make public to allow anyone to comment and propose changes. Then, after this period, the agency will consider all of the comment letters before later issuing its “final rule.”
Lobbyists have two points of access in this process: first, they can engage in “ex parte” lobbying by communicating or meeting with regulators in the pre-proposal stage, and second, lobbyists – and the public as a whole – can submit comments on the draft rules after an agency releases them.
Lobbying regulators can be more effective than lobbying members of Congress.
DODD-FRANK: A CASE STUDY
Take, for instance, the Dodd-Frank financial reform bill: while Wall Street lobbied heavily prior to its passage in 2010, such lobbying intensified during the bureaucratic rulemaking process. Financial interests targeted agencies such as the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Consumer Financial Protection Bureau (CFPB) – among others.
In 2012, representatives of the financial industry including the Chambers of Commerce, the American Bankers’ Association, and leading banks such as JPMorgan Chase sent 406 lobbyists compared to 20 from consumer and public advocacy groups, such as the Center for Responsible Lending.
The industry’s advantages in wealth and personnel translated into far more face time with regulators. In the first 3 years after Dodd-Frank’s passage, the top 5 industry groups logged 901 meetings with regulators compared to 116 such meetings with consumer protection groups.
Lobbying groups can also employ their wealth to pay for expensive top-notch research, analysis, and litigation as a way to delay, impede, and amend rules they want changed.
For instance, a lawyer for the industry, Eugene Scalia – the son of Justice Antonin Scalia – sued the SEC for not considering one such report submitted by a pro-industry group in one of its cost-benefit analyses.
A court ruled in his favor and mandated that each new rule undergo a more rigorous and complete cost-benefit analysis, severely increasing the burden on regulators who sometimes spend 21,000 hours writing a single, simple rule.
All in all, the history of congressional lobbying seems to confirm the late French philosopher Michel Foucault’s insistence on the slipperiness, the fluidity, and the pervasiveness of power – even in spite of good faith measures to contain it.
While laws requiring registration and disclosure of expenses and activities are necessary ways of increasing transparency, some provisions – such as the 20 percent threshold and the “cooling off” period requirements – have had the unintended effects of masking lobbying activities and keeping the revolving door between Congress and K Street spinning.
With the help of watchdog groups including the Center for Responsive Politics and the Sunlight Foundation, as LDA disclosure reports from the House and Senate, it is up to citizens to keep an eye on lobbying activity.