Where Have All the Lobbyists Gone?
Trade association documents, bankruptcy filings and reports from political consulting firms reviewed by The Nation show that many of America’s largest corporations have spent much more on lobbying than they’ve officially disclosed. In some cases, the quarterly registration system, used by the public and journalists, shows only one-tenth of the amount that firms spend to win favorable treatment by the federal government.
This explosion in spending on lobbying activities may not be visible in the lobbyist-registration system, but it is evident in Washington. The growth of the influence industry has created a new generation of millionaires while reshaping the region in its wake. The District of Columbia skyline, once dominated by monuments, is now dotted with cranes building some $5.5 billion in new development. The 14th Street and H Street corridors, formerly gritty sections of the city, are lined with more than forty new bars and restaurants. Census figures show that four of the five wealthiest counties in the country are now DC suburbs. In one of those counties—
Fairfax—high-end carmakers Tesla and Aston Martin have opened new showrooms to keep up with demand.
The new captains of the influence-peddling industry lobby openly and with no interest in registration, reaping enormous rewards. Tim Pawlenty, in his first two months as head of a lobbying association for financial companies that include Barclays and Wells Fargo, made more than double his annual $120,000 salary as governor of Minnesota. The self-described “Sam’s Club Republican” earns over $1.8 million a year working largely on banking regulations. He is not a registered lobbyist.
Chris Dodd, the former senator and Democratic presidential candidate who pledged not to become a lobbyist once he retired from Congress in 2010, made $3.3 million in his second year as chief of the movie industry lobby. (Dodd’s salary increased as he led the Motion Picture Association of America through a failed effort to pass an intellectual-property bill called the Stop Online Piracy Act, better known as SOPA.) Technically, however, Dodd hasn’t broken his pledge: though he seeks to win policy victories for his Hollywood-based members, he is not registered as a lobbyist.
Rather than using the L-word to describe what they do, many lobbyists prefer the more banal rubric of “government relations” or “government affairs.” Reflecting this trend, the American League of Lobbyists—a professional association for the industry—changed its name in November to the Association of Government Relations Professionals. And while registered lobbyists must report payments from clients, those ducking the system quietly bring in the biggest paydays.
Apple’s former vice president of “worldwide government affairs,” Catherine Novelli, earned over $7.5 million last year while helping the company deal with congressional inquiries about its alleged tax-dodging strategies—without registering as a lobbyist. Deborah Lee James, until recently the vice president for government affairs at SAIC, a major defense contractor, earned nearly $1 million in 2013 despite also being unregistered.
Luxury magazines such as The Washingtonian and Washington Life are filled with the latest displays of affluence by the district’s nonlobbying lobbyists. BP’s head of public affairs—another euphemism for influence peddling popular among unregistered lobbyists—recently spent $1.7 million for a six-bedroom house in the tony neighborhood of Spring Valley. Earlier this year, an executive from the Albright Stonebridge Group, a government-relations firm that influences policy on behalf of corporate interests without being registered under the LDA, shelled out $4.2 million for a home in Georgetown.
Commercial real estate tells a similar story. A report by the real estate firm Cassidy Turley forecast “strong gains” for downtown office leases to the corporate lobbying and government-relations industries. In the weeks before fast-food workers earning less than $8 an hour began a wave of walkout strikes across the country in December, the National Restaurant Association, a lobbying group for eateries like McDonald’s and Burger King dedicated to blocking efforts to raise the minimum wage, moved into a swanky new office space on L Street to accommodate its 20 percent growth in staff operations. But even though the National Restaurant Association’s staff and spending have grown, the organization reported its lowest lobbying figures since 2007 on its latest forms.
Notably, despite what the registration forms say, Wall Street doesn’t seem to think that the lobbying business is drying up. The profits from the influence industry have aroused the interest of deep-pocketed investors. As a result, the boutique firms and partnerships that made up America’s lobbying industry for the last two centuries are giving way to multibillion-dollar conglomerates.
The London-based WPP Group has been on a buying spree and now owns prominent lobbying and political-communication businesses like the Glover Park Group, Burson-Marsteller, Hill & Knowlton, the Dewey Square Group, Public Strategies Inc., the Prime Policy Group, and Quinn Gillespie & Associates. The company’s global earnings surged to $15.6 billion in 2012, thanks in part to the expansion of “lobbying and funding of lobbying” in America, according to a speech by WPP chief executive Martin Sorrell.
Qorvis Communications, an international lobbying firm based in Washington, was recently purchased by the Paris-based Publicis Groupe, which is in talks to merge with the Omnicom Group, another conglomerate that owns many government-affairs firms. Fleishman-Hillard, one of the dozens of Beltway public relations firms that work to influence policy without registering under the LDA, is an Omnicom Group company.
And why not keep buying? A November report from McKinsey & Company estimated that the “business value at stake from government and regulatory intervention” is about 30 percent of earnings for companies in most sectors. Simply put, government policies can mean the difference of billions of dollars for major companies, and spending on politics offers a superb payoff. A study from the University of Kansas found that companies lobbying for a tax holiday received a 22,000 percent return on the money they spent to influence the legislation.