Lobbyists cash in on do-nothing Congress
The always-be-selling mentality is already in full effect on K Street. | John Shinkle/POLITICO
By ANNA PALMER and BYRON TAU | 1/2/14 5:00 PM EST Updated: 1/3/14 9:20 AM EST
Congress didn’t get much of anything done last year, but you wouldn’t know it looking down K Street.
Washington Inc. experienced only a minor squeeze, continuing to hum along even as Congress failed to pass the kind of bills that lobbyists are paid top dollar by corporate clients and other special interests to influence — like an overhaul of the Tax Code, immigration reform or a major deficit package.
The fact that big business is just barely scaling back on its spending for hired guns in a year when Congress is expected to do even less and a year after the economy was still weak is a testament to the resilience of Washington — and the firms that have thrived in the economy around it.
Even with early projections that 2014 will be the year to “go small,” K Street still isn’t expecting the bottom to fall out of the lobbying industry.
“I’m cautiously optimistic that some of the signals of cooperation are out there,” Don Pongrace, head of Akin Gump Strauss Hauer & Feld’s government affairs operation, said of the year ahead. “Washington will always create issues for clients on which they will need to have firms such as ours assist them; where those issues arise and how they can be addressed will fluctuate somewhat, but they are always there.”
To be sure, K Street is going through a lean time — the majority of big D.C. lobbying firms have seen their share of federal lobbying flat-line or decline over the last couple of years, a significant shift from the boom years in the mid-2000s.
After a down election year, lobbyists rallied around the possibility of major legislation in 2013 to try to buoy their bottom lines, signing new clients and coalitions to push a variety of issues. Gun control, immigration and even a big deal on long-term spending all looked liked plausible achievements heading into last year. New and long-term clients spent heavily in these areas, hoping to take advantage of potential deal-making momentum.
And, while several downtowners said some companies are reviewing their contract lobbying firms and that many clients have been slow to re-up for 2014, the “always be selling” mentality is already in full effect.
Democratic lobbyist Jimmy Ryan said there is still “opportunity in [a] transitional year to actually get things done” even if it’s unlikely a major corporate tax reform package or grand bargain gains serious traction.
“You can see where there would be common ground between Democrats and Republicans if you were to recognize that the tea party wing won’t be calling the shots anymore,” said noting that legislation like the highway bill contains areas of possible compromise.Downtowners continue to point to immigration reform as an area where there will be a lot of K Street spending. The issue touches virtually every industry — and many of the biggest spenders are wealthy individuals like Facebook’s Mark Zuckerberg and outgoing New York City Mayor Michael Bloomberg, who rely on their personal fortunes and whose commitment to Washington is less affected by short-term economic projections.
Even if proponents can’t gain traction in 2014, they will be setting the stage for the coming years, when most congressional watchers believe some action will be taken to overhaul the country’s immigration laws.
Still, not everyone has such a rosy outlook for Washington spending in the short term.
Many companies are still facing tough economic times, and their Washington government relations budgets are often the first to be slashed, which has a ripple effect on K Street, from companies lowering retainers to reassessing their trade association memberships.
Former trade association executive David Rehr, now of TransparaGov, said he expects another “mediocre year” because “everyone in business is anticipating a ‘good’ 2014 election, which is code for basically having the Republicans retake the Senate.”
Additionally, slow growth at many trade associations also means less hiring of contract lobbyists to help them push their issues.
“If you are a CEO at an association and you aren’t growing [membership] in the positive single or double digits, you are wary of spending more in the lobbying field because you don’t want to be criticized by your board,” said Rehr, who previously headed up the National Association of Broadcasters and the National Beer Wholesalers Association.
The congressional calendar is also at odds with a big K Street year. House members are slated to be in for just 113 days this year.
And while there hasn’t been a massive pullback, Washington is often the first place executives look to cut when they don’t have strong economic growth. Many firms have seen that on the federal lobbying side and have tried to circumvent the loss by adding communications capabilities, consulting operations and more focus on the regulatory side.
Still, the overall economic mood has been felt, especially on the hiring side of the equation.
Veteran K Street recruiter Ivan Adler said the slowdown on K Street has had a big impact on hiring choices, particularly at law firms with government affairs practices.
“It has been an especially bad year for people leaving the government and trying to get into law firms, because they have been as risk averse as I have ever seen it in the years of me doing this,” said Adler, who has been a recruiter for 18 years.
While there wasn’t much to cheer in terms of legislative victories — last year’s Congress went down as the least productive ever — some downtowners still said there were a few bright spots.
“I think this year we made [a] surprising amount of progress on a couple of tough issues, like patent trolls and patent litigation reform,” said David French, top lobbyist at the National Retail Federation.
And while dysfunction and political partisanship led much of the day, French predicted that bipartisan pushes on issues like collecting online sales tax and even immigration reform could gain momentum.
“I think the faction that overplayed their hand at the end of the fiscal year and caused the shutdown, there was a promise implicit in that that they would be able to export the consequence of the shutdown to the White House and the Democrats,” French said.