Economy tanks, lobbying booms

Washington’s influence industry is humming steadily while the national
economy is declining in what several economists predict will be the worst
recession in 50 years.

More than half a million Americans lost jobs last month, and the value
of most 401(k) plans plunged, yet government and public-relations pros in town
expect to make a lot of money over the next two years.

{mosads}Fueling the industry along K Street is an anticipation of sweeping
changes that President-elect Obama and the newly emboldened Democratic Congress
will pursue together — from ending Bush-administration tax cuts to enacting the
broad health reforms proposed during the campaign.

Such
change had the dark-paneled dining room of the Capital Grille, one of the
city’s most posh hangouts for lobbyists and lawmakers, packed on a recent
afternoon at lunchtime, even though Congress had quit town for the year and
traffic downtown was light. 

Rep. Robert Aderholt (R-Ala.), a senior member of the House
Appropriations panel, sat in a dimly lit booth with his chief of staff and two
other companions. Diners at nearby table discussed the ascension of Rep. Sam
Graves (R-Mo.) to the ranking Republican slot on the Small Business Committee. 

A manager at the Capital Grille, where lunch can run a couple hundred
dollars, said there’s been no drop-off in business, even while other retailers
are reporting their worst Christmas season in decades.

Many industries, ranging from oil to financial-services companies, are
terrified about the prospect of layers of new regulation and higher corporate
taxes under the new Democratic regime. 

“A number of interests are extremely concerned that they are going to
be hit with legislation, and this includes a number of parties who have not had
to worry in the Republican era and now see a major threat,” said Wright
Andrews, a partner at the lobbying firm Butera & Andrews, which represents
several financial-services firms.

“Everyone I’ve talked to thinks it’s going to be a banner year,” said
Andrews. “I’m just smiling, quite frankly, at what seems to be happening.” 

Several of Washington’s top lobbyists said this has been the busiest
December they can remember. 

“Usually, December is a very slow month on all fronts, but this year it
has been incredibly busy,” said Steve Elmendorf, a lobbyist and one-time senior
adviser to former House Democratic leader Richard Gephardt (Mo.). 

“Anytime government gets more active and more involved in your
business, you’ll look for more help in Washington,” he said. “When Democrats
control both chambers of Congress and the White House, there’s no question that
government will be more active.” 

Congressional Democrats hope to pass sweeping legislation in the area
of healthcare, financial services regulation, immigration reform and renewable
energy production. They are also looking to end an array of corporate tax
breaks while creating new tax incentives to improve education, combat global
warming and solve a host of other policy challenges. 

Elmendorf said that companies in the healthcare, energy and
financial-services sectors are preparing most aggressively for President-elect
Obama’s new administration. 

At the top of the economic agenda, however, is an economic stimulus
package that could reach $850 billion, ranking among the biggest federal
expenditures in history. Democratic leaders are drafting the package now in
hopes of passing it before Obama takes the oath of office.

With so much money on the table, lobbyists are working late into the
holiday season to pitch their clients’ needs to the bill’s authors. 

While companies look to trim expenses by freezing wages, laying off
workers and reducing matches to employee 401(k) accounts, many executives
realize they cannot skimp on representation in the halls of Congress.

“We have clients who have significant economic problems and we’re
discussing that with the leadership, saying: ‘As you put the stimulus package
together, here’s a part of the economy that has severe credit problems,’ ” said
former Rep. Marty Russo (D-Ill.), a lobbyist at Cassidy and Associates who
served on the House Ways and Means Committee. 

“We’re making those pitches right now,” Russo added. 

Russo explained that many construction firms are in dire need of federal
assistance to save their business in the midst of a national credit slowdown. 

Rep. Eliot Engel (D-N.Y.), a member of the House Energy and Commerce
Committee, said the stimulus would likely include incentives for “green” energy
production, such as wind and solar power. 

He said Congress may also increase taxes on corporations such as oil
companies, which have earned record profits in recent years. 

“Companies that are doing well ought to pay their fair share,” said
Engel. “I don’t want to begrudge them the opportunity to make money, but
companies that are doing better should pay a little more.”

Talk of higher taxes has sent waves of alarm throughout corporate
America. 

Individual companies are turning to boutique lobbying firms and
so-called hired guns at a time when the trade associations that represent their
industries are losing strength. 

Many Washington-based trade associations have lost members in recent
months. Some have decided to focus on immediate business concerns away from
D.C. Others have stopped paying dues because of competing financial pressures.

The National Association of Homebuilders announced this month that it
would eliminate about 50 positions and nearly $12 million from its budget. The
Mortgage Bankers Association has lost about 15 percent of its membership and
the National Association of Manufacturers has frozen salaries and cut staff. 

Joel Jankowsky, a partner at Akin Gump Strauss Hauer & Feld, said
the economic recession and the Democrats’ ambitious agenda puts cross-pressure
on companies. 

“Some will cut back and others will have no choice or choose to move
forward aggressively,” said Jankowsky. “With the new administration and the new
Congress, particularly with the agenda each have, it will be a very busy 111th
Congress.” 

Tony Podesta, a high-profile Democratic lobbyist, said it’s too risky
for companies to cut their lobbying budgets when Congress is poised to pass
landmark legislation. If anything, he said, it’s time to increase spending.

“Lobbyists and discounters may be the only people who grow,” he said. 

“Everybody recognizes that, whether they’re in a deep financial
distress or merely suffering a downturn, there’s a real possibility of lots of
legislating next year, so this is no time to abandon Washington,” said Podesta.
“We’re talking to lots of new people and signed up some of them. We’re really
moving.”