K Street firms back to ‘normal’

The failure of the deficit-reduction “supercommittee” could be a big win for K Street.

The 12-member panel tasked with coming up with $1.2 trillion in spending cuts was a golden opportunity for lobbyists to try to reach an elite concentration of powerful lawmakers. But now that the committee has admitted defeat, lobbyists’ work is far from over.

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“The [supercommittee] deadline is gone but the issues remain,” said lobbyist John Feehery of Quinn Gillespie & Associates. “Congress is going to have to do something. The big question is when? It’s shifted from a supercommitte strategy to a lame duck strategy.”

If Congress fails to meet the $1.2 trillion target, automatic across-the-board cuts, or “sequestration,” will kick in starting 2013. Sequestration would include slashing $600 billion from the defense budget, which defense experts say would be devastating.

“For a lot of folks who continue to be in the crosshairs because of automatic cuts, it’s going to be an interesting year,” Feehery said.

In some ways, the end of the supercommittee means a return to business as usual. The panel was an unusually difficult body to try to pierce, and there remains plenty of work outside the committee’s jurisdiction, such as passing the remaining nine of 12 annual appropriations bills, that needs to be hammered out by the end of the year, said H. Stewart Van Scoyoc, president and chief executive of Van Scoyoc Associates.

“It means [going] back to a normal process, a process that’s going to be a busy one with a lot of activity because there are a lot of problems that need to be resolved,” Stewart said. “The supercommittee was a unique structure, a very difficult structure to have access to and influence on. The more normal process is, at the end of the day, problems have to be solved. We still have the majority of the appropriations process to do.”

The supercommittee had considered including many programs in its deficit reduction plan, but since it failed to come up with one, it’s unclear what will happen to a number of those programs, including the extension of the unemployment benefits, the payroll tax holiday that impacts Social Security and many tax extenders.

Lobbyists’ work on the Hill is not slowing down. Cassidy & Associates President Barry Rhoads, who specializes in base closures, is setting up meetings over the next month with representatives of Craven County, N.C., about keeping fighter jets at the Marine Corps Air Station at Cherry Point.

Even without the threat of sequestration, the Defense Department was looking to cut $460 million over the next decade. “If you look at it from a business standpoint, I don’t want to say it provides an opportunity, but the end game is making sure your projects and installations are protected,” Rhoads said.

Lobbying firms are looking beyond the supercommittee and gearing up for the battle over the tax code.

“Even though the supercommittee process failed, they’ve built up a lot of momentum for tax reform,” said Van Scoyoc, whose firm has set up an internal four-lobbyist tax committee in preparation. “They couldn’t agree on how much revenue needs to be raised by tax reform. Someone, either this president or the next president, will put that out there. Our tax guys are getting significantly busier than they had been the last six months. The committees will spend all of their time next year on tax reform. It’ll be an unusually busy election year, and the year after the election will be an extremely busy year.”

Other firms will be making sure “they have the necessary talent on board to win that fight for their clients,” said Ivan Adler, a headhunter who places lawyers and lobbyists for The McCormick Group, an Arlington executive search firm. “Tax pros are always in demand but we are hearing from more firms who are wanting to hire them now with the expectation that there will soon be a big food fight over taxes and want to make sure they can help their clients.”