Clients' Rewards Keep K Street Lobbyists Thriving

Kansas paid Akin Gump $240,000 to prevent the Defense Department from closing the state's four military bases. The law firm's efforts helped persuade the base-closing commission to spare the facilities last year. As a result, about $190 million in new investment will go to Kansas. Further, bases that were already spinning off $1.7 billion in income to its residents are still open, according to the state's figures.

Akin Gump scored a similar coup for Hanson Building Materials America Inc. Over 18 months starting in 2004, the producer of crushed stone, sand and gravel paid the law firm $450,000 to keep federal highway money flowing. Passage of the highway bill in 2005, which Akin Gump pushed, means the company will receive hundreds of millions of dollars in sales and tens of millions in profit over the next six years, an industry executive familiar with Hanson's situation said.

Lobbying helped keep Northwest Airlines Corp. out of bankruptcy court in 2004. The Pension Funding Equity Act that year allowed Northwest to delay paying an estimated tens of millions of dollars into its pension fund -- enough to allow the airline to put off filing for bankruptcy protection, according to Andrea Fischer Newman, a Northwest executive. Northwest's total spending on federal lobbying in 2003 and 2004 was $4.8 million, and only part of that went to influence the pension proposal.

The costs and benefits of lobbying can sometimes be difficult to quantify. A coalition of technology firms recently spent $850,000 to persuade Congress to set a deadline for the transition to digital television and the accompanying auction of airwave spectrum rights. At the same time, several individual companies spent untold thousands on their own. It is also unknowable what the value of the legislation will be to the wireless communications providers and to makers of wireless devices that will benefit most from the auction.

Yet the companies are anticipating that the payback will be huge compared with the lobbying expenses. New product sales generated by the new law "will be well into the billions of dollars," said Ralph Hellmann, senior vice president of the Information Technology Industry Council.

Sometimes lobbying doesn't succeed at all, of course. "Sure, lobbying can mean millions of dollars, but only if you win, and not everybody wins," said R. Bruce Josten, executive vice president of the U.S. Chamber of Commerce. "For every lobbyist on one side, there's a counterforce on the other."

Watchdog groups also worry that the broad public loses out to the corporations, labor unions and interest groups that can afford lobbying fees. "Lobbying is cost-effective only for those who can pay for lobbyists," said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington. "Those with an opposing view won't be heard as well as those with lots of money."

Nonetheless, well-heeled interests continue to risk significant amounts of money on Washington's influence industry in anticipation of large returns. The current debate on asbestos legislation is an example. After years of dispute, companies seeking legislation that would end asbestos lawsuits by creating a trust fund have spent $130 million on lobbying, according to Democratic calculations. Opponents have spent a like sum and a final resolution hasn't yet occurred.

But neither side shows any sign of relenting. "This is a critical issue, so if that means continuing to hire lobbyists and consultants on Capitol Hill, so be it," said Timothy J. Keating, senior vice president of Honeywell International Inc., a leader among the asbestos bill's many advocates.

Congress is considering several plans to crack down on lobbying. But the growth of lobbying was not slowed by the most recent changes in the law, a decade ago, which increased disclosure and limited what lobbyists could buy for lawmakers.

Annual fees paid to registered lobbyists reached $2.1 billion in 2004 -- the latest full year for which figures are available -- a 40 percent increase from 1999. For 2005, lobbying revenue is on pace to rise by at least $300 million.

The $100 billion tax bonanza that companies saved on foreign earnings helps explain the surge. Former representative Bill Archer, a Republican from Texas, championed the idea of bringing the earnings home tax-free when he chaired the House Ways and Means Committee in the 1990s. But it wasn't until he retired and became a lobbyist in 2001 that the effort finally got some legs. He was asked to lead the coalition and pressed the case for two years before the tax holiday became law.

Some of the provision's backers say $100 billion overstates the savings because some of the money wouldn't have come back without the lower rate. But for the companies involved, it's still a very good deal. "Even if the actual tax benefits are less than the estimate, they clearly dwarf the lobbying expenses," said Donald G. Carlson, a partner of Archer's at PricewaterhouseCoopers LLP, which led the coalition.