A Look Back at the Year's Winners and Losers

By Jeffrey H. Birnbaum
Tuesday, January 1, 2008

2007 was not exactly a barn-burner on Capitol Hill. It was notable mostly for its record number of delaying tactics in the Senate, which helped stymie almost every attempt at major legislation.

For K Street, that was not all bad. Inaction is what a lot of interest groups want. Professional lobbyists love gridlock, because that means they get to renew their lucrative retainers so they can fight another day.

Still, like any year, 2007 had its winners and its losers in the lobbying crowd. What follows is a brief summary of the highlights on both ends.


The year witnessed a new and fairly effective alliance between two of Washington's most potent pressure groups: AARP, the senior citizens lobby, and the American Medical Association, the physicians' leading representative in the capital.

Together they eked out a victory that was barely noticed by the general public at the end of the year but was pivotal to doctors. Through a large, concerted campaign, the two groups persuaded lawmakers to delay for six months a scheduled 10 percent cut in physician reimbursements under Medicare. The groups would have preferred a full year's postponement, but they took what they could get.

The AMA spent more than $3 million on its Medicare campaign last year. This included airing more than 8,200 television commercials, sending out more than 1 million pieces of mail and instigating nearly 50,000 calls to members of Congress from its network of patients and doctors.

AARP bought ads on television and in print publications along with the AMA. It also set up a Web site, ThisIsSoRidiculous.com, to encourage the defeat of a variety of alleged congressional threats to Medicare. In addition, AARP conducted 10 Medicare forums in eight targeted states, persuaded its grass-roots activists to send 81,000 e-mails and 71,000 online petitions to Congress, and kept its 39 million members focused on Washington happenings through its widely read AARP Bulletin.

But the AARP-AMA alliance did not succeed every time; it did not win an expansion of the federal children's health insurance program, known as SCHIP, which had been another of its priorities. Instead, it was defeated by two of the other winners of the year: the tobacco lobby and America's Health Insurance Plans, the leading trade organization for health insurance companies.

An odder pairing would be hard to find. But both came out on top in 2007 because of their efforts to deal with the children's insurance program. Democratic leaders in Congress were determined to expand the program by as much as $50 billion over five years. To do so, under their new rules, they had to come up with $50 billion in tax increases or spending reductions.

The House wanted to pay for the expansion by trimming Medicare Advantage, a health program run by private insurers. The Senate picked tax hikes on cigarettes and cigars. Lobbying helped defeat both options (thanks to repeated vetoes by President Bush), and the program, in the end, was merely extended, not expanded.

America's Health Insurance Plans relied on a network of senior citizens that it has assembled to hammer lawmakers with letters and phone calls. Tobacco companies did the usual sorts of lobbying (including creating a Web site), but cigar retailers took it upon themselves to march up to Capitol Hill and demand that their products not be taxed out of existence. That kind of heartfelt complaining -- along with a desire by Republicans to block every tax boost -- kept tobacco tax increases off the books.

Private-equity executives also benefited from the Republicans' no-tax-increase imperative. Democratic leaders were eager to double the income tax rate paid by the millionaire managers of private-equity firms and hedge funds. But by flooding Washington with lobbyists and campaign contributions -- and by forming a coalition with the powerful real estate lobby (whose managers would also get whacked by the tax change) -- the Wall Streeters were able to beat back the effort. The president's support was also a key to their victory.

Finally, another branch of the insurance industry -- property and casualty insurers-- managed a little-noticed but significant win. Led by the American Insurance Association, the industry convinced Congress to approve a lengthy extension of the federal backstop to terrorism risk insurance, a program that was once considered temporary after the Sept. 11, 2001, attacks but now appears nearly permanent.


Auto companies have spent decades avoiding an increase in fuel-efficiency standards for their fleets. In 2007, their luck finally ran out.

The energy bill that passed last month increased the standards by 40 percent by 2020, and although the carmakers in the end accepted the boost, they had to be dragged to that decision. Their executives argued that, for them, the outcome could have been worse -- but isn't that always the case?

Student lenders dependent on federal subsidies were also pared back significantly in 2007, despite heavy lobbying to avoid the hit. The $85 billion-a-year student loan industry also became a target for the Democratic-led Congress and the subject of a nationwide investigation into questionable business practices. The cutbacks and bad publicity have wreaked havoc on the industry's biggest player, Sallie Mae, and were partly responsible for the scuttling of a $25 billion acquisition of the company.

Thanks to the meltdown of the subprime mortgage industry in 2007, mortgage lenders face new federal restrictions on their lending practices, mostly imposed by the Federal Reserve, and are likely to shoulder even more written by Congress this year.

Drug and oil companies were major targets of Congress's Democratic majority in 2007, but they fended off the strongest assaults. The pharmaceuticals ducked a proposal to force them to negotiate prescription drug prices under Medicare. Oil companies got lawmakers to remove a multibillion-dollar tax increase from the energy bill.

But drug companies did come out on the short end in one legislative skirmish -- the drive to alter the nation's patent laws. An alliance that represents tech companies steered a bill that it likes -- and drug companies oppose -- through the Senate Judiciary Committee and the full House.

Drug companies prefer the existing system, which allows the penalty for patent infringement to go beyond the economic impact of the invention itself and thus broadly discourages copycatting of patents.

Research companies also had a disappointing year. Despite efforts by the R&D Credit Coalition, the federal tax credit for research was not renewed, nor were three dozen other temporary tax breaks known as "extenders." Congress can extend the extenders this year, but until that happens, class those lobbyists among the losers of '07.

Until then, happy new year!

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