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Spending on Lobbying Drops in a Down Economy

The Mortgage Insurance Companies of America trade group slashed lobbying spending by 61 percent during the first half of this year, and the Mortgage Bankers Association cut back 24 percent. Steve O'Connor, the MBA's senior vice president for government affairs, said the group has reduced its use of outside consultants, but he added that "we're as busy as ever."

"I think this is likely a temporary adjustment," O'Connor said about the overall trend. "It's just like any business cycle."

Perhaps the most startling decline comes in a category at the center of this year's hottest political debate. The health sector, which includes hospitals, nursing homes and pharmaceutical companies, spent $22 million less in the first half of 2009 than it did in the first half of last year, amounting to a decline of 9 percent, according to the data. The health sector still ranks as one of the top spenders in Washington -- more than $240 million so far this year.

That decline masks spending increases by the pharmaceutical lobby, though, which is far ahead of its pace in 2008.

The cutbacks have hurt the bottom line of many major Washington lobbying firms. Standard-bearers including DLA Piper, Paul Hastings, Cassidy & Associates and Hogan & Hartson reported millions in reduced business. One prominent exception is the Podesta Group, which has expanded dramatically thanks to its strong Democratic connections.

Smith W. "Smitty" Davis, a partner at Akin Gump, said that although much of corporate America was "feeling pinched" earlier in the year, spending could pick up in coming months with an improving economy and increased activity in Congress.

"The trend has been for companies to realize that Washington is going to affect their lives on policy issues," Davis said. "There's no reason why lobbying should not feel some downturn, given what the economy is doing. But as that comes back, I expect lobbying to come back even more."

Craig Holman, the legislative representative for Public Citizen, agrees. "The more the federal government gets involved in the economic sector," he said, "the more businesses will spend on lobbying practices."

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