By Dan Eggen
Washington Post Staff Writer
Sunday, September 6, 2009
In a year when Washington's influence industry should be thriving, with epic battles over health-care and energy legislation, lobbying in many sectors is in marked decline as defense contractors, real estate firms and other companies pull back in a down economy.
Overall spending on lobbying has leveled off for the first time in a decade, according to disclosure data filed with Congress. Lobbying revenue for many of the city's most powerful advocacy firms, including bellwethers such as Patton Boggs and Akin Gump Strauss Hauer & Feld, plunged 10 percent or more in the first half of the year.
Washington also has 2,200 fewer registered lobbyists than it did a year ago, the lowest tally since shortly after George W. Bush took office in January 2001.
The economy is the primary reason for the slump, according to many lobbyists and public-interest experts. Companies tied to home building, defense, transportation, agriculture and other struggling sectors have pared back on lobbying expenses this year, sometimes dramatically so, according to data analyzed by the Center for Responsive Politics at the request of The Washington Post.
"If you can't make payroll, and you can't get bridge loans like you used to, you have to make a choice: Do you want to pay people to represent you in Washington or delay laying people off?" said Nicholas W. Allard, co-chairman of public policy and administrative law at Patton Boggs. "In tough economic times, it tends to depress the traditional lobbying services."
Lobbying has been a major growth industry in Washington for the past decade. Spending on lobbying more than doubled to $3.3 billion last year from $1.44 billion in 1999, according to disclosure records. The number of registered lobbyists rose in most of those years, peaking at more than 15,000 in 2007. That total has shrunk to 12,500.
Lobbying insiders say factors other than the economy are driving down the numbers. Trade groups and private corporations, for example, increasingly are pouring resources into television ads, grass-roots organizing and other advocacy efforts not counted under the narrow definition of lobbying required for House and Senate disclosure forms.
The Campaign Media Analysis Group estimates that $75 million has been spent this year on television spots related to the health-care debate. Much of that effort is aimed at Congress, but none of it is considered lobbying. "There are many people in Washington who are lobbying by any common definition of it but don't have to register," CRP spokesman David Levinthal said. "You never truly see the full picture."
The Obama administration also claims some credit for cooling the ardor for lobbyists in Washington, enacting stringent new guidelines that restrict lobbyist contact with the government and aim to make the process more transparent. Some public-interest-group activists have withdrawn their lobbying registrations as a result.
The formidable defense industry, reeling from tens of thousands of layoffs, has cut back expenditures by 17 percent this year. That was true even with the lobbying effort triggered by Defense Secretary Robert M. Gates's cancellation of the F-22 fighter jet and other major weapons projects, which had long survived thanks to the lobbying prowess of major contractors. Northrop Grumman has slashed its spending for lobbying in half, and Boeing and Lockheed Martin each have reduced spending by more than $1 million.
Other declining sectors include finance, insurance and real estate (down 5 percent); communications and transportation (each down 6 percent); and energy and natural resources, where record expenditures by the oil and gas lobby were not enough to counter an overall decrease of 16 percent.
Some companies, such as the Lehman Brothers investment bank, no longer exist in the aftermath of last year's financial collapse. Other firms that have been partly taken over by the government, such as General Motors and American International Group, have dropped or sharply curtailed lobbying activities. Bank of America, Citigroup and many other banks have reduced lobbying budgets by hundreds of thousands of dollars.
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."