Spending on lobbying hits plateau for first time in decade
Wednesday, February 2, 2011; 11:15 PM
Could the great lobbying gold rush be over?
Last year, for the first time in more than a decade, the amount of money spent on lobbying appears to have decreased. The total will not be known for a few days, but there are signs that lobbying money declined. At the very least, the once-booming industry's growth has flatlined.
The lobbying industry has expanded over the past decade at a rate that rivals the economy of China, with an average increase in spending of more than 8 percent a year, according to statistics from the Center for Responsive Politics. Businesses and others lobbying Congress reported spending $1.4 billion in 1998, a figure that more than doubled to $3.5 billion in 2009.
But that trend line appears to be shifting: Businesses and advocacy groups spent $2.6 billion on lobbying in the first three quarters of last year, according to the center. That means that the fourth-quarter total - which the center will release soon - would have to be more than $880 million to exceed last year's sum. The last time there was a year-to-year decline was in 1999.
Another signal comes from fourth-quarter reports from major firms, which appear to have cut their spending in that period. The top 50 biggest spenders in the fourth quarter amounted to a combined $205 million, down from $209 million in the third quarter.
"Obviously it's the economy," said Howard Marlowe, president of the American League of Lobbyists, who runs the Marlowe & Co. lobbying firm. "I don't think it's for any other reason than that."
The U.S. Chamber of Commerce, which is consistently the largest spender in Washington, reported a 20 percent drop in expenditures, from $36.4 million in the third quarter to $29.3 million in the last three months of the year.
A busy legislative calendar for 2009 and the first part of 2010 kept lobbying totals rising even while the economy sank. Democrats' major initiatives to stimulate the economy, overhaul the nation's health-care sector and increase regulation of the financial industry were a huge boon to K Street's revenue.
Lobbying reached a record level - $970 million - in the last quarter of 2009 as the Senate and the House passed their versions of the health-care legislation. (Congress agreed on a final package in March of last year.)
"Some lobbyists have found that they needed to reduce their fees in order to keep their clients in tough economic times," Marlowe said. "Expenditures have decreased because of cost-cutting."
In the past, K Street was often considered recession-proof, based on the assumption that cutting back on lobbying could further reduce a company's bottom line - especially when Congress was considering major bills affecting business.
The change in 2010 could also be linked to the fact that lobbying reports do not include many of the methods businesses and others use to try to influence public policy, some in the industry say.
Companies and advocacy groups have increasingly relied on grass-roots mobilization or public relations work - strategies that have been boosted by the rise of the Internet. Examples from the past year abound, including campaigns run by Healthcare for America Now and Americans for Financial Reform, with both supporting the Democrats' agenda.
"The sophisticated people with the money are increasingly looking at these large issue campaigns," said Robert Raben, president and founder of the Raben Group. "My suspicion is that there has been a steady increase in the use of those tools outside of the direct lobbying."
After the passage of the health-care bill, much of the attention shifted away from Congress to the courts and the regulatory process, where the ultimate fate of the legislation, and its details, will be determined. Those activities also aren't required to be reported as lobbying.
"I'm skeptical about reports that lobbying was down," said Nick Allard, a lobbyist with Patton Boggs. "I have a sense that public policy and advocacy - lobbying in a broad sense - was extraordinarily active."