Lobbyist to colleague: "We had some failures last year."

Colleague: "What do you mean, failures? Just look at the books!"

There is a dirty little secret about high-priced Washington lobbyists. Common Cause doesn't spread it around. Neither, for opposite reasons, do politicians or lobbyists. As for the press, forget it.

The "secret" simply is this: They lose a lot.

Not to put too fine a point on it, but they lose roughly half the time--and lately, depending on how you count (that's the trick to Washington: seizing the arithmetic), maybe even a bit more.

Not only that, but the most skillful of this town's persuaders, the ones oozing money and dripping with charm and swimming in deep-pocketed clients; the ones who arrange the fund-raisers and play traffic cop for the PACs; the ones who steer the rookie congressmen onto the "right" committees; the ones who draft the bills and pre-cook the hearings; the ones who play major-domo at the intimate monthly dinners where, for a modest fee (say, $2,000), a congressman will listen attentively as businessmen tell jokes or unburden themselves of their vision of America; the ones who prowl their former haunts for hire (nearly 300 former members of Congress are among the ranks of lobbyists here: They come to govern, they stay to lobby); the ones who ghost write the op ed pieces and book their clients onto the interview shows; the ones who "fertilize" the grass roots and stitch together the inside-the-Beltway pressure coalitions; the ones who rifle-shot the direct mail and scatter-shot the monthly statement stuffers; the ones who get paid a king's ransom to tell the corporate poo-bahs it can't be done; the ones who intuitively understand the hopes and fears of the politicians they lobby; the ones who, in a town where so many relationships are hollow and guarded and transient, are bonded to the politicians they lobby by a set of almost tribal instincts, among which loyalty and empathy and yes, even honesty, are writ large; the ones who, in the felicitous phrase of Michael Pertschuk, the wise Washington consumerist, "know how to take the outrage out of it"--well, by golly, these guys lose a lot, too!

The point seems so basic, and yet never has it wanted to be made more emphatically than now, in the middle innings of the Reagan era.

For never before have the expectations of monied interests in Washington been raised so high, lowered so fast or produced such a rattling of cash registers--both on the way up and down--in the opulent lobbying houses of the nation's capital.

Talk about frontier towns! The underlying truth of business lobbying in Washington turns out to be this: lucrative when the political winds are prevailing, but even more so when they shift.

Consider Charls E. Walker, a Republican tax lobbyist of whom Lyndon Johnson once observed, no doubt admiringly, "He's an SOB with elbows."

Walker had a banner year in 1981. His pet project, accelerated depreciation--to which he had devoted a decade of missionary work (and not all of it compensated by clients)--was enacted into law as the centerpiece of the biggest corporate tax-cutting bonanza in history.

Then 1982 came along, the economy dropped off the charts and Congress fell into a panic over what it had wrought. Out came the long knives.

Walker saw the peril instantly. So did the other heavyweight tax lobbyists who had helped shepherd through not just accelerated depreciation, but along with it an ingenious (if faintly odorous) "corrective" measure that permitted companies lacking the profits to exploit the new law anyway--by selling their unusable tax breaks. This creative bit of tax legerdemain came to be known as safe-harbor leasing.

Walker will defend the equity of that provision until the wee hours of the morning, but he also knows that at the very least it has a certain surface fishiness to it. And sure enough, in due time the press and the Congress were all over it. Walker and other proponents of safe-harbor leasing mounted a massive rescue operation, but in the end the best they could do was protect their clients' short-term interests while the provision was phased out.

"We won the vote but we lost the drafting, I'm not going to say any more," Walker recalls now, the sting of defeat still evident in his voice (which is surprising: The first rule of Gladiators--the 15,000-plus lawyers, economists, association executives, publicists and assorted other lobbyists who represent the varied interests of business in Washington--is Not to Take it Personally).

The only tonic for Walker was this: as losses go, it was the best one his bottom line ever took. "1982 was even better for us than 1981," he said. "A lot of oxen were being gored, and, well, we just made a lot of money."

Walker had good company in the losers column in 1982.

"There are a lot of Guccis outside," someone is supposed to have remarked to Sen. Robert J. Dole (R-Kan.) of the army of lobbyists anxiously encamped outside his Finance Committee's midnight markup of the 1982 tax increase. To which Dole uttered his now legendary reply: "They'll be barefoot by morning."

Three pairs belonged to Messrs. Wilbur Mills, James Corman, and Marlow Cook, two former congressmen and an ex-senator, who know the back alleys of revenue-raising as well as anyone on the Hill. When the Tobacco Institute saw an excise tax on cigarettes looming on the horizon, it rushed out and hired all three, hoping they could put out the fire. Nothing doing.

And it wasn't just that one $98 billion tax hike of 1982 that gave the big-time lobbyists a shellacking, either. For nearly three years now, with the enormous exception of the tax-cut bonanza of 1981, the pattern for business interests on the Hill (things have been a bit less bumpy in the alphabet agencies) has been outsized expectations unmet.

In those heady days around the Reagan Inaugural--the Lear Jets! The Limousines! The Friendlies Finally in Charge! If You Don't Like the Law, Change It!--the food industry rounded up all the high-powered alumni of the Food and Drug Administration it could find and paid them a small fortune to rewrite the nation's food safety laws. Their principal target: the hated and inflexible Delaney standard governing traces of carcinogens.

It had to be the most august gathering of food safety experts since Louis Pasteur dined alone. And guess what? Their draft proceeded to sink without a trace on Capitol Hill.

"It's absolutely amazing that they haven't been able to touch Delaney," said William Schultz, a public-interest lawyer with the Litigation Group, who has been fighting to preserve the status quo. "You'd never be able to get a law like that enacted today."

Or how about Clean Air, that burr in the side of Smokestack America? The Houses of Steel and Auto and Rubber, et al, collected their sharpest in-house guns, reinforced them with some of this town's best Gladiators, and mounted a full-scale attack. And? And today the blasted greenies have not only stopped them in their tracks, but seized back the initiative. Before it's all over, the Clean Air Act may actually get tougher.

The consumer finance industry (Sears, the oil companies, banks, savings and loans, etc.) has thrown several million dollars in PAC money and waves of lobbyists into a bill that would tighten the rules on consumer bankruptcy. After two years, a watered down version has passed the Senate and collected more than 270 cosponsors in the House. But "there is one staff guy on Rep. Peter W. Rodino's committee Alan Parker, House Judiciary Committee counsel who knows how to whup up the consumer groups, and he's pretty much fought us to a standstill all the way along," grouses Loyd Hackler, president of the American Retail Federation and one of the town's savviest lobbyists.

Drug patent term restoration? The pharmaceutical companies have been trying to fix it so the clock on their patents doesn't start ticking until after the government's regulatory clearance procedure has been completed. So far, the lowly generic drug companies and the consumers have held them off.

Accelerated decontrol of natural gas? It was the top priority in 1981-1982 of the proud American Petroleum Institute, whose members do more flat-out and unapologetic political bankrolling than any industry in the nation. But it went nowhere, and a less ambitious full-decontrol proposal is no better than a 50-50 proposition in the current session.

What about doctors? They've got the second most active PAC in town (just behind the realtors), and surely the $6.2 million the American Medical Association has injected into Congress since 1978 is more than the going rate for a modest antitrust exemption from the Federal Trade Commission. But late last year the ingrates in the Senate killed the AMA's amendment, and the congressman who had carried the doctors' bags in the House--Rep. Gary Lee (R-N.Y.)--well, he's not in the House anymore. The voters of upstate New York bade him adieu last fall.

The list goes on: Gutting the Consumer Product Safety Commission? Enacting a national consumer product liability statute that would be more forgiving to manufacturers? Paring back the Freedom of Information Act? All on the business lobby's wish list. All unfulfilled.

"Corporate lobbyists were left sputtering in frustration," Nancy Drabble, director of pro-consumer Congress Watch, wrote in her legislative review of 1982.

"The business community isn't as together as it was in 1981, and there is plenty of disillusionment," said Jerry Jasinowski, vice president of the National Association of Manufacturers.

It should go without saying that business lobbyists have had their wins, too, not only in some of the issues that pit them directly against the consumer (the killing of the FTC's used-car rule springs to mind), but in the everyday gruntwork of lobbying as well, those low visibility intramural fights in which Company A and B or Industry X and Y knock heads before the high councils of government for some marginal advantage, and no overarching policy issue is at stake. (It was a big day for the Rail Lobby when the Trucking Lobby couldn't keep its industry from swallowing a big gulp of the new gas tax, for example.)

But a question poses itself: If business has more lobbyists in town than ever, if the art-form of lobbying is more sophisticated than ever, if the willingness of corporations and business trade associations to underwrite candidates through PACs has never been greater, if the public perception that Congress is on the auction block has rarely been stronger, if the political climate is (or was, from 1978 to 1982) more pro-business than at any time in decades, then how come the lobbyists don't have more legislation to show for themselves?

"When you get right down to it, we're just pimples on the process," said Fred Dutton, the pixieish onetime Robert Kennedy aide who with his wife draws a $300,000-a-year retainer to look after the interests of the Royal Embassy of Saudi Arabia here.

"So much of lobbying is just blue smoke and mirrors," he continued, a contented demystifier of his craft. "One of the phoniest parts of the whole business is the extent to which the Washington office exists simply to feed the corporate vice president back home a steady diet of the insider Washington gossip. You're a bigger man on Fifth Avenue or out on Main Street if you can make a grand processional into Washington."

On their very best days, Dutton said, all lobbyists ever do is influence public policy at the margins in the general direction it already wants to go.

Is such debunking credible, or does Dutton loom as Exhibit A against his own case?

One of the unqualified "lobbying" successes of the Reagan Era was the come-from-behind congressional approval in 1981 of the sale of AWACS radar planes to Saudi Arabia. The American-Israel Public Affairs Council, no mean lobbying outfit in its own right, got flattened on that one, and it places great weight on the role that Dutton and others played in rallying the moguls of corporate America into reminding Congress that their burgeoning business investments and opportunities in moderate Arab nations needed nurturing.

Dutton's view?

"Sure the grass-root stuff helps. Politicians aren't loners; they don't want to be martyrs. They never do anything unless they feel there are formidale forces out there in the dark with them. You have to create a context of legitimacy for them to be with you.

"But clearly what won that fight was the White House, not the business community. If I had a usefulness in the process, it was to critique the early inadequateness of the White House effort. I alerted the Saudis that I didn't think the White House was doing enough at first, and I let the administration know that they couldn't win the Saudi hearts by just fighting the good fight and losing. Once the president gave the matter his full attention, we were home free."

Lobbyists are in a bit of a bind when it comes to trying to pinpoint, for public consumption, their place in the firmament of public policy formulation. On the one hand, they find the stereotypes about their vast and sinister power to be so much poppycock. On the other hand, it sure brings clients to the door.

What most will tell you, in a reasonably disinterested way, is that the nature of their game has changed.

"The classic one-minute-to-midnight 'technical amendment' for one industry or one client is dead as a dodo bird, and appropriately so," said Walker. "It used to be if it was a tax matter and you had lined up Sam Rayburn and Wilbur Mills and whoever was the minority leader on Ways and Means, you were home free.

"Now, with the reduction in power of committee chairmen, and with the open markups, these technical amendments immediately get labeled--the 'EF Hutton amendment' or the 'Ross Perot amendment.' And if it's the least bit controversial, each member wants to know how it will affect his constituents. So you've got to work the whole committee, and maybe the whole floor."

Or maybe . . . the whole country. Exactly. The process of legislating has grown so open and untidy, the exercise of power so diffuse, the threat of public exposure so constant, that the poor lobbyist has no choice but to convince everyone. Even the little old lady in Dubuque. Just think of the manpower that takes. The money. The resources.

But! What do you suppose has built K Street? And L Street? And the West End? And all the rest of it?

We should back up just a moment. What really brought corporate America streaming into Washington in brigades of limousines in the late 1960s and the 1970s was an ascendant consumer movement and a new breed of activist government regulator. "When the government starts dictating to you the size of your toilet seat, you better get someone here to cover your ---," goes the oft-repeated advice of Tom Korologos, a lobbyist with Timmons & Co.

But once business hit town with its little beachheads of corporate offices, it began to realize what a morass it had sunk into. So sloppy, this business of democracy. So complex.

Mercifully, a service industry was growing up to cater to its needs.

The name of the game became to lobby Washington by lobbying the rest of the country. Robert K. Gray can offer his client not only an insider's roadmap of the power centers in the White House (he is a longtime GOP wheel who chaired Reagan's inaugural) but also the publicist's skill for seeding stories and editorials in newspapers around the country. On tough issues, almost nothing helps out more.

Or Anne Wexler, who helped Jimmy Carter galvanize interest-group support for administration programs, can hang out a shingle and offer a lobbying service that does basically the same thing for business causes. She is a leading practitioner of the "Montana Plant Manager School of Lobbying," as in nobody persuades better than the good old foreman (or fireman or businessman) from back home.

Even the long established lobbying houses here quickly realized they had to tailor their services to the new realities. So the Chamber of Commerce now spends more of its manpower and budget on Spreading the Word than on Twisting the Arm. It has, for example, built a multimillion-dollar Biznet satellite communication network that beams home-grown news shows and issues forums to subscribers all over the country.

And as the communications revolution was creating this brave new world of "grass-roots lobbying" (that's what the practitioners call it), something else was happening: The growing professionalization of government (the size of congressional staffs, to take one of many such examples, has more than doubled in the past decade) was creating a vast new market for more paper work in Washington, D.C., proper.

Into the breach swooped local law firms, expanding with a fury that made big firms in the rest of the country flush with envy: Why should Covington & Burling get all that work? So there followed another gold rush, and the great in-migration of out-of-town branch offices was on. Washington is now home to 247 law firm branch offices, more than two-thirds of which have opened in the past decade.

What lawyers do best, of course, is make work for other lawyers. The fable about a lonely lawyer in a small town is on point. He starves for business until he hits upon a stroke of genius: Import a competing lawyer. Presto, they both get rich! Multiply that several thousands-fold: that's Washington.

Right up until the early 1980s, this boom in the lobbying business had been so long and strong that some people assumed it was certified recession-proof. It isn't.

In 1982, according to the authoritative Legal Times, 17 out-of-town law firms closed their branch offices here. Moreover, the city's 25 biggest law firms increased their staffs by only 1.8 percent in 1982, down from an average of 9 percent in each of the four years before that. The recession softened the downtown real estate market, too, with vacancy rates shooting up from less than 1 percent in the late 1970s to 8 percent now. Prime office space rentals dropped from $33 a square foot in 1981 to $25 a foot now.

But these numbers need to be kept in perspective. What they suggest is a leveling off of growth rather than a decline. And they follow 15 explosive years. Even though the lawyering business is now expanding at a faster clip around the country than it is here, the 37,570 members of the Washington, D.C., bar still make this town far and away the most dense concentration of litigiousness on the face of the earth.

And it's not just lawyers. As recently as 1971 New York was headquarters to nearly twice as many national associations as Washington. Now Washington is No. 1 in the nation, home to some 3,136 associations compared to New York's 2,628. The Washington area associations employ 80,000 people.

Many of the lawyers and associations that have come here in the past 15 years represent ideological groups, consumer groups, labor groups--and the growth in the power of all these groups is not to be dismissed. But by far the great bulk represent business interests, and the question persists: Why don't they have more influence?

Two more answers:

"Business had big wins in the late 1970s, when they were basically trying to block things," said Fred Wertheimer, director of Common Cause, the self-styled public interest lobby. "Since then, as they've tried to go on the offense, the yardage has gotten a lot tougher. In this town, defense has always been easier, and the diffusion of power in Congress has made it all the more so."

"More lobbyists doesn't equal more influence," said the NAM's Jasinowski. "You get to the point where you start tripping over each other. You reach a point of diminishing returns."

Call it lobbylock: So many sides of so many issues so forcefully argued before Congress that the whole public policy process grinds to a halt.

The swarming lobbyists here are a symptom of something much bigger. Political scientists such as Theodore Lowi and economists such as Mancur Olsen argue that advanced societies go fundamentally awry when they organize themselves around interest groups and allow the role of government to be trivialized into that of a mere brokering agent.

This me-first factionalism may work out all right in good economic times, when government, lacking the will or the intellectual pretext to make choices among competing group claims, has the resources to yield to them all. But in more austere times, the commodities pit of Washington gets gummed up. Each group continues to agitate for more, but feeding their appetites is inefficient for the economy as a whole. Resources tend to get squandered and misallocated.

So the pie shrinks, the group pressures build, and Washington can't cope.

But the lobbyists. Win, draw or lose--boy, do they make out.

NEXT: Patton, Boggs & Blow