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Erring on the side of shady: How calling out “lobbyists” drove them underground

by guest author Tim LaPira

By most accounts, the business of lobbying has been waning in recent years.

But not really. Lobbying contracts don’t just disappear, they just go unreported.

More and more, lobbyists are following former Senate Leader Tom Daschle’s lead and simply not disclosing their lobbying. The reason shadow lobbyists can get away with it is simple: The definitions of “lobbyist” and “lobbying” suffers from well-recognized loopholes. They justify not lobbying because they do not meet the law’s “20% threshold,” meaning they must be engaged in lobbying activities for 20% or more of their time on behalf of a client; otherwise, they are simply offering strategic political advice. Or something like that.

But what is puzzling is why this has become a trend in only the last few years.

A graph showing the number of registered lobbyists from 1998 and 2013.
Graphic credit: Sunlight Foundation

Why does the decline start around 2008? The loophole-ridden Lobbying Disclosure Act became law in 1995.

During a series of interviews with lobbyists, trade association executives, lobbying shop managers, political law compliance attorneys and lobbyist headhunters in Washington, I have uncovered several competing explanations for this sudden decline in lobbyists and lobbying revenues.

Two transparency steps forward, one step back into the shadows

The most commonly mentioned reasons are the Honest Leadership and Open Government Act (HLOGA) of 2007 and the Obama administration’s executive order on ethics. As one lawyer put it:

Prior to HLOGA — and prior to the Obama administration — I would say that most of us in town who advise clients erred on the side of telling them to register [under the LDA]. There wasn’t much of a struggle with “Is this 20% or not?”

The logic is simple: Before these changes in the rules, individuals registered under the LDA just in case. There was no downside. Now, being a registered lobbyist subjects people to additional campaign finance disclosure and gift rules, as well as steep civil and criminal penalties for non-compliance. So, political lawyers simply say don’t register.

Apparently, there’s no risk for doing so. (Though there seems to be some slight risk for registering and screwing up the paperwork.) As Lee Fang reports, even the U.S. Attorney admits, “We have no ability to know if somebody doesn’t register.” Even though we do. Rather, it seems the Department of Justice just has little interest in investigating these cases.

We are left with two explanations for the same problem. But is it fair to blame HLOGA and Obama’s executive order equally?

In a recent conference on lobbying reform sponsored by American University, former White House Counsel Bob Bauer defended the executive order from recent criticism. In doing so, Bauer admits:

To preserve their career options, [lobbyists] don’t want to be lobbyists anymore, at least in name, and they are retreating to more back door or back room types of strategizing for clients.

By shutting lobbyists out from plum White House jobs or advisory boards, the administration may have driven them even further underground.

Bauer objects. He points to evidence of deregistration beginning before 2009. That’s true. As the data show, the trend started in 2008.

A graph showing the percent change in registered lobbying from 1998 to 2013.
Graphic credit: Sunlight Foundation

Coincidentally, candidate Obama famously made that campaign promise that the executive order institutionalized in Iowa — in 2007. It’s possible that savvy lobbyists may have applied one of the tricks of their trade — monitoring how political developments affect businesses and occupations — to themselves. It’s possible, but not likely. Especially since the administration has offered so many waivers to its own policy.

Clearly, HLOGA — and the legal advice to err on the side of shady — is the primary reason. To be clear, these ethics and open government reforms made significant transparency improvements. But they ignored the key culprit: redefining what “lobbying” and “lobbyist” is.

Alternative explanations

It’s the economy, stupid: Another frequently mentioned reason for the decline in lobbying revenues and the number of lobbyists is the "Great Recession." As the economy declined, businesses and associations cut their budgets, including their lobbying expenditures. This makes sense, but absent better evidence about the lobbying profession specifically, I remain skeptical. According to a 2013 report from the George Mason University Center for Regional Analysis, higher-wage jobs in the business services sector — like lobbying and law — actually grew during the Great Recession. And in any case, the recession was at its peak in 2009, after the decline began.

Partisan gridlock: Political polarization is rightly at the center of any conversation about modern American politics, so it stands to reason that Congress’ apparent inability to do anything could also explain the decline in Washington lobbying. Why hire an expensive lobbyist or open up a Washington office when Congress isn’t doing anything anyway? This is unlikely as well. Recall that Obama enjoyed unified government for two years, so Republican intransigence didn’t really begin until Rep. John Boehner, R-Ohio, took the Speaker’s gavel in 2011. More importantly, Congress does get things done. They just do so under contrived deadlines. So, if anything, that means organized interests need to have constantly vigilant lobbyists ready to act when Congress does. Even political scientists learned this lesson the hard way.

Earmarks: Congress’s moratorium on earmarks means appropriations lobbying specialists have lost their raison d’être. If earmarks in fact did go away, this would be a logical cause for a decline in lobbying. But there’s reason to believe that earmarks are alive and well. They just take different forms. And, if the moratorium dried up business on K Street, then reported lobbying on Federal Budget and Appropriations and Taxes wouldn’t be the most commonly mentioned issues. They are. Just as they have been every year since LDA records have been kept.

In the end, the most plausible explanation for the decline in the registered lobbyist population is HLOGA itself. Even Bauer seemed open to more transparency:

The Executive Order is tied to the definitions under federal law, which seems reasonable. Should federal law have to be amended to provide for a broader, more inclusive definition of lobbyist—and this is a difficult issue, on which there are entirely reasonable differences of opinion—then the policy could be amended along with it.

Why it is such a difficult issue? Even an American Bar Association task force and lobbyists themselves recommend changing it. Though there is more Congress could do to make lobbying more transparent, improving these definitions and insisting on better enforcement are great ways to bring lobbying back out of the shadows.

Now, if only we could find a lawyer with close ties to the White House to make the case…