New session of lobbying kicks off today

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The launch of the 112th Congress means the beginning of another session of lobbying. There are a number of important issues likely to come up in the new Congress, although a large amount of attention will be paid to the regulatory implementation of health care reform and financial reform.

Lobbying spending during the previous Congress (2009-2010) is only available through the third quarter of 2010, but totals $6.1 billion–$3.49 billion in 2009 and $2.61 through the third quarter of 2010, according to data compiled by the Center for Responsive Politics. This total, without the fourth quarter of 2010 reporting, is already equal to the total amount spent on lobbying from 2007-2008.

Lobbying during the previous Congress was furious as Congress tackled health care reform, economic stimulus, climate legislation, and financial reform. Lobbyists for the health care industry were in particularly high form.

It didn’t take a weatherman to know which way the wind was blowing on health care reform come the start of the 111th Congress. President Obama quickly made it a priority and tried to get industry buy-in. Deals were struck behind closed doors with the pharmaceutical industry, the insurance industry, and the hospital industry. Those who didn’t come to play were left in the dust facing tougher rules and regulations.

Once the deals were struck, lobbyists for the various industries fanned out on Capitol Hill to protect their deals from lawmakers who weren’t involved in crafting the special carve-outs. Attempts to change the deal with the pharmaceutical industry by Rep. Henry Waxman and Sens. Bill Nelson and Byron Dorgan were defeated. Less noticed victories, like the extension of patents for biologic drug manufacturers, were won by industry lobbyists as well.

While the effort to pass climate change legislation stalled it was also a bonanza for K Street. Lobbying spending on energy and natural resources companies, at $419 million, was by far the highest it had ever been in 2009. Prior to the beginning of the 111th Congress, a number of companies had joined up with some environmental advocacy groups to form a pro-cap and trade coalition. These companies lobbied for special provisions and exemptions that riddled the climate bill that ultimately passed the House of Representatives.

The financial reform bill faced serious hurdles as lobbyists from the big banks opposed major provisions including derivatives regulation, a bank liquidation fund featuring taxes on banks, debit card interchange fees, and the creation of a new Consumer Financial Protection Bureau (CFPB). While these high profile issues wound up passing in some form, lobbyists were successful in significantly changing the bank liquidation fund and eliminating the taxes that would have funded it, adding loopholes in derivatives regulation for auto dealers and others, and the CFPB was placed under the authority of the Federal Reserve. Bank lobbyists also found ways to craft special exemptions in the Volcker rule and a reduction in the carried interest tax.

Lobbyists for other industries also found time to get in on the act. Net neutrality legislation wound up dead in the water, the Senate Health, Education, Labor and Pensions Committee’s investigation into for-profit colleges was besieged by lobbyists with presidents of for-profit colleges coming to Washington in tow, and the lobbyists for Toyota and BP had to work overtime damage control as congressional committees jumped for attention.

This new Congress, or lobbying session, whatever you want to call it, brings fewer, potential possibilities for the kind of heavy lifting done in the 111th Congress. Most of the action remains with the laws passed in the previous Congress as they move to the regulatory stage. Lobbyists will be meeting with executive branch officials at Health and Human Services, Treasury, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, among others.

In Congress, lobbyists will likely advise the incoming Republican committee chairmen on which new regulations they don’t like. House Oversight Committee chairman Darrell Issa has already sent a letter to a series of companies and trade groups asking for their lists of regulations that they claim impede job creation. Financial Services Committee chairman Spencer Bachus has declared that Washington’s job is serve Wall Street.

One issue, however, has the possibility to lead to a full-blown lobbyist feeding frenzy. Last year the President ordered the creation of a commission to study potential solutions to the increasing national debt. That commission ultimately released a report that included an extensive series of suggestions including cutting Social Security, reducing the number and scope of tax breaks, and altering the tax code. If anything could bring out every lobbyist in Washington it would be a rewriting of the tax code.

The tax code is riddled with special interest breaks, exemptions, and loopholes aimed at helping not just specific industries, but specific companies. Any attempt to alter or reduce these tax loopholes would result in a lobbying version of what fire investigators term “flashover”– when all the combustibles in a room ignite at the same time.

If Congress decides that they are going to take on Social Security and the federal tax code they can expect this lobbying session to ignite all at once.

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