06-02-2001

LOBBYING: The K Street Scramble

Chris Jennings is still tripping over boxes at his two-week-old lobbying
shop and hasn't gotten around to hiring any help, but business couldn't be
better. The phone has been ringing off the hook with inquiries about his
availability ever since Sen. James M. Jeffords announced last week that he
was leaving the Republican Party.


"I'm going wackadoo because I don't have people here," said
Jennings, harried but obviously pleased with the attention. "In
Washington, timing is as critical as everything else."


Timing, indeed.


As a Democrat who was President Clinton's top White House adviser on
health care policy, Jennings is hot because the Democrats will control the
Senate for the first time since 1994, and that means long-stalled
patients' rights legislation has gained new life. In fact, Sen. Thomas A.
Daschle, D-S.D., the new Majority Leader, said this week that as soon as
an education bill is approved, he will move a patients' rights bill to the
floor without so much as a hearing.


Throughout Washington's influence community-from lobby boutiques such as
Jennings Policy Strategies Inc. to big law firms, and from PR and
consulting shops to trade associations and advocacy
groups-inside-the-Beltway professionals are reordering their strategies
and developing fresh tactics for dealing with new political
realities.


Republicans are disappointed and suddenly playing defense. Democrats are
gleeful and, at least for now, on the offensive. But whether they're
delighted or disgruntled, one thing is certain: More conflict and
confrontation means more business on K Street.


Veteran lobbyist John Jonas, a partner at Patton Boggs, noted that the
coming Democratic-GOP battles mean uncertainty for business, and that
usually translates into more billable hours-if for no other reason than to
stop bills from passing. "It's a little like having a burglary on
your street. It makes you appreciate the police more," he
noted.


Another prominent lobbyist, Republican Tom Korologos, president of Timmons
and Co. Inc., agrees. "K Street is better at playing defense than
offense," he said.


Predictably, Democratic-leaning interest groups look forward to the new
Senate lineup. The lobbyists at the National Education Association erupted
in cheers and high fives on the morning of May 24 as they watched
Jeffords's speech on a television in the office of Mary Elizabeth Teasley,
NEA's director of government relations. Jeffords's defection meant that
Sen. Edward Kennedy, D-Mass., a longtime ally, would chair the Health,
Education, Labor, and Pensions Committee.


Hours later, the Health Benefits Coalition, a powerful business group that
has been spearheading the fight against patients' rights legislation,
organized a 3 p.m. conference call of its steering committee to revise its
lobbying strategy. With a patients' rights bill sponsored by Kennedy and
Sens. John McCain, R-Ariz., and John Edwards, D-N.C., now in play, the
coalition decided it had to swing into action faster than expected. The
coalition, whose members include the Business Roundtable, the National
Federation of Independent Business, the U.S. Chamber of Commerce, and
other corporate heavyweights, decided to work town hall meetings, book
visits with key Senators during the Memorial Day recess, and open a TV ad
blitz in Washington and elsewhere when Congress returns.


The power shift happened so quickly that industries, interest groups, and
lobbyists are still trying to catch their breath.


When some 60 power brokers from the energy industry met at the White House
with Vice President Dick Cheney on the day after the Jeffords bombshell,
the mood was subdued. "I think people are still pretty much in a
state of shock," said one oil lobbyist who attended the
session.


"I went up to the Hill after the Jeffords announcement to see what
people were saying," said Leigh Ann Pusey, the American Insurance
Association's senior vice president for federal affairs and a former aide
to ex-House Speaker Newt Gingrich. "People were really caught off
guard. The business community is disappointed and has to regroup. We can't
just rely on [Senate Republican Leader] Trent Lott and [Senate Republican
Whip] Don Nickles anymore."


But like many other savvy trade groups, the AIA had covered its bases long
ago. Pusey said the association had determined last August that margins
would be tight in the 107th Congress, so it recently hired the
Democratic-leaning firm of Verner, Liipfert, Bernhard, McPherson and Hand
to complement its GOP representation on K Street. "We feel we're well
positioned for what has happened," she said.


Now, similar evaluations are being made in every corner of Washington.
Here is a look at how 11 industries and political sectors are taking
stock.


Health Care: More Democratic Lobbyists


They did not predict that Jeffords would jump from the GOP, but health
care lobbyists said that they, too, had been preparing for the possibility
that control of the Senate could change hands at any moment.


Over the past few months, for example, health care associations have been
balancing their government-affairs operations and putting greater weight
on their Democratic-minded lobbyists. "Any experienced organization
has recognized for a while that the fences had to be mended on both sides
of the aisle in the Senate," said Charles N. "Chip" Kahn
III, who is making a change of his own, leaving the helm of the Health
Insurance Association of America to take the top post at the Federation of
American Hospitals. "Any group that hasn't done that is not facing a
reality that, obviously, we knew could have happened any
day."


In January, the American Hospital Association beefed up its outside
lobbying corps by hiring the Democratic K Street shop run by Steve
Ricchetti, who was President Clinton's deputy chief of staff. "He's
already on the team," said Rick Pollack, executive vice president of
the AHA. "This just may change his ability to help us."


At the beginning of the year, the Pharmaceutical Research and
Manufacturers of America had only one Democratic-minded lobbyist, Peter
Rubin, who used to work for Rep. Jim McDermott, D-Wash. In actions that
had been planned before the Jeffords announcement, the association last
week hired Scott Olsen, who for five years was the health care legislative
assistant to Sen. Max Baucus, D-Mont.; and Jacqueline Pomfret, who served
at the American Association of Health Plans as the group's liaison with
the Democratic Senatorial Campaign Committee, the Democratic Leadership
Council, and the New Democrat Network.


In April, the pharmaceutical group also retained Nick Littlefield as a
consultant. Littlefield served as staff director for the former Labor and
Human Resources Committee chaired by Kennedy. Under the Republicans, the
panel became the Health, Education, Labor, and Pensions Committee, and was
chaired by Jeffords. Kennedy is now set to take over the chairmanship. As
Kennedy once again claims the gavel, patients' rights legislation will
become a top priority, with Kennedy's own bill (co-sponsored by McCain and
Edwards) getting top attention.


But health care associations said they are not making immediate, drastic
shifts in their activities. "There's no question that, in control,
the Democrats have an opportunity to chart strategy on the floor,"
said Karen Ignagni, president of the American Association of Health Plans,
which represents managed care health insurance companies. "We'll do
what it takes to support responsible and workable solutions," she
said. "We continue to believe that Kennedy-McCain doesn't meet the
test of `workable.' "


In the Senate Finance Committee, which has primary jurisdiction over
Medicare and prescription drugs, Baucus takes over as chairman. He has
been working cooperatively with outgoing Chairman Charles Grassley,
R-Iowa, to such a degree that lobbyists often meet with the staffs of both
Senators simultaneously. Lobbyists predict that Democrats may speed up
consideration of a prescription drug benefit. Yet, the close margins in
the Senate may ensure continued gridlock.


"It's still the same 100 Senators, and, just as we've seen in the
last couple of years, it can switch," said one health care lobbyist.
"These are 100 mortals."-Marilyn Werber Serafini


Energy Lobbyists Feel Dim


Just days before Jeffords's move, big energy trade groups, such as the
American Petroleum Institute and the Nuclear Energy Institute, were
popping champagne corks to celebrate President Bush's newly unveiled
national energy strategy. But with the Senate's power shift, parts of
their agenda are in trouble.


Vice President Dick Cheney tried to cheer up the energy lobbyists at last
week's White House meeting by reminding them that of the Administration's
105 energy recommendations, 85 require only executive or regulatory
action. But some 20 others need new legislation, which means tough
lobbying battles at key Senate committees. That could involve Jeffords
himself, who is expected to take the gavel at the Environment and Public
Works Committee.


The top legislative victim of the power shift, lobbyists say, is the
Administration's plan to open Alaska's Arctic National Wildlife Refuge to
oil drilling. The proposal faced long odds before, but is now considered
dead. Lobbyists said that proposals to revive the nuclear power industry
and to ease Clean Air Act regulations to build more refineries and power
plants will also face very stiff opposition.


"No one in the big energy trade groups can feel very good about the
shift in the Senate," said lobbyist Clint Vince, who runs the energy
practice at Verner, Liipfert, Bernhard, McPherson and Hand.


The Energy and Natural Resources Committee will likely have a revamped
agenda when Sen. Jeff Bingaman, D-N.M, replaces Sen. Frank Murkowski,
R-Alaska, as chairman. Vince and fellow K Streeters noted that Bingaman
has introduced a bill that would spur energy efficiency and boost
renewable energy sources more than the Bush plan. Bingaman's bill also
raises vehicle fuel-efficiency standards. Auto manufacturers, who employ
an army of in-house and outside lobbyists to look after their interests,
strongly opposed this provision.


As chairman of Environment and Public Works, Jeffords will likely oppose
refinery and power-plant lobbyists who want to loosen the Clean Air Act
restrictions. Jeffords is the lead sponsor of the Clean Power Act, which
would curb carbon dioxide and other power-plant emissions.


Energy lobbyist J. Bennett Johnston, who chaired the Energy Committee when
he was a Democratic Senator from Louisiana, said, "The Democrats are
much less inclined to go along with easing of regulations on coal
plants."


"I'd say nuclear took a giant step back," Vince added. Sen.
Harry Reid, D-Nev., who will become majority whip, is slated to chair an
Appropriations subcommittee with authority over funding a nuclear-waste
repository site that still must be selected. Reid has been a fierce
opponent of a proposed site at Yucca Mountain, Nev.


Still, energy lobbyists are looking for bright spots. Bingaman has been
friendly to nuclear power, and industry lobbyists hope Congress will renew
the Price-Anderson Act, which provides liability protection for the
nuclear industry. "From our point of view, we're still pressing
ahead," said John E. Kane, the chief lobbyist for a nuclear energy
group.-Peter H. Stone


Corporate Tax Breaks on Hold


Business interest groups thought they would be rewarded later this year
for agreeing to hold off on big-ticket tax breaks, such as a capital gains
cut, as part of the Republicans' strategy for winning passage of President
Bush's massive, across-the-board tax cut.


As Bush's tax bill raced to completion in recent weeks, business lobbyists
began dreaming about how they could add as much as $150 billion in
additional tax-cut sweeteners to a future minimum-wage bill, and stick in
a few leftover breaks for business in other bills before the end of the
year.


Then, Jeffords's defection turned all these plans upside down. "All
that stuff is going to disappear into the night," said David Rehr,
president of the National Beer Wholesalers Association, which wants to
roll back an excise tax on beer. "It hurts those who thought there
would be large tax breaks in the minimum-wage bill," added K Streeter
Don Fierce of the firm Fierce & Isakowitz.


With Democrats now in control of the Senate, tax-relief expectations for
the minimum-wage package have shrunk to between $30 billion and $40
billion-about the same amount that was included in last year's failed
bill. Bigger and more expensive proposals, such as a capital gains cut or
even the popular permanent extension of the research and development tax
credit, are now considered out of the realm of "political
acceptance," said R. Bruce Josten, executive vice president of
government affairs at the U.S. Chamber of Commerce.


Less-expensive business write-offs-"asterisks" in the federal
budget, according to Josten-are more of a sure thing. So, too, are
more-moderately priced, industry-specific tax proposals. While the House
will likely be receptive to most tax-cut ideas, the Democrats in the
Senate will be more skeptical and will need some strong evidence that any
business-sponsored tax cut will translate into substantial consumer
savings. "Politically, you're going to want to market your [proposal]
as tax relief for middle- and lower-income Americans," Rehr
said.


Since the White House won its own tax-package fight, business leaders and
lobbyists can't count on Bush to be their cheerleader on other tax bills.
That makes relations with individual members of Congress even more
important. "We're going to have to work the individual personalities
of the Senate Finance Committee a lot more aggressively" to form
coalitions around ideas, Rehr said.


Josten agreed: "This is the kind of Congress where every vote counts,
every single day, no matter what."


Aside from the upcoming minimum-wage package, it is unclear what other
major vehicles might be available for substantial business tax relief.
"We're definitely in a holding pattern to see what happens
next," said Dorothy Coleman, vice president for tax policy at the
National Association of Manufacturers.-Bill Ghent


Teachers Chalk Up a Win


Daschle's ascension heartens the teachers unions the most, because the
South Dakotan is in sync with every aspect of their agenda, while outgoing
Majority Leader Lott almost universally opposes it.


Having Senate Democrats in power "does level the playing field, and
it forces both sides to compromise," said the National Education
Association's top lobbyist, Mary Elizabeth Teasley. At the committee
level, the ideological difference between Jeffords, the outgoing chair of
the Health, Education, Labor and Pensions Committee, and Kennedy is pretty
small. But Kennedy may be better at fending off conservatives. One
education analyst said that Kennedy, because he's come under fire from
fellow Democrats for getting too cozy with President Bush's team, might
recalibrate his political tactics and move even more to the left.


In the near term, Teasley predicted, the leverage of a
Democratic-controlled Senate will play out in small ways when the Senate
and House meet to resolve differences between their education reform
bills. The Senate bill will likely authorize almost $15 billion more in
spending than the House legislation, and, according to Teasley, Daschle
might be able to pull the compromise funding levels closer to the Senate's
figure. Teasley said she had resigned herself to a final bill that
included a block-grant program, which the unions fervently oppose.
"I'm not sure that's the case anymore," she said.


At the American Federation of Teachers, Director of Legislation Charlotte
Fraas said the power shift will bring a longer-term benefit-more
visibility for the AFT's two top issues, reducing class sizes and building
schools.


The teachers unions' greatest opportunity this year may be in
appropriations, said Fraas. She questioned whether Bush would veto an
appropriations bill merely because it contained a class-size reduction
component. "This is an opening," she said of the shift in power
to the Democrats. "Who sets the agenda is pretty important."
Fraas said she is most hopeful about adding money for school construction,
a favorite of Sen. Tom Harkin, D-Iowa, who is set to chair the
Appropriations subcommittee that handles education. Harkin is up for
re-election next year and is expected to face a strong Republican
challenge.


But the bottom line, Teasley acknowledged, is that although the Senate
leadership has changed, the players remain the same. "Our effort to
lobby deep and hard on the Senate side has got to continue," she
said. "We cannot take anything for granted."-Siobhan
Gorman


Trade Lobbyists Scramble


The power shift in the Senate is likely to affect both the timing and the
substance of trade legislation-and the tactics of many now-scrambling
lobbyists. "It certainly will have an impact," said a former
Democratic leadership staff aide who works for a prominent lobbying firm.
"But this early in the game, it's hard to predict how dramatic an
impact."


Lobbyists' "business is tight already," he added. "Fees
have compressed about a quarter. Any foothold you can get to increase the
attractiveness of your firm is a major component of business
development." So look for Democratic trade firms to begin touting
their connections.


The most immediate result of the sudden shift may be a delay of Senate
legislation granting the President trade-negotiating authority. And to a
lobbyist, delay means the sweet scratching sound of bigger checks being
written by clients.


Outgoing Senate Finance Committee Chairman Grassley, "wanted to make
June trade month and mark up a bill," said another trade lobbyist.
"There is now no chance whatsoever to mark up in June. What you will
get will be hearings. And then there will be talks, and real activity in
July." And more billable hours as a result.


But heavyweight trade lobbyists deny that the transition has drastically
changed their Capitol Hill strategy. "We never began with the
assumption that work on trade could proceed other than on a bipartisan
basis," said Calman J. Cohen, president of the Emergency Committee
for American Trade, composed of the 50 largest U.S. international
companies. "Therefore, the change in control in the Senate [only]
confirms that approach."


A more immediate consequence of the change will probably be seen on
individual issues. The steel industry, always complaining of being ground
under by unfairly priced imports, may in the short run gain the most from
the party switch. Senate Finance Committee Democrats, following the lead
of Sen. John D. Rockefeller IV, D-W.Va., had long advocated temporary
relief from imports. It was unclear whether Grassley would have gone
along. A save-American-steel resolution that would give the industry three
years of import protection, is expected from the committee. The resolution
would require a study by the International Trade Commission and a
recommendation to the White House.


Needless to say, industry lobbying around such a move has just gone into
overdrive. The steel producers, who had recently increased their GOP
lobbying stable by adding the two firms Quinn, Gillespie & Associates
and Clark and Weinstock, may now look to strengthen their Democratic
connections.


And the high-technology industry is also expected to step up its lobbying
efforts, now that the Senate changeover appears to have opened the door to
revising export controls. As Majority Leader, Lott had been wary of a vote
on liberalizing trade in computers and other sophisticated equipment
because of sharp divisions within his own party. The Democrats have long
sided with GOP advocates of change on this issue and are likely to give
Silicon Valley what it has long desired.-Bruce Stokes


Alarm, Stoicism on Judicial Nominees


Within 24 hours of Jeffords's announcement, the conservative Heritage
Foundation knew what it had to do. It flooded the e-mail in-boxes of
supporters and friends with an urgent request for money to "fight the
liberal power shift" in the Senate. The shift is a "stunning
development," said Heritage President Edwin J. Feulner, who warned
that "liberals stand poised to thwart critical conservative
programs-from tax cuts to judicial appointments."


With Sen. Patrick Leahy, D-Vt., set to take over the Judiciary Committee,
President Bush's recent judicial nominations will face tough sledding. But
among many groups-conservative and liberal-there was a mixture of stoicism
and nonchalance.


The conservative Eagle Forum, which has a Web page devoted to stopping
activist liberal judges, isn't calling for massive mobilization-and new
donations-from its members. Instead, the group, headed by activist
conservative Phyllis Schlafly, is taking a more restrained approach,
promising to keep "people back home" in the know with phone
calls, faxes, letters, and other grassroots tactics, said Executive
Director Lori Cole.


Reflecting a similar strategy, Jay Sekulow, chief counsel for the
conservative American Center for Law and Justice, said that his group
plans to focus on "getting Senators in touch with constituents."
That outreach will entail a mass mailing to about a million people,
e-mails to another 700,000, a radio broadcast, and up-to-date Web
postings.


Eugene Meyer, executive director of the Federalist Society for Law &
Public Policy Studies, the conservative lawyers group viewed by liberals
as the foremost threat to the selection of moderate judicial candidates,
was nonchalant about the probable makeup of the Senate Judiciary
Committee. "Our role is not to endorse nominees," Meyer said.
"We are going to get the same set of ideas heard, discussed, and
understood" in the same manner, he said.


Similarly, Thomas L. Jipping of the Free Congress Foundation's Coalition
for Judicial Restraint said the shift won't affect the group's agenda
because the "Democrats were in control" of the process and were
a roadblock even before Jeffords's defection. At most, he said, his group
will continue to reach out to conservative lawmakers who aren't on the
Judiciary Committee.


The key adjustment at the liberal judicial nomination watchdog group
Alliance for Justice, said spokeswoman Nan Aron, will be an effort to be
active in the selection process, instead of solely reacting to events.
David Smith of the Human Rights Campaign, a Washington group that lobbies
on behalf of legislation related to HIV/AIDS, gay and lesbian rights, and
hate crimes, said the organization already has a bipartisan approach to
advocacy. "We are digesting what has occurred," he said.
"We are continuing to communicate with offices on both sides of the
aisle."


Marcia Greenberger, co-president of the National Women's Law Center, noted
that the judicial nomination process was just unfolding when the
Republicans lost the leadership. Now, she said, she has a wait-and-see
approach. Greenberger added that she doesn't rule out "roadblocks I
might want to throw in the way" if there is a rush to complete what
should be a deliberate process.-Elisabeth Frater


Environmentalists Get Second Wind


Environmental lobbyist John Stanton has been putting all of his energy
into helping a major power-plant cleanup bill move through Congress. The
moment Jeffords announced that he was leaving the GOP, the bill that
Stanton supports got a badly needed second wind.


Stanton, vice president of air programs at National Environmental Trust,
was so happy about Jeffords's switch that he wanted to share his
enthusiasm with the Senator's staff and the staff of the committee that he
is expected to chair, Environment and Public Works. Stanton called
Jeffords's office and the committee on May 25. He called over and over and
over. "You could not get through to either," Stanton said.
"It was that fast busy signal that led you to believe that they had
their phone[s] off the hook."


But Stanton and other environmentalists expect they will be heard as soon
as the committees formally shift to Democratic control in the coming week.
(Independent Jeffords will caucus with Senate Democrats.)


"On the issues we are actively working, we're going to have a real
opportunity to get hearings on a wide range of issues-from food safety to
nuclear power," said Wenonah Hauter, director of energy and
environment for Public Citizen's Congress Watch.


Most environmental lobbyists are still assessing how their strategies
might be changed by the Senate flip. "Although, in general, it does
put the Senate in friendlier hands, you have to remember, the votes remain
very, very tight," said Debbie Cease, national legislative director
of the Sierra Club.


Environmentalists had low expectations for the Republican-controlled 107th
Congress. Their plan was defensive: Protect the national monuments
established by President Clinton, battle Bush Administration initiatives
to open larger swaths of public land to oil exploration, and prevent
rollbacks of regulations. They said that Jeffords's move definitely
improves their chances.


"The opportunity for oversight of administrative actions is
tremendous," said Alyssondra Campaigne of the Natural Resources
Defense Council. "Just having the opportunity to ask questions and
cast some public light on the policies the Administration is pursuing is
tremendous. There's been a lot of interest on the part of the
Administration in moving things through rather quickly."


The power-plant cleanup proposal is the one major bill that might get a
lift when Jeffords takes the gavel of the environment panel. The bill is
aimed at scrubbing four key power-plant emissions-carbon dioxide, mercury,
sulfur dioxide, and nitrogen oxide. The measure has floundered since
March, when Bush backed away from a campaign pledge to reduce carbon
dioxide emissions, and the Republican committee chairman, Bob Smith of New
Hampshire, quietly supported Bush's reversal.


Jeffords's top environmental priority for the past four years has been
cleaning up power plants, and he joined Democrats on the committee as an
original co-sponsor of the so-called "four-pollutant" bill. One
of the other co-sponsors, Sen. Joe Lieberman, D-Conn., is about to become
the chairman of the Clean Air Subcommittee.


Stanton is seeing brighter days ahead. "This committee is going to
mark up a power-plant bill," he said. "And this cleanup is going
to move now in the Senate."-Cyril T. Zaneski


Liberal Groups See Opportunity


Liberal activists throughout Washington wasted no time last week dusting
off bills and proposals that had long been considered dead: a civil rights
bill protecting gays and lesbians from workplace discrimination,
legislation boosting welfare benefits to the working poor, and new
requirements that insurers cover all Food and Drug Administration-approved
prescription contraceptives.


Jeffords's defection is a boon to abortion-rights advocates, who said they
were particularly pleased that Jeffords mentioned "issues of
choice" in explaining his decision to leave the GOP. The National
Abortion and Reproductive Rights Action League thanked Jeffords with a
half-page advertisement on May 29 in The Burlington (Vt.) Free
Press.


Abortion-rights supporters said they are pleased that anti-abortion
judicial nominees will face tough scrutiny from Democrats on the Judiciary
Committee. But they said they are even more excited about the opportunity
to advance other pieces of a broader liberal agenda. "We're going to
have a great likelihood of having a friendly ear and someone to strategize
with," said Patricia Ireland, president of the National Organization
for Women. The contraception issue, for instance, is one that NOW believes
can generate positive press, even if the bill requiring prescription
coverage doesn't ultimately become law.


Other liberal groups are hoping that they, too, can go on the offensive
and push an agenda, after long playing defense against conservative
proposals. Winnie Stachelberg, political director at the Human Rights
Campaign, a gay-rights group, said that incoming Senate Majority Leader
Daschle is a co-sponsor of two of her top priorities: a civil rights bill
and a hate crimes bill.


Deepak Bhargava, the director of public policy at the Center for Community
Change in Washington, said he now sees hope for Senate passage of
legislation restoring welfare benefits to immigrants and extending more
help to the working poor. A minimum-wage increase, he said, could be the
first step.


Not surprisingly, conservative activists and the most-forceful opponents
of abortion, gay and lesbian rights, and other liberal social policies
were irate over Jeffords's defection. Kenneth L. Connor, president of the
Family Research Council, said that Jeffords had effectively become part of
a "de facto coup" that will hurt some of the FRC's legislative
efforts. "When you put [Sen. Patrick] Leahy [D-Vt.] in the chairman's
seat of the Judiciary Committee, it creates a whole different
dynamic," Connor lamented.


The GOP's loss of Senate control will make it harder for the FRC to
approach its work in an active way, Connor said, and will force the group
to try to pressure liberal lawmakers by marshaling a public consensus.
Fortunately for conservatives, Connor added, Republicans remain in charge
at the White House and in the House of Representatives.


That reality is not lost on Ralph Neas, president of the liberal group
People for the American Way. He said that liberals need to keep the
pressure on the new Senate leadership. The question, he said, is whether
"Democrats have the political will necessary to fight."-Gia
Fenoglio and Shawn Zeller


Telecom Prepares for Hollings


Springtime for the long-distance companies and privacy advocates, winter
for the Baby Bells and for companies collecting personal data. That's the
consensus of high-tech lobbyists as they watch the Senate Commerce,
Science, and Transportation Committee transfer its gavel from McCain to
Ernest F. Hollings, D-S.C.


Hired guns from across the high-tech sector know Hollings well because he
was committee chairman from 1987-95. He has railed against the fallout
from airline deregulation and from what he sees as Baby Bell efforts to
stifle competition in the local telephone market. He's a well-known
opponent of the massive consolidations that have changed the industries
over which the committee has jurisdiction, from aviation to broadcasting
to the local telephone business.


Hollings has often referred to himself as "a born-again
regulator." Lobbyists from various industries looking to win
relaxation of regulatory rules had better buckle up for some tough
fights.


The Senator is a longtime opponent of the Baby Bells, which are pushing
for regulatory relief to help them compete against AT&T in the
next-generation broadband market. Under Hollings, lobbyists said, chances
are even less than before that the committee will lift some regulatory
provisions in the 1996 Telecommunications Act. That's bad news for Rep.
W.J. "Billy" Tauzin, R-La., chairman of the House Energy and
Commerce Committee and the chief author of a pro-Baby Bell deregulatory
bill.


The Democratic takeover gives important chairmanships to several Senators
concerned with data privacy. Marc Rotenberg, president of the Electronic
Privacy Information Center, noted that Hollings-who promoted a data
privacy bill last session-and Leahy, the new Judiciary Committee chairman,
are "two of the main privacy champions taking control of
committees." Sen. Paul S. Sarbanes, the new Banking, Housing, and
Urban Affairs Committee chairman, also supports tougher privacy standards
for financial companies.


Hollings may improve the prospects for state and local governments worried
about the loss of sales tax revenue to out-of-state online vendors.
Hollings has opposed efforts by Senators favoring more of a free-market
approach, such as McCain and Ron Wyden, D-Ore., to bar the states from
collecting such out-of-state sales taxes. Instead, Hollings has pushed a
bill that would help states collect such taxes if they simplified and
harmonized their sales tax rules.


High-tech exporters may get a boost from Democratic control. Opposition
from security-minded Republicans to the pending deregulatory Export
Administration Act is not likely to be a deal-killer. The party switchover
gives Democrats power to oversee executive branch and regulatory agencies
such as the Federal Trade Commission and the Federal Communications
Commission, which have much clout over online privacy and
telecommunications regulation. The stage is set for fireworks between the
regulatory-minded Hollings and the free-market orientation of Bush
appointees at the agencies.-Neil Munro and Kirk Victor


Labor: Back on the Offensive


Before the Jeffords defection, labor unions-which overwhelmingly backed
Vice President Al Gore in last year's presidential race-had been on the
ropes. Now unions are ready to throw a stinging counterpunch.


Organized labor is one of Washington's biggest winners from the Senate's
seismic shift. Just ask Ann Hoffman, the legislative director for the
Union of Needletrades, Industrial, and Textile Employees. "I do have
a smile on my face," she said. "The thought of having Ted
Kennedy back in charge of the [Senate] Labor Committee is a dream come
true."


Democratic control of the Senate machinery will make a world of difference
to organized labor. In the past few months, the Bush Administration issued
executive orders intended to weaken unions, while the GOP-controlled
Congress rolled backed a sweeping ergonomics standard that labor had
championed.


"Instead of surviving, we'll be pushing an agenda," Hoffman
said. "The message of why unions are a good thing and that workers
deserve more will be getting out."


Bill Samuel, the AFL-CIO's legislative director, said that the labor
movement can pursue many of its pet initiatives, such as passing a
patients' bill of rights, increasing the minimum wage, expanding health
care access, and even pushing Congress to reconsider the ergonomics
standard. Yet he conceded that passing these items will be
difficult.


Still, unions argue that having the Democrats in control of the Senate's
committees and agenda is a relief because it gives labor a better chance
to defeat bills and executive orders that it dislikes. "We're not
going to be facing anti-worker pieces of legislation-at least in the
Senate," noted a union official. "We're in a better place than
we were a week ago."


Alan Reuther, the top Washington lobbyist for the United Auto Workers,
said that merely having opportunities to bring up health care, minimum
wage, and other labor-backed bills for debate "makes a big
difference. I'm not saying it will be a slam dunk in terms of passage, but
it's a huge step forward."


Not all unions are jumping for joy, however. Mike Mathis, the director of
government affairs for the politically unpredictable Teamsters, said his
union supports the Bush Administration's call for oil exploration in the
Arctic National Wildlife Refuge in Alaska. He acknowledged that such
action is less likely to happen in the Democratic-controlled
Senate.


Nevertheless, most union officials believe that the transfer of power
means labor is back. "This has been a great time for millionaires and
corporations," said Andrew L. Stern, president of the Service
Employees International Union. "Finally, the voices of working
families are going to be heard."-Mark Murray


From Defense Lobbyists, Shrugs and Smiles


You might expect that a suddenly Democratic Senate would dismay the
defense industrial complex. Surprise: The reaction is less shock than
shrugs-and even some smiles. "Unless you're a big NMD [national
missile defense] enthusiast, it's very good news," said Richard
Aboulafia, an aerospace industry analyst with the Fairfax, Va.-based Teal
Group Corp.


President Bush had already disappointed the defense community by deferring
any budget increase until the completion of Defense Secretary Donald
Rumsfeld's ongoing strategic review. And rumors of forthcoming radical
reforms have raised fears that today's top programs might be cut to help
pay for high-tech research, particularly on missile defense. Now any
Bush-Rumsfeld innovations must go through a skeptical Democratic Senate
and missile-defense-doubter Carl Levin, D-Mich., the prospective Senate
Armed Services chairman.


That obstacle will slow "Son of Star Wars" in particular, and
reform in general. "With the Republican Senate, there would have been
some pressure to get it done right away, just to give the President a
victory," said an official of a leading military officers'
association. Now, "if there are pieces of this we don't agree with,
there'll be opportunities to get a more thorough questioning." So for
most defense industries and military associations, the switch in the
Senate is a slight plus, simply because divided government slows the pace
of change.


Certainly, some companies and causes will suffer or prosper more
dramatically than others. Sen. Harry Reid, D-Nev., has sponsored several
bills that would let disabled military retirees collect both their
Pentagon pensions and their Veterans Affairs disability checks. His
ascension from minority to majority whip delights military retiree groups.
Sens. John W. Warner, R-Va., and Lott just happen to have big home-state
shipyards, so their respective demotions from Armed Services chairman and
Majority Leader dismay shipbuilders.


But these wins and losses reflect individual Senators' agendas, not some
deep partisan divide over defense, where-Bush's missile defense plan
aside-there is a strong bipartisan consensus. In this case, all politics
really is local.


And even locally, it is not the earthquake in the Senate that will shake
things up. "We're not changing our strategy," said Randy Belote,
a longtime official of Lott's home-state shipyard, Litton Ingalls
Shipbuilding, and now a spokesman for Ingalls' parent company, Northrop
Grumman Corp. It's Defense Secretary Rumsfeld's ongoing and secretive
strategic review that really has Belote's attention: "We are
currently waiting for the Bush Administration to make its views and
direction known-which will have a much more significant impact on the
defense industry, in my estimation, than the shift in the balance of power
in the Senate."


In short: Forget the Senate, watch Rumsfeld. "We're all waiting for
something else ... the defense review," said Joyce Raezer, an
advocate for troops' dependents at the National Military Family
Association Inc. "That part of the equation is still
unknown."-Sydney J. Freedberg Jr.


A Staff Report

National Journal