12-07-2002

LOBBYING: Obstacle Course

As some two dozen prominent health care lobbyists gathered at the White
House on the morning of November 7, a palpable sense of optimism was in
the air. The Republicans had just scored impressive victories on Election
Day, and come January, both houses of the 108th Congress would be under
GOP control.


The lobbyists heard encouraging words from President Bush's top political
strategist, Karl Rove, as well as from White House adviser Doug Badger and
Mark McClellan, who was sworn in a week later as commissioner of the Food
and Drug Administration. Rove indicated that the Bush administration would
move early and aggressively to deliver a prescription drug benefit to
seniors through the private sector, provide tax credits to expand health
insurance coverage for uninsured Americans, and impose tort-liability
reforms.


Rove sent a clear signal, according to people who attended the gathering,
that the administration would be looking to Republicans on K Street-and
Democratic lobbying allies-to flex some strong lobbying muscle on these
issues. "This was very much a rallying of the troops for quick and
aggressive action," said one participant.


But Bush's senior political adviser also delivered a dose of caution.
"Rove made a pretty strong point that we can't do this ourselves. It
has to be bipartisan," explained another person who attended the
meeting. According to this lobbyist, Rove's message to K Street was:
"You will have to work with us to get Democrats."


The view from the White House underscores both the potential for success
and the possible pitfalls that lie ahead for corporate and conservative
interests as they seek to capitalize on a GOP-controlled Congress in 2003.
For the first time since the early months of the Bush presidency, the
Senate will boast several business-friendly committee chairmen, and
analysts predict that some industries will do quite nicely next
year.


Many business groups and Republican lobbyists who were frustrated by the
18 months of a Democratic-controlled Senate and a divided Congress are
feeling upbeat. After all, many of these lobbying powerhouses opened their
wallets and marshaled grassroots power to turn out GOP voters in key
races. Little wonder that a number of industries sound bullish.


One optimistic lobbyist is Alan Holmer, president of the Pharmaceutical
Research and Manufacturers of America, which represents 108 brand-name
drug companies. PhRMA and its industry allies doled out about $15 million
in campaign contributions in the most recent election cycle, 75 percent of
which went to Republicans. Most important to PhRMA is that its desire for
a private-sector Medicare drug benefit fits closely with President Bush's
goal-which explains Holmer's confidence that Congress and the White House
"feel a strong sense of responsibility" to pass a drug benefit
quickly.


Another business leader who is feeling upbeat is Lee Culpepper, the top
lobbyist for the National Restaurant Association, a group that has used
its grassroots power on behalf of the GOP. The Republicans' "ability
to control the committee agendas and the schedule will benefit us,"
he says. "I think the change in [Senate] control is psychologically
significant."


Larry Noble, executive director of the Center for Responsive Politics, a
campaign watchdog group, says: "Big donors from the energy,
pharmaceutical, and defense industries are looking at a very Merry
Christmas and a Happy New Year. These groups bet heavily in the elections,
and their agendas will be at the top of the priority list for the
administration."


But having your issues in play hardly guarantees success. And many of
Washington's influence merchants in both political parties cite major
obstacles and tough challenges in 2003 that could wind up curbing or
killing items on K Street's wish lists. The barriers include:


* The narrow margins in both congressional chambers and the need for 60
votes in the Senate to break a filibuster. That means, as Rove observed,
that courting Democrats will be essential to gaining legislative
victories.


* The White House's heavy focus on the 2004 elections. This emphasis on
ensuring a second term for Bush, for instance, may undermine business
groups' chances of gaining as many corporate tax cuts as they
like.


* An intense competition for limited financial resources, which is likely
to pit different business groups and sectors against each other in the
scramble for government dollars.


* Conflicting goals between business interests and social conservatives-a
struggle that was previewed in the surprising defeat of a corporate-backed
bankruptcy reform bill in the lame-duck Congress.


* Limited time in the next session before the 2004 campaign heats up and
makes compromises much harder to broker.


Prominent Republicans and Democrats on K Street acknowledge that the
lobbying terrain could be tricky. Dan Danner, the top lobbyist for the
National Federation of Independent Business, said, "One of the most
cogent statements about the election was by Senator John McCain [R-Ariz.],
who called the results a breeze and not a gale. It's not just that you
will need 60 votes to do controversial things in the Senate, but that
there are a great many things for which you won't even have 50
votes."


Dan Mattoon of the lobbying shop PodestaMattoon said that any effective
strategy for next year will require a group "to be on offense-but you
need to pick your targets carefully and correctly. There's a scarcity of
money and there's a scarcity of time" to get things accomplished,
Mattoon said.


Analysts in academia, too, argue that some groups may have to lower their
expectations. "The new Congress looks like a business dream come
true, but it's not," said Larry Sabato, a professor of politics at
the University of Virginia.


A potential limiting factor for business, Sabato added, is that the Bush
administration is already "clearly focused on 2004 and its own
re-election. They're simply not going to buy into the complete business
agenda if it endangers Bush's second term." Groups whose agendas
overlap with the White House's goals-PhRMA, for instance-are in the best
position to achieve results, Sabato said.


In other areas, such as taxes, some K Street mavens believe that the White
House and the business community will likely have some differences. And
the business community may not get a lot of help from Sen. Charles
Grassley, R-Iowa, who is the incoming chairman of the Finance Committee.
Grassley told The New York Times last week that he is "genuinely
concerned that Republicans not be chastised for only helping business and
the wealthy."


More broadly, Sabato said, "the economy and the federal budget
deficit simply won't permit Congress or the administration to give
business all that it wants."


Roadblocks and New Avenues for Business


Given these political and economic pressures, K Street veterans say that a
key ingredient for success will be to present a united front in lobbying
drives, especially on fundamental issues such as taxes.


Michael Baroody, executive vice president of the National Association of
Manufacturers, says that "unity and persistence" are his
watchwords for winning legislative fights and that the business community
must devise a "meaningful consensus" on tax relief. Baroody
acknowledges, however, that the outlines of that consensus "aren't
yet known." Asked if some business interests might not get all they
want from tax cuts, Baroody quipped, "Manufacturers are adults and
they know how to defer gratification."


Splits in the business community already seem to be emerging over the
shape and size of an early tax package to stimulate the economy. The
Business Roundtable, for instance, surprised some lobbyists in late
November when it endorsed a $300 billion stimulus package that included as
its principal component a temporary cut in Social Security and Medicare
payroll taxes that would primarily benefit middle- and lower-income
Americans. Other business groups have put more emphasis on allowing large
write-offs on new investments or sharply reducing the double taxation of
corporate dividends, an idea that has gained some administration
support.


U.S. Chamber of Commerce President Thomas Donohue, another veteran
lobbyist, also sees potential problems if players on K Street fail to
recognize that they face a limited window of opportunity next
year.


"We're going to have to be very clear in what we want to get
done," Donohue said. "Any of a series of factors on the horizon
could change everything. The simplest is that after the August recess in
2003 we will be in presidential election mode. If we have a winter
excursion in Iraq, that will distract from the regular legislative debate.
And if we went into a debate about a nominee for the Supreme Court, that
could be a distraction as well."


Given these time pressures, GOP lobbyist Mattoon argues that any K Street
offensive must begin well before Labor Day and that gaining Democratic
support will be essential in order to win. "Business groups will be
under the gun to help produce the votes to pass those legislative items
that are important to them, to the leadership, and to the White
House," Mattoon said.


Lobbyists in both parties say that corralling sufficient votes to pass a
bill in the Senate will still hinge heavily on attracting swing Democrats
and Republicans. "Behind the headlines, people on K Street understand
that, as much as things have changed, the more they've stayed the
same," said Joel Johnson, a managing director of the Harbour Group
and a former aide to incoming Senate Minority Leader Thomas A. Daschle,
D-S.D. "My pitch to clients remains the same: If you want to get
something to the president's desk, you will have to convince more than a
handful of senators in the minority party that it's a good
idea."


Knowing the importance of picking up moderate Senate Democrats, GOP
lobbyists say that K Streeters will be actively courting a number of this
group. "If you're going to get 60 votes on something, you're going to
need nine or 10 Democrats, depending on how many Republican defectors you
have," said Gary Andres, a Republican who is a senior managing
partner at the Dutko Group. Andres named Democratic Sens. John Breaux of
Louisiana, Zell Miller of Georgia, and Ben Nelson of Nebraska as the most
likely swing Democrats. He puts Democratic Sens. Mary L. Landrieu of
Louisiana (assuming she wins her runoff election on December 7) and
Blanche Lincoln of Arkansas in the "maybe" category. After those
names, Andres said, "I get a little stuck."


For Andres and other outside lobbyists, the new Senate lineup clearly
requires firms to have bipartisan skills. Andres said that his clients are
well aware that "a determined minority can block almost
anything."


John Jonas, a lobbyist with Patton Boggs, agrees that Democrats and
Republicans with good ties to moderates in both parties will be in great
demand. "As usual, the swingers get more attention," Jonas
said.


On a few issues, such as a potential minimum-wage hike, the Democrats may
be more likely to prevail, now that the GOP controls the Senate. When the
Democrats were in control, then-Majority Leader Daschle sometimes had to
rein in his more liberal colleagues to prevent them from mucking up
important bills with divisive legislation. But now that the Republicans
are in charge, some lobbyists say, a Democrat could be freer to introduce
such liberal measures. Incoming Senate Majority Leader Trent Lott, R.
Miss., wouldn't have political leverage to use against a Democrat, and
moderate Republicans might well be nervous about voting against a wage
hike, fearing a fiercer backlash from constituents than from the business
community.


Nevertheless, the best chances of producing enough votes to move bills,
some lobbyists argue, will be in legislative areas where the two parties
can find common ground.


For example, former Rep. Vin Weber, R-Minn., who is a lobbyist with Clark
& Weinstock and is close to many GOP leaders, suggests a potential for
achieving significant parts of the business agenda where Republicans and
Democrats agree on a goal "in concept, but differ on details."
Prescription drug coverage for seniors is a prime example. "That's a
huge opportunity," said Weber, an outside lobbyist for PhRMA.


Jonas, who works on health care and tax issues, agrees. "The health
care agenda will be very rich and productive. It will be harder for
Democrats to block. I think centrist Democrats in health care will be
freer to compromise with Republicans who want the accomplishment and to
show that they can deliver."


By contrast, he bets that tax lobbyists are the "most likely to be
disappointed. The surpluses are gone and we're into deficits," Jonas
said. "Even though Republicans are engaging in substantial deficit
spending, there are still political limits to the size of the deficits
that Republicans will tolerate."


Possible Spoilers


The need to scramble for swing votes isn't the only big challenge for
business lobbyists. Many corporate advocates fret that abortion and other
hot-button social issues could drain time and energy away from
business-related issues.


"I respect people who feel strongly about abortion, and I have no
problem with them articulating their views, as long as they don't hold up
the rest of the world while they're doing it," said Donohue of the
chamber.


For groups like the chamber, which is focused on an economic stimulus plan
and legislative changes on such matters as capital gains rates,
depreciation, and expensing, a too-aggressive push by social conservatives
would be a nuisance.


But Donohue and other business lobbyists may find it hard to block social
conservatives from pressing hard for their objectives next year. Since
Election Day, religious conservatives have gone to great lengths to
highlight their movement's strength in helping to assure GOP victories,
and to insist that the party now take up its agenda.


"In close races ... pro-life, pro-family issues and voters made a
significant difference," said Ken Connor, president of the Family
Research Council. "All this means that we can expect the GOP to
advance the social issues agenda."


That agenda is imposing. It includes bills that would limit abortion
rights, most prominently a ban on "partial-birth" abortion. Such
legislation passed the House and Senate twice during the Clinton
administration, but President Clinton vetoed it each time. Religious
conservatives will also tout bills banning human cloning, advancing school
vouchers, and eliminating the "marriage tax penalty," which
forces some married couples to pay more in taxes than they would if they
were single. Finally, social conservatives are expecting the new
Republican majority to confirm conservative judicial nominees held up in
the last Congress.


Business-minded Republicans and lobbyists will surely grow frustrated if
Congress dedicates an inordinate amount of time to such matters, and as
with the bankruptcy bill, they may find themselves going head-to-head with
social conservatives again. Elimination of the marriage penalty tax would
presumably leave less money for corporate tax cuts, which business
interests believe they were promised after last year's tax-cut
bill.


For their part, several liberal groups, which took their lumps in the
elections, are poised to play defense. For instance, the Association of
Trial Lawyers of America, which is a huge financial backer of Democrats,
will oppose GOP efforts to move tort-reform bills limiting class-action,
malpractice, and asbestos lawsuits. "If you look back at 1995, the
numbers in both houses were worse than they are today," said ATLA
spokesman Carlton Carl. "I don't have a crystal ball, but I think
it's highly unlikely that any major limitation on legal rights will get 60
votes in the Senate."


Some GOP lobbyists agree that the tort-reform agenda may be very hard to
achieve. GOP strategist Weber sees scant Democratic backing for business's
tort-reform goals, warning that "picking up Democrats will be much
more difficult," despite the high priority that the administration
and business place on the issue.


Meanwhile, other liberal groups under fire are already thinking about 2004
and developing their legislative strategies with the next election in
mind. Some say the trick will be to make the case that many Americans are
still concerned about the environment, abortion rights, and other liberal
issues.


"We have to convince Republicans that there may be
repercussions" for their votes, said Nan Aron, president of the
Alliance for Justice, which opposes conservative judicial appointments.
"It's critical for us to make that link."


Likewise, Sierra Club Executive Director Carl Pope, in a meeting with club
activists immediately after the elections, stressed that if the new
Congress, under pressure from energy interests, moves quickly to weaken
the Clean Air Act or takes other steps that the environmental movement
opposes, green groups should move aggressively to publicize and capitalize
on these actions.


"The Republican leadership feels it now has a mandate, but if recent
history is any guide, those who believe they have a mandate usually
proceed to squander it," Pope argued.


Given all these countervailing lobbying forces, analysts say, business
groups would be smart to be pragmatic and shrewd about what they choose to
push. "Business won't get their entire wish list," cautions
James Thurber, a professor of government at American University.
"They have to be realists and stealthy. They can't be in-your-face
the way that the Contract With America was on business
issues."


GOP lobbyists also suggest that if business pushes too hard, it could well
be disappointed. Weber observes that business interests have to realize
that "there are limits to what this administration can do if they
can't justify it in terms of economic growth or the public good. Business
could overreach if it's not sensitive to the appearance and the reality of
being too close to this administration. The president, like all
Republicans, is sympathetic to business," Weber said. "But he
doesn't want to go into the next election wearing the title of
special-interest president."


In the final analysis, those business sectors and groups that can tailor
their agendas to match the White House's should wind up with lots of
legislative and regulatory goodies.


Ultimately, the University of Virginia's Sabato predicted, many businesses
will do just fine-because the administration will need a healthy list of
accomplishments to tout in the next elections. "It will be the Bush
agenda," Sabato said, "and business-which is absolutely
essential for Bush's re-election-will get a piece of each of the major
policy components."


Peter H. Stone, Louis Jacobson, and Shawn Zeller

National Journal