Monday, January 9, 2012

BACKWATERS ~






Happy Lobbyists, Unhappy Citizens

Few people were more elated at 2:20 a.m. Wednesday morning when Mitt Romney was declared the winner of the Republican caucuses in Iowa than a small group of lobbyists unknown outside of the Washington Beltway. All indications suggest that the New Hampshire primary this Tuesday will bring similar joy.

These 15 men are leaders of what might be called Romney’s K Street army. They are key players in the mobilization of Washington’s $3.5 billion lobbying industry in support of his candidacy. Romney, more than anyone else who is running, is the favorite of the capital’s influence-wielding establishment.

All 15 are active fundraisers for Romney. Patrick J. Durkin, who lobbies for Barclays, for example, raised $254,825, according to reports filed by the Romney campaign. Robert Grand, of the lobbying firm Barnes & Thornberg, raised $110,050; William Mark Simmons and David Beightol, both of the Dutko Group, raised $69,260 and $54,200 respectively; Wayne Berman and Drew Maloney, both in the Ogilvy Government Affairs firm, raised $101,600 and $56,750, respectively. The list goes on.

The presence of these and other prominent Washington players supporting the Romney campaign signals that the establishment, at least its Republican wing, has concluded that the former Massachusetts governor is a safe bet.

The open participation of lobbyists in the current campaign is one more element in the collapse of campaign-finance reform. Two waves of reform — the first in the post-Watergate era of the mid-1970s and the second culminating in 2002 with the passage of the McCain-Feingold act, which sought to end the use of “soft money” in campaigns — are essentially moot.

But these reforms have been gutted by Supreme Court decisions, especially the Jan. 21, 2010 decision Citizens United v. Federal Election Commission, and by a lax Federal Election Commission. Corporate donors, labor unions and individuals willing to write big checks are free to use their money to favor certain candidates. If they want to keep the contributions secret from public view, there are many opportunities for concealment.

In the current election, contributions that would not have been possible before Citizens United are flowing freely. In the first six months of 2011, for example, the Super PAC operating on Romney’s behalf, Restore Our Future, reported corporate contributions of $1 million each from Eli Publishing Inc. and F8 LLC, both based in Provo, Utah; $250,000 from The Villages of Lake Sumter, Inc. in The Villages, Fla.; and $100,000 from 2GIG Technologies in Lehi, Utah.

Members of Romney’s cadre of lobbyists contacted by The Times declined to speak on the record, but each one disavowed seeking any financial gain from Romney’s political success. Instead, they contended that they back Romney because they believe that he is the best candidate running. For lobbyists, few things are more attractive to prospective clients than having their guy in the White House.

The interests represented by these particular Romney supporters run the gamut of national and international corporate powerhouses.

A very abbreviated sampling includes much of the financial sector, including the Blackstone Group, PricewaterhouseCoopers, Visa, MasterCard, JPMorgan Chase, the Mortgage Bankers Association, the American Bankers Association, most of the pharmaceutical industry including Eli Lily & Co., Pfizer, Bristol-Meyers Squibb, the Pharmaceutical Research & Manufacturers of America, and companies like Verizon, AT&T, Walmart, Coca-Cola and General Motors.

The ever-expanding role of lobbyists in politics is a major victory for corporate America. Overwhelmingly, the companies and trade associations that dominate top-dollar lobbyists’ clientele are seeking to protect their own legislated competitive advantages, including special tax breaks, favorable procurement rules and government regulations that prevent new challengers from entering the marketplace.

Republicans should be acutely aware of the dangers posed by the lobbying community. When insurgents led by Newt Gingrich took over the House after the 1994 election, they were determined to open markets, allow free enterprise to flourish and rid the legal and regulatory system of competitive favoritism.

In practice, just the opposite took place. Gingrich, and especially Tom DeLay, ceded enormous power to Washington lobbyists in what they called the K Street Project. Loyal lobbyists were rewarded with earmarks, leadership support for special amendments and the delegated authority to write legislative provisions.

Shortly before he became House whip in 1995, DeLay created Project Relief, a legislated moratorium on new regulations. He appointed Bruce Gates, a lobbyist for the National-American Wholesale Grocers’ Association, to run the project and Gordon Gooch, a petrochemical lobbyist, to write the first draft of the bill. The bill was then modified by Paul C. Smith, an automobile industry lobbyist, and by Peter Molinaro, a lobbyist for Union Carbide.

Romney is not the only Republican candidate with strong ties to the lobbying community. One of the K Street Project’s champions in the Senate was Rick Santorum, then a senator from Pennsylvania, now Romney’s strongest challenger for the Republican presidential nomination, at least right now. Santorum regularly met with lobbyists, helped formulate a pro-business agenda and sought jobs from them for Republican staffers. After he was defeated in 2006, Santorum went to work on K Street as a “strategic adviser” to industry organizations and lobbying groups, skirting the requirement that he register as a lobbyist, earning $1.3 million dollars in the 18 month period from Jan. 1, 2010 to June 30, 2011.

The processes set in motion by the K Street Project resulted in a pervasively corrupt Republican majority that was rejected in 2006.

President Obama, who has claimed to be mindful of the destructive power of the Washington-based special-interest community, backtracked this past year when he raised no objection to the decision of two former White House aides, Bill Burton and Sean Sweeney, to form a pro-Obama Super PAC, Priorities USA Action, which accepts unlimited contributions from unions and lobbyists.

Through the first half of 2011, Priorities USA Action raised a total of $3.2 million to support Obama’s reelection, most of which came from three donors: $2 million from Jeffrey Katzenberg, C.E.O. of DreamWorks Animation; $500,000 from the Service Employees International Union; and $500,000 from Fred Eychaner, chairman of the Chicago-based Newsweb Corporation. These are the type of donations that the McCain-Feingold law sought to prohibit because of their size, in the case of the individual contributions, and because of the source, in the case of the money from the S.E.I.U.

Smaller donors to Priorities USA Action are even more interesting. In 2008, Obama made a highly publicized decision to refuse contributions from lobbyists, and that commitment remains for his own 2012 campaign operation. But not so for this Super PAC, which explicitly supports his candidacy. $5,000 donors include such registered lobbyists as Steve Elmendorf (Citigroup, Goldman Sachs, and the Pharmaceutical Research and Manufacturers of America), John M. Gonzalez (MasterCard, Deutsche Bank AG, and the International Swaps and Derivatives Association), Joel Johnson (Toyota, Ernst & Young, the American Bankers Association, the Corrections Corporation of America, Koch Industries), and David Castagnetti (the American Petroleum Institute).

Many of these lobbyists are decent and knowledgeable people, and much of what they do is essential to the warp and woof of governing. Collectively, however, lobbyists are transforming the political ethos in Washington. In the decade leading up to the financial collapse, 1998 to 2008, the finance, insurance and real estate industries spent a total of $5.18 billion to influence Congress and the White House, including $1.74 billion in campaign contributions and $3.44 billion on lobbying fees, according to an exhaustive study by the Consumer Education Foundation.

Every effort at reform immediately breeds exceptions that subvert the original concept. The past four decades of on-again, off-again reform demonstrate the continuing ingenuity of the private sector in finding ways to influence outcomes, no matter what roadblocks it encounters. When faced with reform, the men and women who use cash to control policy have created novel approaches to put their money in play.

These approaches have included unlimited and unregulated soft money contributions to political parties to avoid limitations under election laws enacted in 1974, and the inventive use of “advocacy” committees under section 527 of the tax code to evade McCain-Feingold restrictions, allowing George Soros on the left to give $23.7 million and Bob Perry on the right to give $8.1 million to try to tilt the election toward their favorite candidates.

In some cases reformers created rules to control the flow of money only to see special interests turn such rules to their advantage. The 1974 legislation gave legal sanction to political action committees, which corporations formerly shunned because of their unclear legal status. After 1974, corporations and trade associations, reassured that what they were doing was fully legal, set up PACs by the hundreds.

On Dec. 31, 1974, when the Federal Election Commission began counting PACs, there were 89 corporate PACs, 201 union PACs and 319 trade association PACs. By the start of 2009, the most recent count, there were 1,598 corporate PACs, 272 labor PACs and 995 trade association PACs.

The formal legalization of PACs effectively institutionalized and legitimized what amounts to a massive system of special-interest financing of federal campaigns. In 2008, PACs of all kinds gave a total of $412.8 million, up from $219.9 million in 1998, with 79 percent going to incumbent members of the House and Senate, 13 percent to challengers, and 8 percent invested in races for open seats.

With so much at stake in the legislative and regulatory process for corporations, unions and members of trade associations, these interests will not stand back from influencing elections or from pushing every lever to affect the outcome of policy debates.

There are idealists who believe that two recent developments raise the potential for reform. On the conservative side, the Tea Party movement is adamantly opposed to machinations inside the Beltway. On the liberal side, the Occupy Wall Street movement has similarly challenged the power of the ‘1 percent,’ a constituency heavily represented by the special-interest community, many of whom are themselves members of the 1 percent. In Washington, the consensus is that despite these movements, little will change.

The weaponry of the special-interest community has become increasingly powerful. Lobbyists not only have ever greater resources at their disposal, they are also armed with the sophisticated technology of influence — polls, television, focus groups, computerized data banks, micro-targeting, each of them important in itself, and devastating when deployed in effective combinations. The net result is that the power of the electorate relative to the power of the Washington establishment has inexorably declined.

Thomas B. Edsall, a professor of journalism at Columbia University, is the author of the forthcoming book “The Age of Austerity: How Scarcity Will Remake American Politics.”




ny times



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