Tax Bill Lobbying: Corporate Influence In Washington Explained By Expert

When Republicans unveil the final $1.4 trillion tax bill negotiated between House and Senate conferees on Friday, they will be unveiling what could be the final shape of the nation’s future tax code, a code that has been largely shaped by lobbyists. More than half of Washington’s 10,963 registered lobbyists have worked on tax reform in 2017, according to a report by the non-profit Public Citizen. That figure means that through the first three quarters of 2017, there were 11 lobbyists lobbying on tax issues for every one member of Congress,

Much has been written about the differences between the current tax overhaul and the last time Congress rewrote the nation’s tax code in 1986. That tax bill had bipartisan support; today’s version passed both houses without a single Democratic vote. President Ronald Reagan announced his desire for a new tax regime at the beginning of 1984 and didn’t submit proposals until a year later; President Donald Trump and his allies in Congress seem hell bent on finishing tax reform in the first year of the new administration. The Senate held 33 days of hearings on the tax bill in 1985; in 2017 the Senate held just four days of hearings on its tax bill.

But perhaps the greatest difference between then and now is the size and power of the lobbying industry. Accurate figures for lobbying expenditures are hard to come by prior to the enactment of the 1995 Lobbying Disclosure Act, but even in 1998 lobbying expenditures totaled less than half of the more than $3 billion spent in 2016. While K street first became a serious political power in the 1980s, firms then were practically mom and pop operations compared to today’s lobbying giants.

“From a modern vantage point, lobbying in the 1980s was a relatively limited affair,” Lee Drutman wrote in his 2015 study of the industry, The Business of America Is Lobbying. Drutman, who is now a senior fellow at New America, a Washington D.C. think tank, interviewed 60 lobbyists and poured through countless lobbying disclosures to produce Business, perhaps the most comprehensive book on the role of the lobbyist in federal policy making. Last week, IBT spoke with Drutman about how lobbyists do their jobs, how the rush to push through a tax bill creates more opportunities for lobbyists, and how lobbying under the Trump administration harkens back to a previous era in American politics.

IBT: Say you're a lobbyist, you got hired this year by a business client who's worried about tax reform, what's your first move? What do you do as a lobbyist to advance your client's interest?

Drutman: This is a company who's never lobbied before?

Yeah.

It's a small company that's maybe worried about one or two provisions?

Sure, that’s a good example.

Basically what you've got to do is you've got to tell a story about why this company is a good company, why they're creating jobs, or why what they're doing is good. Maybe they're doing innovative business or whatever it is that contributes to the economy. You've got to figure out what that story is. You've got to come up with some public interest justification for why this is a good company.

Secondarily, you've got to come up with a story about why this tax break, if it goes away, would be so harmful. It would cost jobs, it would take away this innovative product, or whatever it is. You've got to have a story that has both a positive and a negative side to it.

Then presumably this company is located in a state, or particularly in a district, so the first thing you do is you go to the member who represents that district. You go to the senators who represent that state, and you say, "Hey, we're from your home district, your home state. We have a really important story to tell and we think you need to understand the impact of this tax provision on jobs in your state or district."

If the company’s executive hasn't already been making campaign contributions I'm sure they would be encouraged to do so in order to build good will. Now, with campaign contributions there's no one-for-one exchange, but certainly it's looked on more favorably. It's like bringing wine to the party, right? Nobody wants to be the guest who didn't bring a bottle of wine to the party.

The challenge with your hypothetical a little bit is that there's not that many companies that don't already have lobbyists in Washington at this point. Because it takes several years to build and cement relationships. If you're coming in at the last minute saying, "Oh, hey. Don't cut my tax break," then, well there’s that old saying in Washington, "If you're not at the table then you're probably on the menu."

So are lobbyists ever really able to sort of set an item on the legislative agenda, or are they always sort of nibbling at the edges of the agenda, trying to get pieces here and there for their clients?

For the most part it's the latter. The broader political agenda, what reaches the front pages of the major newspaper, is largely usually set by broader political forces, but there's a secondary question of why is it that certain issues are more doable than other issues, or rise to the level of priority? Some of that has to do with what the lobbying resources are behind those issues.

There's no magic formula to explain why some issues get on the agenda at some times and not others, but I will say this: there are a lot of issues that are off the agenda that are never going to go on the agenda because there's considerable lobbying opposition to them and there's not a lot of political reward for tackling them. Neither party is putting forward a major redistributive bill that would seriously help poverty and inequality in America because there's no lobbying constituency for that and it's not an issue that you can raise a lot of money on.

So specifically about the tax bill: how does the rushed nature of tax reform change the process for lobbyists? Does it create more opportunities for lobbyists, or do you have less time to get in people's ears?

Well, I think it increases the role of lobbyists in the process because it makes staff even more dependent on lobbyists in order to get things done. A lot of these provisions were presumably written by lobbyists who wanted them.

With all of these amendments, it's pretty easy to tell what industry they're designed to benefit. It's unlikely that the member's staffers wrote those provisions themselves. It’s more likely that the lobbyists, and this happens over and over again, wrote the provisions. Maybe the staffers tweak them a little bit or check them out with legislative council, but more likely they just put them in.

The faster the process goes, the more staffers are going to be dependent on lobbyists, and the easier it is to just slip something in because there's so many things happening that how can you focus on any one provision?

If you had a process whereby these provisions are actually debated and discussed a lot of them probably wouldn't stand up to a huge amount of scrutiny. The whole tax process would probably also fall apart if a lot of stuff had to stand up to scrutiny, which is why they rushed it through.

Speaking of that, you've written about how the institutional knowledge of Congress has diminished and how congressional staffers increasingly have to rely on lobbyists for that institutional knowledge. Can you explain that and why that's a problem?

I think it's a tremendous problem. Congress is a place where there's a considerable amount of staff turnover because staff are not paid particularly well and work long hours in stressful situations. The opportunities for a lot more money and more flexible schedule are considerably greater in the lobbying sector.

As a result, you have a constant turnover in which institutional knowledge is steadily lost. What winds up happening is that the lobbyists themselves become the keepers of institutional knowledge because they're the people who have been doing this for 10, 20, sometimes 30 years. They're in a sense the keepers of memory because they’ve been doing it for a long time.

By being able to say, "This is how the process worked last time, this is what your boss did, this is what other members did," that creates a real dependence for staffers because somebody needs to know how the process works and somebody needs to know what the history is, and somebody needs to know how to make their boss happy and be consistent with what he or she did in the past.

If that person happens to be a lobbyist it gives that lobbyist a tremendous amount of power. If you can imagine a newsroom in which the editors are constantly turning over, but the advertisers have been there for a long time, and nobody knows what to do, and the advertisers come in and say, "Here's the way things have always worked, and by the way we always run a nice story about AT&T."

That’s a great analogy. Another thing I found really interesting in your book was I, and I think a lot of people, had a general sense that there's at least some natural opposition to on corporate lobbyists in the form of lobbyists for labor unions or say, environmental groups, and while it may not be perfectly equal, the natural opposition at least keep things sort of even. But in your book, you show that that’s not really the case, is it?

No. It's tremendously imbalanced. When I calculated the money spent on behalf of businesses compared to the money spent on countervailing forces, which I considered union lobbying and public interest lobbying, I found the ratio was $34 for business, $1 for countervailing power. When I interviewed business lobbyists and asked them who their opposition was they never mentioned public interest groups on lobbying on the issues that they were working on. Never.

So it's clear that business lobbyists just have orders of magnitude, more resources when it comes to lobbying. That doesn't even count all the shadow lobbying and all the funding of think tank research and public affairs and issue advertising, which is probably even more imbalanced. It's just not a fair right.

Part of the reason for that is that companies care about very specific, narrow things, whereas a lot of these groups can only lobby on broad, general themes. Power, really it involves controlling the specific details, right?

You can make a small change to the tax code nobody notices and that’s a billion dollars here, a billion dollars there. It starts to add up.

You mentioned think tanks and shadow lobbyists. Can you explain the lobbying apparatus outside of registered lobbyists? What's the rest of that ecosystem look like?

Well, there's the law firms. A lot of that is regulatory lobbying and filing comments. That often doesn't get counted as registered lobbying. There's high-level people who arrange phone calls and meetings, but don't register as lobbyists, they just kind of make connections.

Then there's this soft world of research and policy papers and fake grassroots lobbying and running advertisements in the D.C. Metro, and just soft, soft branding for particular companies so that the staffers who commute to work on the Metro get off at Union Station or Capital South, when they get out they see a bunch of banner ads for some company that make them feel good about that company.

Is there any academic understanding of how much money is spent on that type of unregistered lobbying you described compared to the amounts that are on official government lobbying filings?

A rough estimate is you should at least double what the official annual lobbying expenditures are if you want to get a rough estimate of the size of the industry, but that's probably conservative by my estimation.

I was also wondering what, in your mind, what makes a great lobbying apparatus? Is it just the amount of money you put into it or there companies or interests that are known to get the most bang for their buck?

Oh, yeah. Yeah, there's definitely more to it than how much money you put in. What great lobbyists do is they really understand the political landscape and the players in the landscape. They really understand the policy as well. Great lobbyists are really, really very smart, strategic actors who know how to not only argue for a policy and how to make a convincing case for it, that's an important element, but also they know who are their natural allies and how to strengthen them, and who are their opponents and how to neutralize them. They know how to build coalitions for issues, they know when to keep things quiet and when to make things loud.

They're also just people who are just really good at relations. I mean, there's sort of that intangible element, which is just how do I get people to like me and how do I build trust? It's a unique skillset, but a lot of people have it.

Then, additionally, just kind of knowing, having a certain level of intelligence about policy so that they can come off credibly as experts, which is something that you develop over time if you're smart just working on policy issues. Then, also, being able to call in other experts and just sort of being invaluable to staff and even members of Congress as trusted sources of expertise, who can explain complex policy issues.

Fundamentally it's a knowledge game. It's knowledge of policy, it's knowledge of people, it's knowledge of process, and it's knowledge of specific policy, politics, people, and process.

The numbers show that lobbying has grown dramatically over the last few decades. I'm wondering if that has fundamentally changed how government works, or has that growth mainly made lobbyists richer?

It's certainly made lobbyists' richer. Has it changed how government works? Yeah, I think what it’s done is constrained the range of possible policies because there's so many issues on which it's clear that there's going to be opposition, and then policymakers say, "Well, do I really want to fight this fight given the headache it's going to cause?"

It also enables other issues to be brought forward in the sense that policymakers in congress and in agencies have limited resources and if there are issues where they know they're going to get support because lobbyists are going to do all the hard work, drafting the bill, building a coalition, seeing it forward, those issues are more likely to get a lift up, whereas the issues where they're not, where policymakers know they're not going to get any help from the lobbying community, or minimal help, and they know they're going to face a lot of opposition, those issues are a harder climb. And policymakers makers I think have just spent less resources on things that they know are unlikely. Why waste limited resources to try to accomplish things that are going to be very hard to accomplish?

It sounds like the possibility of a politician putting forth an anti-business policy, the odds of that not only succeeding but happening, is less likely now than when lobbying was a smaller enterprise. Is that accurate?

Yeah, I think so.

I'm wondering too about the “revolving door” between government and lobbying. In some ways that door makes perfect sense because you described all those skills that make a great lobbyist, and those are skills that make a great politician as well. But does the possibility of a well-paid job in lobbying after a career in Congress mess with the incentives of a lawmaker at all?

Oh, a lawmaker probably not. Because, look, if you're a member of Congress a lot of opportunities open up to you. You don't have to act in a particular way to get a job as a lobbyist afterwards. I guess if you're a raving lunatic than maybe you don't get those jobs. But then you have deeper problems.

For staff, I think there are staff who want to become lobbyists and become staffers first, and sort of go into that with the idea of going on to become a lobbying. I think most people who come to work in Washington don't necessarily have the idea of becoming a lobbyist as their plan, but over time they burn out. They come in full of ideals and they burn out based on the reality, and then lobbying looks like a pretty decent job. You still get to be in the mix, you earn a lot more money, you have more control over your time. In many ways get to do much more substantive policy work than you would've as a Hill staffer.

Now, does that mean that once you decide to become a lobbyist, does that change how you're going to act? Maybe a little bit. I think most people who intend to make a career in Washington are just going to try to please as many people as they can and have as many good relationships as they can. Washington D.C. is a small town and people want to have a reputation for being smart and confident and well liked.

What’s your reaction when you hear people, be they on the left or the right, decry lobbying as a corrupting influence on government?

I think there's a lot of people who think that lobbying is bribery, and who would like to view all interests in society as somehow opposed to a mythical “public interest.” I think there's two problems with that. One, is that I can't envision a system in which it would be possible to prevent different interests in society, which all have some stake in public policy, from trying to influence that public policy. And two, even if you could do that, I don't think it would be desirable. Because the alternative is having a bunch of lawmakers and their staffers insulated from broader concerns and implications of their policy. I don’t think that's a good idea.

What I would like to see, and I think the best we can hope for, is a system in which Congress invests considerable sums of money into policy expertise so we have people making policy who know a lot about the policy, who have been working on it for a long time, and who are smart talented people. And who can sort of adjudicate claims based on high-level knowledge and experience. They can and should learn from lobbyists, but those lobbyists should represent all sides of the issue so there's a sort of balance of who's saying what. I don't think we should make tax policy affecting corporations without hearing from corporations about how those policies might affect how they operate. But at the same time, I think we should make sure the people making those policies can adjudicate B.S. claims and figure out what are legitimate responses and what's just B.S. justification for lowering taxes.

Your book came out in 2015. What has changed since then?

I think there's been a lobbying change in the Trump administration in that the Trump administration seems to be much more relationship based. My understanding of lobbying in Congress prior to the Trump administration is that it was a mix of relationship and substance. At least in the Trump administration, the lobbying on the executive branch side seems to be more just purely relationship based and transactional in a way that harkens back to a much earlier era in American politics.

And what era would that be?

The Gilded Age.

This conversation has been lightly edited for clarity and length.