article

08.04.11

Debt Deal's Lobbying Bonanza

Lobbyists are preparing an unprecedented blitz to influence the 12-member "supercommittee" that will cut $1.5 trillion in government spending. Patricia Murphy on K Street's D-Day.

Hopelessly twisted in a deadlock and faced with taking the blame for forcing the first financial default in the nation’s history, congressional negotiators blinked and created a special 12-member supercommittee to do what the House and Senate could not—find $1.5 trillion worth of additional savings in the federal budget within the next six months.

Days after President Barack Obama signed the compromise deal to avert U.S. default, Capitol Hill staff and Washington lobbyists now describe the anticipated onslaught of lobbying targeting the supercommittee as something between a military invasion and the quest for the holy grail. It will be a full-court press by K Street to push their clients’ agendas and protect their interests when every line of the federal budget is up for the ax.

“It’s like putting a big honey pot in the middle of a forest,” said David Donnelly, executive director of Public Campaign, which advocates for accountability in campaign financing. “They’ve created a $1.5 trillion demand for cuts, which every sector will fight."

Donnelly and other Capitol Hill veterans expect the most vigorous lobbying to come from the defense industry, which stands to lose hundreds of billions of dollars if the supercommittee deadlocks and triggers across-the-board budget cuts. Wall Street interests like hedge-fund managers will also invest heavily in lobbying. For years they have been beating back challenges to their low tax rates, and Democrats see them as an easy target for revenues in an otherwise disastrous financial climate. 

Other industries looking to get ahead—or at least not lose their shirts—are:

• health-care providers, who could get a windfall or an ugly haircut depending on the fate of Medicare and Medicaid;
• the telecomm industry, which is pushing to have a public-spectrum provision tucked into the must-pass legislation;
• the technology sector, which is looking to pump up the research and development tax credit, even while Democrats are hunting for tax loopholes to tie off for budget savings.

“It’s going to be a lobbying bonanza,” a senior Capitol Hill aide predicted, explaining that because Congress has legislated so many special favors into the tax code, reforming the code, as the committee could recommend, would sweep up every industry and potentially every lobbyist in Washington. 

Once the members of the committee are named, lobbyists say they expect a top-to-bottom effort to influence the actions and votes of the 12 committee members, including direct meetings, grassroots activities, paid advertising, social media campaigns, and old-fashioned cash donations to members’ reelection campaigns and leadership PACS.

And the efforts certainly won’t be limited to the 12 members.

“You have to get creative because the members will be busy,” a lobbyist explained to The Daily Beast. “So who are their friends? Who are the friends of their friends? Which members would advocate directly to the committee on your behalf?” 

You’d be foolish not to be involved to defend your priorities if you care about the federal budget or taxes, and I suspect that is everybody.

Because the mandate of the committee includes possible cuts from the entire federal government, David Thomas, a lobbyist with Mehlman, Vogel, Catagnetti in Washington, says he expects “as intense a lobbying effort as we’ve ever seen.” 

“You’d be foolish not to be involved to defend your priorities if you care about the federal budget or taxes, and I suspect that is everybody,” said Thomas.

But Public Campaign and a group of two dozen interest groups say the outcome of the committee is too important to appear to have been influenced by outside industries. The groups are calling on the soon-to-be members of the panel to stop fundraising and accepting campaign donations while the panel does its work. 

Otherwise, said Donnelly, “the players that always play big will play bigger.”

Even members of Congress seem to see the potential pitfalls of having the supercommittee overhauling the federal budget look like the beneficiaries of a super-sized slush fund for influence peddlers. Sen. David Vitter (R-La.) has introduced a bill to require the committee members to disclose any campaign donation they get within 24 hours while the group is impaneled.

But before specifics can be discussed, the four leaders of the House and Senate have to appoint the members of the supercommittee by Aug. 16. Those decisions have already become the subject of endless speculation, and yes, lobbying.

Military contractors are fighting to get hawks on the panel and protect defense spending, while the Congressional Black Caucus wants one of its own to represent their interests. And after a huge victory in the first round of the debt fight last week, anti-tax activist Grover Norquist says he doesn’t even need to talk to John Boehner or Mitch McConnell to make sure they name a panel of non-squishes to ensure no tax hikes come out of the process.

“I don’t need to have that conversation because Boehner and McConnell have made it very clear that they will appoint people who will come up with something that can pass both houses, and no tax increase can pass the House of Representatives,” Norquist told The Daily Beast.

If the word on the Hill is right, McConnell has already made his picks, while Nancy Pelosi, Harry Reid, and John Boehner are getting plenty of input from lobbyists, interest groups, and members of Congress themselves.

Once they’re named, the members will meet in September and will be required to make their much-anticipated recommendations before Thanksgiving.

No matter who is named or what they decide, said Thomas, “Everybody is organizing for a very long fall.”