Lobby Expenditures in 2007 Jump by $200 Million

Companies, Trade Groups and Others Spend Whopping $2.79 Billion to Lobby Congress

Posted April 11, 2008 at 6:18pm

Private interests poured a record-busting $2.79 billion into lobbying last year, up $200 million over spending in 2006, according to a new report from the Center for Responsive Politics.

The study found corporations, trade groups, labor unions and others shelled out a staggering $17 million a day, on average, when Congress was in session.

“That’s a phenomenal number, and when you think about it, an important number, because these interests supposedly aren’t lobbying when Congress is not in session,” said Sheila Krumholz, executive director of the center.

Drug makers topped the list of big spenders, boosting their total investment in lobbying by 25 percent to $227 million last year.

Spending in the industry was led by the Pharmaceutical Research and Manufacturers of America ($22.7 million), Amgen ($16.3 million), Pfizer ($13.8 million) and GlaxoSmithKline ($8.2 million).

“That shouldn’t come as a surprise,” PhRMA Senior Vice President Ken Johnson said of the amounts. “We had a challenging year fending off an extraordinary amount of bad public policy,” he said, referring to attempts to change the Medicare prescription drug benefit.

Drug makers also spent heavily to try to extend and expand the State Children’s Health Insurance Program.

Likewise for health insurers, whose efforts for the program helped the broader insurance industry become the second biggest spender, racking up $138 million in lobbying receipts last year.

The property and casualty side of the business, meanwhile, focused on extending a terrorism insurance program, said Blain Rethmeier, a spokesman for the American Insurance Association ($4.1 million).

Other industries that laid out small fortunes to affect the legislative process include electric utilities, which spent $112.7 million; tech companies, which spent $110.6 million; and hospitals and nursing homes, which invested $90.5 million.

The U.S. Chamber of Commerce spent $52.8 million, more than any other individual group but a 27 percent dip below its 2006 expenditure, according to the center’s report.

Bruce Josten, the chamber’s top lobbyist, said the group found fewer reasons to participate as the new Democratic majority focused on its own “Six in ’06” agenda and then debate on the Iraq War.

“It’s their agenda, their clock, their floor time,” he said. “We play through.”

That lobbying overall grew about 8 percent last year amid early signs of an economic downturn suggests the industry is “recession-proof,” Krumholz said.

But others on K Street aren’t so sure. They’re nervously watching as some of their biggest clients catch the flu spreading through the markets.

For example, General Electric spent $23.6 million on lobbying in 2007, more than any other single company, the report found.

But on Friday, the manufacturing giant made a surprise announcement: its first quarterly profit decline since 2003 — a result, GE officials said, of the turmoil riling the financial markets. Company spokesman Peter O’Toole said the news would not likely have an impact on its lobbying spending.

“We’ve been in business 130 years,” he said. “We take a very long-term view. I can’t predict what our expenditure would be. But one quarter’s results won’t have massive long-term impact on our planning.”

Nevertheless, many downtown are trying to assess whether a round of corporate belt-tightening will mean a leaner year for them.

Matt Keelen, president of the Keelen Group, said his firm is positioned for the fallout of an economic slump. “Smaller, less-expensive consulting shops will benefit, because we’re better suited for that environment than big shops that are paid more for being on call,” he said. “It’s a great opportunity for people to make their names.”

Mike House, a partner at Hogan & Hartson, said the double impact of a slowing economy and a presidential campaign will likely spell a “flat year” for K Street growth.

“It’s hard to ask for an increase in your retainer when the economy is struggling and there’s nothing out there that’s really moving,” he said.

But House predicted a turnaround with the energy released by a new administration and, hopefully, a rebounding economy.

Facing fire on Capitol Hill, most firms bulk up on lobbying spending. The Blackstone Group, a private equity firm, last year spent $5.4 million, a 477 percent increase, to derail costly tax proposals. And Exxon Mobil, staring down newly empowered Democrats, goosed its lobbying spending 17 percent to $16.94 million, the center found.

But when industries face more fundamental challenges, lobbying expenses can be the first to be cut. U.S. airlines slashed their K Street clout after the Sept. 11 attacks sent the industry into crisis. Last year, after clawing out of bankruptcy, the largest carriers posted their first increase in lobbying spending since before the attacks.