Lobbyists Mixed on 111th Prospects

Posted January 22, 2009 at 1:54pm

With Democrats now in the White House and Congress, lobbyists are facing a new world order with a reinvigorated legislative agenda.

Ordinarily, that would spell boom times in the industry. After all, with an unprecedented pool of money for American industry, lobbyists would seem to offer that extra advantage needed to beat out competitors for a piece of the pie.

But today’s industry practitioners are far more ambivalent.

The reason: Tough economic times are forcing all of corporate America to cut costs, and Washington, where results are often hard to measure in dollars and cents, is an easy place to put on the chopping block.

Normally, a huge increase in legislative activity forces industry to go on the defensive as well.

But corporate-mandated cost cutting is likely to take precedent over working the halls of Congress, resulting in a less-than-stellar 2009.

“I think the climate is going to be good, but if you look back at this year in comparison to 1992 and 2000, we’re not going to see the uptick that happened there,” said Holland & Knight’s Rich Gold, referring to the first years of Bill Clinton’s and George W. Bush’s administrations.

H. Stewart Van Scoyoc of Van Scoyoc Associates agrees.

“People are being very smart about their spending decisions and are very targeted about what kind of services they need,” Van Scoyoc said.

Still, he said, despite the tough economic times, Washington is often the only remedy available.

“The stakes are so high and the federal government is the only place people can go to for relief,” Van Scoyoc said. “That was my projection, and I think we’re starting to see it already.”

Another factor playing into the slower-than-usual client signups is that it simply takes time, and often lots of time, to put the wheels of a new government in place, according to Mike House, who heads Hogan & Hartson’s government relations practice.

“I think that it’s going to be a slower start than people anticipated originally just because you’re beginning the government,” House said.

One exception to the slow start has been the increase in venture capitalists and green technology companies that are entering the influence business for the first time.

“We’re seeing huge growth in venture capital firms interested in environment and energy,” Gold said.

Congressional investigations is another area that is likely to continue its hot streak. Although Democrats are in control, lobbyists say that with the government taking a more active role in bailing out the banking and automobile industries, for example, they are going to want to keep a close eye on their investment.

“I would expect that the new Congress is going to evidence even more vigor in conducting such investigations,” said Steve Ross of Akin Gump Strauss Hauer & Feld.

So far, most of K Street has been focusing on the stimulus package.

The biggest initiatives have been among green tech, infrastructure companies and other businesses seeking specific tax sweeteners such as the expansion of the loss carryforward provision from two to five years, allowing companies to offset losses against profits for an additional three years.

Behind the scenes, lobbyists are also actively laying the groundwork for health care reform, energy legislation and the upcoming reauthorization of the transportation bill.

Facing a Democratic-controlled Congress and executive branch, much of the business community will be looking to stop legislation or regulations that it believes cuts into its profitability.

Preparation is already under way among industries such as oil and gas, which will likely be in a defensive posture as Congress and the executive branch look to increase regulation.

The financial services industry is also expecting a rush of work once Congress begins to scrutinize an industry many blame for the country’s current economic crisis.

“There is a natural degree of activism that comes with a new president and a new Congress and particularly with a Democratic president and a Democratic Congress,” Martin Gold of Covington & Burling said. “There is an agenda that has been pent up or set aside for a very long time.”