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Street Talk: Unregistered Lobbyists Keep Business Humming

K Street business has hit the skids.

At least, that’s the takeaway from the total lobbying tab for 2011 and 2012. In both years, revenue reported under the Lobbying Disclosure Act declined. So did the number of federal registered lobbyists.

The prevailing theories are that the slowdown is a function of the legislative logjam on Capitol Hill and a reflection of the sluggish national economy.

But what if there’s something more going on?

The tepid recovery and a dysfunctional Congress do bear blame, but a third, much overlooked factor exists: A lot of the work influencing government takes place in the shadows, outside of the view of public disclosures such as the LDA. And with a president who has further stigmatized registered lobbyists, K Streeters and some of their clients have made a practice of keeping their work just under the limits of the lobby laws.

In some cases, lobbyists have remained on the job, even with the same firms, but have deregistered, keeping their clients and their work secret. One prominent example is Steve Ricchetti, who stayed with his Ricchetti Inc., although no longer as a registered lobbyist, before joining the Obama administration last year. Lobbyists, of course, can’t work for the executive branch — President Barack Obama banned them — unless granted a waiver.

“I have looked at this very carefully over the years and thought about it a lot,” said James Thurber, director of the Center for Congressional and Presidential Studies at American University. “I have come to the conclusion that the deregistrations that are going on, because people find out that they don’t really need to register or they’re trying to do a little bit of shadow advocacy  . . .  is the most important factor.”

More than the economy, more than the partisan gridlock on the Hill, Thurber asserted, it’s the lack of enforcement of lobbying laws and the resulting move to keep more lobbying work out of public view that is depressing the LDA tallies. K Street players don’t trigger the lobby law until they make more than one contact with government officials and spend at least 20 percent of their time on lobbying activities for compensation.

“The economy, in my opinion, doesn’t affect it that much — yes, companies are cutting back here and there, but they still have issues on the Hill,” he said. Not to mention that even when there’s an impasse, Congress still debates issues, and some clients actually want an impasse and lobby for the status quo.

Paul Miller, a past president of the American League of Lobbyists who runs Miller/Wenhold Capitol Strategies, noted that his firm put off hiring another professional because of the lagging business environment. But Miller, a proponent of closing what he dubs the 20 percent loophole in the LDA, says there’s no question the unregistered players make a difference.

Miller wants the law to rope in “unlobbyists” such as former Senate Majority Leader Tom Daschle of DLA Piper, as well as the thousands of professional grass-roots lobbyists and policy PR wonks who sit at the same strategy sessions as registered lobbyists but don’t file their billables under the LDA. He noted that he agrees with an exception for folks who fly in from across the country for annual lobby days.

“The minute the president came on board and started to make those comments [about lobbyists], people started to see if they could deregister,” Miller said. “The LDA is written in such a way, you can find a loophole in anything.”

Sheila Krumholz, executive director of the Center for Responsive Politics, tracks the lobbying data. “My sense is the efforts to curtail K Street’s clout have led lobbyists to reconfigure their portfolio,” she said.

The CRP, for example, found that last year the number of registered lobbyists dipped to 12,374 — down from a high of almost 15,000 in the two years before Obama’s first term. Overall LDA revenue dipped in 2012 to $3.28 billion from its high of $3.52 billion in 2010.

The Sunlight Foundation, like the American League of Lobbyists, wants to close that 20 percent loophole, for starters, said Sunlight’s lobbyist Lisa Rosenberg.

Thurber noted that even in 2009 and 2010, when LDA revenue was still climbing — although perhaps not at the pace he expected to reflect the activity surrounding health care and financial services overhauls — the number of registered lobbyists was already ebbing.

“In 2009 and 2010, it was flat, and we had a hell of a lot of lobbying going on,” he said. The weak economy, he added, hasn’t stopped Congress from debating major issues. “Democracy continues,” he said.

So does the lobbying. It’s just hard to see it.

“If anyone believes that corporate America is spending less money and time to influence Washington, I’ve got a bridge to sell them,” one lobbyist said. “All of this money may have flowed into the darkest, deepest corners.”

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