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Lobbying spending by top interest groups dipped amid 2023 gridlock

Some top firms said they saw revenue grow, however, as lawmakers negotiated

Speaker Pro Tempore  Patrick McHenry, R-N.C. presides during an Oct. 18 ballot as the House sought to choose a new speaker.
Speaker Pro Tempore Patrick McHenry, R-N.C. presides during an Oct. 18 ballot as the House sought to choose a new speaker. (Tom Williams/CQ Roll Call file photo)

A year of gridlock amid divided government and Republican infighting on Capitol Hill drove down spending by the biggest interest groups by about 13 percent in 2023 from the previous year. 

In a year in which the House was without a speaker for nearly a month and Congress punted action on many of its obligations into 2024, the top 10 interest groups representing companies across business, technology, real estate and health care sectors spent $283.1 million, down from $326.6 million in 2022.

Tax policy, artificial intelligence and China, along with perennial issues like health care and defense, drove interest and revenue on K Street last year, lobbyists said. Those trends are expected to hold this year. And with a bipartisan tax deal in the works and key tax provisions from the 2017 tax law set to expire at the end of 2025, tax is expected to take on greater prominence this year.

“There’s no doubt going to be a significant amount of work behind the scenes,” said William Moschella, co-chair of the government relations department at Brownstein. “We continue to see great interest in tax policy. And I think that’s going to be a strong area for the firm throughout 2024 and then into 2025.”

The U.S. Chamber of Commerce regained the top spending spot after falling to second place in 2022. The business interest group spent $67.7 million on lobbying last year, down from $79.4 million the year before, according to disclosures.

The 2023 list of top 10 spenders was nearly identical to 2022, with the exception of the addition of CTIA, a trade association representing the wireless communications industry, that took the ninth spot with $17.2 million in lobbying expenditures, according to disclosures. CTIA knocked out the American Chemistry Council, which fell to the 11th position. 

Half of the 10 biggest spenders laid out more on lobbying in 2023 than the year before: the American Hospital Association; American Medical Association; Meta Platforms Inc., the parent company of Facebook; CTIA; and AARP.

Busy year, despite delays

Despite the overall slowdown by the top spenders on lobbying, many of the top firms that get paid to do that work did not report a drop in revenue compared to 2022. That was the case even though 2023 lacked the mega bills that characterized the 117th Congress and House activity ground to a halt in October while Republicans ousted Kevin McCarthy, R-Calif., from the speaker’s chair and replaced him with Mike Johnson, R-La.

“If the question is, did it somehow harm business? The answer to that is no,” Moschella said of the monthlong speaker race last fall. “Uncertainty is something that our clients need help navigating, and so it’s something that we continue to assist them with.”

Brownstein Hyatt reported $62.6 million in revenue in 2023, up from $61.5 million the year before.

Congress missed many year-end deadlines last year, including on fiscal 2024 spending legislation, the farm bill and reauthorizing the Federal Aviation Administration, deferring action to this year. But negotiations on those and other bills, including a supplemental spending package to aid Israel and Ukraine and a tax extenders deal, were ongoing throughout the fourth quarter, driving private sector interest, Moschella and others said.

“The issues didn’t go away. They just got postponed,” Moschella said.

Loren Monroe, a principal at BGR Group, agreed. The firm reported $41.7 million in revenue in 2023, up from $39 million in 2022.

“That work was going on in a detailed, thoughtful bipartisan, regular-order type of way by committees and leadership. It just wasn’t on the floor,” Monroe said. “A lot of people are quick to dismiss [it as] nothing happening, but the truth was our policy team was as busy as ever. And I don’t see that changing in the next six months just because there’s so much work to finish, but also in an election year a lot of the work will be front-loaded.”

Taxes, AI and China

Taxes, artificial intelligence and China stood out to lobbyists as areas that drove interest last quarter and in 2023 more broadly. Lobbyists told CQ Roll Call that 2024 would be a big year for engagement on tax policy as businesses gear up for the expiration of many provisions of the 2017 tax law at the end of 2025.

“A lot of the work being done now is setting the stage for what happens as TCJA [Tax Cuts and Jobs Act] expires, with potentially a new president, changes in Congress and a challenging fiscal environment,” Monroe said. “Most of the businesses interested in tax policy and the impact on their long-term planning have to be engaged and are engaged this year.”

In addition, the $78 billion family and business tax bill winding its way through Congress now was another lobbying focus at the end of last year, as Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Jason Smith, R-Mo., were negotiating the deal, Monroe said. 

“I do think it passes,” Monroe said of the bill. “Usually when people are complaining both that it doesn’t do enough and that it does too much, then you’ve found a pretty good middle ground in this Congress. They need to take some legislative victories when they’ve got them.”

Brian Pomper, a partner at Akin, agreed that 2024 would be a “table-setting” year for 2025 tax expirations, and that there’s been an uptick in interest in the Wyden-Smith deal. 

Artificial intelligence also emerged as a focus for Akin, which is expected to continue into 2024, he said. The firm reported $54.7 million lobbying revenue last year, up from $53.1 million in 2022.

“If I had to boil it down to one thing, I’d say increased interest in artificial intelligence regulation,” Pomper said. “There’s a lot of interest in how to craft the proper regulatory architecture for AI, and I think that includes both the agencies and Congress.”

President Joe Biden issued an executive order in October establishing parameters for AI to protect consumers. Senate Majority Leader Charles E. Schumer, D-N.Y., held a series of AI forums with private sector experts throughout last year with an eye toward possible legislation to ensure the U.S. doesn’t fall behind China on the technology.

The competitive threat of China, a major focus of the 118th Congress and one of the few areas of bipartisan agreement, was another big issue for the firm, Pomper said. He expects the screening of American investments flowing into China to demand attention again this year, after being axed from the fiscal 2024 defense authorization bill.

“Clients are always very interested in that and trying to monitor and shape things like that to the extent that they can,” he said.

Regulatory ramp-up

K Street also expects lobbyists to stay busy thanks to the steady clip of new regulations as the Biden administration races to finish up major rules in the first half of this year — outside the window that would leave them vulnerable to congressional overturn if the White House changes hands next year and Biden could not veto them.

“By May or so they need to have their priority rules finalized or else they go into a vulnerable period of Congressional Review Act if Biden doesn’t win reelection…so they are working feverishly to pass some pretty major rules,” Monroe of BGR Group said. “A lot that will gain attention from lobbyists throughout this town.”

The Labor Department this month finalized an independent contractor classification and has a fiduciary rule that would affect investment firms on the horizon. The Securities and Exchange Commission still has a climate risk disclosure proposal to finalize. The Federal Reserve and other banking regulators have also proposed increases to capital requirements.

“Sometimes you see a little bit of a drawdown during a presidential election year because the assumption is that not much may happen,” Brownstein Hyatt’s Moschella said. “However, I think this year is likely to be different because the agencies continue to be hyper-aggressive with rulemakings, policy changes and enforcement actions, and because there is such political uncertainty that our clients remain keenly engaged in Washington.”

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