New ethics rules change the lobbying landscape

Strict new ethics rules governing lobbying interactions with members of Congress make it more crucial than ever for businesses to diversify their influence-building strategies. The W. P. Carey School's management Professor Gerry Keim, who studies the relationships between business and government, says companies need to develop grassroots advocacy networks among employees.

Strict new ethics rules governing lobbying interactions with members of Congress make it more crucial than ever for businesses to diversify their influence-building strategies. The W. P. Carey School's management Professor Gerry Keim, who studies the relationships between business and government, says companies need to develop grassroots advocacy networks among employees.

Lawmakers will no longer be allowed to accept gifts, tickets to sporting events, meals or free travel from corporate lobbyists under rules prompted by a string of Congressional corruption scandals. For firms doing business in Washington, the crackdown on lobbyists will make it much more difficult to spend time discussing issues with lawmakers, said Keim, who studies business advocacy and consults with firms and associations.

Firms will need to explore other ways to influence Congress and make better use of fewer opportunities to meet with legislators, he said. "The contact between members of Congress and groups of constituents back home is going to be more difficult, so you will have to make it as effective as possible," he said. Businesses that have relied exclusively on high-level contacts between executives and politicians lubricated by lobbyists, Keim said, will be particularly hard-hit by the changes.

In contrast, firms that have invested in building grassroots networks will be relatively unaffected. Citing the success of grassroots advocacy groups like the National Rifle Association and agricultural groups, Keim said members of Congress will always respond to grassroots groups that can move voters, regardless of changes to ethics regulations.

Major elements of the new ethics rules remain under discussion on Capitol Hill. Some top Democrats hope to go significantly beyond the gift and meal ban by imposing new regulations on lobbying firms that would force them to disclose more information about contributions they arrange to lawmakers' campaign funds.

Lawmakers are also considering creating a new enforcement arm of Congress to investigate ethics complaints and police the lobbying industry. The new rules, which Congress plans to finalize in the coming weeks, make good on a key campaign promise that helped Democrats win November's midterm elections against scandal-plagued Republicans.

Crackdown on perks

The new rules for members of the House of Representatives, passed by a 430-1 vote Jan. 4, forbid representatives or members of their staff from accepting trips, gifts, meals, or travel on corporate jets from lobbyists. Senators are currently considering legislation to impose similar restrictions on themselves, a bill given the designation S. 1 in a symbolic move by Democrats to signal its importance.

However, current Senate proposals do not contain an outright ban on traveling in corporate jets, instead allowing Senators to continue accepting flights as long as they disclose their trips and reimburse the full charter cost. Previously, lawmakers and their staffs had been allowed to accept small gifts and meals from lobbyists, as long as the total value was less than $50, and were expected to repay only a fraction of the cost of jet trips.

But a series of Congressional scandals linked to high-profile Republican lobbyist Jack Abramoff led to calls for more stringent ethics rules in the 2006 election. Several Republicans linked to the Abramoff scandal lost their re-election bids, and in exit polls voters cited corruption as a major issue in the election.

Some of the new regulations do not require Presidential approval, since the two chambers of Congress have the right under the Constitution to set their own rules of conduct. However, more far-reaching ethics rules backed by some Democrats that would impose stricter regulations on lobbying firms and force them to disclose more information about the donations they arrange to lawmakers would require a floor vote and President Bush's signature.

Senator Majority Leader Harry Reid (D-Nev.) said on the Senate floor Jan. 9 that in addition to banning gifts and meals from lobbyists, he would seek to expand the restrictions to forbid Senators from accepting perks from any corporations that employs lobbyists, in an effort to close a potential loophole in the rules.

In floor action last week, Senators also added a provision to the ethics legislation to require more disclosure of earmarks, which are small spending provisions often tucked into bills anonymously at the last minute at the behest of lobbyists. Some of the lawmakers wrapped up in the Abramoff scandal are accused of abusing earmarks.

Overreaction?

The impact of the new ethics rules on businesses in the capital remains unclear. While the meal and gift ban will hit hardest restaurants and entertainment venues in Washington — a city where sports tickets and entrees at restaurants are often strategically priced just below the old $50 limit — it may also make it more difficult for lobbyists to spend time with lawmakers, Keim said.

"If you can get together at a ballgame in the suite or in the corporate jet, we've got several hours of attention uninterrupted," Keim said. "To put a ban on that obviously makes it more difficult then for the constituents to petition their government." Lobbying, Keim pointed out, is protected by the Constitution.

The new rules, he argued, were an overreaction to abuses that will make legitimate lobbying activities more cumbersome. "I think it does go too far in the opposite direction. I think it's certainly important to have easy ways for people to communicate interests and concerns to their government. That's the essence of democracy," he said.

"What we find is that individuals back in the district have often the most detailed and valuable information about how a new policy or changes in an existing policy would actually work out, and not being able to get that information communicated to people in Washington will, I think, result in inferior democracy." However, Keim said lobbyists would find ways to work around the new rules, perhaps by more use of teleconferencing instead of travel. "Organized groups will find alternatives that we haven't even thought of yet," he said.

Other reforms under consideration

Meanwhile, several Senators are pushing to stiffen the rules still further. Senators Barack Obama (D-Ill.) and Russ Feingold (D-Wis.) have announced that they will offer an amendment to the Senate ethics bill that would require lobbying firms to disclose any "bundled" donations they arrange.

Part of a lobbyist's job is to tell clients where they should direct their campaign contributions, meaning a lobbyist can "bundle" hundreds of thousands of dollars in donations to favored lawmakers. Under the Obama-Feingold proposal, firms would have to disclose the source and amount of donations they channel to Congressmen.

Ethics groups say such a rule, if enacted, could potentially have the most far-reaching effect of any of the new restrictions under consideration. "No single change would add more to public understanding of how money really operates in Washington," the Washington Post editorialized.

Adding to the uncertainty, Reid has promised an open floor vote on the ethics bill in the Senate, making it hard to predict how it will look in its final form. Under Reid's rules, other lawmakers could offer amendments next week. Several Senators have already suggested creating an independent Congressional ethics watchdog group, which would investigate ethics complaints against lawmakers.

Keim noted that one little-noticed Democratic campaign promise — to make Congressmen work five days a week instead of two — could ultimately have a greater impact on the lobbying business than any piece of ethics legislation, since it would force lawmakers to spend far less time in their home districts meeting with constituents.

"The combination of the restriction on travel and the Congress staying in Washington five days a week instead of Tuesday to Thursday would significantly reduce opportunities to interact with legislators," he said.

Bottom Line

• The final form of new Congressional ethics legislation is still in flux, and could change significantly over the next several weeks as Congress considers amendments to the Democratic proposal.
• At minimum, lawmakers will no longer be permitted to take gifts, meals, and travel from lobbyists, ending common lobbying practices and making it more difficult for firms to gain access to Washington lawmakers.
• To preserve their influence in Washington, firms should develop grassroots advocacy networks among employees to communicate with lawmakers.