Lobbying Spending Decreased in 2010

2010 saw a dip in lobbying revenues compared to 2009, the first time a year-to-year dip in revenue has been observed in ten years. Rollcall has a theory or two.

“I think the recession has contributed to the decline in business expenses across the board, and lobbying is not immune to budget cuts,” said Jan Baran, a senior partner at the Wiley Rein law firm who specializes in lobbying compliance.

Lobbying dollars for those involved in agriculture, defense, health care, retail, real estate, transportation and construction sectors declined last year. Energy, communications, finance and organized labor lobbying revenues rose only slightly.

Aside from the economy, experts said, other factors were likely responsible for the overall revenue dip, including completion last March by Congress of the health care overhaul that consumed K Street for more than a year.

Spending by health care companies and associations dropped almost 9 percent in 2010, with drug companies such as Pfizer Inc., which lobbied for the health care overhaul, posting some of the biggest declines.

I’m not really on board with the “end of the health care debate” argument, because the health care debate isn’t over – surely groups will want to have a hand in whatever legislation the new Republican House majority comes up with to counter the new policy – and because the implementation of the health care bill requires a new draft of regulatory oversight into the health care industry overall that surely concerns industry groups. When a bill gives itself a decade-long implementation timeline, its fair to say that its passage is not the end of its battles. And of course, when a journalist does some hedge-betting, as with here:

The completion of the health care legislation did not necessarily mean that professional groups or companies trimmed their Washington, D.C., operations.

For example, the Federation of American Hospitals, which lobbied for the health care measure, reported spending $2.6 million last year compared with more than $3.8 million in 2009.

It seems fair to wonder if there’s something else going on.

In fact, I think that two good answers to the puzzle are contained later in the piece, but they don’t get the attention they deserve:

However, much of regulatory lobbying, particularly if it does not involve political appointees, is not required to be disclosed in the filings with Congress. That means that for some entities, the total lobbying expenditure may have simply shifted out of reported categories, not declined.

[…]

Some of the decreases in lobbying spending can also be explained by a simple change in reporting preference. A number of companies, most notably BP and Exxon Mobil Corp., switched in 2010 to a more limited definition of what is reportable lobbying revenue. Prior to last year these oil giants selected the IRS method for reporting lobbying revenue, which includes disclosing money spent on expensive advocacy advertising as well as lobbying in the states. They now are using the method allowed by the Lobbying Disclosure Act, which includes advocacy before Congress and the executive branch but excludes television ads and lobbying in state Capitols.

The first one – that regulatory lobbying is reported differently – speaks directly against the argument that the “winding down” of the healthcare debate could be responsible for much of a decrease in lobbying expenditures. Indeed, if the Administration is handing off its big energy, health care, and tax policies to agency heads and regulatory bodies, shouldn’t we expect a superficial decrease in lobbying revenues? Isn’t this Administration the “Czar” Administration, with the likes of Cass Sunstein and Ben Bernanke responsible for large swaths of new policy? If this is the case, then even a tiny difference in reporting rules could shift the balance.

The point is that when government expands, we should expect efforts aimed at regulatory capture to expand as well. This was the crux of some of George Stigler‘s Nobel-winning economics corpus: That as there is more to be gained by exerting influence on government as a “special interest,” more spending and competition should be expected. Make no mistake that in 2010 the government’s influence on the lives of Americans increased. As such, we should be incredibly hesitant to fly in the face of coherent political theory and believe that there has been any real “decrease” in interest in access to government.