President Obama has talked tough about freezing lobbyists out of his administration, and Treasury Secretary Timothy Geithner promised new rules restricting lobbyist influence over bailout funds. But with the relationship between business and government growing so much more intimate through the Bush bailouts, the proposed Obama stimulus, and other ambitious new regulatory and subsidy programs, you have to wonder if lobbyists are redundant now, making Obama’s lobbying restrictions moot.
For instance, Obama invited high-tech and energy chief executive officers to the White House as part of his push to complete his nearly trillion-dollar “stimulus” bill, which contains tens of billions of dollars in technology subsidies and many handouts for renewable energy. As The New York Times reported: “To rally support for his administration’s economic recovery bill recently, President Obama invited about a dozen chief executives, seven of them from technology and energy companies, to the Oval Office.” Similarly, Obama’s transition team was packed with former lobbyists and current executives on leave, who helped write policy.
In this brave new world in which government is buying stakes in banks, nationalizing some companies, bailing out others and proposing what must be the largest spending bill in the history of the planet, government and business have become partners. With a government like this, who needs lobbyists?
Goldman Sachs, for instance, cut its lobbying expenditures in half in last year’s fourth quarter — at the very moment that Congress and the administration were drawing on $700 billion in bailout money and talking about buying banks. But whatever influence was sacrificed by cutting its lobbying budget from $1 million in the third quarter to $500,000 in the fourth was made up for when Goldman CEO Lloyd Blankfein sat in on a top-level meeting with Bush’s Treasury Department on crafting the details of the bailout.
When Obama and Geithner say that they will restrict lobbyist contact with Treasury staff over handling of the bailout funds, it’s important to understand how finely they mean it. A Treasury official made it clear to this column that there will still be open lines of communication between Wall Street and Pennsylvania Avenue — after all, Treasury now owns a portion of these institutions, and it’s not as if they can stop talking to one another.
So, just what is Geithner limiting? We don’t have the actual rules yet, but you can bet they will be narrowly limited to literal lobbyists. Recall White House press secretary Robert Gibbs’ response when pressed on Tom Daschle’s lucrative work helping drug companies and other firms advance the policies that will drive profit: “If you’re not registered to lobby, you can’t be a lobbyist,” Gibbs said.
Gibbs is correct. Washington has a definition of “lobbyist,” and it’s set by the Lobbying Disclosure Act. The law defines a lobbyist as “Any individual who (1) is either employed or retained by a client for financial or other compensation (2) for services that include more than one lobbying contact; and (3) whose ‘lobbying activities’ constitute 20 percent or more of his or her services on behalf of that client during any six-month period.”
CEOs can call the president, sit down with the Treasury secretary and serve on the president’s special economic recovery commission — all ways of influencing policy — without the administration crossing into that magical realm of “consulting with lobbyists.” While the meetings may count as “lobbying contacts” and “lobbying activities,” they are not contacts with a “lobbyist” if the executive spends 81 percent of his time doing something else.
And this is exactly what’s going on. More and more, government is calling on private sector specialists and experts to craft policy — not because Obama or Bush are corporate stooges, but because Obama and Bush have injected Washington more deeply into the economy.
So, if Obama finds corporate influence in Washington problematic, he has an unavoidable problem on his hands, given the new powers of the federal government. Bush’s bailout, Obama’s stimulus and the hope-change mission of “remaking America” from within Washington all have put bureaucrats and politicians in charge of tasks that in our country’s history have been handled by private businessmen.
In short, you can’t limit corporate influence while increasing government’s role in the economy, unless you want to crowd out all the experts. But, if you’re willing to be legalistic (and grant some waivers) you can keep out the “lobbyists” — which is just what Obama is doing.
