July 2009

Arts & Letters

Revolving doors

By Guy Pearse

Robert G Kaiser’s ‘So Damn Much Money’

Robert Kaiser’s exposé of lobbying in Washington, DC helps to explain why Barack Obama has declared “war on lobbyists”. It also leaves the Australian reader very uneasy about the cosy détente between government and lobbyists here, and the consequent lack of reform.

So Damn Much Money (Knopf, 416pp; US$24.95) is especially illuminating because Kaiser persuaded one of the biggest names in the lobbying business to talk. In three decades of lobbying, Gerald Cassidy amassed a personal fortune of US$100 million – a world away from his impoverished Brooklyn childhood. Now in the twilight of his career, he’s granted Kaiser multiple interviews. Alongside a history of Washington lobbying, Kaiser uses Cassidy’s rise and rise as a “governing metaphor” for the “triumph of lobbying and the corrosion of American government”.

Cassidy came to Washington with good intentions, in 1969, to work for George McGovern’s ‘hunger committee’. In 1975, he and a colleague, Ken Schlossberg, started a lobbying outfit and pioneered a winning formula – using their Congressional connections to help universities win multi-million-dollar grants known as “earmarks”. These one-off legislative amendments, made by political fiat, avoided the competition and peer review of existing funding programs. Politicians got the credit, and happily let Cassidy help them “bring home the bacon”. Everyone had a local pet project that could use an earmark; political “horse trading” flourished. Clients usually waited a couple of years to win earmarks and paid Cassidy tens of thousands of dollars a month in retainers, but the payback was generally 20 to 50 times that. When Cassidy bought Schlossberg out for over $800,000 after a falling out, the eventual payback was of a similar order. What began as a two-man, zero-revenue outfit became a $100-million behemoth, employing over 200 staff, and servicing 1100 clients. It routinely ranked first among DC lobbying firms.

Along the way, Cassidy broadened the business, seeing the increasing reach of government as a golden business opportunity. Most clients didn’t have a project that desperately needed funding or a policy problem that needed fixing. Cassidy’s lobbyists helped them dream it up, frame client interests as the national interest, then guide politicians through the process – often acting as de facto Congressional staff. Meanwhile, dozens of “10 per centers” scoured the country for new clients in exchange for a slice of the lobbying revenue. Lobbying advertised itself – even critics spread the word – and it doubled as recruitment. Retiring members of Congress and staffers got a doubling in salary, generous bonuses and a slice of the company. New technologies such as polling, focus groups, direct mail and manufactured grassroots activism (otherwise known as ‘astroturfing’) prompted Cassidy to create a one-stop public-affairs shop. These costly campaign tools also made the financial dependency between lobbyists and Congress much, much greater.

The cost of winning Congressional office rose exponentially. The average cost of a US Senate campaign rose eight-fold (after inflation) between 1974 and 2008, to around US$10 million. This drove Congress into “permanent campaign” mode, its members routinely spending a quarter of their time “dialing for dollars”. Lobbyists got most calls, as former Senator Chuck Hagel explains: “You go to a committee of 25 lobbyists, a steering committee. And you say, ‘Okay, you guys each have to come up with a million dollars.’” For lobbyists and their clients, the beauty of political contributions was that somehow the favours paid for themselves without any explicit quid pro quo arrangement. As campaign costs spiralled, lobbyists caught the perfect wave. Cassidy’s staff routinely gave half their bonuses as political contributions. Their clients gave far more. From lobbying houses across Washington the money rolled in, the number of earmarks went through the Congressional roof, and the “revolving door” became a whirring turbine. From the late 1990s almost half the retiring members of Congress became lobbyists, as did thousands of former staffers and White House officials. Punching your card on Capitol Hill en route to cashing in downtown as a lobbyist was the new norm.

Kaiser acknowledges there never was a “pristine age”, but argues persuasively that lobbying money has broken Washington. A Congress more concerned with financing campaigns than financing America provides precious little oversight. Taxes were cut back when ‘small government’ was politically de rigueur, but fiscal caution was thrown to the wind in the chase for earmark’ and other campaign ‘pork’. Permanent campaigning also attracts different people to run for office. The ‘lions’ of the Senate, who had strong views of their own, did the work and even wrote speeches themselves, are all but gone. Now Congress attracts followers not leaders, “smaller people who are afraid and nervous” and more partisan, people who can “raise money and follow instructions”. The fewer issues they feel strongly about, the easier it is for the political consultants.

It’s eerily familiar but tempting to imagine that Australia’s government is not so broken. Election campaign costs have risen here, but less so than in America. Unlike Washington, our parliamentarians rarely cross the floor, so there’s less point in lobbying them individually. Congressional committees have the real power that attracts intense lobbying; most Australian parliamentary committees are political garnish by comparison. Yet, power rests in fewer hands here, so lobbyists usually need only convince a minister, a few staffers and senior departmental officials. It’s quicker, quieter, and money plays a similar role. So far, the Opposition and Senator Fielding have blocked attempts to ban foreign donations, to cut the disclosure threshold for political contributions from $10,900 to $1000, and to stop candidates pocketing unspent public campaign funding. Even so, these reforms wouldn’t stop lobbying firms and their clients channelling millions to political parties, directly and through an opaque network of front groups so Byzantine as to stymie all but the most determined political hacker.

Meanwhile, Canberra’s revolving door spins freely. The new Register of Lobbyists reveals that dozens of recently retired MPs (and ex-staff) are now professional influence peddlers. It does little else. A who’s who of the lobbying fraternity isn’t covered: not the industry associations or in-house corporate lobbyists, nor the economic consultants, lawyers, accountants and PR flacks who arm ministerial door-knob polishers. Lobbyists needn’t disclose whom they lobbied on what. Unlike the US, their clients needn’t disclose funds spent on lobbying. As observers of Australia’s lamentable climate-change response will know, you can lobby for the coal or oil industry one day, sit on the parliamentary front bench the next; be Ambassador for the Environment one day, lobby for the coal and aluminium industries the next; run ABARE one day, then be the carbon lobby’s hired economic gun the next; or run the Australian Chamber of Commerce and Industry one day, and the federal industry department the next – all without signing up to the Register of Lobbyists or breaching any law or code.

These corrosive things are getting harder in Washington. In 2007, Congress extended ‘cooling-off periods’ preventing retiring members of Congress and their staff from directly lobbying former associates. The glaring difference in the US is that the one- to two-year restrictions apply to communicating or appearing with the intent to influence on any matter where action is sought. Australia’s cooling-off periods (18 months for former front-benchers; 12 months for ministerial staff and senior public servants) only apply to matters with which the persons concerned had ‘official dealings’ in their last 12 to 18 months in office – as if they might only exert undue influence over what they recently controlled. Obama’s recent executive order leaves Australia further behind. Two-year cooling-off periods now apply to ex-lobbyists coming into the US administration as well as political appointees headed the other way. To stop stimulus funding becoming a lobbying free-for-all, Obama even banned “oral communications” between lobbyists and officials while competitive grant decisions are pending, and required written communications to be made publicly available on the internet.

Like eunuchs at an orgy, lobbyists work around this by calling themselves ‘strategic advisers’, managing various aspects of lobbying campaigns without ‘communicating’ or ‘appearing’ before Congress and the administration. Sadly, Congress and Obama baulked at restricting these ‘lobbying activities’. Still, the US is moving further and faster, perhaps because transparency and public interest are their priorities whereas here the naive stated aim of reform is ensuring politicians know when they’re being lobbied. If Kaiser’s book teaches us anything, it’s that knowing they are being lobbied is hardly the problem for politicians caught in mutual dependency.

Australia could use a book like So Damn Much Money – the stories of the Gerry Cassidys in Canberra need telling. Cassidy’s story makes lobbying more real, adding an element of human frailty through which Kaiser deftly leaves us with a conundrum: there is no villain in this story. Lobbyists are not evil people hell-bent on undermining government. They’re “ordinary people responding logically to powerful incentives”. Many acknowledge the corrosive influence of special-interest money, few can resist the profitable path of least resistance. Perhaps Kaiser’s real message is for those who can: if you can’t join ’em, help us beat ’em.

Guy Pearse
Guy Pearse is a research fellow at the Global Change Institute, University of Queensland, a former political adviser, lobbyist and speechwriter, and the author of High & Dry and Quarterly Essay 33, ‘Quarry Vision’.

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