Lobbyists heard

Why is it corporate lobbyists are the only ones heard?

Ted Kaufman

Lobbyists have always played an important role in the legislative process, and that's not a bad thing. We all have a right to present our side of an issue to the people who make our laws. At its best, the lobbying industry reflects that right.

Lobbyists also bring needed expertise to complicated questions that concern their industries or special interests. One of the major problems in Washington right now is that legislators are increasingly being lobbied, not from diverse groups with conflicting interests, but from only one side.

That wasn't so when I went to work for Joe Biden in his first year as a senator in 1973. On practically every issue, representatives of large corporations and powerful labor unions, explaining and advocating for their respective positions, would contact our office. Often what they had to say was helpful. Sometimes it was just sheer self-interested disinformation. But we always heard from both sides.

That's not how Washington operates these days. According to the Center for Responsive Politics, a non-profit, nonpartisan research group, corporations and organizations representing corporations spent $2.6 billion on lobbying last year and labor unions spent $45 million. In fact, just one corporate representative, the U.S. Chamber of Commerce, spent $124 million, almost three times more than all labor unions.

Lee Drutman is a senior fellow in the program on political reform at New America, another non-partisan think tank. "Today, the biggest companies have upwards of 100 lobbyists representing them," he says, "allowing them to be everywhere, all the time. For every dollar spent on lobbying by labor unions and public interest groups, large corporations and their associations now spend $34. Of the 100 organizations that spend the most on lobbying, 95 consistently represent business."

Given the decline in labor union membership, from 25 percent of the workforce in 1973 to 11.3 percent today, it is no surprise who you are most likely to meet in the waiting rooms of Members of Congress and regulatory agency commissioners. On just about every issue, corporate lobbyists dominate the debate.

To illustrate what is going on, let's look at how we dealt with the issue of bank regulation after the two worst financial crises of the past hundred years – the 1929 Wall Street crash that led to the Great Depression of the 1930s, and the 2008-09 meltdown that triggered the recession we are still recovering from. In the 1930s, Congress formed a commission that studied what had gone wrong and came up with a solution that then became the law. The Glass-Steagall Act created the Federal Deposit Insurance Corporation that protected bank deposits in commercial banks. It also forced existing banks to either close or sell off their risky investment banking divisions if they wanted deposits to be FDIC-insured.

It was a clean, simple solution that worked well for decades. Many believe the repeal of Glass-Steagall in 1999 was one of the major causes of the 2008 banking crisis.

Contrast that with what happened during and after the debate of the Dodd-Frank Wall Street Reform Act in 2010. Voices of consumer advocates were drowned out by the overwhelming numbers and unlimited money of the big bank lobbyists. The law that finally passed in large part kicked the can down the road to the regulatory agencies, giving them the responsibility to fix the system.

Dodd-Frank set 390 rule-making requirements for the regulatory agencies to act on. Regulatory agencies have to seek the advice of the "public" on every one of them. Those quotation marks are there to underscore just who has showed up to give the agencies advice. Kim Krawiec, a colleague of mine at the Duke Law School, did a study of lobbying contacts on the regulatory agencies' consideration of the Volcker Rule, an attempt to restrict certain kinds of risky investments by commercial banks that has been repeatedly watered down and is still not in final form. She found that among the lobbyists who had contacted the agencies, 78.2 percent represented financial institutions, 7.9 percent were law firms representing financial institutions, and 7.2 percent were financial trade association, Only 4.1 percent represented public interest and labor groups. The remaining 2.7 percent represented Mr. Volcker or Senators Merkley and Levin.

In the real world, when a force as powerful as the corporate lobby becomes virtually the only voice heard on legislation that will affect all of our lives, both our economic system and our democracy are at risk.