(This newsletter consists of three short commentaries on lobbying and lobbyists.)
WASHINGTON — By the time this newsletter is distributed, the 1976 Presidential election will be history and everyone will have had a chance to analyze the effect President Ford’s close associations with lobbyists may have had upon its outcome. That such close relationships existed — personal friendships and the acceptance of hospitality and other favors — was never in question. The President himself acknowledged them. They were not illegal but they give the appearance of impropriety, something a public official can ill afford.
The President’s actions also raise ethical questions as old as democratic government. Golfing trips and favors from US Steel and other corporations may not have bought the then House Minority Leader’s assistance. Nor do legal campaign contributions. But they do buy something, that elusive component to all legislative or executive activity — access. Access is the opportunity to be heard and to be taken seriously. Access is the ability to speak directly to a legislator or an administrator. It is something to be savored and not abused. It is something to be saved up against the time when it is really needed — against the threat of banking reform if you are a commercial banker, against the threat of vertical divestiture if you are the president of an oil company, against a court decision banning clearcutting in the National Forests if you run a timber operation.
First, the appearance of impropriety. President Ford said he did nothing wrong by accepting hospitality from his old friend and golfing companion, US Steel Washington vice president William G. Whyte. There is no record that US Steel got any specific benefits from Mr. Whyte’s friendship with the man who would soon be President of the United States. There was no visible quid pro quo.
But the appearance of impropriety is something that every good public official and every good lobbyist, too, should seek to avoid. Not long ago, the executive vice president of a large and powerful trade association here told me that during a recent multi-million dollar lobbying campaign on an issue of vital importance to his industry, he was preoccupied with a recurring nightmare: someone in his industry had presented a Member of Congress with a campaign contribution at just the wrong moment such as before a crucial vote. Although such a contribution would have been legal, the lobbyist feared that “well-intentioned things being misinterpreted” would spell doom for his bill. Earlier this year, revelations that Rep. Robert C. Krueger, chief proponent of deregulating natural gas prices, had received more than $51,000 in campaign contributions from independent oil and gas producers raised questions about his motives and the propriety of his advocacy.
The appearance of impropriety is important because it is almost impossible to pinpoint the motive of a political figure in any area other than his own ambition(and not always there). Earlier this year, retiring Sen. Philip Hart, one of the most intelligent and humane of politicians, told Washington Post columnist Colman McCarthy something which is worth quoting in full.
“You never know your own motive most of the time,” Hart told his interviewer, “but most people are always assuming they know the motives of everyone else. But it’s hard. It’s hard for a politician looking at another politician. It’s even more difficult for the public looking at the votes and the positions taken by a politician to determine what motivated that man. I am sure that there are people in Michigan, for example, who believe that the reason I have a voting record that conforms generally with the labor movement is because labor gave me money. And certainly in the liberal group, there’s much too much assumption that the reason some conservative around here is conservative is because some company or corporate officials fund him. We liberals don’t credit conservatives with what we credit ourselves. I say I vote in a way that finds approval with labor because it happens that I believe that this is the best for the people. Our goals are common but we arrive at them independently. The liberal is apt not to give the conservative credit for the same thing. A conservative may conclude quite independently of constituent pressure that the program of, say, the National Manufacturers Association makes good sense.”
In the absence of any precise code of ethics, it may be impossible to say whether the President acted improperly. What, for instance, is the difference between the then Minority Leader’s golfing trips with Whyte and the three day meeting the chief executives of the country’s largest corporations hold twice a year at the Homestead, a luxury resort in Hot Springs, VA, at which they confer, socialize and play golf or tennis with the heads of many executive agencies (even an occasional President) and top Congressional leaders? The Business Council, which is attended by the likes of Rawleigh Warner Jr. (Mobil Oil), Walter Wriston (Citicorp), Lewis W Foy (Bethlehem Steel) and Henry Ford II (Ford Motor Company), would bridle at any suggestion of impropriety, as would the public officials who have been trooping down to that secluded valley in the Virginia hills for more than thirty years.
It is patently absurd to insist that there be no contact except of the most formal sort between lawmakers and/or administrators and the representatives of the industries affected by their laws or rulings. But where does one draw the line? What, for instance, makes the Business Council’s behavior acceptable and the President’s friendship with lobbyist Whyte questionable? Is it that the Business Council is itself a formal function (despite the heavy emphasis upon the tennis courts and the golf links) attended (though at considerable arm’s length) by members of the press? Is it that anyone who cared to find out could obtain a list of the executives who attended and the public officials with whom they might have talked? And yet what better opportunity is there for establishing access than in the other-worldly atmosphere of the Homestead where a string trio plays for tea every afternoon and, until a few years ago, black waiters regularly performed a cakewalk in the hotel’s bar after dinner? Think what a friendly game of tennis with the right federal official can mean for a corporation. And it has nothing to do with what is said on the tennis courts.
Presidential candidate Jimmy Carter called the ambiguous netherworld where public officials and corporate officers meet, talk and play “a bloated mess,” according to the New York Times. He was quoted by correspondent Charles Mohr as saying of the last thirty years of Washington leaders and their corporate constituents, “They go to the same restaurants, they belong to the same clubs, they play golf on the same golf courses, they communicate with one another, they support one another in the absence of participation, understanding and control by the people ourselves (sic ).”
Carter’s point was clear. The poor, the blacks the chicanos, the farm workers, the students, the women (except in the supportive role of wives), the tax reformers, the environmentalists, and the consumer representatives do not play golf with the President.
Would not the same problem exist in reverse if the President played golf with Ralph Nader or tennis with Gloria Steinem? What if he regularly shared a pizza with the iconoclastic lawyers at the Natural Resources Defense Council? Or hiked the Appalachian Trail with Dave Brower of Friends of the Earth? Or if he were she?
No one can question that a President has a right to friendships with whomever he likes or that he needs those friendships. Perhaps all the public can ask for is some sort of disclosure. That was the object of a lobbying registration bill which just missed passing Congress this past fall. Extended to cover all federal officials above a certain level, it might have provided some accurate picture of who talks with whom and about what in Washington, provided the information was all properly indexed and fed into a computer. Undigested, the mass of information would be nearly useless.
California now has a broad lobbying law which forbids the sort of favors the President accepted while House Minority Leader. Its chief result, remarked one California congressman, has been to reduce social activity in Sacramento. No one asks anyone else to dinner anymore, he said, and, if you do get invited, you are sure to be asked to bring your own hamburger.
Bringing your own hamburger seems a small price to pay for public confidence.
The Bill Nobody Wanted
In the last hours of the 94th Congress, dozens of pieces of legislation were approved. But one which was not, the victim of Senate rules and vigorous opposition from all sides, was the Public Disclosure of Lobbying Act. When its chief Senate sponsor, Abraham Ribicoff, attempted to bring the bill up for a final vote in the Senate, a move which under the existing parliamentary situation required unanimous consent, another senator objected. The lobbying disclosure bill died for this year.
Ribicoff bitterly blamed the “special interests” for its death, Ralph Nader as much as the National Association of Manufacturers. Nader immediately denied Ribicoff’s charges and Common Cause, which had been the chief impetus for the bill, blamed “powerful business lobbyists” for its demise. But the truth is that few lobbyists, whether representatives of the public interest or the special interests, were happy with the idea of such a bill in the first place. And they were even less happy once some delicately-balanced compromises achieved in the House Judiciary Committee fell apart on the floor.
The Congressmen were no more enthusiastic than the lobbyists. Few felt they could vote against the bill with impunity (slightly different versions passed the House by a vote of 307 to 34 and the Senate by 82 to 9) but even the bill’s most ardent supporters were nervous about infringements of their constituents’ First Amendment rights.
The Senate and House bills varied somewhat in their definition of a lobbyist, although both defined “lobbyist” in terms of an organization rather than an individual. The Senate bill defined a lobbying organization by its contacts with Members of Congress and Congressional staffs. Any organization whose employees or officers made twelve or more direct oral communications with Congress in one three month period was lobbying. So was an organization which hired an outside lawyer or representative to lobby for them and paid that person more than $250 in a calendar quarter. And so was any organization which spent $5,000 or more in any quarter promoting letter-writing campaigns. The House bill defined a lobbying organization in terms of money spent. An organization paying an individual $1,250 or more in a three month period or employing a person who spent 20 percent or more of his time lobbying in any quarter was a lobby.
Since a similar lobbying disclosure bill will probably come before the next Congress, it is worthwhile exploring some of the good-faith objections to the 1976 proposals.
The major objection was based upon a concern by a substantial number of Congressmen and Senators that, while big corporations and wealthy trade associations could afford to assimilate the costs of the additional paperwork the disclosure process would involve, these costs might well put smaller, less-well-financed lobbies out of business. This concern reflected the worries expressed by public interest lobbies, by so-called “public charities” (anything from the American Cancer Society to the Audubon Society) financed by tax deductible contributions which were this year given greater leeway to lobby without loosing their C-3 status (more about this later), and by single interest lobbying coalitions.
As Sen. John A. Durkin observed, shortly before voting for the Senate bill on June 15, “Let us face it. Nothing we can do here today is going to really reduce the interest or ability of Exxon, the AFL-CIO, or the Business Roundtable, or the Chamber of Commerce to contact Members of Congress to attempt to influence votes, either through sheer force of logic or sheer force. But if we are not careful, we make it very difficult for the Right to Lifers or the antiwar activists and many other less well organized and well financed groups.”
Reps. Don Edwards and John F. Seiberling both wrote dissenting views to the House bill when the Judiciary Committee reported it on September 2. Citing California legislation which limits lobbyists’ spending for gifts, food, drinks and other favors for legislators to $10 a month, Edwards wrote: “The extensive reporting requirements will fall most heavily on those least able to afford it, the low budget groups, the community grassroots lobbyists, often organized on an ad hoc basis to address a single issue. They may well be discouraged by the mountains of paperwork required. Corporate lobbyists on the other hand, would not be discouraged, having plenty of staff available, the costs tax deductible.” Implicit in Edwards’s dissenting views was the question of whether disclosure was the proper approach. Should the object of such legislation be the prevention of corrupt practices associated with lobbying rather than the mere disclosure of lobbying activities, he wondered.
Seiberling did not object to disclosure as long as it did not abridge individual and organizational First Amendment rights but argued that the time and expense of complying with the legislation would constitute a “chilling effect” upon lobbying by small organizations which were not well-financed. Much of his concern about the bill was based upon its effect upon C-3 organizations, those to which contributions are tax deductible. Since Seiberling wrote his dissenting views, Congress has passed the 1976 tax reform bill which contains a section that will permit such organizations to spend up to twenty percent of their budgets, on a sliding scale up to $1 million, on direct lobbying of Congress without the loss of their C-3 status and many of the Congressman’s arguments are now moot.
The delicate compromise worked out in the House Judiciary Committee and then unraveled on the floor had to do with the disclosure of contributions to a lobbying organization. The House committee bill required disclosure of the identity of any contributor to a lobbying organization whose contribution was in excess of $2,500 in one year, amounted to more than one percent of the total dues or contributions, and was in excess of the dues or contribution schedule of the organization. This was “one of the most carefully worked over provisions of the legislation,” Walter Flowers, the bill’s chief architect in the House, told the Judiciary Committee during markup. “Nobody was totally satisfied with the balance but we have substantial agreement that this will not upset anybody’s applecart.”
Opponents argued that present campaign financing laws require the disclosure of contributions of more than $100. Why shouldn’t the same argument apply to contributors who choose to enter the public domain by supporting lobbying activities? Flowers replied that many trade associations feared that disclosure of the dues paid by their members would give some sort of advantage to competitors. Public interest groups were afraid that the disclosure of contributors’ names would diminish public support, especially for unpopular or controversial causes. They cited NAACP v. Alabama ex. rel. Patterson, a 1968 case in which the Supreme Court ruled that the disclosure of an individual’s associational ties could have a significant deterrent effect upon the free exercise of the right of association, since retaliation might result from disclosure in the case of contributors to unpopular causes. The amendment was opposed by most public interest lobbies though supported by Common Cause.
Flowers’ compromise survived the committee markup but not the floor debate where the House, by a vote of 290 to 53, adopted an amendment offered by Rep. Tom Railsback, requiring the disclosure of all contributions of more than $2,500, regardless of their relationship to the total budget of the organization in question. It was, Railsback said, an amendment which put small-budgeted organizations on an equal footing with better heeled ones, however, it was opposed by most relatively small lobbying groups, as well as wealthy trade associations.
There was an emotional, though confused, discussion of whether Ralph Nader would have to register as a lobbyist under the terms of the House bill. In fact, he would not have had to under either bill since Nader is an individual and not an organization. However, all the Nader lobbying groups would have had to register if they met the definition of a lobbying organization. What was interesting about the discussion was not the question itself — was Nader covered by the provisions of the bill — but the animosity which some Congressmen clearly felt toward Nader. Fearing that since Nader is not paid by any of his organizations he would not qualify as a lobbyist, Rep. Delbert Latta said of “volunteer” lobbying, “This is a vicious form of lobbying and should cease.” This bit of hyperbole was remarkable even on the House floor.
The Congressmen also floundered on the question of whether constituents can be considered lobbyists. Constituent lobbying is, after all, the most effective kind of lobbying as organizations as diverse as the American Bankers Association, Exxon, and the Sierra Club have discovered. “I have great courage standing up against people from Seattle, Washington,” remarked Rep. William Hungate of Troy, Missouri.
This debate gave birth to something variously called the “home state exemption” and the “geographical exemption.” The idea is that a person who writes, phones or visits only his own senators and congressman is not a lobbyist but a constituent seeking assistance. It is, of course, a loophole. As one member of the House committee observed during markup, should such a law pass, national organizations will simply diffuse and decentralize in order to take advantage of it. But few congressmen wanted to put their constituents in the position of having to register as lobbyists.
There were other issues and questions and no clear cut answer for any of them. The lobbying bill was a difficult one to draft. Even Flowers at one point verbally threw his hands up in the air and cried, “This bill is a hornet’s nest!”
It stirred up great interest among its own peculiar constituency, the men and women who prowl the halls of Congress and who stand outside the doors of the House and Senate chambers, appropriately enough in the lobby, looking for votes. One day when the House Ethics Committee, which claimed and exercised its jurisdiction over the House bill thereby contributing substantially to its demise, was deliberating what to do about lobbying disclosure, the tiny room in which the committee met and the corridors outside were jammed with lobbyists seeking to hear what was going on inside. There they all were, shoulder to shoulder- the NAM, the AFL-CIO, and Public Citizen — in the curious position of being commonly threatened by a proposed procedural reform. For this year, at least, Congress let them all off the hook.
A Loophole For Lobbyists
A little-noticed section in the 1976 tax reform bill passed by Congress in September will make some changes in the landscape of Washington lobbying. Next year, small “public charities”, those organizations financed by tax-deductible contributions whose chief concern is influencing public policy, will have more clout than they have had in the past.
Up until now, the status of groups as diverse as the Campfire Girls, the Environmental Defense Fund and the Audubon Society have been precarious because lobbying Congress could mean loss of their coveted C-3 status. That is Internal Revenue Service jargon for an organization whose primary purpose is “research and education” and which does not do a “substantial” amount of lobbying. Contributions to such organizations are tax deductible and thus are more easily raised. Similar organizations which lobby have to operate on non-deductible contributions.
The problem lay in the meaning of “substantial”. The IRS always refused to define it, asserting that it varied depending upon the organization. A 1955 appeals court decision which held that five percent was not “substantial” was not clear enough to set a standard. No one knew what “substantial” meant. In 1966, the Sierra Club lost its C-3 status partly because of newspaper advertisements urging voters to lobby Congress against the construction of two dams. Still no one knew what “substantial” meant.
The result has been that many small issue-oriented groups have been timid about showing themselves on the Hill. “It hasn’t been that we’ve been locked out by the tax status situation,” said Tom Barlow of the Natural Resources Defense Council recently. “It’s the psychological effect.” NRDC itself does not lobby although Barlow recently took time off from NRDC to run the Coalition to Save Our National Forests which did lobby.
Under the new law, public charities will be permitted to spend up to twenty percent of their budgets on a sliding scale up to $1 million upon lobbying Washington. They will also be required to disclose the sources of their funds, something lobbies such as Common Cause (which is not a C-3 organization) already do and which Congress nearly required of all lobbies, public and private, this year.
The new law will put small organizations such as these more nearly on a footing with industry and labor. The federal government already subsidizes lobbying by businesses since the expenses of lobbying are legitimate business expenses and deductible as such. Union dues are also tax-deductible, as are dues and contributions to trade associations and professional groups.
Oddly enough, under the old law, providing Congressional committees with expert testimony and assistance did not constitute lobbying, although providing information is one of the prime functions of any lobbyist. As long as Congress asked for the information, a C-3 group was in no danger of losing its special status by providing it. This was easy enough to arrange. “We write them letters to keep them out of trouble with IRS,” said a member of one Senate committee staff.
The new law will probably not change the operations of two of the largest public interest lobbies, Common Cause and the Nader umbrella of organizations. Contributions to Common Cause and Nader’s Public Citizen, which finances his lobbying organizations are not deductible, although contributions to Nader’s Center for the Study of Responsive Law are. Anyway, both Common Cause and the Nader lobbies will continue to spend more than twenty percent of their funds for lobbying.
But double door organizations, those such as Tax Analysts and Advocates/Taxation with Representation and Environmental Action/Environmental Action Foundation/Environmental Action Dirty Dozen Campaign Committee which have been organized so that one group operates on tax-free dollars and does not lobby and the other lobbies on non-deductible funds, may be helped. Now some funds from the non-lobbying group can legitimately be channeled into the lobbying group.
Of course, the new provision is a tax loophole, but one that the public interest lobbies accept eagerly. The reason is that, in lobbying, money equals political clout and that is what lobbying is all about.
It is not as simple as campaign contributions or gifts and favors, although those play their role. It is something more fundamental. A good lobbying operation requires bodies and it requires skilled bodies, something more than law school students on their summer vacations. (This is not intended to in anyway denigrate the efforts of law students. For example, this past summer law students working for Tax Notes, a highly reputed publication put out by Tax Analysts and Advocates, at editor Jim Byrne’s direction, questioned the staff of the joint Committee on Internal Revenue Taxation closely about the effects of numerous obscure provisions of the Senate Finance Committee’s tax bill. They were not acting as lobbyists but as reporters, but their questions started a chain of events that led to the exclusion of some special interest provisions from the 1976 tax bill.) The fact remains that a good lobbyist works twenty-four hours a day, seven days a week, if necessary. And such a person must be paid.
Many public interest lobbies depend heavily upon grassroots lobbying. For the Sierra Club, the most important lobbying is the letter writing by Sierra Club members which precedes crucial votes. But a first-class, full-scale mailing to stimulate these letters costs $20,000, according to Sierra Club lobbyist Brock Evans.
It is true that the new law will put small groups, labor unions and industry on a slightly more equal footing. But a more basic question is whether any of these things ought to be tax-deductible in the first place, be they business expenses or contributions to the March of Dimes. Given the present Swiss cheese of tax law, it is hard to fault the new lobbying loophole on its merits. It is, however, valid to question a tax structure that creates the need for such a loophole in the first place.
In my last newsletter, I identified Herbert Schmertz, vice president of the Mobil Oil Corporation, as a member of the American Petroleum Institute’s task force on divestiture. H.J. Schmidt, a member of the board of Mobil, is that company’s representative on the task force. However, Schmertz is the mastermind behind Mobil’s issue-oriented advertising campaign described in the newsletter
Received in New York on November 10, 1976.
©1976 Mary Clay Berry
Mary Clay Berry, a freelance writer, is an Alicia Patterson Foundation award winner. She is studying lobbying in Washington, DC. This article may be published with credit to Ms. Berry as a Fellow of the Alicia Patterson Foundation. The views expressed in this newsletter are not necessarily the views of the Foundation.
