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How does changing control of Congress affect the fortunes of lobbying firms?

by Alexander C. Furnas and Michael T. Heaney

When control of a chamber of Congress changes from one party to the other, there are lots of winners and losers in Washington. Among these are the lobbying firms that have focused their capital investments on currying favor with only one political party. Firms that are closely tied with the outgoing party may find that it is harder to attract new clients and demand high fees. Firms tightly connected with the incoming party may enjoy new business opportunities and need to expand their operations. However, these benefits may depend on whether the change occurs in the House or the Senate. In fact, a study that we published this week in the open-access journal Research & Politics, entitled “The Partisan Ties of Lobbying Firms” (with our co-author Timothy M. LaPira), shows that it matters more when a firm is associated with the party leading the House of Representatives than with the party leading the Senate.

We examined the lobbying records of 1,603 lobbying firms that lobbied in Washington, DC between 2008 and 2016. We found that while many lobbying firms pursue a bipartisan strategy, at least 42 percent of firms anchor themselves firmly to just one party. When lobbying firms were identified with the party controlling the House of Representatives, they could count on a reliable stream of an extra $5,000 to $6,000 per lobbyist per quarter (after taking into account other factors that explain revenue, such as firm size). Yet returns from being connected with the party leading the Senate were not as clear. Our statistical models did not reliably show that being linked to the party in control of the Senate corresponded with more income for the firm.

The benefits of connections to the House were clearest in 2011, just after the Tea Party routed the Democrats from chamber’s leadership. Democratic firms lost approximately $40,000 per lobbyist that year because of the switch. On the other hand, Republican firms gained approximately $10,000 per lobbyist that year that can be attributed to the new majority. In contrast, the bottom line of Republican firms appears to have been unaffected when Republicans reclaimed the Senate in 2015 during President Obama’s final term of office. Democratic firms lost money as a result of this development (we estimate a drop of about $20,000 per lobbyist), but their loses were not large enough to be significantly different from revenue variations experienced by Republican firms.

Data from the lobbying records do not provide us with clear answers for why ties to the House appear to be safer investment than ties to the Senate. However, we speculate that a number of factors may be at play. First, the Senate’s super-majoritarian rules (such as the filibuster) may dampen the advantage of having friends in the Senate leadership. Because friends in the minority still have considerable power in the Senate, lobbying firms may not be able to charge as much of a premium when their favored party leads the Senate. Second, larger, more experienced, and better-compensated staffs in the Senate may make senators less responsive to lobbyists than is true for representatives. If senators do not rely on lobbyists for information and support as much as representatives do, then lobbying firms may not earn as much for their efforts in lobbying senators.

Third, senators may face wider cross pressures than do representatives, making it less likely that they will do the bidding of any one interest than is the case for representatives. If senators are less likely to pay attention to lobbyists than representatives are, then lobbyists may profit less from their time spent pressuring the Senate. Additional research is needed to assess which, if any, of these explanations provide a convincing account of why firms benefit more when they are aligned with the party in the House than with the party in the Senate.

If our analysis is correct, then the current session of Congress is likely to be a profitable one for Democratic lobbying firms. Given that Democrats seized control of the House of Representatives this year for the first time since 2011, Democratic lobbying firms should be poised to make up for the revenues that they lost in the intervening years. The full extent of any changes will not be apparent, however, until this year’s fourth quarter lobbying reports are filed in early 2020.

Our research demonstrates that lobbying firms are an important part of the party system in Washington, DC. A considerable share of firms align their fortunes closely with only one party. We would like to know more about how these firms support their partisan allies. How does partisanship affect who the firms hire as lobbyists? What clients do they serve? Do they actually have more influence on their partisan allies than bipartisan firms do? Or do their clients merely assume that they do? Addressing these questions would add one more layer of depth to our appreciation of the interaction of parties and lobbyists.

Alexander C. Furnas is a Ph.D. candidate in political science at the University of Michigan. Michael T. Heaney is a research fellow at the University of Glasgow and an adjunct research professor at the University of Michigan.

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