Sheila Krumholz, Executive Director, Center for Responsive Politics
Making money in politics data accessible; advocating transparent, responsive govt. In 2010, Fast Company magazine named Sheila to its “Most Influential Women in Technology” list. Sheila has a degree in international relations and political science from the University of Minnesota.
Season 1, Episode 1:
Businesses have long used lobbyists to influence business and government leaders to create legislation or conduct an activity that will help their organizations. Lobbying is typically focused on legislators or members of regulatory agencies to influence specific legislation or gain corporate tax benefits. Understanding the role of business lobbying is essential for successful business leader activism.
Lobbying: The Politics of Influence
Sheila Krumholz, Executive Director, Center for Responsive Politics
Season 1, Episode 1 Transcript
Jon Mertz: 00:02 Welcome to the inaugural episode of Activate World, a series focusing on how business leaders have more power to solve societal issues than any elected official. We explore business activism with substance and depth of thought. We’re excited to have Sheila Krumholz with us today. She’s the executive director of the Center for Responsive Politics and is here to discuss the history and evolution of lobbying. We wanted to set a foundation as we continue to explore business and CEO activism, so welcome, Sheila. If you want to give us a little insight into your background as well as your organization, that would be great.
Sheila Krumholz: 00:39 Terrific, and thank you for inviting me to participate. I am executive director here at the Center for Responsive Politics. Many know us by our website, opensecrets.org. CRP is in its 35th year. We are a non-partisan non-profit research group that tracks money in federal politics. That means we focus on campaign donations. We code them by industry and interest group, which is one of our key value adds. We also look at expenditures, lobbying, the revolving door, personal finances, public officials, and hope to make this more accessible, more transparent to the press, but especially to the voters, to the public so that they can do a better job of being informed and holding their representatives accountable. That is CRP in a nutshell.
Jon Mertz: 01:33 Okay, that’s great. I’m sure it keeps you and the team busy as well. Give us a little background on how lobbying started and evolved through the ’50s, ’60s, and ’70s.
Sheila Krumholz: 01:43 Sure. Of course, everyone knows, or most of us know, lobbying is enshrined in the Constitution as a right to seek redress of grievances. The courts have upheld that right of both individuals and corporations to exercise free speech and petition the government. Washington used to be a pretty sleepy town, if not a one-horse town, in the early days, and lobbying was so much less common. Few companies had their own lobbyists, much less armies of lobbyists at their disposal, at their command as is now not uncommon. In the earliest days, lobbying was focused really on state legislatures. The Industrial Age, and oligopolies, and steel, and railroad really got the federal government more involved in regulating the economy, and hence the focus on lobbying federal officials gradually grew. Unions, of course, were a far greater powerhouse in the ’50s. When we think of the union machine, it hearkens back to the days of bean feeds and really truly local grassroots gathering and organizing by unions and political machines. Again, even then I think the focus was far more widespread. It was less focused on Washington.
Jon Mertz: 03:12 It seemed like the ’60s was a turning point because there was a lot of legislative activity at the federal level. It seemed that businesses who didn’t get involved would be passed by. But it was really the ’70s, as I understand it, this Powell Memorandum that really was a pivot point as far as how businesses approach the legislative process within DC.
Sheila Krumholz: 03:32 Precisely. The Powell Memo followed the growth in government regulation of business in the ’60s and promoted the notion that business needed to push back or could push back, had the ability to create a new path. That created a path for the growth and professionalization of lobbying, and really made it prudent and the prudent and proactive thing to do, and ultimately, of course, quite profitable, even lucrative for both corporations and for lobbyists on K Street. The Powell Memo is credited with leading to the creation of the Business Roundtable, a group of CEOs focused on influencing Washington. They saw legislative success and in their broader PR about convincing the American public of the need to rein in out of control big government. That created a snowball effect to the point where companies went from not typically having their own lobbyist on the payroll to realizing they were potentially getting disadvantaged by comparison with their competition. It was a, “If you can’t beat them, join them.”
Jon Mertz: 05:03 It seems like some of the business thinking changed in the ’80s to more of a, “If I’m going to invest in lobbying, what am I going to get back in return?” kind of a more direct relationship there.
Sheila Krumholz: 05:13 Yeah, that’s when we saw there was just so much action, so much activity as K Street grew and expanded. That was really the heyday. Certainly by the ’90s, the die was cast. After the go-go ’80s and the rise of super lobbyists like Gerald Cassidy of Cassidy & Associates and Tommy Boggs of Patton Boggs, the balance of power was really shifting already away from Congress toward K Street. Then when Newt Gingrich’s Contract with America, some would call it an assault on congressional expertise and technology, was launched in the early ’90s, it just turbocharged the changes that were already well underway.
Jon Mertz: 05:55 If I’m a business and I’m obviously investing in lobbying, what’s the general formula of how I approach lobbying in Washington today?
Sheila Krumholz: 06:04 I think the general approach is if you have the resources, it’s a small cost of doing business relative to the potential value in protecting your industry from, your company from overreach from government regulation. It is a small cost of business relative to the rewards, to the profits that can be realized. What stands in my memory as exhibit A of this is Amgen getting a second patent extension on their dialysis drug Sensipar tucked into an omnibus spending package on the fiscal cliff legislation in the dead of night. I believe it was on December 31. Must past legislation. That meant huge profits for them, that success. It took everyone by surprise on both sides of the aisle among congressional aides. A couple weeks later, the CEO of Amgen was on a quarterly earnings call with shareholders crowing about their success. Yes, the employed 84 lobbyists.
Jon Mertz: 07:16 Right.
Sheila Krumholz: 07:16 That was only one of their issues that they were lobbying on, but I am sure that that patent extension made it all well worth their while.
Jon Mertz: 07:27 Right. It’s building those relationships not only at the member level but also at the staff level to get things tucked in when needed.
Sheila Krumholz: 07:35 Yeah. When you look at what the investment can return, it makes sense. The money represents relationships.
Jon Mertz: 07:46 This might be a good point to change the conversation. What’s your view on lobbying? What makes it good? What makes it bad?
Sheila Krumholz: 07:53 If a lobbyist is bringing new or important perspective to a political debate or policy debate, that is, in my view, good. I think it should be recognized that not all lobbyists are evil. Not all lobbying is bad. If you’re the one doing the lobbying, you’re going to want to have your calls returned and meetings taken. I think we should want more information to be a part of the mix. Of course, it needs to be accurate. It needs to be provided in good faith and not misleading. Lobbying really is value, I don’t know how to say this, value-neutral. It’s a good thing when it’s done properly. I don’t have a negative perspective of lobbying or lobbyists per se, but as with any profession, any aspect of the policy debate when you have bad information or people acting in bad faith, when it skews the debate away from the public good or information that would be helpful to a corporation but that doesn’t include alternative perspectives, leaves out those critical perspectives, that’s when it’s potentially quite harmful.
Sheila Krumholz: 09:11 We rely on our public officials to be that protective layer, to guide the debate so they’re accepting this information but not to the exception of other perspectives from opposing sides. It is a balance. It is not one necessarily that we should expect lobbyists to make. They don’t work for us. The onus is put on us as constituents to hold our representatives accountable, to know what they’re doing in our name, and to contact them, to be in touch with them so that if they are representing a corporation, an industry, a union, an interest that is not in our interests, they hear from us. That too often does not happen.
Jon Mertz: 09:59 There are a lot of great points on that. There’s obviously the responsibility of constituents to hold their elected officials accountable and make sure they’re exploring issues in a balanced and transparent way. It’s important for the representatives themselves to take on that responsibility and to not only take information from the lobbyist per se but also doing some research beyond what’s provided by that lobbyist. Also from a lobbyist’s perspective, there’s both the company responsibility as well as their own because if they want to maintain their relationship or their reputation within Washington, they also have to make sure that they’re representing the company with integrity.
Sheila Krumholz: 10:35 Precisely, yes. In order to achieve balance, most big firms, most big lobbying firms and law firms that lobby have representation on both sides of the aisle so that they can reach out to the point people in various offices in the majority and the minority. They have to hire people who have specific expertise on the issues. Of course, when they’re broad issues like taxation, those are quite valuable folks to have in house. They may also just reach out to lobbyists who have particular expertise or unique expertise on a less common policy issue and then either subcontract with them on a lobbying contract or bring them in as the needs arise.
Jon Mertz: 11:33 We hear a lot, especially over the last couple of years, the drain the swam chant. Is that even realistic? What are your thoughts?
Sheila Krumholz: 11:40 President Trump’s five-points Ethics pledge dealt exclusively with lobbying, and yet this has not by any stretch of the imagination been a key focus for the Trump administration. Many, many lobbyists were part of the beachhead teams at agencies. They have been quite visible in the administration. They don’t even bother to seek waivers for the pledge. Although it made for a great chant at political rallies, governing is a horse of a different color. I don’t think this will be one of the themes that the Trump administration is remembered for.
Jon Mertz: 12:22 One of the things that’s changing is how much more active CEOs and other business leaders have been in certain policy conversations, whether it’s around immigration, or gender discrimination, or gun control.
Sheila Krumholz: 12:34 I think any time you have, honestly, anyone who is willing to stake their name and reputation on being of high integrity and exhibiting qualities of leadership and character that are so often lacking in politics, we should applaud that and celebrate that because it is perhaps not easy to stick out and to carve out a new path when all others are keeping their heads down and trying to stay out of the fray.
Jon Mertz: 13:12 If we take an issue and dive into it a little bit like immigration, what’s your insight into businesses and trying to lobby for immigration reform?
Sheila Krumholz: 13:21 Immigration has long been one of the key issues that we see in lobbying reports, but among those who have mentioned immigration the most, Microsoft tops the list, not surprisingly. Tech companies, restaurants, home builders are all making use of immigrant workers, legal or otherwise. They’re lobbying very often to protect their labor force. And universities, universities are trying to keep the door open for students coming from abroad. That’s an important source of revenue but also of intellectual value that they are looking to keep and expand. It is a hot topic, and it is somewhat complicated. But again, here it seems like we’re looking for something to break the gridlock that has this issue so immobilized, and perhaps corporate America can offer a path forward.
Jon Mertz: 14:27 What’s your best advice for a business CEO as it relates to the mix of lobbying and being active in some of the social and economic policy issues that are facing our country?
Sheila Krumholz: 14:36 I do think that a scholar that focuses on lobbying, Lee Drutman, has some useful advice. That is that we need to invest more in government if we expect it to function. We need to stop starving it, especially Congress. It would be ideal if corporate America were behind that view or is in support of that view to reinvest in especially the technological expertise needed in government and in Congress in particular to give policymakers the resources and the ability to hire and retain the most experienced expert and technologically savvy staff to replace the brain drain that has afflicted our government. That would, of course, have the net effect of reducing Congress’s reliance on lobbyists.
Jon Mertz: 15:31 Transparency is a key thing too that corporations can not only give to their shareholders but to their employees as well.
Sheila Krumholz: 15:38 Yes, if corporate leaders can walk the walk on transparency. The Center for Political Accountability is one group in town that espouses the ideal of having corporations show what they pay and not hide their investment in political activities through super PACs, or dark money organizations, politically active non-profits. Here too with lobbying, we are confronted with issues of a lack of transparency because so many lobbyists have fallen off the roster, and yet we are spending now record amounts, $3.37 billion seen reported, just what’s reported as having been spent on lobbying the federal government down from a peak of $3.51 billion in 2010. Even for what’s reported, which we know is not everything, hopefully it’s more than the tip of the iceberg but we’re not capturing all spending, but even for what’s reported so far this year in just the first quarter at $.88 billion, if that speed of spending continues, this will be the most expensive year in terms of lobbying the federal government ever.
Jon Mertz: 16:54 Do you foresee any big change on the horizon as it relates to business lobbying over the next three to five years?
Sheila Krumholz: 16:59 I fear that we are entering a new phase where there is lip service to draining the swamp but very little evidence to back that up and little care paid to explaining the disconnect at the same time that the amounts spent are growing and we’re fighting this loss of disclosure. There are some challenges buffeting the lobbying industry, those who track it such as Open Secrets, and the public because they’re going to be the ones kept in the dark. In a way, we’re in a more sophisticated, technologically savvy age, and yet it’s almost as if we’re returning to the smoke-filled backrooms where deals are cut.
Jon Mertz: 17:50 I think that’s a big challenge for CEOs and business leaders to set that example of being more transparent. Let’s try to work together to figure out how to make it function better.
Sheila Krumholz: 17:59 Absolutely, and to help the public to hold their representatives accountable. It’s a complicated age. It only gets more complicated. How can we leverage technology, how can we leverage social media to help people reconnect with their government? We may not be attending bean feeds and engaging in union organizing, but perhaps there are other facets or paths back into the public forum for Americans. If corporate leaders can both lead by example and help us with creative new tools to get back to business in government, I think we’ll be on a safer path.
Jon Mertz: 18:52 Sheila, thank you so much for your time. It was very value, very informative. Your site opensecrets.org is a wonderful resource not only for the insights just on the current topics, but in the work that you do to make lobbying more transparent. Thank you for everything.
Sheila Krumholz: 19:07 I’m so pleased to have joined you. I hope people find the information they’re looking for on Open Secrets and feel free to reach out to us. We’re here to help with research and custom requests.
Jon Mertz: 19:24 Listeners, we’d love to hear from you. What place does lobbying have in a true democracy? Would you like to see more CEOs take part in lobbying efforts? Send your perspective to me at jon @ activateworld.com. That’s Jon without an H, J-O-N, @activateworld.com. Write it out or record it, send it my way. We want to hear and share your thoughts.
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Join us next time as we speak with Adam Winkler, author of We the Corporations: How American Businesses Won Their Civil Rights. Activate World is a team endeavor. Special thanks to Kaela Waldstein and Kent Nutt, music by Jason Goodyear. For Activate World, I’m Jon Mertz.