When the Democrats Take Back K Street

By Massimo Calabresi

The reception thrown by Nancy Pelosi at the Capitol a week after the Democrats prevailed in congressional elections was a party some power players had been waiting more than a decade to attend. The fete was for newly elected freshmen lawmakers, but Pelosi's invited guests included big-name Democratic lobbyists like Jack Quinn, Tony Podesta and Steve Elmendorf. Said a partygoer: "I thought to myself, they're all back, all the same old faces. It was just like old times."

For 12 years, Democratic lobbyists lost influence--and money--as Republicans tightened their hold on power. G.O.P. leaders amplified the effect by launching an overt effort to push Democrats out of trade associations and lobbying firms, with the aim of increasing the G.O.P.'s share of campaign contributions from the groups' clients. G.O.P. leaders also punished firms that were too Democrat-friendly by excluding them from meetings on the Hill. The combined effect of power and persuasion added up to a decade of Republican domination in the business of influence peddling.

But the Democrats are making their comeback on K Street, the metonymic home of Washington's $2.36 billion lobbying business. A gold rush is under way for lobbyists who have an in with the winning team. Firms are hiring away key Democratic congressional staff members and bidding up the salaries of Democrats already in the business. And companies that tilt Democratic are signing clients from industries that previously relied on Republican outfits.

There's one hitch. It's not supposed to be like old times. In an election in which exit polls identified corruption as the No. 1 voting issue and Washington's biggest corruption scandal involved lobbying, Democrats won in part by promising to curtail K Street's excesses. Pelosi has said her first act as Speaker of the House in January will be to pass new rules limiting contact between lobbyists and lawmakers. Later in 2007, Pelosi plans to rewrite the laws on pork-barrel spending. She promises that the overall effect of her reforms will be "to break the link between lobbyists and legislation" in Washington.

Who will win the coming battle between reformers and revanchists? The market is betting against reform. Demand for anyone with access to powerful Democrats on the Hill is soaring. Lobbyists who couldn't get a meeting are suddenly a hot commodity. "I've gotten a lot of calls from headhunters in the last two months," says Florence Prioleau, a lobbyist who has maintained close ties with her former boss, New York's Charles Rangel, incoming chairman of the Ways and Means Committee. Pelosi's former chief of staff, George Crawford, has just been hired by Amgen, a biotech company, to represent its interests with the new Congress. Toby Moffett, a former Democratic Congressman from Connecticut now with the Livingston Group, says he recently told a Republican lobbyist desperate to hire Democrats that he had two options: "One is to go after [congressional] staff members who are thinking of leaving, maybe someone with tuitions to pay. The second is to overpay for people who weren't thinking of leaving."

Lobbying firms can gross multimillions-- Livingston takes in some $10.9 million a year--by winning annual contracts worth $180,000 to $600,000 from businesses, individuals, churches, universities, states and municipalities. Those clients are willing to pay because of the large sums of money that lobbyists can help them obtain from Congress. Earmarks, the targeted handouts that have dramatically expanded over the past decade, now total in the tens of billions a year. And everyone wants a piece. "The key thing for me," says a Democratic lobbyist at a top K Street firm, "is don't miss the moment. It's a big opportunity here."

All that money will be working against Pelosi's link-breaking efforts. The Speaker's proposed rule changes would ban lobbyist-paid meals, gifts and travel for lawmakers of the sort that made superlobbyist Jack Abramoff a household name. She also proposes to double to two years the cooling-off period during which former staff members are barred from lobbying their ex-bosses. And Pelosi has pledged to open the earmarking process to public scrutiny so that tax money could no longer be funneled secretly to special interests. Reform-minded Republican Representative Jeff Flake of Arizona says the Democrats' plans, if fully implemented, would in fact be "definitive" and "preferable" to the changes the G.O.P. pushed through Congress in the wake of the Abramoff scandal.

But even if Pelosi delivers the particulars of what she has so far pledged, it's not exactly a revolution she's offering. The gifts, free meals and travel she proposes to ban are largely symbolic perks to lawmakers. Serious oversight, of the kind proposed by some reformers, would include a new office of public integrity and an independent investigator to shine a light on greedy congressional rule breakers. And Pelosi's promised transparency on earmarks is a step down from Democratic campaign vows to ban earmarks sponsored by a lawmaker if the spending benefits the member, his or her spouse, relatives or firms that employ any of them. What's more, Pelosi has tapped Wisconsin's David Obey, a 37-year veteran of the House who is the top Democratic appropriator, with drafting the actual earmark reforms, a troubling choice given that Obey was responsible for approximately 40% of the past earmarks under an informal system established by both parties, according to Scott Lilly, Obey's former chief of staff.

Some Democrats have openly resisted even mild reform. Representative Jim Moran of Virginia announced at a campaign stop in June that he would "earmark the [expletive]" out of spending bills if he got the chance. John Murtha, a Pelosi confidant, told centrist lawmakers the week after the election that he thought her reform measures were "total crap." Democratic lobbyists are doing what they can to fuel the naysaying. "Republican lobbyists have been writing legislation that needs to be reformed, so are we just going to cut off lobbying completely now that we have the chance to fix things?" asks a top Democratic lobbyist.

But the biggest obstacle to lobbying reform may be that in an electoral system almost entirely dependent on campaign donations, lawmakers and wealthy interests will always find a way to connect. Members of Congress know their job security depends on the money they raise before each election, and much of that comes from K Street. "The dirty little secret is that the biggest lobby in town is members of Congress lobbying us," says the Livingston Group's Moffett. Moffett says he bumped into a powerful Senator last spring. They sat on a bench overlooking the city and talked about Moffett's clients. After a few minutes, Moffett gave the Senator his card. By the time the lobbyist got back to his office, the Senator's campaign staff had sent him an invitation to a $1,000-a-plate fund raiser. "When you're holding the chum," says Flake, the Arizona Representative seeking reform, "you can't complain about the sharks."