By Rachel Leven - 07/28/11 10:00 AM EDT
K Street is ready for the debt-ceiling saga to end.
Forced mostly to the sidelines by the backroom maneuvering over the debt limit, lobbyists are eager for Congress to return to normal legislative work. Many anticipate an increase in business once the crisis is resolved.
The ever-shrinking window of opportunity for moving legislation through Congress is making downtown firms pine for normalcy. With delayed bills piling up, lobbyists are having a hard time figuring out what to focus on.
“A lot of initiatives that we’re working, the markups have been delayed or initiatives have been delayed,” House said. “It’s not business as normal and it won’t be until they get it resolved.”
The switch to divided government this year has also put a damper on the lobbying industry. Most of the top firms have reported revenue decreases when compared to this point last year, when there was flurry of activity on healthcare and financial industry reforms.
K Street sources interviewed by The Hill said the sandwich effect of the debt-ceiling talks and the 2012 election cycle gives Congress only a few months to pick up the pace and pass legislation. Once election season arrives, all bets are off for anything moving through Congress.
Marc Lampkin, a senior Republican strategist at Quinn Gillespie & Associates, said presidential election years are usually the toughest time for lobbying firms to pick up new business.
“This year I think has been more like a presidential [election] year because there have been so many macro-level issues that have sucked the energy out of the congressional calendar,” Lampkin said. “Because they’ve spent so much time fighting two or three big issues and not enough time on smaller issues.”
Even though most lobbying firms aren’t worried about their business weathering the storm, many of their clients are.
“I’m aware and our clients are aware of the [dangers of predicting the future], but they don’t have the luxury of not making choices,” said Nick Allard, a partner at Patton Boggs. “The uncertainty of the future is putting a premium on expert advice more so than ever before.”
The cloudy picture for legislation has also brought uncertainty for lobby firms, which are waiting to see how much business rebounds in the fall. House, of Hogan Lovells, doesn’t think the increase will be dramatic, though he says there is a lot of “pent-up demand on moving a number of issues.”
“At this point you don’t have a large piece of legislation that is out there,” House told The Hill. “You have other things on the horizon, but there is not a lot of major legislative initiatives that are moving at the present.”
If a deficit-reduction plan leads to a major restructuring of the tax code, though, there will be plenty of business to go around.
“We have a wonderful battle coming up regarding who pays and who doesn’t,” Venable Partner Tom Quinn said of tax reform. “There’s going to be an avalanche of activity when they start [examining] loopholes. There are no easy loopholes [to close]; otherwise they would have been found in the last 30 years. It’s going to be excruciating.”
Allard said the question isn’t whether comprehensive tax reform will be debated this year, but whether “it’s a 2012 or a 2013 issue.” With the House Republican majority, it will be difficult to pass any reform legislation that raises additional tax revenues, he said.
Lobbyists say the implementation of a debt-ceiling agreement could also spill over into the rest of the year, depending on the details of the final bill.
“I don’t think there’s enough time to work out all the details,” Allard said, referring to work after a deal is passed. “So there will be follow-up legislation and some of the things proposed, some of the packages, you know, like Fannie and Freddie reform, [that’s] major legislative work that remains to be done to fill in the details.”
Lobbyists also mentioned the pending trade deals, entitlement reform, Dodd-Frank and implementation of the healthcare law as issues that could soon be back in play.
But they acknowledged they are reading the tea leaves like everyone else.
“If you try to make your living with a crystal ball, you sometimes have to eat glass,” Allard said.