K Street expects to be shut out of lame-duck deal on ‘fiscal cliff’

Lobbyists are pessimistic about delivering for their clients in whatever package lawmakers craft to resolve the “fiscal cliff” during the lame-duck session after the election.

There is hope on K Street that Tuesday’s election will lead to more legislative work — and more lobbying fees — in the coming year. But many lobbyists expect to be shut out of the process as Democrats and Republicans work to stop the massive budget cuts and tax increases set to begin in January.

Tony Podesta, chairman of the Podesta Group, said lobbyists will have to focus on leadership in the House and the Senate if they hope to attach any items to what could be the only major legislative vehicle moving in the lame-duck session. 

“If the [House] Speaker and the [Senate] majority leader are for it, you have got a shot at it. There won’t be any markup where you can add a few extraneous items to the bill. … The lobbying will be very narrow,” Podesta said. “The odds of a passionate member of the leadership adding something to the bill may be low. The odds of the rank-and-file membership getting something into the bill are zero.”

Few expect party leaders to create a “Christmas tree” bill that K Street can hang provisions on for clients, because any compromise would be heavily scrutinized by the press and rank-and-file members.

“As you know, we always try. That’s what us lobbyists do,” said Kathryn Lehman, a partner at Holland & Knight. “[Lawmakers] have shown the discipline before to keep bills clean that they wanted to keep clean in the past. They will have the wherewithal to do that again.”

Lehman cited the stopgap spending bill that Congress passed this past September as evidence of lawmakers’ ability to keep legislation free of extemporaneous goodies.

That’s not to say any “fiscal cliff” bill won’t be lobbied on heavily if one does appear on Capitol Hill. But K Street as well as lawmakers will be on defense, trying to protect interests that would be hurt by budget cuts or tax increases.

“We are not going to be adding things to this Christmas tree. We are going to be clarifying what programs should and should not be cut. There are cuts that are going to be made, and that leads to winners and losers, which leads to the need for advocacy,” said Bob Van Heuvelen, founder of VH Strategies. “It’s going to be hard, but it’s not going to be impossible.”

With campaign season now finished, lawmakers will get back to work, leading to a potential rebound for K Street at the end of a disappointing 2012.

Former Rep. Billy Tauzin (R-La.), now special counsel to Alston & Bird, said the lame-duck session and the next Congress promise to bring up a flurry of issues, forcing both parties to work together.

“If gridlock is a drought season for our kind of work, we’re going to enter the rainy season,” Tauzin said.

Alston & Bird lobbyists said at a post-election briefing Wednesday that their lobbying revenues have been on the rise, and the firm expects that trend to continue.

Ex-Sen. Blanche Lincoln (D-Ark.), also at Alston & Bird, said that this Congress will “begin to move” on big issues, mostly because neither side has the option to delay action any further. 

Tax reform continues to be a major driver of foot traffic to K Street, with the election results hinting that a deal to bring down rates by ending loopholes could be in the offing. Every industry could come under threat, which has led to expectations of increased business for lobbyists.

“We are trying to bring people in the door to get them ready,” said former Rep. Jim Walsh (R-N.Y.), a government affairs counselor at K&L Gates.

“People need to be engaging and ready to engage, because it’s all going to be on the table,” Lehman said.

Despite the election shake-up, some dynamics won’t change in Washington. Lobbyists expect that the GOP-controlled House will serve as a check against regulations being proposed by the reelected Obama administration.

“I assume Obama, without another election on the horizon, will do what he truly believes is the right thing to do. He’s probably going to do some things in the next four years that he wouldn’t do in the last four,” said one Republican lobbyist. “What we do is get Congress to perform its oversight function, ask some questions, get some documents. Those are some of the resources we would use to slow down an unburdened president.”

But don’t expect a K Street hiring spree now that the election season has passed. 

Lobbyists said many clients are already staffed up, though some are looking to hire in preparation for what is expected to be a busy 2013 on Capitol Hill.

“To the extent that people are shopping for legislative counsel, they are looking for next year, not for the lame duck,” Podesta said. “If you were running a business concerned about the major questions facing the country, you want to know what they are, [and] you would want to be in a situation where you would have a team on the field.” 

Megan R. Wilson contributed to this report.