K Street eyes a return of earmarks to boost business

But congressionally directed spending won’t look like the old days

Congressional earmarks practically built the modern lobbying business. And though the influence sector has endured a decade without them, the likely return of member-directed federal spending has sent cautious jubilation down K Street.

With earmarks poised for a likely comeback this Congress, lobbyists are eyeing new business opportunities. But they’re not expecting it to be a return to K Street’s high-flying days of yore, when lobbyists built empires out of the business of securing earmarks for clients.

Lawmakers, if they do bring back the practice of earmarking appropriations bills with the pots of member-directed spending, are likely only to allow the federal dollars to go to nonprofit organizations and local governments. And they’d likely be publicly disclosed as a way of preventing the scandal and corruption that led to earmarks’ official demise in 2011.

Still, lobbyists say even limited earmarks for nonprofits could spur new public-private partnerships, with businesses queuing up to collaborate on future projects.

“For advocacy in general, it’s going to be a positive, another avenue of advocacy for our clients and another potential way for helping clients meet their needs and working with lawmakers and working on projects in their districts and states, on bills that are must-pass bills,” said Ed Pagano, a lobbying partner at Akin Gump Strauss Hauer & Feld and a former congressional and administration aide. “It’s another option for them to achieve their goals.”

A Cassidy spokesperson did not provide comment. Another firm built largely around earmarking was Van Scoyoc Associates; a spokesperson for the firm declined to discuss the matter until after Congress has made a final decision and announced the parameters of the proposal.

Bottom line

Overall lobbying revenue dipped in 2011, after hitting a peak in 2010, according to an analysis of LDA reports by the nonpartisan Center for Responsive Politics. That drop, which has since rebounded, was likely due to a combination of factors, including the demise of formal earmarks, the trend of lobbyists to deregister and the ripples of the Great Recession catching up to K Street.

“Our clients are excited about the prospect of a return to earmarks, and we think we can be helpful to them with our advocacy there,” said Cristina Antelo, founder of the lobbying firm Ferox Strategies.

She noted that while her firm does work with some nonprofits, many of her clients have federal contracts. “For these, our lobbying on the Hill will be focused on helping the agencies fund the interests, technology and needs they have already determined they require for their own missions and that our clients can help accomplish,” she said.

The politics of earmarks cuts both ways. Lawmakers who secure funding for projects in their districts or states can tout such measures as accomplishments. On the other hand, earmarks can make for fodder in opposition ads, given past scandals involving earmarks and campaign contributions. Before he left office, President Donald Trump pardoned former Rep. Randy “Duke” Cunningham, R-Calif., who went to jail over a scandal involving earmarks.

Dead earmarks society

Still, lobbyists see potential arguments in favor of lawmakers steering public funds.

“Congress needs to reassert its power of the purse and its oversight responsibility over the executive branch,” said lobbyist Michael Herson, who runs American Defense International. As for whether a likely return of earmarks might serve as a boost to his business, he said that “for now, there are more questions than answers.”

Paul Brathwaite of the lobbying firm Federal Street Strategies said it all comes down to the kind of earmarks lawmakers seek.

“People can ridicule earmarks, but if we identify these as national priorities, I think it’s defensible to say, ‘In 2021, women shouldn’t die because they’re having children, and we are going to try to figure out how to bring better health care access,’” Brathwaite said. “These are the kinds of investments that folks should be able to rally around and say that’s a good use of money.”

Some lobbyists remain skeptical about the process of earmarks’ possible return this Congress. Rich Gold of the lobbying firm Holland & Knight has been advocating a resurrection in congressional earmarks for years, as part of an odd-bedfellows collaboration, à la a dead earmarks society.

He said his club had put in a lot of time and effort into fixing some of the problems with earmarks and added that lawmakers “haven’t reached out to anybody I can tell who has a lot of expertise in this area.”

Another member of that dead earmarks club, Craig Holman of the liberal organization Public Citizen, said he believes earmarks are likely to return, though he doesn’t expect lawmakers to adopt his recommendations, such as banning earmarks for campaign contributors.

“If you can remove the corruption element and conflicts of interest, you can set up a system where members of Congress will negotiate over legislation,” Holman said. “It’s been known to cross party lines. It would help reduce the polarization that has just made Congress absolutely dysfunctional.”