The announcement this week that the new Democratic Congress will eliminate all 2007 spending earmarks and instead pass a stopgap measure to keep the government funded for the entirety of this fiscal year has caused widespread confusion and anxiety, both within the Bush administration and on K Street, as lobbyists scramble to figure out how their clients will be affected.
“We don’t know what that means,” said Sean Kevelighan, spokesman for Office of Management and Budget Director Rob Portman. He added, “There’s no real clarity above and beyond the statement that was released.”
On Monday, incoming Senate Appropriations Chairman Robert Byrd (D-W.Va.) and incoming House Appropriations Chairman David Obey (D-Wis.) announced in what many regarded as a cryptic statement that they had decided to forgo passing the nine remaining fiscal 2007 spending bills and instead pass a “joint resolution” to keep the government funded until the new fiscal year begins on Oct. 1, 2007. The statement added that all earmarks included in the nine bills would be scrapped.
While OMB will be integral in shaping the spending bill, considering that administration and Congressional staffers already have begun informal discussions, the Democrats’ announcement sent shockwaves through the appropriations lobbying sector, which has been one of the fastest-growing and most reliable practices on K Street in recent years. With other policy measures stalled, clients such as companies, local governments, universities and other nonprofits have turned to the spending process to seek federal assistance.
Michael Fulton, a lobbyist with several appropriations clients at Golin/Harris International, said he got word out to all his clients by Monday night when news hit that Democrats would scuttle the 2007 earmarks.
“I’m sure a grief counselor would tell you there are many stages of recovery after disaster,” Fulton said. “It is a major, major disappointment.”
Confusion exists largely because even Democratic appropriators say they are not sure what the final product will look like.
Byrd spokesman Tom Gavin noted that the two incoming chairmen are not looking to pass a continuing resolution that would keep funding flat at fiscal 2006 levels. Instead, they plan on using the discretionary pot of money — $463 billion — available to them under the fiscal 2007 budget rules.
In essence, Gavin explained, the joint resolution — a term that he said was carefully chosen — would be a “very streamlined” bill that would specify how much money Cabinet departments and the agencies under them would be able to spend during the fiscal year, while not including the kinds of Congressional directives on how to use that money that traditionally accompany appropriations bills.
Gavin indicated that the bill might freeze some agencies’ funding while others get increased.
“Given the austere budget numbers we’ve been handed, they’re going to try to make adjustments to make whole as many agencies as they can,” he said of the two chairmen.
A spokeswoman for Obey declined to elaborate on the bill, referring a reporter back to the original Obey-Byrd statement from Monday.
Kevelighan said Portman would prefer that Democrats try to pass the fiscal 2007 bills individually, as a means of assuring that the president’s priorities get funded.
“The disappointment lies in that we really felt that it was too early to just drop” any attempt at passing the nine remaining appropriations bills, he said.
Kevelighan said programs such as the president’s “American Competitiveness Initiative” that have not yet been funded could fall by the wayside under the Byrd-Obey plan. The initiative seeks to improve science and math education. He also said the president’s “Advanced Energy Initiative,” which would encourage the development of alternative fuels, might not be funded under any joint resolution.
“The administration will continue to emphasize its priorities,” said Kevelighan, who noted that in addition to informal discussions at the staff level, Portman has reached out to the chairmen and ranking members of the Appropriations panels.
Meanwhile, on K Street, lobbyists were trying to make sense of the decision and decide on another plan of action for their clients.
Roger Gwinn, president of the appropriations-focused firm Ferguson Group, called the situation “fluid” and said he continues to hear rumblings from various Capitol Hill sources about what might actually happen with the 2007 budgets.
“Assuming they continue along this path, the only thing you can do is work with the Congressional delegation and the agencies directly to see what sort of resources can be made available [to clients],” said Gwinn, whose registered clients include the National Association of Towns and Townships and the city of College Park, Ga., among others. “We’re going to work directly with the agencies [and] with Members that support these projects, and say these projects ought to receive some funding and some priority.”
Another longtime appropriations lobbyist said that he and his colleagues have spent hours in meetings this week with clients and on the Hill, not to mention strategy sessions at the firm.
“There’s a lot more cards to be played in this game,” said the lobbyist, who requested anonymity. “Do Democrats really want to cede total control of the fiscal year 2007 budget to the agencies? And the [Capitol Hill] staffers are very upset that something they worked on for 12 months is getting thrown in the trash.”
This lobbyist added, “You’re seeing aggressive, spirited lobbying, where people are going to say, ‘Sure, throw everybody else’s in the trash, but mine is in the national, public interest.”
Lobbyists said they will try to get their clients’ earmarks in a joint resolution, even if that remains a long shot, as well as in an upcoming war funding supplemental and in the fiscal 2008 bills.
Another lobbyist, speaking only on background, said that most clients aren’t blaming their lobbyists and likely will retain them next year. “When things get screwed up this badly by partisan games, nobody suggests that they have to stop working in Washington,” this lobbyist said. But if the Byrd-Obey approach prevails, it might be more difficult to sign up new clients, some lobbyists agreed.
While some lobbyists say they do not work for success fees for their appropriations clients, such bonuses are permitted as long as they do not come from appropriated funds. For the firms that do write them into their client contracts, they won’t see the end-of-the-session payday they expected. “Those people would be up a certain creek without the necessary paddle,” said an appropriations lobbyist.
While appropriations lobbyists moaned about the uncertainty, one business lobbyist for a trade association called the Democrats’ move “brilliant” and said it could mean that Congress is getting closer to a balanced budget, which would help the overall economy. But this lobbyist added that while most businesses are for a sound economy in the abstract, no company wants to sacrifice its own earmarks for that goal.
“They’re all for fiscal discipline except for when it comes to themselves,” the lobbyist said.
