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Thank you Mr. Chairman and Members of the Subcommittee for the opportunity to testify today. My name is Joan Claybrook, and I am the President of Public Citizen. Public Citizen is a national consumer advocacy group, founded by Ralph Nader in 1971, with approximately 100,000 members across the country. Public Citizen has for many years sought to increase government accountability to citizens through a number of legislative initiatives, including campaign finance reform and lobbying reform. I understand that a number of issues will be discussed at this hearing, including the revolving door and foreign agents registration. My testimony today is directed primarily to lobbying reform.
Mr. Chairman, I am, of course, pleased and honored to be here, but in one sense I am also sorry to be here. I very much regret what occurred at the end of the last Congress when the conference report on lobbying reform and gifts legislation passed the House by a lopsided 306-112 vote, but died in a filibuster in the Senate. I was happy to note that despite a fierce misinformation campaign mounted by opponents in the waning days of the session, only one member of this subcommittee voted against the conference report on that bill last year. Mr. Chairman, I want to commend you for putting this issue on the agenda early in this Congress. I am confident that you and Mr. Frank will be able to work together to build on the work done by Mr. Bryant and Mr. Gekas last year and shepherd meaningful and comprehensive lobbying reform legislation to the House floor. I sincerely hope this can be done before one party or the other determines that for some reason it is in their political interest to try to stop this very important reform legislation once again.
Let me start by admitting, no, by saying proudly, that I am a lobbyist -- a registered lobbyist at that -- and have been for 13 years. Public Citizen currently employs ten individuals other than myself who are registered lobbyists and represent the consumer and
1 I would like to thank Robert F. Schiff, the staff attorney at Public Citizen's Congress Watch who works on lobbying reform and other government accountability issues, for his assistance in preparing this testimony.
citizen perspective on Capitol Hill in a wide variety of legislative debates, inciuding those concerning product liability and medical malpractice, the regulatory process, health care reform, global trade, campaign finance reform, and nuclear safety and energy conservation issues. I believe strongly in the constitutional right of citizens to petition their government that is, in the right to lobby. None of our recommendations are meant to "chill" lobbying or to interfere with communications between Members of Congress and their constituents or anyone else who is affected by legislation.
At the same time, as a veteran of numerous legislative battles, I have seen over and over how the political system is subverted by monied interests -- how citizen and consumer interests are outgunned by the interests of big business and corporate America. The simple truth is that money buys influence in this town. It buys clout and access through campaign contributions, through experienced legal, lobbying, and public relations representation, through advertising, polling, and professional grassroots lobbying firms, and through social contacts at meetings, resorts, and restaurants. Nowhere is the fact that money buys access clearer than in the campaign finance system. Lawmakers are, unfortunately, constantly starved for campaign donations. Many begin thinking about their next election and how they are going to pay for it literally the day after they win their seats. When the PAC for a large business interest doles out money to a lawmaker, that interest buys access, squeezing out citizens and constituents who cannot afford large campaign contributions. And professional lobbyists often act as the go-betweens, the brokers in political fund raising. Carnpaign contributions are an integral part of many lobbying campaigns, as last year's health care debate made perfectly clear. Lobbyists have become expert at bundling contributions, to increase their influence well beyond that which a single PAC contribution or contribution from the lobbyist's own pocket would buy. Indeed, Public Citizen strongly believes that the most effective way to make government work for the people is to revamp the campaign finance system. Until there are sharp limits on PAC donations, tough restrictions on "bundling," limits on campaign spending, no more "soft money," and, most important, the replacement of some of the private money that funds congressional campaigns with clean, public money like the system for presidential candidates, abuses of the political process will continue. In-fact, there can be no real lobbying reform without campaign finance reform, because special interest money will continue to open doors for a select few, while the vast majority who cannot contribute large sums are left out in the cold.
The Need For Lobbying Reform
Campaign finance reform alone is not enough, nor is the fact that the campaign finance issue may be difficult to tackle in this Congress reason not to move forward with lobbying reform. Public Citizen believes there is a tremendous need for strengthening and updating lobbying disclosure laws. The public will benefit from better access to information about lobbying -- and the role money plays in it -- just as it benefits from information about campaign donations. Right now, a citizen who wants to see how her representative's vote on telecommunications legislation squares with contributions received from the telephone or cable industries has a way to do it: the Federal Election Commission (FEC) can provide the information. However, if she wants to know how much money telecommunications interests spent lobbying that Member of Congress, what sort of gifts, meals, and entertainment they enticed him with, or how much was spent on advertising such as the full page ads that we see in Roll Call every week -- she will have great difficulty finding that information.
The reason is not that there are no lobbying disclosure laws. In fact, there are several such laws: the Federal Regulation of Lobbying Act (PRLA), the Foreign Agents Registration Act (FAR A), and legislation known as the HUD and Byrd amendments. The problem is that these laws are cumbersome, vague, riddled with loopholes, and rarely enforced. A GAO study in 19øl fou.ld that of the roughly 13,500 people and organizations listing their services in the reference book Washington Representantives, only about 3,500 were actually registered as lobbyists. Even those lobbyists that register rarely provide complete or useful information.
This is not entirely the fault of lobbyists. The most recent set of guidelines for complying with the FRLA dates back to 1946--and actually predates U.S. v. Harriss, a 1954 U.S. Supreme Court decision that narrowly construed the registration requirements. As a result, the contents of lobbying disclosure reports are left to the judgment of each individual lobbyist or organization, resuldng in vagueness, inconsistency, and plenty of disclaimers.
In September 1993, Public Citizen released a report entitled Indecent Disclosure, which examined lobbying disclosure forms for lobbyists and organizations reporting activities in three major legislative battles in the 101st and 102nd Congresses. (I have submitted a copy of that report to the subcommittee and request that it be included in the hearing record.) We looked to see whether lobbyists were specific about which issues they were lobbying on; whether the amounts they reported spending seemed realistic; whether they reported sources of funding; whether or not they reported whom they lobbied; and whether or not they iternized gifts, travel, and meals. Predictably, we found that the lobbying disclosure reports were woefully inadequate, even though probably not in violation of existing law:
ù The Problem of Misleading Coalitions. As Jeffrey Birnbaum writes in The Lobbyists: How Influence Peddlers Get Their Way in Washington, the use of misleading coalitions has grown in recent years:
[I]ncreasingly, lawmakers saw fewer...individual pressure groups. Instead what they saw was a coalition of interests that claimed to care about the public good, often led by organizations that, politically speaking, were less offensive to an elected official than were the self-interested corporations that tended, in reality, to bankroll such efforts. Lobbyists even had a term for this type of special interest manipulation. It was called creating coalitions of nontraditional allies. [p. 36]
One example of this phenomenon that emerged in the late 1980s and early 1990s was a group called the Business Coali.ion for RICO Reform. The coalition lobbied hard to weaken the Racketeer Influenced and Corrupt Organizations Act (RICO) to make it virtually impossible to sue accountants and law firms who participated in S&L and other major white collar crime scams. Forms filed by the law firm of Rivkin, Ratter, Dunne ~c Bayh on behalf of the coalition from January 1989 - January 1990, during the 101st Congress, failed to reveal the source of funding for this coalition. While the coalition~counted such members as the American Civil Liberties Union (ACLU) and the AFL-CIO, because current disclosure laws are so weak, it remains a mystery to this day who actually was funding and therefore likely controlling the coalition's work. We believe that the source of funding for a coalition that lobbies on an issue is a basic piece of information to which the public is entitled. We strongly support requiring disclosure of the identity of any organization or individual that provides significant financial support to the reporting individual or group and helps direct its lobbying activities.
ù The Problem of Inadequate Gift Reporting. In the face of a major reregulation bill, the National Cable Television Association (NCTA) pulled out all the stops in 1992, hiring a virtual who's who of powerhouse lobbying and law firms: The Duberstein Group; Patton Boggs and Blow; Manatt, Phelps, Phillips and Kant or, among others. All of these groups filed disclosure forms, as did NCTA's own lobbyists. Yet the information provided raises more questions than answers. For example, NCTA's own lobbyists reported spending $1,624.05 for meals during the 3rd quarter of 1992 alone. During the months leading up to votes on cable reregulation, NCTA lobbyists reported wining and dining at some of the swankiest restaurants in town, including La Colline, Le Mistral, The Red Sage, and Two Quail. For example, Pamela Turner, vice president for government relations, dropped $101.94 at The Peasant four days before the first cable vote. Kathleen Ireland, director of government affairs, spent $630.86 over a six-week period from July to August at such establishments as Galileo, Le Mistral, Sfuzzi, and La Colline. While NCTA lobbyists were assiduous about reporting these meals, they did not report with whom they dined, since the law does not require that.
In contrast, not one of the outside firms hired by NCTA to lobby reported any meals, suggesting that they followed a very different standard for reporting than their client or had a very different lobbying style. In fact, the most detail about any expenses claimed was provided by Patton Boggs ~œ Blow, which claimed $20.00 for Thomas H. Boggs in "travel" expenses from July - August 1992. The problem of inadequate reporting of gifts and meals can be easily solved ~ by not allowing those gifts and meals in the first place. Public Citizen strongly favors a tough and comprehensive gift ban and believes it should be included in a lobbying reform bill. There is simply no justification for Members and staff receiving this kind of largesse from lobbyists. If it is to continue, however, there must be better disclosure, including the names of the beneficiaries of the lobbyists' generosity.
ù The Problem of Spotty and Inconsistent Income and Expenditure Reporting. During the 102nd Congress, three drug companies, American Home Products Corporation (AHPC), Procter & Gamble (P&G), and Upjohn, sought patent extensions for certain drugs, worth millions of dollars to these companies. Disclosure forms filed by these companies and the firms they hired raise many questions:
ùAHPC's claims of money spent lobbying are unrealistic. AHPC claimed to have spent just $4,745 on its own lobbying, nearly half of which went to "office overhead." If that is all they spent, they must have the most efficient lobbying operation in town.
ùThe lobby disclosure forms for one P&G employee, Edwin L. Behrens, Associate Director for National Government Relations, illustrates one significant ambiguity in current law. Behrens assiduously reported time spent with Members of Congress to the minute and then pro-rated his salary accordingly to determine amount spent on lobbying. These records, though, do not include lobbying of congressional staff. Some interpret current law not to cover such contacts, even though most lobbyists communicate largely with staff.
Some interpret current law not to cover such contacts, even though most lobbyists communicate largely with staff.
ùSimilarly, the amounts reported expended by lobbying firms hired by Upjohn make little sense. At the firm Bailey, Morris, and Robinson, one partner reported receiving zero dollars for the entire year. Another partner reported receiving $41,000 for the entire year, all in the fourth quarter. Still another partner, filing for the whole firm, reported that the firm received $30,000 in the first two quarters -- the same time period for which his partners claimed they received nothing at all. Clearly, it is impossible to tell who received how much and when from these forms. There simply can be no debate over the need to clarify the reporting requirements of the FRLA so that consistent and useful information can be obtained by citizens interested in the expenditure of funds by companies and organizations active in the legislative arena. The current system does nothing to dispel the widespread public sense that "lobbying disclosure" is an oxymoron.
ù Current Examples. In our efforts to analyze the influence of corporate special interests on the legislative process, we regularly run up against the inadequacy of the lobbying disclosure laws and the cavalier attitude of those who are subject to them. Recently, for example, it was reported that lobbyists from the law firm of Hunton & Williams had conducted a pre-markup staff briefing on the regulatory legislation then being considered by the Senate Judiciary Committee. We attempted to determine what clients the firm represented with an interest in that legislation. We were disappointed, though perhaps not surprised, to discover only one current lobbying report on file for the firm, listing a single client. None of the individual lawyers involved in the staff briefing had current reports on file or were mentioned on the firm's report. After the staff briefing was reported in the press and questions were raised by Senator Leaky an~ Public Citizen about the f~m's lobbying disclosure reports, Hunton & Williams filed a new preliminary report listing 14 different letter, of course, that the filing of a report was not an admission that the firm's activities are subject to the Act.
We are also reviewing lobbying reports filed by organizations and individual lobbyists active in the product liability and civil justice debate. While our research is not yet complete, it is already plain that a clear picture of the players and their expenditures cannot be gained from these reports. At least one very active group and lobbyist has not yet filed a disclosure statement for the first quarter of this year. Others give no indication on their reports that they are lobbying on product liability. (My personal favorite is the report of a lobbyist for the National Federation of Independent Businesses who reports that the issues on which she lobbies are "[a]ll legislation affecting small business and the economic well being of the country.") And the income and expenditures disclosed on many reports seem like a vast understatement given the resources that we all know are being expended in this debate.
These cases of incomplete and inconclusive reporting are hardly isolated. In 1991, the General Accounting Office (GAO) conducted a survey of lobby disclosure forms filed in 1989. The agency's review of a sample of over 1,000 quarterly reports showed that only 32 percent listed bill titles for issues lobbied; only six percent described publications issued or distributed on legislative issues; only one percent of registrants replied 'yes' to the question of whether contnbutions of $500 and more were received; almost 90 percent reported no expenditures for wages, salaries, fees, or commissions; more than 95 percent reported no expenditures for public relations and advertising services; and a full 73 percent reported zero money spent on travel, food, lodging and entertainment.
Important Issues In Lobbying Reform
Mr. Chairman, as far as we are aware, the only significant lobbying disclosure bill that has been introduced in the House to date is H.R. 119, which is essentially identical to the conference report that passed the House last year. Public Citizen supported that bill last year, and supports it now. We believe that it addresses the major issues of lobbying disclosure in a thoughtful and balanced way. Public Citizen would be pleased to offer views on other specific legislation as that legislation is developed. At this initial hearing, I would like to touch on a few of the more difficult and important issues that the subcommittee will need to address as it moves forward.
ù Grassroots Lobbying
The issue of grassroots lobbying was the focus of intense debate during consideration of the bill last year, particularly at the end of the session when politically motivated charges were made that the bill would interfere with comrnunications between constituents and Members or with the activities of membership organizations such as the Christian Coalition. We found these charges to be completely without merit and especially disturbing because those that made them took advantage of the public's distrust of Congress to give opponents cover for stopping a bill that was designed to increase public understanding of the legislative process and ultimately help restore public confidence in the institution.
It is essential from the outset to understand what the term "grassroots lobbying" means in this context. As used in the conference report last year and in H.R.ll9, "grassroots lobbying" does not refer to communications from constituents, the "grassroots," to Members of Congress. Instead, it refers to communications to the "grassroots" from lobbying organizations to encourage individuals to contact their elected representative, or to encourage them to ask their friends and neighbors to make such contacts. Thus, the disclosure sought in these bills is of expenditures made to generate grassroots activity.
Some have suggested that the best way to avoid a repeat of last year's divisive debate is to eliminate coverage of grassroots lobbying from the bill ensirely. That would certainly avoid controversy, but it would also weaken the bill substantially by omitting disclosure of a very significant component of the modern lobbying campaign. The public will not get a clear avoid controversy, but it would also weaken the bill substantially by omitting disclosure of a very significant component of the modern lobbying campaign. The public will not get a clear picture of the resources brought to bear on legislative activities if grassroots lobbying, as defined above, is not included.
A recent cover story in the magazine Campaigns & Elections noted the explosion of professional grassroots efforts in today's legislative battles: "In the modern world, few major issues are merely lobbied anymore. Most of them are now managed, using a triad of public relations, grassroots mobilization, and lobbyists." In addition to public media campaigns, "[t]he other side is the planned and orchestrated demonstration of public support through the mobilization of constituent action. That is what grassroots lobbying is all about, and it is one of the hottest trends in politics today." Ron Faucheaux, "The Grassroots Explosion," Campaigns & Elections, Dec. 1994/Jan. 1995, at 20.
Estimating that nearly $800 million was spent on grassroots lobbying at the federal, state, and local level in the two year cycle 1993-1994, Campaigns & Elections included a Grassroots Lobbying Buyer's Guide listing over 100 private companies that offer services such as direct mail, phone banks, petition gathering, and grassroots organizing. Organizations such as the National Federation of Independent Businesses (N~;IB), the Independent Insurance Agents of America (IIAA), the American Association of Retired Persons (AARP), and the American Nurses Association (AN A) have significant in-house grassroots lobbying operations that play a major role in their legislative activities. (I have attached a copy of the Campaigns & Elections story to this tesimony and request that it be included in the hearing record.)
Public Citizen believes that lobbying disclosure requirements must include expenditures on grassroots lobbying activities, i.e., expenditures to generate communications from the grassroots to the Congress, if the public is to have an accurate picture of lobbying in the 1990s. This does not mean that small grassroots organizations who don't employ professional lobbyists should be covered (see discussion of thresholds below), or that an lobbying from the bill entirely, and we hope this subcommittee will have the courage to address this issue.
ù Front Groups and Coalition Funding Disclosure As noted above, businesses often form coalitions to lobby on a single issue, and the name of that coalition gives little clue as to its sources of financial support. Public Citizen 4upports a requirement that such coalitions report their primary sources of funding. This type of provision in last year's conference report led to claims that membership organizations would have to disclose the names of their members. Not only was that not the intent of that provision, but such a result would be unconstitutional. See NAACP v. Alabama, 357 U.S. 449 (1958). We are confident that statutory language and legislative history can be drafted to eliminate any doubt as to the purpose and constitutionality of such a provision.
ù Thresholds for Registration snd Reporting
The purpose of lobbying disclosure legislation is to increase public awareness of paid professional lobbying. The burden of reporting, while not overwhelming, is substantial enough to justify exceptions for what might be termed "de minim us" lobbying. There are balances to be struck on many issues raised by lobbying disclosure, and this is one of them. The additional inforrnation to be gained from having every person who is paid to make a lobbying contact register as a lobbyist does not justify placing the burden of registering and reporting on those who don't spend a significant amount of their time on lobbying.
Whatever the exceptions are, they should be easy to apply and difficult to turn into loopholes. For that reason, we strongly prefer the approach taken in the conference report, which was to excuse from registration those individuals whose lobbying activities constitute less than 10% of their work for a client or organization. By contrast, an earlier version of the bill, which would have excused individuals whose lobbying was "incidental to, and not a significant part of" the work for a client, was so vague that it would have led to evasion, litigation, or both. We are also comfortable with the dollar amount ~ inimum thresholds for significant part of" the work for a client, was so vague that it would have led to evasion, litigation, or both. We are also comfortable with the dollar amount mir~imum thresholds for reporting of $2,500 in semi-annual income for a lobbying firm from a single client, or $5,000 in semi-annual expenditures for an organization that lobbys on its own behalf.
We would suggest one change in the operation of the thresholds to reduce the burden on local organizations that engage in a small amount of direct lobbying of federal representatives. For purposes of determining whether an individual has spent 10 percent of her time on lobbying activities and must therefore register, grassroots lobbying should not be included. Thus, a small organization that has one employee who makes a handful of direct lobbying contacts and also spends over 10 percent of her time generating grassroots contacts should probably not have to register. We would be happy to suggest legislative language to accomplish this change.
ù Treatment of Nonprofit Organizations
One of the thorniest issues in this legislation is how to treat non-profits, such as Public Citizen, who are already subject to reporting requirements on lobbying in connection with maintaining their tax-exempt status. The basic principle from which our analysis proceeds is that this legislation must treat all lobbyists equally -- I am just as much of a lobbyist as lobbyists in the business community are, and the public has just as much right to know about the expenditures of my organization on lobbying as it does to know about those of General Motors or the American Tort Reform Association. We concluded long ago that to be credible, this legislation has to be evenhanded.
Having said that, we also recognize the concern of the non-profit community over the difficulty of having to keep records for purposes of lobbying disclosure that differ from those kept for the Internal Revenue Service because of different definitions of what constitutes lobbying. This is a problem with which the business community does not have to contend. The ~-,ternal Revenue Code's definition of lobbying includes lobbying of state and local legislation). We support the accommodation reached in the conference report to allow non profits to base their estimates of lobbying expenditures on their tax reporting records, as long as they make it clear that that is what they are doing. This separate treatement should have a limited duration, however, until the GAO investigates the problem and makes recommendations to resolve it. As far as we concemed, the legitimate concems of non-profits were amply met in the conference report. Further exceptions will undermine the evenhandedness of this bill.
ù Lobbying of the Executive Branch and Congressional Staff
One of the major accomplishments of last year's bill was to finally require registration and disclosure by paid lobbyists who seek to influence decisions made by executive branch officials. Significant effort went into crafting those provisions so as not to cover routine interaction with government officials, while recognizing that the public ought to be able to get inforrnation concerning the activities of lobbyists hired to lobby high level decision makers in the executive branch. Last year's bill also made clear what no one can now seriously dispute -- that communication with congressional staff is as much "lobbying" as communicating with Members themselves. Public Citizen obviously supports closing these two loopholes in current law.
ù Meaningful Enforcement
Rightly or wrongly, the public is skeptical of Congress's willingness to make significant changes in the lobbying culture of this town. For that reason, a credible enforcement mechanism for this legislation is essential. The current FRLA became virtually unenforceable because it provided for criminal penalties, leading the Supreme Court to determine that it had to be quite narrowly construed. We support a civil enforcement scheme with significant money penalties for willful violations and lesser penalties for minor violations, such as those provided for in last year's conference report. In order for this law to work and the public to receive the information to which it is entitled, lobbyists m_st obey the law. Credible deterrence, namely swift and certain penalties for willfully failing to register or inadequate disclosure, is therefore essential.
ù Gifts
I close on this topic, recognizing that this hearing was not called to cover the gift problem. But gifts are inevitably tied in the public mind to loWying reform. Few things 'oother average citizens more than reports of lobbyists buying Members meals at fancy restaurants or treating them to expensive vacation junkets. Public Citizen urges this subcommittee to report out a tough and comprehensive gift ban, separately or attached to its lobbying reform bill. There is simply no justification for allowing current practices to continue. Whether or not the criticisms of Members on this issue are justified, the time has come to lay the issue to rest by "just saying no."
Mr. Chairman, thank you once again for giving us the opportunity to testify today. We are prepared to assist you in any way we can as you move forward on this important issue. I would be happy to answer any questions that you have.