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CONGRESS


LOBBYING SPENDING BY TOP INTEREST GROUPS DIPPED AMID 2023 GRIDLOCK


SOME TOP FIRMS SAID THEY SAW REVENUE GROW, HOWEVER, AS LAWMAKERS NEGOTIATED




Speaker Pro Tempore Patrick McHenry, R-N.C. presides during an Oct. 18 ballot as
the House sought to choose a new speaker. (Tom Williams/CQ Roll Call file photo)
By Caitlin Reilly
Posted January 24, 2024 at 3:10pm
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A year of gridlock amid divided government and Republican infighting on Capitol
Hill drove down spending by the biggest interest groups by about 13 percent in
2023 from the previous year. 

In a year in which the House was without a speaker for nearly a month and
Congress punted action on many of its obligations into 2024, the top 10 interest
groups representing companies across business, technology, real estate and
health care sectors spent $283.1 million, down from $326.6 million in 2022.

Tax policy, artificial intelligence and China, along with perennial issues like
health care and defense, drove interest and revenue on K Street last year,
lobbyists said. Those trends are expected to hold this year. And with a
bipartisan tax deal in the works and key tax provisions from the 2017 tax law
set to expire at the end of 2025, tax is expected to take on greater prominence
this year.



“There’s no doubt going to be a significant amount of work behind the scenes,”
said William Moschella, co-chair of the government relations department at
Brownstein. “We continue to see great interest in tax policy. And I think that’s
going to be a strong area for the firm throughout 2024 and then into 2025.”

The U.S. Chamber of Commerce regained the top spending spot after falling to
second place in 2022. The business interest group spent $67.7 million on
lobbying last year, down from $79.4 million the year before, according to
disclosures.

The 2023 list of top 10 spenders was nearly identical to 2022, with the
exception of the addition of CTIA, a trade association representing the wireless
communications industry, that took the ninth spot with $17.2 million in lobbying
expenditures, according to disclosures. CTIA knocked out the American Chemistry
Council, which fell to the 11th position. 

Half of the 10 biggest spenders laid out more on lobbying in 2023 than the year
before: the American Hospital Association; American Medical Association; Meta
Platforms Inc., the parent company of Facebook; CTIA; and AARP.


BUSY YEAR, DESPITE DELAYS

Despite the overall slowdown by the top spenders on lobbying, many of the top
firms that get paid to do that work did not report a drop in revenue compared to
2022. That was the case even though 2023 lacked the mega bills that
characterized the 117th Congress and House activity ground to a halt in October
while Republicans ousted Kevin McCarthy, R-Calif., from the speaker’s chair and
replaced him with Mike Johnson, R-La.

“If the question is, did it somehow harm business? The answer to that is no,”
Moschella said of the monthlong speaker race last fall. “Uncertainty is
something that our clients need help navigating, and so it’s something that we
continue to assist them with.”

Brownstein Hyatt reported $62.6 million in revenue in 2023, up from $61.5
million the year before.

Congress missed many year-end deadlines last year, including on fiscal 2024
spending legislation, the farm bill and reauthorizing the Federal Aviation
Administration, deferring action to this year. But negotiations on those and
other bills, including a supplemental spending package to aid Israel and Ukraine
and a tax extenders deal, were ongoing throughout the fourth quarter, driving
private sector interest, Moschella and others said.

“The issues didn’t go away. They just got postponed,” Moschella said.

Loren Monroe, a principal at BGR Group, agreed. The firm reported $41.7 million
in revenue in 2023, up from $39 million in 2022.

“That work was going on in a detailed, thoughtful bipartisan, regular-order type
of way by committees and leadership. It just wasn’t on the floor,” Monroe said.
“A lot of people are quick to dismiss [it as] nothing happening, but the truth
was our policy team was as busy as ever. And I don’t see that changing in the
next six months just because there’s so much work to finish, but also in an
election year a lot of the work will be front-loaded.”


TAXES, AI AND CHINA

Taxes, artificial intelligence and China stood out to lobbyists as areas that
drove interest last quarter and in 2023 more broadly. Lobbyists told CQ Roll
Call that 2024 would be a big year for engagement on tax policy as businesses
gear up for the expiration of many provisions of the 2017 tax law at the end of
2025.

“A lot of the work being done now is setting the stage for what happens as TCJA
[Tax Cuts and Jobs Act] expires, with potentially a new president, changes in
Congress and a challenging fiscal environment,” Monroe said. “Most of the
businesses interested in tax policy and the impact on their long-term planning
have to be engaged and are engaged this year.”

In addition, the $78 billion family and business tax bill winding its way
through Congress now was another lobbying focus at the end of last year, as
Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman
Jason Smith, R-Mo., were negotiating the deal, Monroe said. 



“I do think it passes,” Monroe said of the bill. “Usually when people are
complaining both that it doesn’t do enough and that it does too much, then
you’ve found a pretty good middle ground in this Congress. They need to take
some legislative victories when they’ve got them.”

Brian Pomper, a partner at Akin, agreed that 2024 would be a “table-setting”
year for 2025 tax expirations, and that there’s been an uptick in interest in
the Wyden-Smith deal. 

Artificial intelligence also emerged as a focus for Akin, which is expected to
continue into 2024, he said. The firm reported $54.7 million lobbying revenue
last year, up from $53.1 million in 2022.

“If I had to boil it down to one thing, I’d say increased interest in artificial
intelligence regulation,” Pomper said. “There’s a lot of interest in how to
craft the proper regulatory architecture for AI, and I think that includes both
the agencies and Congress.”

President Joe Biden issued an executive order in October establishing parameters
for AI to protect consumers. Senate Majority Leader Charles E. Schumer, D-N.Y.,
held a series of AI forums with private sector experts throughout last year with
an eye toward possible legislation to ensure the U.S. doesn’t fall behind China
on the technology.



The competitive threat of China, a major focus of the 118th Congress and one of
the few areas of bipartisan agreement, was another big issue for the firm,
Pomper said. He expects the screening of American investments flowing into China
to demand attention again this year, after being axed from the fiscal 2024
defense authorization bill.

“Clients are always very interested in that and trying to monitor and shape
things like that to the extent that they can,” he said.


REGULATORY RAMP-UP

K Street also expects lobbyists to stay busy thanks to the steady clip of new
regulations as the Biden administration races to finish up major rules in the
first half of this year — outside the window that would leave them vulnerable to
congressional overturn if the White House changes hands next year and Biden
could not veto them.

“By May or so they need to have their priority rules finalized or else they go
into a vulnerable period of Congressional Review Act if Biden doesn’t win
reelection…so they are working feverishly to pass some pretty major rules,”
Monroe of BGR Group said. “A lot that will gain attention from lobbyists
throughout this town.”

The Labor Department this month finalized an independent contractor
classification and has a fiduciary rule that would affect investment firms on
the horizon. The Securities and Exchange Commission still has a climate risk
disclosure proposal to finalize. The Federal Reserve and other banking
regulators have also proposed increases to capital requirements.

“Sometimes you see a little bit of a drawdown during a presidential election
year because the assumption is that not much may happen,” Brownstein Hyatt’s
Moschella said. “However, I think this year is likely to be different because
the agencies continue to be hyper-aggressive with rulemakings, policy changes
and enforcement actions, and because there is such political uncertainty that
our clients remain keenly engaged in Washington.”

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