Introduction

Major enterprises competing in Washington, D.C. against established rivals commonly find themselves mired in a lobbying stalemate.  Stagnant total lobbying expenditures and declining retainers for even the largest K Street firms signal the need for new approaches to corporate political competition that reflect an era characterized by party realignment and intensifying ideological conflict.  The first in a two-part series on the future of business advocacy, this Baron Political Risk Brief explores the factors that produced the current lobbying standoff and the growing pressure on C-suite executives to field new tactics and technologies. 

The Lobbying Stalemate

Although still necessary and ubiquitous, corporate lobbying in Washington, D.C. has become far less consequential during the past decade.¹  The biggest companies and trade associations contesting major issues have often reached lobbying parity, reflecting practical limits on the capacity of government to absorb direct advocacy (see below).  The clearest evidence of this phenomenon is that while lobbying maintains no barriers to entry, the number of registered practitioners has barely risen – 12,080 to 12,937, or only seven percent – during the past decade.  Total lobbying spending tells a similar story: adjusted for inflation, the figure has slightly declined, from $4.49 billion in 2013 to $4.26 billion in 2023.2 Combining these indicators, the per capita value of a lobbyist has fallen from $371,585 to $329,185 in real dollars.³ 

Flat lobbying spending does not reflect Washington, D.C.’s diminishing influence or affluence.  On the contrary, the city has become richer and more powerful in the last decade.  The nation’s capital today boasts a far higher per capita personal income than any of the 50 states, exceeding that of Massachusetts and Connecticut by more than $13,000.⁴ 

Several major corporations – such as Amazon, Boeing, and Raytheon – have established new headquarters in the area around Washington, D.C. in just the last five years.  In 2021, German publishing giant Axel Springer paid $1 billion for Politico, “the global authority on the intersection of politics, policy, and power,” headquartered in Arlington, Virginia.⁵  Single-family residences in Bethesda, Maryland – a community that many of Washington, D.C.’s wealthiest lawyers and consultants call home – averaged $1,297,936 as of April this year, which is more than three-and-a-half times the national average.⁶

Nevertheless, even among 15 of the highest-grossing lobbying firms, the inflation-adjusted average monthly retainer per client dipped by approximately 20 percent between 2013 and 2023.⁷  The business of politics has boomed during the past 10 years, just not for lobbyists. 

Market Constraint

While some lobbying activity targets the executive branch, most targets Congress, which has an inherently limited capacity to meet lobbyists’ demand for access.  The number of voting Members of Congress has not changed since 1963, and the number of legislative staff has plateaued in recent years.  The total number of U.S. House staff, including all personal Member offices and committees, has drifted slightly lower, from 9,386 in 2013 to 9,247 in 2023.⁸  Between 2012 and 2022, the number of U.S. Senate staff has barely grown, from 5,964 to 6,019.⁹  Of course, the number of aides who possess meaningful authority constitutes only a fraction of this universe.  The limited number of true decision makers means that lobbyists encounter a legislative apparatus with a constrained supply of meeting slots – the tangible, albeit highly imperfect, metric of lobbying productivity.

Searching for an Edge: Balancing Risk, Cost, and Measurability

To secure an advantage, corporate decision makers responsible for advocacy must manage a complex mix of requirements, as well as broader trends in business culture.  These demands include a strong preference for tech-driven solutions that promise efficiency and metrics.  When such quantitative approaches run up against the essentially qualitative nature of politics, frustration often results, followed by pressure to pursue higher-risk tactics.  This tendency commonly begins at corporate headquarters with a fundamental misunderstanding of political engagement as a subdiscipline of business, rather than an entirely distinct domain that should be engaged on its own terms in the service of business objectives. 

Flawed tactics resulting from this misunderstanding of government relations include: 

• Opaque third-party proxy armies that conceal funding sources, denying policy makers the transparency essential to assessing the merits and likely consequences of policy proposals; 
• Digital advertising and other online advocacy activities, ineffectively applying the data-driven solutions of e-commerce to a political arena defined by the limitations imposed by interpersonal relationships; and
• Large-scale revolving-door hiring of government employees by private enterprises, blurring the boundary between public service and professional advancement, while potentially compromising the integrity of procurements with budgets in the hundreds-of-billions of dollars and massive implications for private-sector competition.

Outlook

At a moment when lobbying has reached saturation, America’s largest companies confront new risks from highly motivated ideological opponents and nascent political coalitions animated by rising anti-corporate sentiment.  The confluence of these trends amounts to a “Revolution in Political Affairs” that increasingly drives companies to recognize personalities, networks, and ideological communities as the foundation of effective advocacy.  The forthcoming second installment of this two-part series will investigate this phenomenon and the solutions required to prevail in the emerging competitive landscape.

Endnotes

1. “Lobbying Data Summary,” OpenSecrets, https://www.opensecrets.org/federal-lobbying/summary.
2. Baron’s own calculations using data from “Lobbying Data Summary,” OpenSecrets, https://www.opensecrets.org/federal-lobbying/summary; and adjusted for inflation using the “Consumer Price Index for All Urban Consumers: Services Less Energy Services in U.S. City Average,” Federal Reserve Economic Data (FRED), Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CUSR0000SASLE
3. “Lobbying Data Summary,” OpenSecrets, ibid.; and “Consumer Price Index for All Urban Consumers: Services Less Energy Services in U.S. City Average,” FRED, ibid.
4. The figure is in nominal dollars, not adjusted for inflation. See: “SAINC1 State annual personal income summary: personal income, population, per capita personal income,” U.S. Bureau of Economic Analysis, last accessed June 20, 2024.
5. “About Politico,” Politico, https://www.politico.com/about-us.
6. Baron’s own calculations using April 2024 prices from “Bethesda, MD Housing Market,” Zillow, ibid.; “United States Housing Market,” Zillow, https://www.zillow.com/home-values/102001/united-states.
7. Baron’s own calculations using yearly data for 15 of the highest earning lobbying firms from 2013 to 2023, using “Top Lobbying Firms,” OpenSecrets, https://www.opensecrets.org/federal-lobbying/top-lobbying-firms; and inflation adjustment using “Consumer Price Index for All Urban Consumers: Services Less Energy Services in U.S. City Average,” ibid.
8. R. Eric Petersen, “House of Representative Staff Levels, 1977-2023,” Congressional Research Service, November 28, 2023, https://crsreports.congress.gov/product/pdf/R/R43947.
9. R. Eric Petersen and Tyler L. Wolanin, “Senate Staff Levels, 1977-2022,” Congressional Research Service, August 2, 2023, https://crsreports.congress.gov/product/pdf/R/R43946.