- The Washington Times - Friday, April 10, 2009

Big companies that spent hundreds of millions lobbying successfully for a tax break enacted in 2004 got a 22,000 percent return on that investment - proof that for those who can afford it, hiring a lobbyist can pay handsome dividends.

The figures, compiled by professors at the University of Kansas for a study released Thursday, offer a rarely seen glimpse of how the lobbying business works, and why - even as President Obama vows to curb lobbyists' influence - the industry is booming as never before.

The report details efforts by hundreds of companies in 2003 and 2004 to push through a one-time tax “holiday” that lowered for a year the tax rate they paid on profits earned abroad. All told, U.S. companies saved about $100 billion in taxes, with pharmaceutical behemoths Pfizer and Merck & Co., technology giants IBM and Hewlett-Packard, and health products maker Johnson & Johnson among the top beneficiaries.

The study zeros in on 93 firms that spent as much as $282.7 million lobbying on the issue during that period, and ultimately saved a total of $62.5 billion through the tax change. Researchers used publicly available lobbying disclosures filed with Congress and financial statements submitted to the Securities and Exchange Commission to compare the amount each company saved with its lobbying expenditures.

“It calls into question what Congress did in 2004,” said Stephen Mazza, who conducted the study with Raquel Alexander and Susan Scholz. “It clearly is a very lucrative field for lobbyists. Congress wanted to create jobs, and what they probably did was create jobs for the lobbyists.”

The results reflect one reason that lobbying - always a major industry in Washington - has experienced explosive growth in recent years. Companies and interest groups spent $3.42 billion lobbying Congress and the federal government in 2008, the last year for which such figures are available, according to the Center for Responsive Politics. That's a 14 percent jump from the previous year.

And there's mounting evidence that companies get what they pay for - maybe a lot more - when they hire seasoned Washington hands to help them win major legislative fights. A separate group of business professors reported last year that companies that lobbied had better market valuations and investment returns than those that did not, and those that did so most intensively had portfolios that consistently outperformed the market.

Hui Chen of the University of Colorado, David C. Parsley of Vanderbilt University and Ya-Wen Yang of the University of Miami found that, on average, a company's income rose by more than a half-percent for every 10 percent more it spent on lobbying. That translates into many millions of dollars for a large firm.

Lobbyists say they're not surprised by the findings, which prove what they tell their clients all the time: You can't afford not to have a seasoned Washington player on your team.

“There's literally no way that you can take an action in Washington by simply coming to town and sitting around on street corners waiting for it to happen - you really do have to have professional help,” said Robert S. Walker, a former Republican congressman whose firm Wexler & Walker Public Policy Associates lobbies heavily on transportation, health care, energy and trade matters. “It would be like going to court without a lawyer.”

Some lobbyists calculate the returns they bring clients and use the information to woo new business. The Carmen Group, a midsize lobbying firm that has lobbied for private companies like HealthSouth as well as local governments, hospitals and universities, among others, markets itself as an outfit that brings clients an “extraordinary” return of investment of 100 to 1 or better, according to its Web site.

But the data alarm some watchdog groups that worry ordinary Americans who can't afford representation by a well-paid lobbyist will lose out in debates with companies and interest groups who can afford advocates.

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