Insiders Become Outsiders as Lobbyists Shut Out of Debt Debate

Photographer: Win McNamee/Getty Images

About two dozen Tea Party activists gathered outside the Capitol yesterday, urging members to oppose any increase in the debt ceiling that isn’t accompanied by a constitutional amendment to balance the budget. Close

About two dozen Tea Party activists gathered outside the Capitol yesterday, urging... Read More

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Photographer: Win McNamee/Getty Images

About two dozen Tea Party activists gathered outside the Capitol yesterday, urging members to oppose any increase in the debt ceiling that isn’t accompanied by a constitutional amendment to balance the budget.

Sweltering in the heat at his son’s lacrosse tournament, Joseph Stanton sat thumbing through his blackberry -- laptop nearby -- as he tried to track developments in Washington’s debt debate.

The chief lobbyist for the National Association of Home Builders started his work on July 24, a Sunday, at 7:30 a.m. and finished about 8 p.m., knowing little more than he did in the morning about whether the housing market would be hit in a deal.

“There’s really just mass confusion everywhere, not on Congress’s part, but the rumor mill of the lobbying world,” said Stanton, 49. Asked how the debt-deal talks compare in terms of their frenetic atmosphere with other debates Stanton’s seen in his two decades of advocating on Capitol Hill, he said: “This is in the top one.”

Lobbyists earn their salaries by getting information about what’s moving on Capitol Hill, who’s behind it, and how they can amend it to help their clients. With almost every government program, tax and payout potentially affected by a deficit- reduction agreement needed to pave the way for raising the $14.3 trillion debt ceiling to avoid a projected Aug. 2 default, lobbyists are finding it hard -- if not impossible -- to do their jobs.

Lab Co-Payments

With President Barack Obama and congressional leaders conducting closely held private meetings in search of an accord, “it’s been very difficult to get information from them and into them,” said Mark Birenbaum, head of the National Independent Laboratory Association. His group is trying to follow the status of a Republican proposal that would require labs to collect a co-payment from Medicare patients.

Michael Buckley, communications director at the Alliance for Retired Americans, said his group has opted to save its energy for the post-deal period, when hundreds of billions of dollars in spending cuts tied to the debt ceiling vote are expected to be implemented.

“There are only a handful of people in this town that are the decision-makers on this now,” he said.

Other groups are trying to advance their positions by getting ahead of the final negotiations.

Groups such as the anti-government spending Tea Party Patriots to the seniors’ advocacy group AARP are marching members up to Capitol Hill. The oil industry, religious groups, unions and a political organization advised by Republican strategist Karl Rove are running ads to influence the negotiations.

Tea Party

Tea Party Patriots members, who oppose raising the debt ceiling, last week met with more than 30 House members and staffers, along with a handful of senators.

About two dozen Tea Party activists gathered outside the Capitol yesterday, urging members to oppose any increase in the debt ceiling that isn’t accompanied by a constitutional amendment to balance the budget

“I pledge to you that I will not vote for any bill that raises the debt ceiling,” Representative Paul Broun, a Georgia Republican, told the flag-waving crowd.

The country takes in enough money to pay bondholders, Social Security recipients, and the military without raising the ceiling, said Jenny Beth Martin, co-founder of the Tea Party Patriots, in an interview.

“When President Obama is saying we are going to default,” Martin said, “it’s a lie.”

Cuts, Taxes

Proposals floated during the last two weeks of talks include cuts to farm subsidies, defense spending, Social Security, Medicare and Medicaid. They’ve also included hikes in taxes on the rich and the reduction of tax breaks for private equity firms, oil companies and home owners.

The July 22 collapse of talks between House Speaker John Boehner and Obama for a deal to revamp the government’s finances through both spending cuts and a tax overhaul left lobbyists with no proposal to review and lots to worry about through the weekend. The situation didn’t improve this week when competing deficit-cutting plans proposed on July 25 by Boehner and Senate Majority Leader Harry Reid also contained few specifics.

The 10-year plan introduced by Reid calls for more than $2 trillion in cuts and savings to defense and non-defense discretionary spending -- programs whose budgets are set in Congress’s appropriations process. It includes changes to the federally chartered housing finance agencies, cuts in agriculture subsidies, changes to eliminate waste and fraud and an auction of additional spectrum.

Boehner’s plan, which has undergone revision, would require two separate phases of cuts totaling close to $3 trillion.

Both lawmakers would create a committee to choose specific budget cuts later.

Housing Issues

Stanton, of the Washington-based homebuilders group, is concerned about tax proposals that have been discussed to eliminate the deduction for home mortgage interest, the credit for low-income housing and an increase in the rate on carried interest.

“Any one, or partial one of these, could certainly send an uncertain housing market further into the abyss,” he said. It’s a message he and his association members have been repeating to anyone on Capitol Hill who will listen.

He’s not alone.

The Washington-based American Petroleum Institute is organizing a “fly-in” this week of refinery workers and executives to meet with lawmakers and make the case that the industry creates high-paying jobs and already pays more taxes than most.

“We’re doing the old-fashioned burning the leather on Capitol Hill and we’re activating our grassroots,” said Eric Wohlschlegel, a spokesman.

Ad Campaign

The group is also running TV, radio and print advertisements across the country. “America needs more energy jobs, not more energy taxes,” the ad says.

Sojourners, a Washington-based group of religious leaders, is running radio ads in Kentucky, Ohio and Nevada pushing lawmakers to protect programs for the poor. Crossroads Grassroots Policy Strategies, the group advised by Rove, is spending $10.5 million on two ads saying the U.S. economy is “hanging by a thread” and that, “There’s got to be a way to take away President Obama’s blank check.”

The Service Employees International Union is airing commercials in the House districts of some Republicans accusing them of risking default to “protect tax breaks for millionaires.”

Senior Citizens

Social Security Works, a coalition that includes labor unions, groups representing retirees, and advocacy organizations such as the NAACP, sent a dozen senior citizens from Maryland to walk the halls of Congress and argue that the government pension system isn’t the cause of the debt and shouldn’t be cut, said Don Owens, the communications director. Last week, the group organized a telephone lobbying effort, urging 30,000 seniors to call their representatives.

“Our sole focus is ensuring Social Security is not the end-all bargain to getting the debt ceiling raised because Social Security is not contributing to the debt,” Owens said.

AARP has used its membership lists to generate what it claims are 243,000 calls to members of Congress and the White House, as well as more than half a million e-mails.

“We’re talking about the health programs, Social Security, the tax code, you’re talking about all of government,” said David Certner, AARP’s director of federal affairs.

Julie Allen, a lobbyist who represents the independent labs, said “every day is a new day on this one. At some points, it felt like it was minute to minute. It’s insane.”

To contact the reporters on this story: Alison Fitzgerald in Washington at afitzgerald2@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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