The Pros & Cons of Government Intervention
"The nine most dangerous words in the English language: We're from the Government, and we're here to help."
-President Ronald Reagan, 1986
An honest message 25 years ago which still rings true today... maybe more so. Strategas Research teamed up with the data gurus at Bloomberg's BGOV to track how corporate perception about government has evolved over time. They compared hundreds of annual reports from 2012 to those from 2005, focusing on whether companies cited "Government Risk" as a source of concern. Fifty-nine percent of U.S. companies have become more concerned about Government posing a risk to their businesses:
There are certainly plenty of issues facing U.S. companies today:
- Higher costs of hiring under the Affordable Care Act
- Retaining talent given immigration uncertainty
- Regulatory questions from stalled Dodd-Frank legislation
- Foreign profit repatriation walls keeping capital abroad
- Rancorous tax debate discouraging capital investment
-Sequestration and debt ceiling debate freezing Federal projects
Amid all the concern (and we've only mentioned a few), no wonder lobbying has become big business in Washington. Turns out, lobbying may be one of the best investments a company can make. Strategas' Index of the 50 U.S. companies which lobby the most has steadily outperformed the S&P 500 Index, rising 51.4 percent since 2012 vs 39.4 percent.
Strategas back-tested the index, and 2013 YTD marks the 14th consecutive year of outperforming the S&P 500... friends in Washington make for returns on Wall Street. The team also notes companies tend to outperform even after being replaced in the index by other companies spending more... lobbying one year pays dividends the next. Strategas re-balances the Lobby Index quarterly. Here are the new additions:
The index is proprietary to Strategas Research, so we're only sharing a few of the names. Blog readers might be surprised by some of Washington's biggest spenders: Expedia (EXPE), FedEx (FDX), Goodyear Tire & Rubber (GT), Monster Beverage (MNST), Netflix (NFLX).