Lobbyists Have a New Secret Weapon
The tax plan that Congress just passed was most notable for two things: the size of the overhaul—it’s the biggest rewrite of the tax code in 31 years—and the speed with which it came together. Republicans didn’t unveil the details of the plan until November, setting up a two-month lobbying frenzy as industries fought to preserve certain loopholes, deductions, and other goodies. Some won, some lost.
Among the biggest winners is the retail sector. That’s in part due to the success it had earlier in the year killing a provision called the border adjustment tax. The plan was a favorite of House Speaker Paul Ryan, and it called for taxing imports while allowing companies to deduct revenue from exports, effectively letting U.S. sales abroad go tax free. The rule would’ve had major consequences for the U.S. economy, particularly retailers, which waged a swift and lethal lobbying campaign against it.
One company that lobbied particularly hard against the BAT was Wal-Mart Stores Inc. From February until July, when the tax was removed from consideration, the company tailored messages to specific lawmakers to communicate how the tax could have a “chilling effect” on consumers—ranging from cheese production in Wisconsin to port cities on the Eastern Seaboard. Walmart’s campaign came together quickly thanks in part to a piece of computer code designed in a Harvard dorm room a few years ago, which now serves as the backbone of a D.C.-based consulting firm trying to push Washington’s oldest industry into the 21st century.
While the face of lobbying is often a polished government relations executive trekking the halls of Capitol Hill armed with talking points, attending luncheons, and writing op-eds, the hidden side of the business entails hours of research and grunt work. And despite the billions of dollars that corporations pour into lobbying efforts each year, the work has remained relatively low-tech. Part of the problem is knowing how to sift through reams of information. That’s hardly unique to the lobbying business, but in many ways it’s been slow to catch up. Industries from finance to manufacturing to marketing have been using algorithms and big data to solve some of their biggest challenges. Those tools are now starting to catch on in lobbying.
Alex Wirth, a 24-year-old Harvard grad, co-founded Quorum Analytics Inc. in his dorm in 2014. In June 2015 he moved to Washington. The idea was to give lobbyists the tools to automate some of the more rote, labor-intensive parts of their work. Wirth claims that Quorum has built the world’s most comprehensive database of legislative information. The company’s software pulls a wide array of government data from across the internet. The technology collects data from press releases, tweets, Facebook posts, legislative bills, and other sources, and compiles it in a searchable database. Quorum then adds an analytical layer that runs on top of that. Clients can refine searches to, say, the number of legislative assistants from Texas who work on banking issues, or how many times a member of Congress has co-sponsored a fellow member’s legislation. That can all save weeks of work.
Quorum’s algorithm helped Walmart eliminate hours spent on tedious tasks like sifting through documents, allowing government relations employees to spend their time more effectively, on such things as building relationships and trust with elected officials. “Now it’s not ‘I gotta block four hours out of my day to manage this stuff,’” says Gerard Dehrmann, Walmart’s senior vice president for government relations. “I get through it with a few clicks. It’s allowed more time for hand-to-hand lobbying.”
When Walmart set out to lobby officials on the border adjustment tax, it already had a curated group of policymakers from lobbying for its U.S. manufacturing policy road map. The lobbying team knew which state-level officials were interested in U.S. manufacturing initiatives, and used the overlap between manufacturing and trade policy to reach out to the right people.
“Rewind five or 10 years, and we were sending letters, postcards, or emails,” says Dehrmann. “Quorum has taken the inefficiencies out of our system and built a whole new muscle for our team in how we communicate efficiently and effectively.”
Wirth estimates that about 10 other competitors exist. One of those, GovPredict, is used by the second-biggest lobbying firm in the country, Brownstein Hyatt Farber Schreck LLP. Elizabeth Gore, Brownstein’s government relations director, says the abundance of information in the digital age has made lobbying more complicated. Algorithms provide a fast way to cut through the clutter and isolate sought-after information. “Lobbyists need to find a way to break through all of the noise that’s swirling around,” she says. “Now you have an algorithm that does it for you.” Bloomberg Government, owned by an affiliate of Bloomberg LP, also competes in this space, providing data and analytics to government affairs and government contracting clients.
For Toyota Motor Corp., Quorum has provided an inlet to an entire world of political dialogue that it previously wasn’t privy to. Stephen Ciccone, head of government affairs for Toyota Motor North America, says much of the conversation that influences policy is now happening online. Using Quorum lets Toyota monitor issues on a much more expansive scale, and then reach out to members of Congress with a more up-to-date understanding of their policy stances. “You could have not understood that someone is an ally because you’re unaware of what they said on social media,” says Ciccone. “If you’re just waiting for them to say something on the floor, you’re probably late to the party.”
Quorum isn’t cheap. Wirth says a yearlong subscription ranges from tens of thousands to hundreds of thousands of dollars. GovPredict Chief Executive Officer Emil Pitkin says his product runs in the $8,000-$40,000 range for standard access, while enterprise solutions are priced case by case. Congress Plus, a simpler product that provides a database without the analytical layer, is advertised at $3,000 per year.
Issue One, a D.C.-based nonprofit dedicated to campaign finance reform, uses Congress Plus since the price points for more advanced products are beyond its means. “The only lobbying shops in town that can afford to take advantage of these services are the people who already have a lot of money,” says Meredith McGehee, chief of policy programs and strategy at Issue One. “It’s putting rich information in the hands of those who can most afford it.”
McGehee says the algorithmic products are symptomatic of a greater issue: a political system heavily tilted toward moneyed interests. She says Issue One tries to keep up with the corporations using speedy algorithms by hiring a lot of interns.
But regardless of their stances on these products, D.C. lobbyists across the corporate and nonprofit sectors stand unanimously behind one idea: Technology has not and will not replace shoe-leather lobbying. Algorithms serve as a complement, not a substitute. “You can get all this information, but it doesn’t get in a member’s head,” says McGehee. “It’s like building a relationship with dating apps. You can swipe left or right. But if your policy position is bad, this information won’t help you overcome that.”
(Updates with Bloomberg disclaimer in the ninth paragraph.)