Democrats' House Takeover Sparks K Street Lobbying Reshuffle

(Bloomberg) -- The Democratic takeover of the U.S. House is expected to spark a reshuffle of Washington’s K Street lobbying shops as Corporate America signs up advocates to help influence new personalities and priorities in Washington.

As Democrats emerge from eight years in the minority, companies and trade groups are searching for experienced hands to tackle a new agenda that could win bipartisan support, including infrastructure, drug pricing and tech privacy, lobbying experts said.

The shift in power on the Hill also may spawn congressional investigations into corporate issues such as executive pay, environmental track records, diversity, and how companies used money gleaned from President Donald Trump’s tax cuts, said several K Street watchers.

“We anticipate sustained and aggressive oversight, both of the Trump administration and of multiple industries,” said Bruce Mehlman, a Republican lobbyist and former Hill staffer who was an assistant secretary of Commerce under President George W. Bush.

In the new landscape, Republicans remain in control of the Senate and the White House. As attention swings to the 2020 presidential campaign, Democrats will be revving up efforts to unseat Trump, whose tax, trade and immigration policies fueled a lobbying surge in the first two years of his administration.

Phones Ringing

Democrats’ phones had begun ringing even before the election, according to lobbyists, and the courtship is bound to accelerate. Mehlman said some Democrats at his bipartisan firm -- including one with ties to Nancy Pelosi and another linked to the powerful House Judiciary Committee -- were getting waves of calls. Pelosi is poised to regain her former position as speaker of the House.

“People are busily trying to figure out, what do I need to do to make sure that I have the best team,” said veteran Democratic lobbyist Steve Elmendorf. “You’ll have a very quick ramp-up.”

Oscar Ramirez, also a Democratic lobbyist, said he started getting calls from potential clients before the election, especially from companies looking to leverage his relationships with a more diverse group of legislators as women, African-Americans, Hispanics and others take over key committee posts and positions in leadership. The firm Ramirez co-founded, InSight Public Affairs, signed Alphabet Inc.’s Google, T-Mobile US Inc., Lyft Inc. and Airbnb Inc., among others, this year.

New Friends

“You will definitely see companies, law firms and lobbying shops building out their relationships to Democrats,” Ramirez said. “A big part of that will be the Black and Hispanic and Asian-American caucuses.”

Top Democratic staff in Congress will have a choice whether to keep their newly acquired power or move into lucrative lobbying jobs. Demand for Democrats with key relationships and experience would likely boost salaries for those who exit, although a ban on lobbying one’s recent colleagues could put a damper on some opportunities. Former members of Congress also often find themselves targets of eager recruiting as well.

“This is their time to command top dollar,” said Tom Susman, a lobbyist for the American Bar Association, saying both lobbyists and lawyers would probably draw interest. “They’re going to clean up.”

Republicans Leaving

Fallout from the midterm elections may also spawn a glut of Republicans leaving government to seek lobbying jobs in a city that isn’t necessarily looking for their connections and insights, Susman said. More than a thousand staff members who work for retiring or defeated Republican incumbents will be looking for jobs come January, as well as hundreds of staffers working for the permanent committees.

Given months of polls suggesting the House majority would flip, altering the balance of power in Washington, some firms strengthened their ties to Democrats ahead of Election Day.

McGuireWoods Consulting announced that a former communications director to onetime Democratic Virginia Governor Mark Warner, who’s now in the Senate, would head its federal government relations practice, succeeding a former White House aide to President Ronald Reagan. In October, S-3 Group, a previously all-Republican boutique firm, hired Michaeleen Crowell, the former chief of staff to Senator Bernie Sanders, the progressive independent and former presidential candidate who caucuses with the Democrats.

The most active industries and trade groups in Washington, such as defense, tend to maintain politically balanced rosters of lobbyists. Now, companies that face new risks or opportunities in the upcoming Congress are more likely to add Democrats, lobbyists said. Companies that stocked up on Republicans when Trump’s surprise election left them scrambling for insight into the new administration may be doing the same, the lobbyists added.

Investigations Possible

In the new Congress companies also could face investigations over issues such as executive compensation and product failures, among other issues, lobbying experts including Mehlman said. Firms that help companies respond to congressional document demands and prepare executives to testify before Congress are expecting a wave of new business.

“What you do to gear up for it is to remind people that you’re there, that you’re bipartisan, and you’ve got your ear to the ground,” said Fred Dombo, chair of the public policy group at the law firm Nossaman LLP.

Historically, Democrats have been more aggressive with corporate targets when they’ve held the reins of investigative power, with action often coming independently from committees’ legislative work, said Stanley Brand, whose practice at Akin Gump Strauss Hauer & Feld LLP includes representing organizations and individuals investigated by Congress.

“These things are driven by the issue du jour,” Brand said.

Even with control of Congress split between the parties, some issues are still expected to gain momentum. Trump, Pelosi and Senate Majority Leader Mitch McConnell all said action on infrastructure and lower drug prices could win bipartisan agreement.

Infrastructure Spending

Trump and House Democrats are talking about cooperating on a plan to spend billions of dollars to upgrade U.S. roads, bridges, and other public works, something Trump promised during his 2016 presidential campaign.

Democrats want a plan that calls for raising federal dollars through a higher gas tax or another funding mechanism, Democratic Representative Peter DeFazio of Oregon, who’s in line to become the new chairman of the House Transportation and Infrastructure Committee, said last week.

The Trump administration and Congress are being lobbied hard to deliver a major spending measure while the U.S. Chamber of Commerce and America Trucking Associations favor raising federal fuel taxes.

Pharma Lobby

The pharmaceutical industry, meanwhile, is bracing for a fight over drug prices as both Democrats and Republicans target the problem. One starting point could be a Democratic plan that would allow Medicare Part D to negotiate drug prices and create a Senate-confirmed drug price “enforcer” that could fine companies for excessive price increases.

Big pharma is also preparing a push for the remaining weeks before Democrats take control of the House at the beginning of 2019, the so-called lame duck session of Congress. That effort seeks to peel back a loss earlier in the year that forced drugmakers to increase discounts for seniors in the Part D program. Democrats oppose rolling back the discounts, while the Trump administration has made lowering drug costs for consumers a priority.

Privacy and Tech Scrutiny

Several key Senate Republicans are developing consumer privacy legislation amid high-profile data lapses and growing scrutiny of the tech sector. Democrats in the House have also called for a federal privacy law.

Tech companies, which are also facing strict new privacy rules in Europe and California, are embracing an effort to blunt the toughest regulations, and to harmonize them. Several have issued their own principles, although companies have had trouble agreeing on the specifics of a proposed law.

A key point of contention is likely to be enforcement of what could be the U.S.’s broadest national privacy law, particularly whether the Federal Trade Commission can be strengthened and what role state attorneys general will play.

©2018 Bloomberg L.P.