Lobbyists find a tougher sell after Enron

Businesses spend millions on Capitol Hill, but increasingly don't get what they want.

For big-time lobbyists and the corporations that sustain them, Washington is a tougher town since the Enron debacle.

Conventional wisdom dictated companies need to spend big dollars in politics to protect their interests. Microsoft didn't, until it looked like decisions in Washington could break up the business. Now it does.

But Enron is casting a new light on the limits of what money can buy in politics: It signals that you can spend millions, and still not get what you want. All that money can even make politicians afraid to help you, because voters may think they have been bought.

"It's turning Washington upside down," says a longtime Washington lobbyist, who won't be quoted by name.

"We've been saying to clients: 'You need to go to these fundraisers, you need to be part of the process.' Enron did. Now, precisely when they need these guys, the politicians run for cover, then turn and beat up on them. ... I've had CEO's say to me: 'Where is the disconnect?' " he adds.

Global Crossing Ltd., another recent corporate meltdown, also had been a big player in Washington. Since 1999, the fiber optics and communications company contributed some $3.5 million in campaign contributions, according to the Center for Responsive Politics. Yet, like Enron, it received no help from Congress or the White House as it fell into bankruptcy in January.

Since Enron, those big checks that corporations pour into the political system are getting more scrutiny. No politician in an election year wants the appearance of exchanging political favors for cash.

Checks returned

Many lawmakers have returned their Enron checks since controversy emerged after the Houston company filed for bankruptcy protection last December.

Enron is also credited with shifting last-minute votes on campaign finance reform, which limits the amount of money corporations and labor unions will be able to contribute to political parties in the future. A campaign finance bill passed the House on Feb. 14 and awaits action in the Senate, where it is expected to pass.

But key tests of how profoundly the climate is changing for big money in Washington will be the effort to deregulate telecoms - the most heavily lobbied bill of the 107th Congress.

The House bill, dubbed Tauzin-Dingell after its sponsors, would lift regulations that block regional Bell phone companies from expanding into the market for high-speed Internet service. It pits the Baby Bells against cable giant AT&T and other long-distance carriers.

Both sides have already spent nearly $40 million in lobbying, since the bill was first introduced in 1999. Tauzin-Dingell passed the House last week, but faces very uncertain prospects in the Senate - in part, experts say, because of the new climate created by the Enron collapse.

Key senators have long opposed the deregulatory thrust of Tauzin-Dingell. They are wary of any bill that would make major changes to the 1996 Telecommunications Act, the result of long and hard negotiations.

Last week, both the chairman and ranking Republican on the Senate Commerce Committee signaled strong opposition to the bill. The objections of Sen. Ernest Hollings (D) of South Carolina had been expected. But opposition from Sen. John McCain took many of the bill's supporters by surprise.

"It's a stunning reversal. Just a year and a half ago, Senator McCain had a bill that would have gone further than Tauzin-Dingell in deregulating broadband," says Adam Thierer, director of telecommunications studies at the Cato Institute, a libertarian think tank.

"Clearly, Mr. McCain has a bigger stake in the fight over campaign finance, and if you want to be seen as cleaning up the system, you don't want to be seen as aligned with a bill that has attracted more special interest money than any other this session," he adds.

But a recent analysis of the Feb. 27 House vote on Tauzin-Dingell signals that the flood of money on this issue may have had some impact on the 273-157 vote.

Unlike most big bills in the House, this one did not track along party lines. Instead, it followed the pattern of campaign contributions, according to the Washington-based Center for Responsive Politics.

"This is the type of battle that members of Congress like. The issue drags on forever, and the players have deep pockets. These are big companies with a lot of money, and they are willing to spend it," says Larry Noble, executive director of the Center for Responsive Politics.

For lobbyists trying to shape outcomes close to Enron, such as the debate on energy policy that opened in the Senate yesterday, the Enron debacle has raised the stakes.

"On issues like energy or legislation around 401-Ks, you can't give a speech without Enron coming up. But legislating under the klieg lights takes place in every scandal, and it's important that calmer heads prevail," says Bruce Josten, chief lobbyist for the US Chamber of Commerce.

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