Large Corporations as Washington, D.C., Lobbyists - dummies

Large Corporations as Washington, D.C., Lobbyists

By Greg Rushford

We all know that companies lobby in Washington D.C. From Goldman Sachs on financial regulatory reform to Microsoft on online piracy laws to Lockheed Martin on defense appropriation, companies exercise their right to petition so they can advance and protect their ability to conduct business and earn profits.

In an age when government increasingly makes decisions that affect day-to-day business operations — from food safety standards to the taxes on imported steel — it’s no wonder that companies have built up sophisticated lobbying operations to ensure that the government makes decisions that help, rather than hinder, their ability to conduct business and deliver returns to shareholders.

Does corporate lobbying automatically imply greed and selfishness on the part of executives? Far from it. In 1989, celebrated American economist and Nobel Prize winner Milton Friedman made this statement to the National Association of Business Economics regarding an executive’s motivations for lobbying:

A corporate executive who goes to Washington seeking a tariff for his company’s product is pursuing his stockholders’ self-interest. . . . If he’s made a valid, accurate judgment that a tariff will be in the self-interest of his enterprise, he is justified in lobbying for such a tariff.

Why, then, does the public perceive that corporate lobbying is inherently evil? Perhaps because the substantial dollars involved in the lobbying process seem wasteful or smack of bribery. But anyone whose retirement plan includes investments in companies can realize why participating in the federal policy conversation matters to their own bottom line.

As shareholders — even very small shareholders — in the nation’s corporations, everyone invested in the stock market stands to profit if a corporation takes action that helps it conduct business less expensively and more efficiently.

Who are the biggest guns in the corporate lobbying world? Each year, Congress gives varying degrees of attention to the myriad issues it faces, so examining lobbying spending year by year is sure to result in some anomalies. If a once-in-a-decade bill to regulate your industry is facing a vote in Congress, you’ll probably spend extra cash that year to ensure the vote goes the right way.

Looking over an extended period of time can reveal who is really engaged in lobbying for the long haul. According to the website Open Secrets, from 1998 to 2012, these were the top ten corporate spenders for lobbying activities:

  • General Electric

  • Blue Cross/Blue Shield

  • Northrop Grumman

  • Exxon Mobil

  • Verizon Communications

  • Edison Electric Institute

  • The Boeing Company

  • Lockheed Martin

  • AT&T, Inc.

  • Southern Company

What do you notice about this list? Despite the vast complexity of the U.S. economy, the top spenders on lobbying are remarkably concentrated in a few industries: three in defense, two in telecommunications, and two electric and natural gas utilities. The others are involved in healthcare, general manufacturing, and oil and gas.

Not surprisingly, these sectors are incredibly dependent on the federal government. If you make fighter jets, your main customer will likely be the federal government. Even if you want to export to foreign markets, you’re going to need the federal government’s permission.

If you are a public utility (such as an electric or natural gas company) or were once a utility (in the case of telecommunications), your industry is, by its very nature of providing a quasi-public service, among the most heavily regulated. Government decisions on new regulations, laws, and procurement can be the difference between making a profit and breaking the bank.