Congress may have closed officially in August, but the challenges of a recession, healthcare reform, and a swollen federal deficit forced many members to stay on the job last month. With them were some of Washington's top lobbyists.
Lobbying on taxes can bring clients a 22,000 percent return on their investments, according to a study released in April by three professors at the University of Kansas using data from 2003 and 2004. That study reflects expenditures made to persuade Congress to permit repatriation of foreign income at a vastly reduced tax rate in the American Jobs Creation Act of 2004. Those results may not be typical. But even a remote possibility of earning $220 for every $1 spent undoubtedly inspires clients to shell out funds to retain the capital's top lobbying talent. (For the study, see http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1375082.)
Congress has been occupied with healthcare reform and climate change legislation, almost to the exclusion of other work, and both areas are laden with tax provisions (or tax-like fees to offset new expenditures). Ordinary taxpayers may have a tough time winning favors from Washington, but lobbyists can be highly successful at persuading Congress not to increase their clients' tax burdens.
To select the top individual tax lobbyists, Tax Analysts interviewed dozens of lobbyists and Capitol Hill staff and examined data based on lobbying registrations in sources such as the Senate's Lobbying Disclosure Act Database and OpenSecrets.org.
Below, in alphabetical order, we profile the 10 whose names came up most often. (For a similar project from 2003, see Tax Notes, Nov. 17, 2003, p. 815, Doc 2003-24690, or 2003 TNT 221-4 . For profiles of lobbyists made influential by the 2006 Democratic takeover of Congress, see Tax Notes, Nov. 27, 2006, p. 809, Doc 2006-23567, or 2006 TNT 228-2.)
Charles M. Brain — Capitol Hill Strategies LLC
Before joining Capitol Hill Strategies LLC, Brain worked for many years in government. Those included 13 years on the staff of the House Ways and Means Committee, some of that time as its deputy chief of staff. He later served as director of legislative affairs in the Clinton White House.
Brain said the keys to effective lobbying are "the three P's: policy, process, and politics."
"You really have to be able to understand and be sensitive to each of those, especially in a dynamic process, in order to get something done in D.C.," Brain said. "For example, good policy can be trumped by bad politics. Similarly, being knowledgeable about the legislative process can allow you to create more than the obvious opportunities to move a proposal."
In today's political and economic climate, Brain said, the biggest challenges for tax lobbyists are the dim fiscal outlook and a commitment to adhere to "pay as you go" budgetary rules.
"Groups that have been used to asking for tax cuts may very well need to shift from an offensive position to a defensive one as we switch to a search for loophole closers, revenue enhancements, and offsets that we really haven't seen in years," he said.
Lobbying reports from the first two quarters of 2009 reveal that Capitol Hill Strategies' largest tax clients include the National Venture Capital Association, Citigroup Management Corp., and Prudential Financial.
James Dennis — Palmetto Group
Dennis had a long history in government before becoming a lobbyist. In 1996 he served as counsel to the IRS restructuring commission. Then, after a stint in the private sector, he became tax counsel to Sen. Charles Robb, and later counsel to Sen. Jeff Bingaman, D-N.M.
In discussing his success, Dennis stresses teamwork: "When I came to Capitol Hill in the late '90s, I was fortunate to be supported by a strong network of veteran tax staff, such as [Senate Finance Committee staff members] Russ Sullivan and Mark Prater, who were always available to provide guidance and counsel."
"I have tried to take the same approach to lobbying and am fortunate to have a similarly good network of mentors, particularly my colleagues John Winburn and Steve Glaze — two of the best in the business," Dennis said. (Winburn and Glaze are profiled below.)
Hill experience has strongly influenced his lobbying style, Dennis said. "I try to keep it pretty simple as a lobbyist — interact with staff and clients in much the way that I preferred to be treated when I was on the Hill. That means being respectful of others' time, being thoroughly prepared, and always being candid and straightforward."
Because disruptions are the norm in Washington, and "your scheduled half-hour meeting with staff may be suddenly compressed into a several-sentence discussion," another key to lobbying success is flexibility, Dennis said. "It is crucial to be adaptable and willing to alter your approach to a problem quickly so that you do not miss opportunities for your clients."
When asked about current challenges, Dennis focused on uncertainty. "All the paradigms developed over the past several years during Republican control are dramatically shifting," he said. "The days of large, unpaid-for tax bills are over, with revenue offsets becoming the primary focus of businesses."
"Over time, many of the more subtle changes in personalities, approaches, and patterns will become clearer, but right now much of it is still evolving," Dennis said.
The Palmetto Group counts among its largest tax clients Lazard Frères & Co. LLC, Altria, and Koch Companies Public Sector LLC.
Jeffrey A. Forbes — Cauthen Forbes & Williams
Compared with other top lobbyists, Forbes has a more overtly political background. His career in Washington extends back to then-Sen. Al Gore's 1988 run for the presidency. In 1992 Forbes was the New Hampshire field director for Bill Clinton's presidential bid, and followed that in 1996 as the deputy political director and director of delegate selection for Clinton's reelection campaign. Between the Clinton campaigns he served as the Midwest political director to the Democratic National Committee.
Forbes founded his firm with partners H.E. "Sonny" Cauthen Jr. and Zachary W. Williams. Among the firm's largest tax clients are Motorola and Comcast Communications.
Forbes declined Tax Analysts' request for comment.
Nicholas P. Giordano — Washington Council Ernst & Young
A near-unanimous choice in interviews for this article, Giordano followed the unusual career path of returning, after several years as a lobbyist, to government service in 1993 as the legislative director for Finance Committee Chair Max Baucus, D-Mont.
In 1995 he went back to the private sector, but returned to the Finance Committee in 1997 as its chief tax counsel. He has been with Ernst & Young since 1999.
There are a lot of different ways to be effective as a lobbyist, Giordano said. He noted that many lobbyists are former members of Congress or ex-Hill staffers, and emphasized the significance of "relationships at all levels, in and out of government."
Giordano said relationships should extend across party lines. Working on a bipartisan basis, he said, has served him well.
Relationships within the firm are also important. Maintaining "a very team-oriented approach" has contributed to his achievements, Giordano said. "I may get credit for being successful when it's really a team success."
A balanced knowledge of politics, process, and policy is also essential, both to communicate with members and staff and to advise clients, Giordano said. "The successful lobbyists that I work with and observe have this type of knowledge, but often in different proportions."
In a recession, industries face different challenges, and Giordano said he helps his clients understand how to prioritize their legislative interests accordingly.
A recent example is Congress's continued focus on healthcare reform. With so much energy being spent in that area, clients concerned about the fate of some temporary tax provisions have to keep those issues on Congress's radar screen, but they must also bide their time until those issues return to the forefront.
Another challenge is the awareness of long-term fiscal difficulties that put pressure on Congress to find additional revenue sources. "That's been a constant, but is getting more acute," Giordano said.
Washington Council Ernst & Young has among its largest clients the Association of Bermuda Insurers and Reinsurers and Charles Schwab & Co.
Steve Glaze — Palmetto Group
Glaze spent 1990 to 1996 as tax counsel to David Pryor, then a Finance Committee member and chair of what then was called the Finance Subcommittee on IRS Oversight and Private Pension Plans. He has been with the Palmetto Group since 1999.
"A successful lobbyist must have an accurate vision of what is possible in the future, a competitive drive to win, and the know-how, relationships, and communication skills to make it happen," Glaze said. "Success is tenuous, so these attributes must be displayed consistently over a long period of time."
According to Glaze, another critical element in lobbying is collaboration. "No man or lobbyist is an island, so it is important to associate with other strong lobbyists with diverse backgrounds," he said. "Then you must work hard to fit in with your team."
The ability to work as part of a team is Glaze's biggest asset, he said. "I know my partners and clients make me better, and this boosts my confidence. I focus on this every day. That is my strength."
Glaze also spoke of the need for flexibility. "If you can't adapt and stay relevant, you can't survive" in Washington, he said. "The communication of this fact of life to others in the right way is the hardest task we do."
Flexibility may have recently become even more urgent, Glaze said. "Today, we are experiencing one of the more dramatic transformations in politics, and our country faces some very difficult choices," he said. "So it forces us to pull ourselves out of the old paradigms and convince others to stay ahead of the coming events."
Yet that challenge "is what makes this place vibrant and fun for me," Glaze said.
Kenneth J. Kies — Federal Policy Group
Kies began his career in 1977 as a tax associate with Baker and Hostetler LLP. In 1982 he joined the staff of the House Ways and Means Committee, becoming the chief Republican tax counsel before returning to private practice in 1988.
In 1995 Kies became the chief of staff for the Joint Committee on Taxation. Since founding the Federal Policy Group in 1998, he has become a regular commentator on tax issues in popular news media.
Kies said his substantive expertise is most important to his success. "Few who lobby on taxes are real tax lawyers with real tax practice experience," he said. "I have done both tax litigation and IRS controversy work. I have also done deal structuring. Most tax lobbyists have none of that experience."
His experience with the tax legislative process is another important ingredient, Kies said.
Government experience provided Kies with some connections, but "maintaining relationships with both staff and members of the taxwriting committees" is vital to effective lobbying, he said. "A lot of lobbyists can talk to staff. Few have the stature and relationships to deal directly with members."
Kies advises would-be lobbyists to "work harder than anyone else. There is no luck in this game."
Compared with peers, Kies seems relatively unfazed by the tasks before him. "The only real challenge of the existing environment is keeping track of so many things in play," he said.
The Federal Policy Group in the first two quarters of 2009 listed as its clients General Electric Co., the Council on Foundations, and the American Council of Life Insurers.
Robert M. Rozen — Washington Council Ernst & Young
Rozen was a congressional legislative counsel from 1980 to 1994, first for Sen. Wendell Ford, and later for Sen. George Mitchell. He has been with Ernst & Young since 1995.
Rozen said the most important attribute a lobbyist can possess is trust. "The people I lobby must expect that I will be completely accurate and truthful in whatever information I give them on an issue," he said.
"Ideally, a lobbyist should have experience with, and an understanding of, the legislative process, a sensitivity to political considerations, and a thorough expertise on the issue that is being worked on," Rozen said. "I think I bring all of those attributes to the issues on which I lobby."
In discussing obstacles in lobbying, Rozen focused on federal finance, which he said "subordinates policy considerations to revenue constraints."
Currently, "tax policy is driven less by what makes the most policy sense and more by what are the fiscal implications," Rozen added. "This applies both to changes in the law that would cost revenue if enacted and to changes that are enacted in an effort to raise revenue."
Jonathan Talisman — Capitol Tax Partners LLP
Talisman, a former Treasury assistant secretary for tax policy, quoted Dirty Harry in explaining his success as a lobbyist: "A man's got to know his limitations."
"As with any other form of advocacy, successful tax lobbying requires a detailed understanding of the issues, good judgment, creativity, the trust of policymakers, and the ability to communicate effectively with them," he said.
Talisman gave much credit to his team at Capitol Tax Partners, too. "Any success we've had to date has been based on our team approach and our model of marrying technical tax expertise with strategic policy and political experience," Talisman said. "The team approach here allows us to use our strengths to best serve our clients."
Talisman said current lobbying challenges are largely the result of economic issues. "The current economic environment has altered the tax base for many of our clients, which puts pressure on their ability to use losses and other tax attributes," he said. "Also, the budget picture has increased the need for revenue offsets, which changes the tax policy dynamic and may affect our clients."
Capitol Tax Partners' biggest tax clients include General Electric Co. and the Private Equity Council. In the first two quarters of 2009, the firm also performed significant amounts of work for the Coalition for Equitable Treatment for Victims of Massive Financial Theft.
Anne I. Urban — Venn Strategies LLC
Urban is a principal with Venn Strategies LLC. In the 1990s she worked as legislative director to Sen. Bob Kerrey and as policy adviser to Sen. Joseph I. Lieberman, I-Conn. (then a Democrat), before joining Venn Strategies in 2002.
"Being effective in my view is about being a straight shooter, being prepared, knowing your audience and understanding the process," Urban said.
Collaboration is also important, said Urban. "Our team approach at Venn really increases the breadth and depth of what we are able to do for our clients," she said.
Those professional assets may not be enough to be successful. "It's also about enjoying the work," Urban added. "I loved working on the Hill, and I particularly enjoy tax policy and the folks who work tax issues on both sides of the aisle, both sides of the Capitol, and elsewhere."
Urban said she is happiest when she's working with clients as "both a colleague and a friend who has spent enough time understanding their issues to be able to represent them effectively."
Today's dim federal fiscal outlook is the greatest challenge facing tax lobbyists, Urban said. "It is a lot tougher to do interesting and innovative things in the tax space when there isn't a lot of money available."
For that reason, she said, a lot of the work now is defensive in nature. "It's very important to be able to justify the need for current tax preferences in this challenging economic environment."
Venn's largest tax clients include Thrivent Financial for Lutherans, MetLife, and the advocacy group Employee-Owned S Corporations of America.
John Winburn — Palmetto Group
Winburn is one of a few lobbyists that may have had political ambitions in the past. In 1982 he ran for a House seat from South Carolina. The man who defeated him in the Democratic primary, John Spratt, has held the seat ever since and is chair of the House Budget Committee.
Before his run for office, Winburn spent over a decade on Capitol Hill working for members of Congress, including as administrative assistant to Rep. Ken Holland and Rep. Tom Gettys, and as staff director of the Congressional Textile Caucus.
To Winburn, the ability to prioritize information is a critical skill when communicating with lawmakers. "I like the saying that goes, 'Now we are to the wet part of the onion,'" he said. "It means we are now down to the real issue. In these busy days, legislators have little time for a song and dance when they are considering hundreds of issues. So a successful lobbyist must be able to get to the wet part of the onion quickly."
"After 38 years on Capitol Hill, I appreciate those who work in this way, and I put a lot of time and thought into this effort," he said, but added, "The timing must be right, and you must know that your audience is open to the cause."
Winburn takes pride in his work at the Palmetto Group. "The most challenging — and gratifying — part of my job is working to build a firm of lobbyists who can work together to grow together," he said. "After years in this business, I think I am now most proud of the team I have helped to build, and I look forward to more growth and an even stronger presence for our business in the years ahead."
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