Rules of the Game: To Some, Lobbyist Cleanup Is Clear As Mud

The Treasury Department's new restrictions on financial bailout lobbying have won praise from government watchdogs, but they've left some on K Street confused and angry.

Treasury Secretary Timothy F. Geithner's recent directive sends a positive message that his department "will not be dominated by lobbyists," said Mary Boyle, vice president for communications at Common Cause, which is pushing for better oversight of the government's $700 billion financial bailout program.

The stepped-up rules aim "to limit the influence of lobbyists and special interests" on the Emergency Economic Stabilization Act, Treasury announced on Jan. 27. The safeguards will include "restricting contacts with lobbyists in connection with applications for, or disbursements of, EESA funds." The moves go hand in hand with the department's efforts to increase transparency.

But some lobbyists have bristled at the Treasury curbs and questioned their effectiveness and constitutionality.

"I am concerned that that is really going down a slippery slope of restricting the First Amendment rights to petition the government," said Dave Wenhold, president of the American League of Lobbyists and co-founder of Miller/Wenhold Capitol Strategies.

Lobbyists are scratching their heads in part because Geithner's new rules have yet to be spelled out in detail, so all they have to go by is the department's Jan. 27 release. The ALL has sent a letter to Treasury asking for the chance to comment publicly before the rules are finalized.

"This is the sort of thing that should be done through a public process, with public comment, rather than through... guidelines," said Thomas M. Susman, director of the American Bar Association's governmental affairs office. Susman also questioned whether cutting off lobbyists is practical, or the best way to prevent abuses.

"Is this going to apply to all employees of lobbying organizations -- that is, CEOs of auto companies -- or is it just going to apply to listed lobbyists?" Susman asked. "I'd say the CEO or the CFO is likely to be more influential as a 'lobbyist' [than] the registered lobbyist would be."

The exact language of the rules matters constitutionally, say legal experts. Imposing fines on lobbyists who attempt to contact federal officials, for example, "would be clearly unconstitutional," said Eugene Volokh, a constitutional law professor at the University of California, Los Angeles. "Because people have a constitutional right to speak to both their elected representatives and to government officials."

On the other hand, simply instructing Treasury officials to decline phone calls from lobbyists would probably not violate the First Amendment. "From a purely constitutional perspective, while you and I have a right to talk, no one has a duty to listen to us," noted Volokh.

"The Treasury Deparment can choose who they will meet with and who they will not about this," concurred Boyle, of Common Cause.

Still, some lobbyists are disgruntled over what they see as a mixed message from Treasury.

No sooner did Geithner announce new lobbyist curbs than the news broke that his new chief of staff would be Mark Patterson, a former lobbyist for Goldman Sachs.

Patterson is one of a few recent administration hires who have raised eyebrows because they violate President Obama's Jan. 21 executive order on ethics. That order bars lobbyists entering the Obama administration from working on issues or joining agencies that they lobbied during the previous two years.

"I find it kind of hypocritical that Treasury releases that press statement, and comes back the next day and hires a chief of staff who's an ex-lobbyist," said Wehnold. "You're sending differentiating messages. What are you trying to get across here?"

Reaction on Capitol Hill has been mixed. GOP Sen. Charles Grassley of Iowa wrote to Office of Management and Budget director Peter Orszag on Jan. 29 to complain about OMB's waiver allowing ex-Raytheon Co. lobbyist William J. Lynn to be nominated as deputy secretary of Defense. "It seems like the OMB waiver embraces the lobbyist culture that President Obama promised to change," Grassley wrote.

Sen. Dianne Feinstein, D-Calif., by contrast, commended the new Treasury rules, and is pushing to restrict financial bailout lobbying still further. "Taxpayer dollars must not be spent on lobbying or lavish corporate expenditures," she said in a statement. Along with Sen. Olympia Snowe, R-Maine, Feinstein has introduced a bill that would bar financial firms from spending federal assistance they receive on lobbying.

The handful of waivers allowing ex-lobbyists to join the administration "is not a pattern at this time," said Boyle. "But certainly we don't want to see lobbyists overseeing industries that they used to work for."

At bottom, the administration's problem is not hypocrisy but the inevitable clash between campaign promises and real life in Washington, said Stefan C. Passantino, who heads the political law team at McKenna Long & Aldridge. "Governing is much more complex than running for office," he said. The recent dustup over lobbyists, he added, "simply reflects the fact that this administration is now having to make the transition from a political campaign to a governing administration. And they find that it's far more complicated."