Monday, November 10, 2008, 5:52 PM

Welcome to the first post-election edition of "Political GPS: Your Quick Route Through Law and Politics."

Change. It was the rallying cry of an historic campaign, and now an historic presidency. It has enveloped the financial services industry, where the government now has ownership stakes in major banks and insurance companies. With so many other urgent needs – two ongoing wars, energy independence, healthcare – more fundamental change is on the way.

What do these historic times portend for the regulation of political activity, especially lobbying and government ethics? Here’s what we expect:

  • In spite of the campaign rhetoric, we believe there will be more lobbying, not less. Why? There’s a new Administration, a new agenda, and a lot at stake for many important industries. The Obama administration will likely add more seats at the table, creating opportunities for businesses and advocacy groups to make their case. There will also be fewer earmarks, which may necessitate more advocacy. Jeff Birnbaum of the Washington Times, in a talk before the ASAE & Center for Association Leadership, called the prospect of growth in lobbying activity “an absolute certainty.” We agree.
  • Lobbying and ethics laws may be changed again. Don’t assume this will be a back-burner issue because the country faces more pressing problems. The McCain-Feingold law was passed just six months after 9/11. Besides, reform in this area fits with the President-elect’s emphasis on a new kind of politics and greater transparency in government.
  • What might the changes be? Expect calls for more disclosure of interactions between lobbyists and government officials. There will also be efforts to subject executive agencies to the same ethics restrictions that apply to Congress.
  • Will lobbyists find jobs in government? In this area, campaign rhetoric will likely yield to reality. The lobbying community has too much expertise and understanding of how government works to cross off lobbyists as potential hires. Yesterday, the Politico’s Jeanne Cummings told a conference hosted by the Greater Washington Board of Trade that the new Administration will bring on former lobbyists, but will keep them away from the same issues on which they’ve lobbied and will impose lengthier cooling-off periods.
  • The public financing system is in the political ICU. Major candidates routinely decline $45 million in funding for the primaries – money that isn’t available until January 1st of the election year, which is too late to compete in Iowa and New Hampshire. Watchdog groups want to see the system fixed and expect help from President-elect Obama, who supported reform legislation (S. 436) unveiled last year by Senator Feingold. But as the first major party candidate to reject public financing and instead tap the vast potential of the Internet to reach small donors, Senator Obama may have lost his enthusiasm for this issue. Obama wound up raising around $630 million – well in excess of the $84 million he could have received in taxpayer funding.
  • The law may be changed to require greater disclosure of campaign contributions. Federal law requires campaigns and other PACs to identify donors who contribute over $200. Contributions under that amount are merely reported as a lump sum. In the pre-Internet age, no one could have conceived of raising tens of millions of dollars in such small contributions. Now someone has, and a vast amount of money went unreported.
  • There may be an effort for more regulation of political spending by outside groups, especially 501(c) organizations. Millions of dollars were spent by these groups in key Congressional races. Members of Congress tend to notice this sort of thing.
  • While the FEC is generally immune to the shock of regime change - the result of a politically divided six-member Commission and a rotating Chairman with weak powers - all signals are that the FEC will be active in the coming months. The Commission is poised to adopt new bundling rules and has been ordered by the courts to re-write its rules governing coordination with candidates and parties. A backlog remains in the enforcement docket. Political committees may face new obligations to screen contributions from small donors and those made by pre-paid credit cards. Audits of some of the Presidential campaigns are also on the horizon. The law requires an audit of the McCain campaign because it accepted public funding. On the other hand, the Obama campaign, which did not take public money, will only be audited if at least four of the six FEC Commissioners vote to authorize it.

The Who said "the change, it had to come." Well, it certainly has in a dramatic manner, and the rules-of-the-road for political activity, lobbying, and ethics rules will change too.

If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).

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