12-18-2004
Special Report - Ripples on K StreetBara Vaida and Peter H. Stone (E-mail this author)
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© National Journal Group, Inc.
Republican lobbyist Bill Paxon was fuming over the question: Would there be fallout on K Street if House Majority Leader Tom DeLay were to be indicted in an ongoing campaign fundraising case in his home state of Texas?
"I think it's an outrage to speculate," said Paxon, a former member of Congress from upstate New York who is a senior adviser in the Washington office of Akin Gump Strauss Hauer & Feld and a friend of DeLay's. "This is exactly what [Texas prosecutor] Ronnie Earle and the whole media feeding frenzy have been about -- harming Tom DeLay as a leader."
Beyond blasting what they see as irresponsible speculation, many K Street Republicans dismiss the possibility of an indictment. "If [Earle] had grounds for an indictment, [he] would have done it before the election," said another GOP lobbyist.
Still, in a voice vote in November, House Republicans repealed their decade-old rule that required GOP leaders who are indicted to relinquish their leadership posts. Under the new rule, the House Republican Conference would hold a separate vote on whether any GOP House leader, such as DeLay, would have to step down following a grand jury indictment.
So far, Earle, the Democratic district attorney of Travis County, Texas, has persuaded a grand jury to indict three of DeLay's political allies on charges of illegally collecting corporate campaign donations through an organization associated with DeLay -- the Texans for a Republican Majority Political Action Committee -- and then pouring the money into state legislative races. DeLay has said that he has done nothing improper and that he has no reason to believe he is a target of the grand jury.
Publicly, Republicans are showing a united front in backing their House leader. Privately, however, GOP lobbyists -- none of whom is willing to be identified by name -- are expressing various degrees of concern about the possibility that DeLay could be indicted.
More than a dozen such lobbyists with good ties to the House leadership were interviewed for this story. They said that an indictment would likely create short-term fundraising difficulties for the GOP and significant image problems for DeLay, as well as headaches for a few lobbyists who are closely identified with the powerful Texan. But they argued that the "K Street Project" -- the DeLay-blessed strategy of pressuring trade groups and lobbying firms to hire only Republicans for top jobs in Washington -- would survive because that effort is much bigger than DeLay himself. A DeLay spokesperson declined to comment for this story.
"DeLay would have a kind of Madison Avenue problem," said one prominent GOP lobbyist. "He'd be like a bar of soap that's been proven to cause a rash." DeLay would not be able to do as much fundraising for House members. "These members are very unforgiving of their colleagues' press problems. They're in the public-relations business."
In the 2004 election cycle, DeLay's re-election campaign and his leadership PAC, Americans for a Republican Majority, raised a combined $6.5 million and contributed about $1.2 million to other Republican candidates and committees, according to the nonpartisan tracking group PoliticalMoneyLine. DeLay also supported GOP candidates by traveling to their districts and attending their fundraisers.
DeLay's vaunted fundraising skills are a key reason why he commands loyalty from House Republicans. The grand jury probe in Texas caused DeLay to curtail some personal appearances on behalf of candidates in the 2004 election, and if he were to face charges, he would likely make even fewer appearances, especially for candidates in tight races who may not want the local papers to report that they campaigned with an indicted leader.
Said one GOP lobbyist: "They'd have political handlers say, 'Why have Tom come? We may love him, but we don't need reporters writing about this.' "
But an indictment could have an opposite effect, said Larry Noble, the executive director of the Center for Responsive Politics, by boosting fundraising among DeLay's ardent supporters in the GOP rank and file who would see the action as politically motivated. Similarly, Qorvis Communications Managing Director Don Goldberg, who worked in the Clinton White House, noted that President Clinton raised more money and increased his popularity among his party's faithful after his 1998 impeachment by the House. "DeLay has put into place a vibrant fundraising mechanism," Goldberg said.
Over the long term, GOP fundraising would bounce back from any temporary reversal if DeLay were indicted or forced to step down, some campaign finance watchdogs said. "If he leaves the scene, there will be any number of others to fill the short-lived vacuum," said Democracy 21 President Fred Wertheimer.
K Street has about a dozen successful lobbyists who used to work for DeLay and could feel a pinch. The firm with the largest number of DeLay alumni appears to be the Alexander Strategy Group, led by former DeLay chief of staff Edwin Buckham. Also at Alexander Strategy are Karl Gallant, former executive director of ARMPAC; and Tony Rudy, DeLay's former deputy chief of staff. In the first half of 2004, Alexander Strategy Group reported earning $3.82 million in lobbying fees, an increase of 38 percent from the same period the year before, according to lobbying disclosure documents.
Other successful former DeLay aides on K Street include Ralph Hellmann, senior vice president at the Information Technology Industry Council; Susan Hirschmann, a partner at Williams and Jensen; William Jarrell, a partner at Washington Strategies; Glenn LeMunyon, a principal at the LeMunyon Group; and Drew Maloney of the Federalist Group.
These and other former aides are part of an informal network that makes up the core of DeLay's support on K Street. These lobbyists help each other get clients and assist Republicans in getting top jobs in the lobbying and trade association community.
A raft of news stories about a DeLay indictment could distract the attention of DeLay-affiliated lobbyists if they are forced to both defend their friend and explain to clients why an indictment would not impair their ability to lobby. These lobbyists would have to make clear to clients that their Hill connections extend beyond the majority leader.
"There are two types of lobbyists connected with DeLay," said one lobbyist with good ties to House GOP leaders. "There are those who understand Capitol Hill, and those who are dependent on relationships." Lobbyists who rely on DeLay "as a one-stop shop to solve their problems" would be in the most trouble if DeLay were indicted, the lobbyist said.
Alexander Strategy "is at the top of the DeLay-heavy shops," said a former GOP leadership aide who is now a consultant. "If there's a blow to be taken, Alexander Strategy will take it the hardest."
Asked to comment for this story, Alexander Strategy released a statement to National Journal saying, "The backgrounds and experiences of our 12 lobbying and public-affairs partners are as broad and diverse as any firm in Washington, and that diversity is reflected in the variety of clients with whom we work." The firm said it is "very proud" of its work with DeLay and added that it also works with the entire House and Senate leadership, with committee chairs, and with the administration.
For lobbyists, an indictment could make approaching DeLay on controversial, high-profile battles more difficult. One lobbyist said it might be tougher for DeLay to take on a fight like the long-running Bacardi USA case, in which that company sought a change in U.S. trademark law. DeLay took heat from the media and other House members for supporting Bacardi. "In the short term, I think he'd want to keep a low profile," said a GOP lobbyist.
More broadly, Republican and Democratic lobbyists alike said that almost all ex-DeLay aides have developed other connections in the House and Senate that would help them weather tough times for their former boss.
Further, K Street is full of successful lobbyists who previously worked for lawmakers -- such as former House Speakers Newt Gingrich, R-Ga., and Jim Wright, D-Texas, and House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill. -- who were indicted or censured, were forced out of leadership, and even left the House.
Sources doubted that a DeLay indictment would bring K Street any change in the ongoing effort by some Republicans and conservatives to pressure associations and companies to hire Republicans. Several headhunters said that because the Senate, House, and White House are in GOP hands, it makes sense that more top lobbying jobs should go to Republicans over Democrats. And Wertheimer said that an indictment would have no effect on that trend.
"The K Street Project is now a reality in the psyche of Washington lobbyists," Wertheimer said. "We know that illusion is reality here. One would not expect this modern cultural phenomenon to disappear with DeLay." Democrats, however, would probably use an indictment "to attack the K Street Project and say that the campaign finance case shows how DeLay goes too far," said one Hill GOP aide.
Interviews with GOP lobbyists suggest that few expect the Texas grand jury to indict DeLay. The majority cite Earle's 1993 indictment of Sen. Kay Bailey Hutchison, R-Texas, who was charged with misusing her office for campaign-related activities. Earle dropped his case in 1994 after a judge blocked Earle's attempt to enter his primary evidence against Hutchison. DeLay's supporters say they've looked at the evidence in the Hutchison case as well as in the DeLay case and believe that Earle is again building a case that won't hold up in court.
Even if DeLay is not indicted, some lobbyists worry that ongoing Senate and federal law enforcement probes related to Indian casino lobbying may bring other headaches for the Texan. The investigations are focused on allegations of misconduct toward six Indian tribes by lobbyist Jack Abramoff, who was a prominent fundraiser for DeLay, and by Abramoff's partner, public-relations man Michael Scanlon, a former DeLay aide.
Boasting of their ties to the powerful House leader, the duo prodded the tribes to increase contributions to Republican campaign coffers, including DeLay's ARMPAC. Not long after the scandal broke, DeLay distanced himself from Abramoff and Scanlon by decrying lobbyists who trade on his name to get clients. But some lobbyists worry that even though DeLay has not been directly linked to the scandal, more negative news could be coming.
"The Abramoff-Scanlon probe could be the vehicle needed to get inside the very intricate dealings of DeLay Inc.," said one GOP lobbyist. "At some point, it could lead to DeLay himself."
Even so, most are betting that even with an indictment, DeLay would ultimately thrive, because he has faced ethics scrutiny in the past and has come out pretty much unscathed. "I think this is all about jealous people sniping about DeLay," said a lobbyist.
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