The Art of Government
Relations
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Lobbying
Lobbying is the practice of influencing decisions made
by government. It includes all attempts to influence legislators
and officials, whether by other legislators, constituents or
organized groups…
The term lobbyist has
been traced to the midseventeenth century,
when citizens would
gather in a large lobby
near the English House
of Commons to express
their views to members of
Parliament.
The Art of Government Relations
• Lobbying is rooted in the U.S. Constitution
which prohibits Congress from making
laws that restrict the people’s right to
“petition the Government for a redress of
grievances.”
• George Washington 1766 – Privy Council
• Colonial Special Interests…publically
funded roads for farmers… militia or army
to protect New England farmers… navy to
protect southern cotton trade routes
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The Art of Government Relations
The media has done a pretty good job
demonizing lobbying,” says David
Wenhold, president of the American
League of Lobbyists.
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The Art of Government Relations
“Special interest groups are behind this…”
• Is Greenpeace a special interest group?
• Clean Coal?
• Student loan recipients?
• The Girl Scouts of America?
• Farmers?
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The Art of Government Relations
In the past 10 years,
400 federal lawmakers
and 5,400 legislative
staff have left the
federal government for
private lobbying. During
this time, only 605
lobbyists have moved
into positions as
congressional staffers.
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The Art of Government Relations
Government Relations Function
• Knowledge of how the government works
combined with issue expertise to provide
issue education, and information to
legislators and government officials that
allows them to make informed decisions.
• Sometimes we…
– Support regulation
– Oppose regulation
– Seek to amend or change regulation
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The Art of Government Relations
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The Art of Government Relations
The Regulatory Challenge
• Total costs for Americans to comply with federal regulations reached
$1.806 trillion in 2012. It is more than the GDPs of Canada or Mexico.
• Last 20 years; 81,883 final federal rules have been issued. That’s
more than 3,500 per year or about nine per day.
• The ratio of regulations issued to laws passed by Congress and
signed by the president – stood at 29 for 2012. 127 new laws
translated into 3,708 new rules – or a new rule every 2 ½ hours.
• Regulatory costs amount to $14,678 per family – 23 percent of the
average household income.
Source: US Chamber
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The Art of Government Relations
The Legislative Challenge
• 2012 State Bills Introduced first 6 months =
155,450
– Enacted first six months 23,840
• 2012 Federal Bills Introduced first 6 months =
8,997
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The Art of Government Relations
SAMPLE ISSUES
• Carbon Trading/Cap Trade
• Credit Scores
• Data Privacy - Identity theft
• Farm subsidies
• Foreclosures
• Medical Conflicts of interest
• Toxins
• Undocumented workers
• Waste medical, electronic, meth labs
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The Art of Government Relations
Legislators and Staff
• Backgrounds – few come from the corporate world
• Staff – how can one be an expert on all legislative issues
under consideration?
• Advocacy Groups
• Unintended consequences
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The Art of Government Relations
Internal and external lobbyists
External lobbyists
• Understand and navigate the political landscape
• Go from an outsider to less than an outsider
• Can develop the legislative strategy based on
reality.
• Subject matter expert versus political expert
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The Art of Government Relations
First Priority - Positioning the Debate
• The actual issue may not be mentioned
– Campaign for human rights
– Defense of marriage and the family
• Take a complex concept and make it appear
simple
– Healthcare; sitting around the dinning room table
– BP; tourists returning to the Gulf
– Joe the Plumber
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Fracking pollutes our ground water
Fracking is safe with the right
rules
The Art of Government Relations
Advocating for your industry/company
• Unintended consequences
• “6000% return for the credit card
companies”
• Appreciate your time senator…
• “The ____ State Senate has never been
concerned with the constitutionality of
anything we have passed?”
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The Art of Government Relations
Maintaining highest ethical standards
• “Can you get me NASCAR tickets”
• “Senator what do you want?”
• Dinner plus legal fees
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The Art of Government Relations
Grassroots, Grasstops, Astroturfing
• Grassroots – formation of ideas and advocacy
from the ground up.
• Grasstops – involvement of individuals who
are more influential; position in the community
or position to the policy maker.
• Astroturfing – appearing as a grassroots effort.
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The Art of Government Relations
Trends in Public Policy Debates - Astroturfing
• Political, advertising, and public relations
campaigns seeking to create the impression of
being a spontaneous “grassroots” movement.
• Techniques – few people attempting to appear
as a mass movement. Letters to legislators,
newspapers. Blogs, etc.
• Examples – Healthcare Town Hall Meetings,
Working Families for Wal-Mart, McDonalds
(Japan)
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The Art of Government Relations
The Use of Coalitions
• Issue coalitions, industry coalitions
• Pool resources, funds, analysis
• Sends a message to legislators
• Opening closed doors
• Protect corporate reputation behind the
coalition – “tip of the spear”
• The coalition becomes the lightening rod.
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Think Tanks - Public Policy Institutes
• Non-profit research organizations engaged in public
policy analysis and research
• Often, advocate solutions, but do not lobby
• Some are strictly nonpartisan, researching policy issues
without regard to political outcomes
• Others see their function to provide intellectual support
for politicians or political parties.
Top Ten U.S. Think Tanks
1. Brookings Institution
2. Council on Foreign
Relations
3. Carnegie Endowment for
International Peace
4. Center for Strategic and
International Studies
5. RAND Corporation
6. Cato Institute
7. Heritage Foundation
8. Woodrow Wilson
International Center for
Scholars
9. Peterson Institute for
International Economics
10. American Enterprise
Institute
Protecting Corporate Reputation
Public Relations Firms and Media Consultants
• Managing the flow of information between a
corporation and the public
• Help corporations shape and position their media
messaging and shape public perception
• Public policy issues (poling, focus groups)
• Damage control
• What combination of media to use
• Social media
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The Art of Government Relations
It Is All About Getting Reelected
• PACs
• Corporate Contributions
• Access
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The Art of Government Relations
Corporate Political Action committee - PAC
• Effective means for employees and stockholders to join together to
pool their contributions to further common political and legislative
interests.
• There are over 1,500 corporations, including many Fortune 500
companies, that operate federal PACs.
• Corporate PACs can contribute up to $5,000 to a federal candidate's
primary election, $5,000 to the same candidate's general election, and
$5,000 per year to a federal officeholder's "Leadership PAC."
Leadership PACs are created by Members of Congress to help fund
their colleagues' campaigns (200 active Leadership PACs).
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The Art of Government Relations
For a corporation, government regulation can…
• Provide a competitive advantage
– Play to a core competency
– Raise barriers to entry – best in class practices
– Provide incentives to protect or grow your market
• Competitive disadvantage
– Overlay costs through compliance
– Restrict the commercial viability of the market
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The Art of Government Relations
Corporate Calculus:
Government Relations $$ < Litigation $$$$
• Studies validate that Government
Relations provides a superior return on
investment.
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Porter Industry Analysis
Competitors
Employees
Alt. Competitors
Industry
Customers
Government Regulation
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Government Relations Process Flowchart
Legislative Regulatory
Initiatives
Legislative or
regulatory initiatives
that could impact
HRB operating
models
• IRS – Treasury
• State Revenue
Departments
• Federal legislation
• State legislation
• Advocacy Groups
Government
Relations
Request Legal and
Business Segment
legislative review
• New issue - need to take
to Sr. Management for
consensus response.
Develop Government
Relations Policy
Positions
• Combine inputs
• Resolve inconsistencies
• Formulate strategies
• Develop legislative tactics
that insure success
- Talking points
- Amendment language
Legal
New Issue
Legal Review
• What are the legal
Issues?
• Suggested amendment
Language
Compliance
Risk Management
The Tax Institute
Operations/Compliance
Review
• How would this impact
operating models?
• Quantify impact?
• Impact on new products
and services?
• Impact HRB versus
competitors?
• Assign priority rating
Senior Management
Develop a Consensus for a
Corporate Strategic
Response
• Review inputs from Government
Relations, Legal, Operations,
Risk Management and The Tax
Institute.
• Reach a consensus on a
corporate goal for this issue.
Regulatory Roadmap
Corporate Strategic Plan
Government Relations
Playbook
• Issue
• Background
• Position
• Strategies & Tactics
• Opposition
- Positions
- Strategies
- Tactics
Annual Operating
Plans for businesses
New Product/Service
business case
Legislative Updates
• Weekly or monthly
• Updating legislation
and regulatory issues
• Updates on specific
legislative issues of high
importance.
The Art of Government Relations
The Roll of Corporate Government
Relations
• Insure that senior management
understands the risks or potential rewards
– GR Updates
– Senior management reviews
• Help build a corporate consensus and
develop legislative strategies in support of
the consensus
• Quantify the GR value-add
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The Art of Government Relations
Touch-points for Corporate Government
Relations
• Strategic Plan
– Regulatory Roadmap
• Annual Plan
– Short term impact
• Business Cases
– Products and Services
• Reputational - Crisis Management
• Investor Relations
• Public Relations
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The Art of Government Relations
S.566: Creates a Financial Product Safety Commission, to provide stronger
protections and better information in connection with consumer financial products
and to provide more regulatory protections
S.414: Amends the Consumer Credit Protection Act, to ban abusive credit practices,
enhance consumer disclosures, and protect underage consumers.
S.235: Establishes fair and transparent practices relating to the extension of credit
under an open end consumer credit plan.
S.255: Empowers the States to set the maximum annual percentage rates
applicable to consumer credit transactions.
S.500: Establishes a national usury rate of 36% for all consumer credit transactions.
H.1368: Amends the Internal Revenue Code to require the Secretary of the
Treasury to establish an Auto File Program which will provide income tax forms
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containing pre-filled information.