WASHINGTON — Big companies that spent hundreds of millions lobbying successfully for a tax break enacted in 2004 got a 22,000 percent return on that investment — proof that for those who can afford it, hiring a lobbyist can pay handsome dividends.
The figures, compiled by professors at the University of Kansas for a study to be released today, offer a rarely seen glimpse of how the lobbying business works, and why — even as President Barack Obama vows to curb lobbyists' influence — the industry is booming as never before.
The report details efforts by hundreds of companies in 2003 and 2004 to push through a one-time tax "holiday" that lowered for a year the tax rate they paid on profits earned abroad.
All told, U.S. companies saved about $100 billion in taxes, with pharmaceutical behemoths Pfizer and Merck & Co., technology giants IBM and Hewlett-Packard, and health products maker Johnson & Johnson among the top beneficiaries.
The study zeros in on 93 firms that spent as much as $282.7 million lobbying on the issue during that period, and ultimately saved a total of $62.5 billion through the tax change.
Researchers used publicly available lobbying disclosures filed with Congress and financial statements submitted to the Securities and Exchange Commission to compare the amount each company saved with its lobbying expenditures.
"It calls into question what Congress did in 2004," said Stephen Mazza, who conducted the study with Raquel Alexander and Susan Scholz. "It clearly is a very lucrative field for lobbyists. Congress wanted to create jobs, and what they probably did was create jobs for the lobbyists."
The results reflect one reason that lobbying — always a major industry in Washington — has experienced explosive growth in recent years. Companies and interest groups spent $3.42 billion lobbying Congress and the federal government in 2008, the last year for which such figures are available, according to the Center for Responsive Politics. That's a 14 percent jump from the previous year.
And there's growing evidence that companies get what they pay for — maybe a lot more — when they hire seasoned Washington hands to help them navigate major legislative fights.
A separate group of business professors reported last year that companies that lobbied had better market valuations and investment returns than those that did not, and that those that did so most intensively had portfolios that consistently outperformed the market.
Lobbyists say they're not surprised by the findings, which prove what they tell their clients all the time: You can't afford not to have a seasoned Washington player on your team.
"There's literally no way that you can take an action in Washington by simply coming to town and sitting around on street corners waiting for it to happen — you really do have to have professional help," said Robert S. Walker, a former Republican congressman whose firm Wexler & Walker Public Policy Associates lobbies heavily on transportation, health care, energy and trade matters. "It would be like going to court without a lawyer."
While companies and coalitions may get their money's worth from lobbying, there's at least some evidence that the result isn't always in the public interest. The Kansas paper notes that the tax holiday didn't accomplish its stated objective of encouraging multinational companies to invest in jobs and equipment in the United States.