From the Halls of Congress to K Street: Government Experience and its Value for Lobbying

• Author: Pamela Ban,Benjamin Schneer,Maxwell Palmer
• DOI: http://doi.org/10.1111/lsq.12250
• Published date: 01 November 2019
• Date: 01 November 2019

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LEGISLATIVE STUDIES QUARTERLY, 44, 4, November 2019

DOI: 10.1111/lsq.12250

PAM ELA BAN

University of California, San Diego

MAXWELL PALMER

Boston University

BENJAMIN SCHNEER

Harvard Kennedy School

From the Halls of Congress to K

Street: Government Experience and

its Value for Lobbying

Lobbying presents an attractive postcongressional career, with some for-

mer congressional members and staffers transitioning to lucrative lobbying ca-

reers. Precisely why congressional experience is valued is a matter of ongoing

debate. Building on research positing a relationship between political uncertainty

and demand for lobbyists, we examine conditions under which lobbyists with past

congressional experience prove most valuable. To assess lobbyist earnings, we de-

velop a new measure, Lobbyist Value Added, that reflects the marginal contribu-

tion of each lobbyist on a contract, and show that previous measures understate

the value of high-performing lobbyists. We find that former staffers earn revenues

above their peers during times of uncertainty, and former members of Congress

generate higher revenue overall, which we identify by comparing revenues gener-

ated by individuals who narrowly won election to those who narrowly lost. These

findings help characterize when lobbyists with different skillsets prove most valu-

able and the value added by government experience.

While some p oliticians remain in off ice until the end of their

professional lives, many others are defeated or choose to leave

office to explore the career options available to them outside

of electoral politics. Former officials receive job offers and ac-

cept positions that reward them for their political background;

roughly one in four former high-level politicians and government

officials go on to postpolitical employment as a board director

or lobbyist (Palmer and Schneer 2019). Lobbying presents a par-

ticularly lucrative and visible form of postpolitical employment,

perhaps because value as a lobbyist so clearly relates to human

capital developed while serving in govern ment.

© 2019 Washington University in St. L ouis

714Pamela Ban, Maxswell Palmer, and Benjamin Schneer

The theoretical literature on lobbying has traditionally ad-

vanced two views of the lobbying process, both of which point to

why former members of Congress (MCs) and their staffers may

be successful in particular as lobbyists. First, the literature has

emphasized how lobbying can serve as a form of information

transfer, with interest groups sending informational signals on

policy issues to politicians (Austen-Smith 1994, 1995; Grossman

and Helpman 2001; Lohmann 1995). Under this view, issue ex-

pertise proves to be a valuable characteristic, and so former MCs

and staffers may be highly valued for expertise developed while

in office (Berry 1977; Esterling 2004; Heinz et al. 1993; Salisbury

etal. 1989). Other scholars have emphasized the importance of

political connections as a crucial currency for lobbyists, which

can allow them to help tip the scales for or against legislation

considered before Congress. In a study of former congressional

staffers, Blanes i Vidal, Draca, and Fons-Rosen (2012) find that

former US Senate staffers who became lobbyists suffered a sub-

stantial drop in revenue when their senator left office. Similarly,

Bertrand, Bombardini, and Trebbi (2014) argue that connections

bring lobbyists more of a revenue prem ium than does issue exper-

tise. McCrain (2018) also demonstrates the high value of connec-

tions between former and current legislative staff.

Recent political science research on lobbying, however, has

begun to advance a subtly different understanding of the role of

lobbyists in the policy making process. LaPi ra and Thomas (2017)

characterize lobbyists as providing a form of political insurance

for firms and other g roups worried that government policies may

affect their interests. This view of lobbying as political insur-

ance provides a compelling rationale for the explosion in lobby-

ing activity over the past three decades. As the analytic capacity

of Congress has declined and strong, centralized parties have

emerged, uncertainty about government policy has increased

and, in tur n, created a strong demand for those with knowledge of

policy as well as insider process knowledge—termed “revolving-

door” lobbyists by LaPira and Thomas (2017). Revolving-door

lobbyists are valued, the authors argue, not just for their policy

chops or their conne ctions per se, but rather for their understand-

ing of how the policy process really works, which is developed by

actually working in government and thatlends firms insight into

navigating the policymaking process. It is this form of human

capital—proc ess knowledge—that helps generate sky-h igh wages

715From the Halls of Congress to K Street

for some lobbyists and not others, even those working on behalf

of the same fir m.1

,2

The relationship between political uncertainty and demand

for lobbyists is crucial to this model of lobbying, but some im-

portant propositions about this linkage remain unstudied and

untested. To our knowledge, no one has actually tested the re-

lationship explicitly. As part of the explanation for why demand

for lobbying has increased over time, LaPira and Thomas illus-

trate that congressional staff head counts have declined (2017, 13)

and indicators for party centralization (2017,18–19) have in-

creased. But linking these trends to measurable increases in pol-

icy uncert ainty and, in turn, f luctuations in demand for lobbying

is a trickier matter. For one, policy uncertainty is a function not

only of the institutional dynamics in Congress but also of exter-

nal events.3

Looking within a single year, LaPira and Thomas

find that lobbyists suited to reduce political uncertainty tended

to work across policy issue areas and in political domains, such

as taxes, particularly sensitive to uncertainty about government

policymak ing (2017,153). However, because the bul k of the analy-

sis focuses on a snapshot of lobbyist behavior i n a single year, this

approach does not facilitate an examination of the fundamental

relationship betwee n political uncertai nty and demand for lobby-

ists over time.

Our article seeks to examine this issue and several interre-

lated questions about postpol itical employment of former offic ials

(MCs and congressional staffers) as lobbyists. First, what is the

relationship between uncertainty about public policy and the de-

mand for these lobbyists? In particular, we aim to assess whether

lobbyists with particular skills developed serving in Congress—

either as a legislator or staffer—see outsize returns to their earn-

ings in moments of heightened policy uncertainty. Second, can

we establish exactly how much higher a return from lobbying can

be earned due only to past employment in Congress? Several ob-

stacles prevent easy answers to these questions. Measuring indi-

vidual earnings from lobbying is not a straightforward exercise.

Lobbying firms must file reports detailing their activities, but

they need only report payments from a client overall rather than

reporting on a per-lobbyist basis —a problem that complicates any

study probing the earnings of lobbyists. Moreover, the personal

characteristics that lead to successful careers in politics also cor-

relate with succ ess as a lobbyist. As a result, a simple comparison

of the earnings of lobbyists who served in the Senate or House