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

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

713

LEGISLATIVE STUDIES QUARTERLY, 44, 4, November 2019

DOI: 10.1111/lsq.12250

PAM ELA BAN

University of California, San Diego

MAXW ELL 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 c areer options available to them outside

of electoral politic s. Former officials re ceive job offers and ac-

cept positions that reward them for their political background;

roughly one in four former high-level pol iticians and government

official s go on to postpolitical employment as a board director

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

ticularly lucrative and v isible form of postpolitical employme nt,

perhaps becaus e value as a lobbyist so clearly relates to human

capital developed whi le serving in govern ment.

© 2019 Washington University in St. L ouis

714 Pamela Ban, Maxswell Palmer, and Benjamin Schneer

The theoretical l iterature on lobbying has traditionally ad-

vanced two views of the lobbyi ng process, both of which poi nt to

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

be succes sful in partic ular as lobbyists. First, the literature has

emphasized how lobbying ca n serve as a form of information

transfer, with interest groups s ending informational sig nals 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 va luable characterist ic, and so former MCs

and staffers may be highly valued for expertise developed while

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

eta l. 1989). Other scholars have emphasize d the importanc e of

political connections as a crucial currency for lobbyists, which

can allow them to help tip the s cales for or against legislation

considered before Congre ss. In a study of former congressiona l

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

former US Senate staffers who be came lobbyists suffered a sub-

stantial drop in revenue when the ir senator left offic e. Similarly,

Bertrand, Bombard ini, and Trebbi (2014) argue that connection s

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 staf f.

Recent political s cience research on lobbying, however, has

begun to advanc e a subtly different understa nding 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 th at government policies may

affect their i nterests. This vi ew of lobbying as political insur-

ance provides a compel ling rationale for the explosion in lobby-

ing activity over the past th ree decades. As t he analytic capacity

of Congress has declined and strong, central ized parties have

emerged, uncertainty about government poli cy has increase d

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

policy as well as i nsider process knowledge —termed “revolving-

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

lobbyists are valued, the authors arg ue, 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 i n government and thatlends fi rms insight into

navigating the policy making proces s. 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 behal f

of the same fir m.1

,2

The relationship betwe en political unc ertainty and dema nd

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

portant propositions about this l inkage remai n unstudied and

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

lationship explicitly. As part of the explan ation for why demand

for lobbying has increased over time, LaPira and Thomas i llus-

trate that congres sional staff head counts h ave declined (2017, 13)

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

creased. But li nking these trends to measurable increases in pol-

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

is a trickier matter. For one, policy un certainty is a fu nction not

only of the institutional dy namics in Congre ss but also of exter-

nal events.3

Looking withi n a single year, LaPira and Thomas

find that lobbyists su ited to reduce political uncertai nty tended

to work across policy issue a reas and in political domains, such

as taxes, par ticularly sensitive to unc ertainty 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 a n examination of the funda mental

relationship betwee n political uncertai nty and demand for lobby-

ists over time.

Our article s eeks to examine th is issue and several i nterre-

lated questions about postpol itical employment of former offic ials

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

relationship betwee n uncertainty about public policy and the de-

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

lobbyists with particular skills develop ed serving in Congress—

either as a legislator or staf fer—see outsize ret urns to their ear n-

ings in moments of heightene d policy uncertainty. Second, can

we establish exactly how much hig her a return from lobbying can

be earned due on ly 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 fir ms must file repor ts detailing the ir activities, but

they need only report payments from a client overall rather th an

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

study probing the earn ings of lobbyists. Moreover, the personal

characteristics that lead to succ essful care ers in politics also c or-

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

of the earni ngs of lobbyists who served in the Senat e or House