The Value of Political Connections

by on September 24, 2010 at 7:31 am in Economics, Political Science | Permalink

In an excellent paper titled, Revolving Door Lobbyists, Jordi Blanes i Vidal, Mirko Draca and Christian Fons-Rosen use data on the lobbying revenues of ex-Senate staffers to show:

[L]obbyists connected to US Senators suffer an average 24% drop in generated
revenue when their previous employer leaves the Senate. The decrease in revenue is out of line with
pre-existing trends, it is discontinuous around the period in which the connected Senator exits Congress
and it persists in the long-term. The sharp decrease in revenue is also present when we study separately
a small subsample of unexpected and idiosyncratic Senator exits. Measured in terms of median revenues
per ex-staffer turned lobbyist, this estimate indicates that the exit of a Senator leads to approximately
a $177,000 per year fall in revenues for each affiliated lobbyist….We also fi nd evidence that ex-sta ffers are more likely to leave the lobbying industry
after their connected Senator or Representative exits Congress.

Here is the key figure showing the drop in revenues at the time the Senator exits:

Graph_Senators_Fig6_Press

Bill September 24, 2010 at 8:01 am

Revenue is intake, but not expenditure.
So, when the Senator leaves, the lobbyist also does not make political contributions to the Senator’s campaign either.
Net income would be more interesting, particularly if the ex-senator also becomes a lobbyist competing with the other lobbyist.

charlie September 24, 2010 at 11:26 am

Exactly how did they get their data?

The real money is when you don’t have to file a lobbyist registration, and can use attorney-client to hide everything. The actual lobbyist registration is just the tip of the iceberg.

Lobbyists usually make money by brining people in on small retainers, rather than a large sum. So you have multiple clients at say $500 or $1000 a month.

That is double-true for “lobbyists” firms because what kills lobbying at law firms is conflict checks.

IN terms of ED pay, that is very true for associations but less true for non-profits. Some non-profits do pay a lot more than you would expect. However, a quid pro quo is the ED is expected to donate 15-20K a year to various campaigns. For a non-profit (501c3) that is an easy way to bring money to political campaigns.

hairstraightener September 25, 2010 at 5:35 am

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Andrew September 25, 2010 at 10:44 am

Political REcalculations

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