On September 14, 2007, President George W. Bush signed the Honest Leadership & Open Government Act (HLOGA) into law as an amendment to the Lobbying Disclosure Act (LDA) of 1995. Largely a response to the Jack Abramoff scandal, the HLOGA was the first major overhaul of federal lobbying laws in the 21st century. Previously, federal lobbying law under the LDA primarily sought to increase lobbyist registrations and create a uniform mechanism to collect reports of lobbying activities, among other reforms.
Bundling as a Problem
Codified in the First Amendment, the right to “petition the government for a redress of grievances” has exemplified a fair and open democratic process that allows the people to hold their elected representatives accountable and direct attention to constituents’ needs. However, as the United States population and the government’s involvement in everyday life grows, the act of “redressing grievances” has, in turn, expanded into a multi-million dollar lobbying industry, operating both openly and discreetly. The expansion of lobbying activities in Washington has spurred policy action to address the problems that come with the business of influence. Since 1938, the federal government has enacted four major pieces of lobbying-related legislation, addressing problems including, but not limited to, foreign agent influence and registration, the ethics of the revolving door, lackluster enforcement mechanisms for activity disclosures and registration, and the influence of money in politics. The most recent of these laws include the LDA of 1995 and HLOGA of 2007. After the LDA passed, it became clear that the law did not adequately strengthen the transparency and regulation of lobbying activities to address the growing problem of corruption and quid pro quo arrangements between lobbyists and covered officials.
One of the most contentious issues regarding the intersection of political influence, lobbying, and campaign finance is the sheer amount of money involved in today’s federal election campaigns. The 2000 presidential election saw a near doubling of money raised during the election cycle, and election spending continues to grow. Now, a candidate and their staff must dedicate a significant portion of time and effort to fundraising activities to be competitive in a federal campaign. This fundraising thus has the potential to allow undue influence from those who give large sums of money to a campaign, despite ever-stricter campaign finance laws.
Prior to the HLOGA’s passage in 2007, campaigns openly encouraged efforts to increase individual and corporate donations using known and legal loopholes to avoid campaign finance law restraints. These efforts included bundling as a major resource for large donations and offering in-kind benefits to donors, like VIP access to candidates and invitations to private campaign events. Bundling refers to “the practice wherein an individual solicits campaign contributions from multiple donors and then presents the resulting ‘bundle’ to a candidate.” Because campaign finance law clearly defines individual donation maximums, bundling operations became a popular loophole, where a particular organization would “front” the bundled donation and have no obligation to disclose the individuals or organizations behind the bundled contribution to the federal government. This “arms race” of campaign fundraising is most notable in the case of Norman Hsu, a donor who utilized bundling to raise over $800,000 in campaign contributions for then-Senator Hillary Clinton’s presidential campaign in 2007 — exposing the corruption and exertion of influence behind bundling.
Bundling presents a particularly insidious form of potential corruption because it allows individuals or corporations to donate much larger sums to candidates than they could as an individual. Not only is the “bundling” organization not obligated to reveal the individuals behind these contributions, but the LDA placed no cap on bundled contributions to political campaigns. As a result, these operations made it possible for large and reliable donors to exert excessive influence over a particular campaign or federal office and unfairly impact the political process.
Major Goals of the HLOGA
Through increased accountability and transparency within the industry, one of the HLOGA’s objectives was to shine a light on the lobbying industry that had become increasingly riddled with corruption. The Jack Abramoff scandal, which exposed the LDA’s weaknesses and much-abused loopholes, informed the HLOGA’s primary goals. The HLOGA sought to revise the LDA by halting quid pro quo arrangements to gain influence on political activities, such as excess gifts for federal officials, bribery, and hiring former staff in exchange for favors. Abramoff and others could do so because of nonexistent LDA enforcement as money in politics and campaigns continued to grow exponentially. The Abramoff scandal soured the lobbying field, and lobbying reform became a bipartisan priority for the 110th Congress.
In addition, the HLOGA responded to the growing problem of bundling political donations. Until its passage, there was no federal definition of bundling and no enforcement mechanism on the allowed number of bundled contributions to a particular campaign. The HLOGA attempted to define bundled contributions and eliminate sophisticated shadow bundling operations that exposed loopholes in campaign finance and lobbying laws.
The HLOGA sought to reform and strengthen the 1995 LDA, which was the first major lobbying legislation since 1946. In response to the misuse and abuse of bundled contributions, HLOGA’s reforms attempted to strengthen enforcement mechanisms on campaign finance disclosures. The law also attempted to increase the transparency of lobbying by requiring quarterly reports on lobbying activities, setting the individual federal campaign contribution threshold to $15,000 biannually, and requiring the disclosure of the names of all individuals, businesses, or interest groups who contributed at least twice to a bundled contribution. Not only did the HLOGA seek to bring all individual donors to light, but it also worked to increase public awareness of lobbying activities through the “searchable, sortable, and downloadable” electronic filing requirements of lobbying disclosure reports. The HLOGA also required lobbyists to disclose campaign contributions to presidential libraries, inaugural committees, or any entity that honors a member of Congress. Lastly, the HLOGA strengthened LDA enforcement by toughening the penalties on falsifying financial disclosure forms and failing to register as a lobbyist with heftier fines and longer prison time.
Impact of Passing the HLOGA
Since the LDA and HLOGA were signed into law, the Department of Justice, charged with enforcing the penalties outlined in these laws, has only achieved one criminal conviction under the LDA; Jack Abramoff was convicted in July 2020 for failing to register as a lobbyist. This is a clear indication of minimal enforcement under the HLOGA. In addition, the Government Accountability Office, in charge of auditing lobbying disclosure forms, has repeatedly missed blatant attempts of forgery and dishonesty in the forms. Finally, the consequences of greater bundling enforcement did not adequately address the underlying problem: lobbyists carry out less than 3% of known bundling operations. Lobbyists do not monopolize the landscape of influence, which current legislation does not adequately address.
The HLOGA’s attempt to add greater transparency to and minimize the effects of bundling operations in campaign finance is critical to bundling enforcement. The HLOGA requires lobbyists to submit disclosures to the Federal Election Commission when they bundle over $15,000 semiannually in contributions to any elected official or candidate. The key issue with this definition is the singling out of lobbyists as the sole contributors to bundling operations. Rather, as evidenced by campaign finance disclosures from both the 2000 and 2008 election cycles, lobbyists made up just a fraction of these bundles. Interest groups, wealthy individuals, and corporations are increasingly involved as powerful donors in campaign cycles. Not only do they give hundreds of millions of dollars to their preferred candidate, but they are also involved in get-out-the-vote drives, ad hoc advising on campaign best practices, and shoring up additional grassroots activities. Neither campaign finance legislation nor the HLOGA monitors these activities, and therefore, they go undetected, undisclosed, and unmonitored. Singling out lobbyists as the sole contributor and abuser of bundling largely ignores the unmitigated operations of influence that take place through a variety of avenues.
One of the major unintended consequences of the HLOGA was the dramatic decrease in lobbyist registrations after its passage. In 2007, there were 14,822 registered lobbyists in Washington; in 2019, there were 11,893 registered lobbyists, marking a nearly 20% decrease in registrations. The added risk of penalties associated with misreporting or not reporting lobbying activities partly prompted the surge of de-registrations. The new wave of “19 percenters” grew exponentially, referring to groups of individuals participating in lobbying activities for only 19% or less of their time for a client. The LDA outlines this threshold for lobbyist registration, therefore ensuring these lobbyists do not have to register and disclose their activities. While the HLOGA has significantly increased lobbying transparency, it did create a new subset of shadow lobbyists that forgo registrations for fear of penalties — continuing their activities under pseudonyms like “political consultant.”
Bundling from groups not classically categorized as lobbyists is an incredibly lucrative asset for political campaigns. Not only are bundles unrestricted from donation disclosures, but they also can utilize a “front” organization for individuals, businesses, and interest groups to disguise their participation in bundling efforts.
To adequately address the influx and the influence of bundling, Congress should amend the HLOGA to disclose the individuals, interest groups, corporations, and others who seek to influence the political landscape. Lawmakers must understand that reciprocity can come from obtaining personal favors, good faith agreements with politicians towards certain issues, or “plum” appointments — not just through campaign contributions. If Congress hopes to curb influence from outsiders in the political process fully, both campaign finance and lobbying reforms must take place simultaneously and synergistically enforce and improve each other. All bundling operations must be transparent to the public and other lawmakers during a campaign cycle, not just afterward. Similar to the LDA, Congress must widen the current narrow definition of lobbying activities to include potential influence during a campaign cycle, such as ad hoc arrangements and other in-kind contributions. These reforms would ensure adequate transparency for all lobbying and campaign activities.
In addition to widening the microscope on lobbying and campaign activities, it is imperative for Congress to strengthen enforcement mechanisms. The lack of LDA enforcement has allowed not just lobbyists but interest groups, corporations, and individuals to influence the political process through campaign contributions, directly leading to bundling abuses. Congress must fund and direct the Department of Justice and the Federal Election Commission to form a robust enforcement body to combat these issues. Doing so would compel lobbyists and all groups hoping to influence the political system to act transparently and abide by fair practices.
Featured Image by Colin Watts on Unsplash.