Why Lobby? Because Lobbying Pays

Business Week has done some research on the return received by companies on their lobbying expenditures. The results are frightening -- BW concludes that dollars spent on lobbying are returned many times over:

The results suggest a startling conclusion: On average, companies generated roughly $28 in earmark revenue for every dollar they spent lobbying. And those at the very top did far better than the average: More than 20 companies pulled in $100 or more for every dollar spent. By any standard, that's a hefty ratio: The companies in the Standard & Poor's 500-stock index brought in just $17.52 in revenues for every dollar of capital expenditure in 2006. Or look at the results in direct marketing, where an extremely successful campaign might bring in $5 in revenue for every dollar spent. "If mainstream American businesses got a 28-to-1 ratio in sales, they'd be ecstatic," says Steve Zammarchi, president and CEO of Wunderman New York, a sales and marketing firm.

According to Citizens Against Government Waste, Congress spent about $30 billion on earmarks in 2006. Significant as that is, it's just a drop in the bucket -- the US government spent about $2.7 trillion in 2006, so earmarks were only about 1 percent of federal expenditures.

The bulk of federal spending is on entitlement programs -- primarily Social Security, Medicare -- consume about 40 percent of federal spending. The federal government also maintains farm programs, commodity price supports, welfare programs, subsidies for product research and development and a myriad of other programs -- all of which are heavily lobbied. The AARP, AFL-CIO, NEA, Chamber of Commerce, National Association of Manufacturers, and a host of other organizations also lobby for spending in this area of the budget. They spend millions of dollars, but in contrast to earmarks, the cost to the taxpayer is far harder to quantify.

Further, while a business such as Raytheon or Boeing represents only itself, its employees, and stockholders, those mass organizations listed above collectively represent tens of millions of Americans. As such, they have far more clout than any single company. Plus, they're far harder to demonize than any one of those companies -- because just about every American is represented by several of the groups listed above -- either directly or indirectly. So while the lobbying of specific companies for earmarks rightly attracts attention, the lobbying for more costly benefits will forever be downplayed.

Hat Tip: Rob Bluey