Delving In Together: Government Affairs on the Frontlines
Making A Difference For Your Industry
If anyone questioned the power and importance of effective advocacy, the past few weeks should put that doubt to rest. As The Associated Press declared this week, “in the Washington lobbying world, business is booming,” noting their “analysis of federal lobbying filings shows the number of companies and organizations hiring lobbyists shot up dramatically across the months of February, March, and early April.”
Many of those increasing their presence in Washington are focused on the pandemic, and while some see the rush as a “potent example of the power and sway Washington’s permanent influence industry can hold during times of crisis,” we saw something of greater note: the clear return on investment provided by informed, savvy, and proactive public affairs and government relations efforts. While the day-to-day impact of these efforts may seem hard to quantify, the response to the coronavirus pandemic has provided meaningful, tangible examples of how, now more than ever, companies’ investment in advocacy is a necessity for survival.
In past crises, such as the Great Recession, government relations took a hit, with companies cutting back or even zeroing out their Washington offices. In this pandemic, however, there is hope that companies and industries will instead recognize the critical importance of building and maintaining meaningful relationships with policymakers over the long term. So to help bring about this recognition, below are what we think are some of the key lessons about public and government affairs highlighted by the coronavirus pandemic.
Government Relations Is Relational, Not Transactional.
Despite the misconceptions promoted by the media and certain “watchdogs,” government relations is about building long-term relationships, not about transactions. History shows that companies and coalitions who invest in advocacy on a long-term basis are better poised to achieve their policy goals than those who don’t.
One such example is Wells Fargo, who faced intense public backlash and scrutiny from policymarkers over the past several years as a result of controversies surrounding some of its past banking practices. In 2018, the federal government responded by imposing a lending cap on the bank until policymakers could determine they had improved their corporate governance and established controls to protect consumers. In response, Wells Fargo bulked up its efforts, focusing on broad community engagement while dedicating more than $5 million last year alone to rebuilding trust with lawmakers in Washington.
These strong connections proved vital when the bank, which now finds itself along with other banks across the nation serving as a critical lending partner for small business loans under the Paycheck Protection Program, quickly reached its lending cap. Thanks to its investment in external affairs infrastructure, Wells Fargo was in a position to quickly petition the federal government for regulatory relief to keep desperately needed funds flowing to its small business customers, even as the financial services industry struggles to manage the critical needs of consumers and issuing new loans under the program.
Smart advocacy Is Constant.
There is often temptation in the corporate world to see government relations as a cost center rather than an investment. Often, lobbying and advocacy teams are called upon to deliver desired legislative or regulatory changes or address a particular issue, but then see efforts reduced and stopped entirely when there are no imminent threats or critical needs. However, some companies and coalitions choose instead to maintain their efforts for the long-haul, and they find themselves in a better position to mobilize when crisis strikes unexpectedly.
One such example is the craft beverage and distilling community. Geared up to fight for tax breaks in the Craft Beverage Modernization Act and its extension in 2019, these entrepreneurs were well-equipped to advocate for additional tax relief as America’s craft beverage companies and distillers provided the critical public service of transitioning their production to the creation of needed hand sanitizers.
The Distilled Spirits Council, which dedicated $4.23 million to federal lobbying in 2019, pushed lawmakers to waive typical federal excise taxes on alcohol for distillers who shifted their facilities to produce hand sanitizer during the coronavirus shortage. For brewers and distillers grappling with diminished demand for their products due to coronavirus restrictions, this reprieve from excise taxes, which amounted to nearly $10 billion in 2017, will be a huge help.
Anticipate Vulnerabilities Before You Seek Help.
In the coronavirus pandemic, we have also learned that even the most effective government affairs and public relations efforts can’t solve policy problems if an organization is fundamentally at-odds with lawmakers on important issues. And worse, if they’re unprepared or unable to remedy those differences, they can be caught flat-footed in an emergency.
We saw this clearly with the federal response to the cruise industry, whose executives had been among the most outspoken about their desire for aid in the coronavirus legislative package. While President Donald Trump heaped praise upon the industry in his daily coronavirus press conferences, bipartisan opposition emerged, with lawmakers from both parties expressing frustration that cruise companies were demanding a bailout from American taxpayers while maintaining their headquarters in countries like Panama, Liberia, and Bermuda to avoid U.S. taxes and regulations. Many lawmakers felt that extending relief to organizations with such practices would be unfair to industries who paid U.S. taxes and lived under U.S. laws and regulations. This skepticism left cruise companies seemingly unprepared to make the case for support in the stimulus package.
The denial of aid stood in stark contrast to the airlines, who faced demands from House Democrats to accept aggressive carbon emission reductions if they wanted aid. Airlines had launched large-scale awareness campaigns prior to the coronavirus about their efforts to cut emissions. Anticipating this vulnerability helped them keep these demands from becoming a part of the recovery legislation. cruise companies have made no such promises to the public.
The Bottom Line
Consistent investments in government relations matter. Companies and coalitions who prioritize these efforts not only accomplish long-term policy aims but also remain poised to tackle new challenges as they arise. And public affairs professionals must anticipate potential roadblocks to policy goals and find ways to navigate around them, especially in times of crisis.