Much at Stake in Revision Bill : Lobbyists Busily Courting Congressional Tax Writers

Aides to members of the House Ways and Means Committee routinely put in long and grueling hours for relatively little pay. But the job has its rewards.

Earlier this month, for example, the Equitable Life Assurance Society flew about a dozen House aides, along with their spouses or guests, to New York, put them up in the tony Plaza Hotel and whisked them by limousine to choice seats at the U.S. Open tennis tournament, a string of expensive restaurants and the hit Broadway show “Biloxi Blues.”

One staff member recalls that Equitable spent more than $500 for her hotel bill alone. For all this, the congressional aides merely had to spend a few hours listening to the giant life insurance firm present its position on President Reagan’s tax plan, which the Ways and Means Committee began revising last week.

Such is the courtship that is proceeding as special interests seek to influence what could become the most thorough overhaul of the tax code in its 72-year history. Congressional tax writers, weighing proposals affecting virtually every company, organization and individual in the country, are being pulled and tugged by one of the broadest lobbying efforts in recent memory.

Key congressmen are finding big crowds at their campaign fund raisers and receiving seemingly endless offers to go on “fact-finding trips” or to receive generous speaking fees for participating in events sponsored by lobbying groups.

Their staffs are wooed almost as ardently. Not only can key staff members determine who gets a congressional ear but they are generally much more closely involved than their bosses with the nuts and bolts of legislation--and, therefore, are more likely to notice an obscure change in legislative language that could have a big effect on a certain special-interest group.

The tax issue has kept hundreds of interest groups busy lobbying. On Capitol Hill, the bill is jokingly referred to as KETLLE (pronounced “kettle”)--which stands for Keep Every Tax Lawyer and Lobbyist Employed.

Unusual alliances have been forged. Americans for Tax Reform has brought together corporate heads, the Knights of Columbus and advocates for traditional American families. The Coalition for the Advancement of Industrial Technology, which opposes the Reagan plan, encompasses 59 corporations, 17 universities and 10 trade associations.

Some Support Reagan

Some business groups, such as retailers, food processors, supermarkets, high-technology companies and small business, have joined forces to lobby in support of Reagan’s package despite its overall increase in corporate taxes. Those interests believe they would gain more from the plan’s lower tax rates than they would lose from the repeal of numerous tax preferences, which largely go to heavy manufacturing firms, utilities and financial institutions.

Other groups have focused on much narrower aspects of the tax proposal. A coalition called 401(k)s for 501(c)s has organized to preserve the ability of nonprofit organizations to offer tax-deferral retirement plans. And then there is the Ad Hoc Group to Preserve the Cash Method of Accounting.

“Every time I open the door, there’s a different coalition standing out there,” said Jonathan Keyserling, an aide to California Rep. Robert T. Matsui (D-Sacramento). Keyserling estimates that Matsui is receiving as many as 50 phone calls a day from lobbyists interested in various parts of the bill.

Lobbyists Line Corridors

Hours before the committee’s first drafting session Thursday, scores of lobbyists lined the marbled corridors outside the room in which the committee would meet. Waiting among the usual representatives for industry associations, labor unions and the like were such figures as ex-New York Gov. Hugh L. Carey and Pomona College President David Alexander.

Carey, a Ways and Means Committee member when he served in Congress before becoming governor, acknowledged that his law firm is involved in lobbying on several provisions of the bill. But he insisted he was there simply to “visit” committee member Charles B. Rangel (D-N. Y.) about Rangel’s coming race for a spot in the House leadership.

Showing the Flag

Alexander was there to show the flag for the National Assn. of Independent Colleges and Universities and press the case for retaining deductions for charitable giving.

The lobbyists’ basic need is access to Ways and Means Committee members--and those who do not have the stature or connections of former governors and college presidents invest heavily to get it.

Torrent of Contributions

They are channeling a torrent of campaign contributions to members of the House and Senate tax-writing committees. “I wouldn’t say a campaign contribution is going to buy you influence, but it’s going to buy you an opportunity to influence,” said one lobbyist for a major corporation.

Most of the cash comes from corporate and labor political action committees (PACs). Members of the House Ways and Means Committee and the Senate Finance Committee raised a total of $3.7 million from PACs during the first six months of this year, more than triple the contributions they reaped during the first half of 1983, their last non-election year, according to the watchdog group Common Cause.

Leading the way among business PACs was the insurance industry, where companies like Equitable are concerned with a variety of provisions proposed by Reagan that could make insurance a less attractive buy. And most large insurance firms are also involved in other businesses, such as leasing and real estate, that could become less profitable.

The PAC contribution has become an essential, though widely disdained, part of the mating dance between congressmen and special-interest groups.

“Nothing is tackier than lobbyists’ mentioning they’ll be dropping off a PAC check” when they make an appointment to meet with a congressman, sniffed an aide to a Ways and Means Committee Republican.

Lobbyists are equally unimpressed by the way congressmen on the tax-writing committees badger them for contributions.

“The fund raising is non-stop these days,” a real estate lobbyist complained. “The members are hitting us up for everything they can. Every time you turn around there’s a $500-a-plate dinner that somebody is holding.

“But we can’t afford to ignore them,” he conceded. “They notice if you don’t show up.”

Rostenkowski Fund Raiser

At one of those dinners--a mid-June fund raiser for Ways and Means Chairman Dan Rostenkowski (D-Ill.)--House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) surveyed a crowd of hundreds of lobbyists. “Danny, this is really marvelous,” the Speaker reportedly said. “All this for just a little piece of legislation, which might or might not get to the House floor.”

Rostenkowski had made a nationally televised appeal asking the average guy to “write Rosty” in support of the bill, but those who handed over $500 donations for the dinner received buttons boasting: “I did better than write Rosty.”

The 50 representatives and senators who sit on tax-writing committees also raked in more than $1 million last year in speaking fees--about one-fifth of the total paid all 535 members of Congress, Common Cause reported. Such speaking engagements--sometimes to groups numbering no more than a handful--often are built into expense-paid weekends at resorts.

Staff members also cash in with invitations that vary from expensive lunches to theater tickets to Caribbean trips. “I’ve been invited to Puerto Rico a couple of times, but I don’t have time to go,” said the staff member who had racked up the $500 hotel bill on Equitable’s weekend excursion to New York.

‘Fact-Finding Events’

House ethics rules specify that congressmen and their aides may accept such trips only if they can be considered legitimate “fact-finding events.” The sponsor may pay only “necessary expenses” for food, lodging and transportation.

But no one knows how closely these rules are followed. Lobbyists are not required to disclose how much they spend on wining and dining a staff member unless the aide is designated as the congressman’s “principal assistant” or earns more than $62,000 a year.

Financially Attractive

Puerto Rico apparently holds a large number of facts this year, because it is one of the most popular destinations for fact-finding missions. The island’s government has joined forces with companies that have operations there to preserve a tax break that makes it a financially attractive place to set up shop.

Public filings with the clerk of the House show that a coalition calling itself the Puerto Rico/USA Foundation took four Democratic House members there for three days in January and four Democratic senators there for four days in April. It spent $3,528 on food, entertainment and lodging for the House members; the senators’ tab for hotels, meals and security came to $11,839.36--or more than $700 a day for each senator.

Ways and Means member Rangel, a strong backer of maintaining the tax incentives to businesses in Puerto Rico, was one of those who went, and he is urging other members to do likewise. Rangel aide George Dalley vigorously defended such on-site inspections.

“Tax incentives are a large part of the reason for Puerto Rico’s success,” Dalley said. “Frankly, a lot of members don’t know Puerto Rico is part of the United States.”

Peter Holmes, a foundation lobbyist, insisted that an opportunity to meet Puerto Rican government officials and see first-hand the number and quality of jobs created by the tax incentive “is very impressive to people. A thriving middle class has developed on the island.”

25 to 30 Took Trips

Holmes estimated that the foundation has taken between 25 and 30 congressional staff members, in addition to “a number” of congressmen, to Puerto Rico. He said such junkets are “just a small part of the ongoing program” and “not that outrageously expensive.”

‘Put It Into Perspective’

Similarly, an aide to a Ways and Means member cited a trip to a Bell Laboratories facility as a valuable learning experience at a time when Ways and Means is looking at tax breaks for research and development. When the company vividly demonstrated that the product of $3 million in research could fit into a single petri dish, “you finally put it into perspective,” the aide said.

But an aide who listened to Equitable’s presentation in New York did not find it so enlightening.

“We knew everything they were telling us,” the staff member said. “I mean, how many times can you talk about ‘inside buildup?’ ” Reagan has proposed taxing inside buildup, or the growth in cash value of life insurance policies.

A reporter repeatedly but unsuccessfully asked Equitable spokesmen in New York and Washington for comment on the trip. Equitable has frequently sponsored such trips in past years, according to congressional aides.

Behind Closed Doors

Now that Ways and Means has gone behind closed doors to revise Reagan’s tax proposal, lobbyists find their access to committee members more important than ever. Although lobbyists are banished to the hallways, one said, “At some point, we all find out what’s going on.”

‘Public Loses Out’

Ann McBride, senior vice president of Common Cause, agreed. “The lobbyists always find out what went on in those closed meetings,” she said. “It’s the public that loses out.”

As the committee debates controversial proposals, staff members--including those who have enjoyed the lobbyists’ generosity--will shuttle back and forth between the committee members and the lobbyists to make sure that each side knows what the other is thinking. This is crucial, staff members say, because lobbyists are much more familiar than they are with the implications of complicated tax provisions.

Lobbyists, one staff member said, “are kind of part of the process. They just aren’t in the room.”