Gramm-Rudman Law Creates a Bonanza for Lobbyists and Consultants

The words “Gramm-Rudman” have struck terror in the hearts of most of official Washington, but the labyrinthine new budget-balancing law is yielding a bonanza to one small minority: the handful of people who claim to understand it well enough to be able to explain it to everybody else.

“I couldn’t have picked a better time,” said Wendell M. Belew Jr., the former chief counsel of the House Budget Committee, who struck out on his own last month as a partner in a budget consulting firm and is having no trouble finding well-heeled clients. Belew’s schedule is filling up with seminars and speeches, he said one day recently as he dashed from lunch with one Wall Street brokerage firm to a mid-afternoon meeting with another.

Partly Voided by Court

Congressional Quarterly magazine, which had expected about 75 people at its $145 half-day seminar on Gramm-Rudman last month, got 640 instead, and now it is quickly putting together other seminars throughout the country. Never mind that a federal court on Feb. 7 declared Gramm-Rudman’s automatic spending cuts unconstitutional; the rest of the law’s Rube Goldberg-like mechanism apparently will be implemented, and a lot of people are going to pay top dollar to find out how much that matters.

The stampede to cash in on Gramm-Rudman, which threatens practically every government program with periodic cutbacks until the deficit is wrestled to zero, represents an extreme example of one of Washington’s time-tested axioms: Every new law breeds opportunity for lobbyists and consultants.

In the early 1970s, it was a host of new environmental laws and the creation of the Environmental Protection Agency that spawned a lucrative industry for specialists who previously had been unable to get the attention of profit-minded corporations. A few years later, a web of complicated oil price regulations provided work for those select few who could navigate their way through them.

Demand for Budget Experts

Budget experts were in demand briefly in 1981, when Congress enacted President Reagan’s first sweeping spending cuts. “Take that and multiply it by a hundred” to gauge the present scramble, said Stanley E. Collender, one of those who has capitalized best on the budget boom.

Just a year ago, Collender was following the federal budget process in relative obscurity for the Washington office of Touche Ross, the giant accounting firm. “Everyone was either sick or bored with the old budget process,” he said. “Now, everybody’s concerned about it.”

As a result, he is scheduling midnight flights from coast to coast so that he can keep all his speaking engagements. Groups are willing to pay as much as $2,000 to hear him talk about how to cope with the new law. He is a star attraction at one-day Touche Ross seminars, where participants pay about $300 to hear his views.

The Committee for a Responsible Budget, an organization of former congressional and White House officials, drew about 150 people at $300 each for an intensive one-day session on Gramm-Rudman in New York recently. In addition to planning more seminars, the nonprofit committee is organizing a one-hour public television special on the law.

Experts Under Siege

Jim J. Tozzi, who worked two decades for the Office of Management and Budget, finds his consulting firm besieged by Wall Street investment banking firms wanting to know how to profit from the huge government asset sales being proposed as a means of reaching the deficit-reduction targets required under the law.

“Investment bankers know how to sell Beatrice Foods,” he said, “but they don’t know how to sell Bonneville Power”--a federally owned utility in the Pacific Northwest that the government hopes to put on the block. Although the Reagan Administration annually has proposed selling various federal operations to private business, Tozzi said, “no one took them seriously, but now, with Gramm-Rudman, you’ve got to take them seriously.”

The new law, named for sponsoring Sens. Phil Gramm (R-Tex.) and Warren B. Rudman (R-N. H.), is what Belew called “one of the most radical changes in the way Congress and the President do business in a very long time.” Enacted two months ago, it sets a series of declining deficit ceilings designed to yield a balanced budget by 1991. If Congress fails to adopt spending and tax policies to meet those target ceilings, the law triggers across-the-board cuts in almost all federal programs, divided equally between military and non-military spending.

That means defense contractors have a particular stake in Gramm-Rudman. So Touche Ross is going to Long Beach next month to offer Southern California’s military companies a seminar on “The New Reality” of Gramm-Rudman.

“Program instability will be a way of life,” a brochure for the session warns. “Gramm-Rudman means many more partial and complete contract terminations, additional program stretchouts, contract modifications, delivery schedule changes and dramatically increased uncertainty about funding levels.”

Advice Questioned

One congressional budget staff member, who was closely involved in drafting the law, questioned the value of some of the advice being peddled.

The staff member, who participated in a recent Gramm-Rudman seminar offered by a major economic forecasting firm, recalled his anger at listening to so-called experts try to explain the more complicated provisions of the law.

“They were flat wrong,” he said. “It kind of ticks me off. A cottage industry that sprang up overnight has its quacks.”