California's 'Big 6': Masters of the New Lobbying Game

Times Staff Writers

For years, Catherine Abernathy toiled as an aide to Republican Rep. Bill Thomas of Bakersfield. She was with him during his first congressional campaign. She helped him climb through the ranks. She was there when he became chairman of the Ways and Means committee and one of the most powerful men in Congress.

Abernathy and her husband grew so close to Thomas and his wife that in 1986 they bought a condo together. And in 1998, the Abernathys gave their half-interest in the property to Thomas.

But in 2001, Abernathy decided it was time for a change. As her boss took over Ways and Means, she became a lobbyist representing the healthcare industry and other clients seeking favors from Thomas and his committee. In 2005, Abernathy reported collecting $2.4 million in fees. Thomas got thousands of dollars in campaign contributions from Abernathy's clients.

Welcome to the new world of congressional committee chairs, their aides, friends and lobbyists.

It is a cozy world where personal relationships count for millions of dollars and a latter-day "Triangle Trade" has developed among powerful committee chieftains (who are expected to raise vast sums in campaign contributions), business and other interests (which seek favorable treatment), and lobbyists (who can make a fortune bringing the two parties together).

It is also a world dominated by a few California Republicans.

Despite the state's predilection for voting Democratic, six of its 20 Republican Congress members are chairmen of major committees. Their rise has brought millions of federal dollars and other benefits to parts of the state. Thomas snagged about $755 million for his district in last year's highway bill. Rep. Jerry Lewis (R-Redlands), chairman of the House Appropriations Committee, tucked $4.25 million for his district into one recent spending bill -- more than the individual allocations for 11 states.

Some congressional leaders, however, have grown so close to well-connected lobbyists and have been so aggressive in channeling tax dollars to favored interests that their activities have sparked scrutiny and calls for reform. One California chairman, Lewis, is the subject of a federal grand jury investigation.

The November elections will decide whether five of California's "Big Six" chairmen -- Thomas is retiring at the end of the year -- continue to hold their powerful positions. The others are: Lewis; Rep. Duncan Hunter (R-El Cajon) of Armed Services; Rep. Howard P. "Buck" McKeon (R-Santa Clarita) of Education and the Workforce; Rep. David Dreier (R-San Dimas) of Rules; and Rep. Richard W. Pombo (R-Tracy) of Resources.

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Washington is no stranger to scandal involving government officials, private interests and well-connected middlemen. But the current controversies reflect a new reality that is defined by several factors, including the increased money involved in lobbying, new fundraising demands on chairs and the increased use of earmarks -- federal funding for projects often slipped into bills at the behest of lobbyists.

With all this, a new career track has developed that enables ambitious individuals to move rapidly from modestly compensated congressional staff jobs to astronomical lobbying fees such as those collected by former Thomas aide Abernathy. The insider connection makes the lobbyists valuable to clients, and the lobbyists' connections to potential campaign donors is valuable to lawmakers.

And earmarking allows key committee chairs and other insiders to insert spending instructions into pending legislation without the usual checks and balances or scrutiny. A kind of budgetary shortcut, earmarks offer quick rewards to those who seek financial favors from government. The closed aspect of earmarking makes it ripe for exploitation by congressional leaders and well-connected lobbyists.

"Committee chairmen have always dealt with lobbyists," said Julian Zelizer, a specialist in congressional history at Boston University. "But in scale and scope, we've never had anything like this ... just the sheer number of lobbyists and sheer amount of money we're talking about. There's more opportunity for things to go bad now."

Though their roles differ, all six California chairmen play the new game in at least some respects. For example:

* Lewis sold a piece of Washington real estate for $830,000 and reinvested the money with a Northern California developer named Marvin "Buzz" Oates. The deal allowed Lewis and his wife to defer capital gains taxes for a year and earn a net gain of $35,000 to $40,000 through a lease-back and mortgage deal he struck with Oates, according to Lewis spokeswoman Barbara Comstock.

Since that time, Lewis' Appropriations committee earmarked $500,000 for a computer exhibit to be installed in a new aerospace museum Oates is helping build. Another earmark, $4 million in planning money, was approved by the House for a dam project that has long counted Oates among its supporters.

Oates said that the terms of the real estate deal with Lewis were not out of the ordinary and that he had sought no favors.

Comstock said that neither Lewis nor his staff recalled hearing from Oates on the projects and that Lewis' minimal role in the earmarks was based solely on the merits of the projects.

* Hunter's fundraising is so tied to his Armed Services Committee's work that 66% of his campaign contributors, most of them defense contractors, got earmarks in this year's defense spending bill, which went through Lewis' committee. General Dynamics, Hunter's second largest donor in the current cycle, received at least $11 million in earmarks in the 2006 appropriations bill, including a single line item setting aside $4.3 million to purchase "General Dynamics ordnance and tactical system."

A spokesman for the congressman said that Hunter "does what he thinks is right for the country" and cited an instance several years ago when he worked to cut funding for a submarine produced by General Dynamics.

* McKeon, former co-owner of a chain of western-wear stores who became Education and the Workforce chairman in February, hired as committee staff director a former committee aide turned education lobbyist who received more than $1.7 million from his firm in 2005 and early 2006.

The former lobbyist, Victor Klatt, has promised to recuse himself from committee matters specifically benefiting a former client. "We went above and beyond what's currently required in these kinds of situations," he said. "I gave up a lot to come back to the committee.... We come back because we believe in good government."

McKeon spokesman James Geoffrey said his boss would "rather work with people he knows, whose judgment he trusts, who have experience. That's what you want if you want a good policy."

* Thomas shepherded through his Ways and Means Committee provisions in the recently approved pension overhaul bill that allowed Northwest Airlines and Delta Air Lines to delay meeting their financial obligations to future retirees. Northwest pays Abernathy, the chairman's friend and former aide, $160,000 a year to represent it before the committee.

Abernathy said her success was based on the merits of the case, not her past relationship with Thomas. The chairman got a $5,000 contribution from Northwest in the current election cycle.

A Thomas spokesman said: "Members, lobbyists and interested parties both for and against an issue come before me in the course of a legislative process. We craft legislation, notwithstanding any contact by any of the above, which produces the best possible outcome for consumers with the approval of taxpayers' dollars."

* Dreier, who boasts of eating an apple and doing 200 push-ups every day, has enormous power over the flow of legislation to the House floor as Rules chairman. He has collected more than $7.5 million in political donations through his campaign committee and leadership PAC since 1997 and more than $1.6 million in this cycle alone, according to the nonpartisan Center for Responsive Politics, which monitors fundraising. He contributed a good chunk of the money to help maintain the House GOP majority.

He is not considered a significant player in the earmarks game.

* Pombo, who often wears cowboy boots, draws a large portion of the money he raises from groups with interests before his Resources Committee. He has raised more than $6.5 million since 1997 and more than $3.1 million just in the current cycle. Like Dreier, he is not a major earmarker.

"The truth is that thanks to the six committee chairmen, California has never had more clout in Washington," said Dreier's chief of staff, Brad Smith. "California is the big winner."

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Washington has at least 15,000 lobbyists, according to the Center for Responsive Politics. That number has held fairly steady, but spending on lobbying has increased 41% in the past five years to an estimated $2.2 billion, making it the third biggest enterprise in Washington after government and tourism.

Small wonder that the path from congressional offices to lobby shops has become deeply grooved.

At Lewis' office, for instance, former staffer Letitia White went to work for a lobbying firm representing clients seeking federal funds from Lewis' committee. She became a partner in a prominent lobbying firm.

The appeal such lobbyists have for clients is clear. One defense company, Trident Systems, saw its federal contracts more than double in value in three years after hiring White as a lobbyist, according to Taxpayers for Common Sense, a research organization that tracks earmarks. A spokesman for White said that before leaving the Hill, she sought guidance from the House ethics committee and has followed the panel's instructions diligently.

In a twist, some former aides who left jobs with chairmen to become lobbyists are returning to work for their former bosses, dealing with the lobbying firms and colleagues they left behind.

Jeffrey Shockey worked for Lewis from 1991 to 1999, then joined a fast-growing lobbying firm headed in part by former California congressman Bill Lowery, a close friend of Lewis'. The firm's specialties included seeking earmarks for clients before the Appropriations Committee. Shockey rejoined Lewis' staff after the latter became chairman in 2005, and reported receiving $2 million as a payout from his former lobbying firm.

"This type of situation takes the revolving door and turns it into a merry-go-round," said James Benton of political watchdog group Common Cause.

"It's become a putrid dynamic now," added Norman Ornstein, a scholar at the American Enterprise Institute and coauthor of a forthcoming book, "The Broken Branch," that examines the decline of Congress in recent years. "There is a system now -- from Capitol Hill to K Street -- that works as a self-reinforcing loop, with staffers being offered astronomical salaries as lobbyists; they in turn help members raise ever larger sums for their leadership PACs -- from industries with an interest in earmarks and other legislative favors."

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What makes the new game so efficient and attractive to those who play it is the growing readiness of congressional chairs and other senior members to use earmarks. Using them to help political friends has become so routine that now-disgraced former lobbyist Jack Abramoff referred to the Appropriations Committee as "the favor factory."

According to Sen. John McCain (R.-Ariz.), an advocate of reform, the use of earmarks has risen 300% in the decade since Republicans took control of Congress. "In dollars, the cost borne by taxpayers for earmarks has nearly doubled," McCain said recently. "That's not a record Ronald Reagan would have been proud of."

Both the growth of earmarks and the other elements in the problem spring in part from a fundamental change in the role of committee chairs -- a change that began two decades ago when Democrats controlled Capitol Hill, but grew exponentially after Republicans took over the House in 1994.

In an earlier era, chairs were chosen purely on the basis of seniority. Most were aging autocrats whose authority over both policy and spending issues was beyond challenge.

Today, chairs get and hold onto their positions by doing the bidding of the leadership, by reflecting the views of their party, and by raising and distributing millions of dollars in campaign funds to grateful colleagues.

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The bridge between chairs and favor-seekers is lobbyists, who make large contributions to helpful chairs and extract larger donations from their clients.

Since most chairs have safe seats and little need to campaign, they are often free to curry favor with colleagues by giving away money they've raised.

Lewis was among the top House Republican contributors to the National Republican Congressional Committee in the last election cycle -- giving more than $655,000, according to the Center for Responsive Politics. He also gave more than $500,000 to 90 House Republican candidates.

The closeness of the relationships that can develop between powerful Congress members and aides who become lobbyists is illustrated by Thomas and Abernathy, his longtime staffer. She saw her income soar after leaving the Hill in 2001, when she started a lobbying firm serving clients seeking help from the Ways and Means Committee.

The first year, her firm reported $330,000 in lobbying fees. Last year, her small firm reported receiving $2.4 million, for a total of $7.2 million since she left her congressional job.

In 1986, while still on Thomas' staff, she and her husband, California GOP political consultant David Abernathy, went halves with the Thomases on a Bakersfield condo. In 1998, Abernathy and her husband gave their condo share to Thomas.

At the time he received it, Thomas did not report the gift on his annual ethics report. A spokesman for Thomas said the congressman did not report it because -- with falling property values at the time -- there was nothing of value to report.

Experts on House disclosure rules said the grant of a condo deed qualified as a gift and should have been reported.

The Thomases and Abernathys had purchased the condo for $89,000. Less than a year after taking full title and assuming the balance on the whole mortgage, the Thomases sold the unit for $65,000.

Because details of the mortgage and tax consequences have not been disclosed, it is not clear what, if any, profit the Thomases may have made, but they quickly bought another, more expensive unit in the same complex.

Giving the condo share to a congressman is notable not only because of the apparent breach of reporting rules but because Catherine Abernathy would go on to a career that depended, in part, on access to Thomas.

Both the Abernathys and Thomas' spokesman say there was nothing wrong with the transaction. Catherine Abernathy did not begin representing private interests until two years after making the gift.

Her husband advised Thomas, but in recent years received most of his revenue from others with ties to Thomas, including the Kern County Central Republican Committee.

Thomas' chief of staff, James Min, said that after the deed transfer the Thomases remained liable for the full balance of the mortgage on the condo. He also noted that personal residences are generally exempt from House financial reporting requirements.

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Real estate was also at the heart of the coast-to-coast deal that not only earned Lewis a quick profit, but also shielded him temporarily from capital gains taxes.

In late 2001, Lewis and his wife sold a Capitol Hill property for $830,000. In June 2002, the Lewises reinvested the money by purchasing a 78% interest in a Sacramento warehouse owned by "Buzz" Oates. Under the law, the Lewises did not have to pay capital gains on the Washington sale because they promptly reinvested the money in another real estate venture.

In August 2003, the Lewises sold their 78% share back to Oates.

Lewis' ethics statement for 2003 shows he made a profit between $250,000 and $500,000. But Lewis spokeswoman Comstock said that amount reflected the sale of his Washington, D.C., property, which he had owned for years. And, she said, he eventually paid a six-figure capital gains tax bill related to the sale.

Oates said the financial arrangements with Lewis were "the same kind of deal I've done with probably 50 other people. It was an arm's-length transaction." He said he sought nothing in return.

Nonetheless, one of Oates' projects, a new aerospace museum being built on the site of the now-closed McClellan Air Force Base, may soon benefit. The House version of a pending budget bill contains a $500,000 earmark, proposed by Rep. Dan Lungren (R-Gold River) and approved by Lewis' committee, to pay for an interactive computer exhibit in the museum.

According to Roxanne Yonn, development director for the California Aerospace Museum, Oates agreed to build the museum and then lease it back to the foundation created to own and operate the facility.

The museum is not the only Oates-backed project in line for federal funds. Oates is part of a group that has long sought federal funds for a new Auburn dam.

This spring, Lewis took a helicopter tour of the proposed site. And a pending appropriations bill was amended to include $3 million for a new study for the dam and an additional $1 million to begin planning to relocate a bridge that lies within the proposed dam site.

Lewis' sudden, active involvement surprised the project's opponents.

"It's not anywhere near his district, and it's hard to see how it could possibly have any effect for his district. We don't understand why Jerry is interested in the Auburn dam," said Ron Stork of Friends of the River.

Comstock said Lewis had followed the dam project for years and in the early 1990s had cast a vote in favor of it.

Oates said he did not recall whether he talked to Lewis about the dam, saying, "I've been a supporter of it for 35 years."

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(BEGIN TEXT OF INFOBOX)

California's 'Big Six' chairs

Democratic-leaning California enjoys considerable clout in the Republican-controlled House of Representatives, with six of the state's Republicans chairing committees -- more than any other state.

Rep. Bill Thomas

Bio: R-Bakersfield, age 64, elected to Congress in 1978

Chairmanship: Ways and Means Committee, which oversees tax legislation and bills affecting Social Security, Medicare and trade policy. Chairman since 2001, the first Californian to head the panel. Retiring at the end of the year.

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Rep. Jerry Lewis

Bio: R-Redlands, age 71, elected to Congress in 1978

Chairmanship: Appropriations Committee, which, with its Senate counterpart, writes all spending bills -- for programs ranging from defense to the National Endowment for the Arts, making it one of Congress' most powerful panels. Chairman since 2005. The first Californian to wield the committee gavel.

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Rep. Duncan Hunter

Bio: R-El Cajon, age 58, elected to Congress in 1980

Chairmanship: Armed Services Committee, which oversees the Pentagon and writes legislation related to national security, from deciding how big the Army should be to what kind of weapons should be purchased. Responsible for calling senior military and Pentagon officials to hearings to explain Iraq policy. Chairman since 2003.

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Rep. Howard P. 'Buck' McKeon

Bio: R-Santa Clarita, age 67, elected to Congress in 1992

Chairmanship: Education and the Workforce Committee, overseeing education and labor programs, including job training and pensions. Chairman since February 2006.

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Rep. David Dreier

Bio: R-San Dimas, age 54, elected to Congress in 1980

Chairmanship: Rules Committee, which is the House's traffic cop for legislation, setting terms for the debate on legislation, including deciding what amendments will be considered. Chairman since 1999. The first Californian to chair the panel.

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Rep. Richard W. Pombo

Bio: R-Tracy, age 45, elected to Congress in 1992

Chairmanship: Resources Committee, which oversees millions of acres of national forests, parks and other federal land, and deals with water policy, endangered species regulation and energy production on federal land and offshore. It is a battleground for environmental fights. Chairman since 2003.

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Times staff writers Rone Tempest, William Heisel and Peter Pae in California contributed to this report.

For The Record Los Angeles Times Saturday August 12, 2006 Home Edition Main News Part A Page 2 National Desk 2 inches; 94 words Type of Material: Correction California's congressional chairmen: An Aug. 5 Section A article reported that Rep. Bill Thomas (R-Bakersfield) had shepherded pension legislation favored by Northwest and Delta airlines through the House Ways and Means Committee. In fact, Thomas shepherded the pension provisions into law by getting them included in the final version of a House bill, but the provisions did not go through his committee. Aviation lobbyists and staffers from both parties credit Thomas with playing a leading role in securing passage of the pension legislation this year that provided the special breaks for the two airlines.
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