The US federal lobbying industry, based in Washington DC, is major focal point for political money and the exercise of influence, with expenditures peaking at approximately $2.5 billion per annum during the first Obama administration.
Recently, there have been increasing concerns that some lobbying effort (and therefore political influence) has gone unmeasured, with lobbying firms potentially ‘going underground’ with some of their activity. We study potential unmeasured lobbying activity in the context of the so-called ‘Daschle Rule’ whereby lobbyists do not need to register their activities because, following the terms outlined by the 1995 Lobbying Disclosure Act (LDA), their lobbying effort is claimed to represent less than 20% of their overall working time. To study this, we construct a comprehensive database of ex-Congressman and former Congressional staffers as potential unregistered or ‘shadow’ lobbyists and map this into lobbying firm revenue data. We find that lobbying firm revenues significantly co-move with the entry and ongoing presence of these shadow lobbyists. The effects associated with comparable registered and unregistered lobbyists are similar, with 8-10% increases in revenue associated with each type of lobbyist. This indicates that either the shadow lobbyists have very high levels of productivity relative to registered lobbyists or, alternatively, that the spirit of the LDA’s 20% rule is not being adhered to in practice.