news-record.com

A story from NPR's Planet Money team caught my attention last week, but I haven't had time to blog about it until now. A trio of University of Kansas professors investigated the age-old question, "What's the return on investment for lobbying?" No company is going to invest the time, treasurer and personnel to skulk about the capitol if they didn't get something out of it. The question has long been: what's the value of what they get? How good is that return on investment?

This has been a difficult question to answer since some people lobby for reasons that can't be quantified in dollars and cents. The Humane Society probably can't put a price tag on animal welfare laws, and the NRA seeks to loosen gun laws because that's what their members want. And sometimes the answer will be "nothing" or "zero" if a lobbying effort fails.

What the Kansas team hit on was The American Jobs Creation Act of 2004. This was a piece of legislation that allowed corporations bring overseas profits "home" to the United States.  If this sounds familiar, it's because U.S. Sen. Kay Hagan of North Carolina is a primary sponsor of a bill to do that again.

In 2004, companies got a 22,000 percent return on investment. And no, that wasn't my keyboard stuttering. From the abstract:

"In this paper we use audited corporate tax disclosures relating to a tax holiday on repatriated earnings created by the American Jobs Creation Act of 2004 to examine the return on lobbying. We find firms lobbying for this provision have a return in excess of $220 for every $1 spent on lobbying, or 22,000%. Repatriating firms are more profitable overall, but surprisingly, profitability is not a predictor of repatriation amount. Rather, industry and firm size are most predictive of repatriation. Cash on hand, a proxy for ability to repatriate, is not associated with the repatriation decision or the repatriation amount."

The push-back against Hagan's current bill is that Return on Investment went into corporate treasuries and into executives' pockets. Hagan says that her current bill has more safeguards that would require companies invest that money in hiring workers in order to get the full benefit of the tax break. In other words, if the new bill passes, Hagan is arguing some of the ROI will accrue to the nation's economy, not just the companies themselves. Still, one can imagine opponents of the current bill using this study of the 2004 bill to try and stop it.

Also, it's worth noting that the 2004 bill is a pretty specific case. Not all lobbying efforts yield such a bonanza and, as I said above, not all lobbying is aimed at monetary gain.

Click here for the Planet Money story.