D.C.'s `Gucci Gulch' Gets More Expensive For Capitol Lobbyists

THE denizens of Washington's "Gucci Gulch" are notoriously adept at winning tax-breaks for a variety of special interests. About the only special interest that lobbyists can't seem to protect is their own.

Both the House and Senate, with the backing of President Clinton, have passed provisions in their budget reconciliation bills that would eliminate the tax-deduction for companies' lobbying expenses. The House version, expected to raise $850 million over five years, bans the deduction for lobbying Congress or the White House "in connection with influencing legislation." The Senate version, expected to raise $1.25 billion over five years, extends the ban to lobbying officials in regulatory agencies.

The differences between the two bills are now being ironed out by a House-Senate conference committee. Lobbyists naturally like the less sweeping House provision, but they say either one would significantly hurt their business. Here are their top three arguments for keeping the tax deduction:

* Lobbyists don't just work for fat cats. You, too, are represented if you belong to the American Association of Retired People, the Chamber of Commerce, a labor union, church, the Boy Scouts of America, or virtually any other major organization.

* The loss of the tax break will not kill major-league players like the law-lobbying firms of Patton, Boggs, and Blow or Akin, Gump, and Strauss. But it may put some smaller trade associations out of business.

* It's not fair to get rid of the lobbying deduction while keeping some legal expenses deductible, since both are "necessary and ordinary" business expenses. Besides, due to the spread of law-lobbying firms, enforcing this distinction may be an administrative nightmare.

But no matter how many arguments lobbyists make in favor of the deduction, "there's virtually no chance of the provision being knocked out in conference committee," says Timothy Jenkins, a partner in the Democratic law-lobbying firm of O'Connor and Hannon in Washington. The debate, he says, isn't being conducted "on the merits." Instead, he says, `it's basically a public-relations, political issue," because Ross Perot's attacks on "special interests" have made lobbyists an easy target.

By contrast, industries with a better public image have had an easier time defending their tax breaks. The restaurant industry, for instance, has mobilized an effective lobbying campaign against a plan passed by both houses to scale back the business-meal deduction from 80 percent to 50 percent. The National Restaurant Association has been running advertisements showing waitresses who allegedly will be put out of work by the move.

Why doesn't the lobbying industry mount a similar campaign? "The only pictures we could show of victims would be of someone in Guccis," bemoans Dick Kimberly, president of the American League of Lobbyists in Washington.

The lobbyists have been lobbying, however. Jenkins has organized a pro-deduction group misleadingly labeled "The Coalition for Tax Equity." Its membership consists of eight corporations and two trade associations, but Jenkins says they don't want their names revealed because that would be "bad P.R."

Mr. Kimberly says that many lobbyists have been making a pitch against eliminating the tax-deduction while they lobby members of Congress on other issues: "When we're leaving the office with a member or staff, a great many of us say, `There's something else we'd like to mention to you that's significant.' And we mention this issue."

Kimberly adds that, in private, many members are sympathetic but the lobbyists haven't found a "champion in Congress willing to lay down in front of this rapidly moving train."

So the lobbyists are now focusing their efforts not on defeating the tax-deduction provision, but on simplifying its paperwork.