Stimulus Creates Jobs... For Lobbyists
New spending programs create new demand for Washington insiders.
And lobbyists are wringing their slippery paws with delight.
Of the $787 billion to be doled out as part of Obama's economic stimulus package, $77.6 billion is earmarked for clean-energy projects. In the San Francisco Bay area, the country's venture-capital hub, green startups are pouring money into lobbying efforts to get their share. According to Bloomberg, hiring a Washington insider is now essential for new companies.
The lobbyists work both sides of the trade, so to speak. On the one hand, they help companies write grants and figure out which government programs they're qualified for; on the other, they sidle up to federal employees and convince them to design grants to suit their clients.
This shift in focus -- from private money to public -- reflects the old accounting axiom: Follow the cash. With private capital hard to come by, government funding is fast becoming the only game in town.
Companies that lack the resources or will to pander to federal and state initiatives will be at a severe disadvantage to those willing to navigate maze-like government bureaucracy.
Case in point: The recently announced Public-Private Investment Program, or PPIP.
Investors able to get cheap government leverage can bid more aggressively for distressed assets, pushing up prices. Meanwhile, those without access to federal programs can't afford the new, higher levels - and are summarily pushed out of the market.
This works out well for big banks like JPMorgan (JPM), Bank of America (BAC) and Citigroup (C), all of whom are eager to unload their "toxic assets" at favorable prices. Then again, that's the way the system was designed.
As the government takes an ever-growing role in our economic affairs, companies must become ever more nimble in order to tap into this program or that to optimize capital.
The President's new initiatives are ironically (or sadly) creating more work for the very insiders he promised to boot out of Washington. Lobbyists, it appears, aren't just here to stay - they're in higher demand than ever before.
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