Daschle's Problems: When Is a Lobbyist Not a Lobbyist?

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Susan Walsh / AP

Health and Human Services Secretary–designate Tom Daschle

According to the White House, the important thing is that Tom Daschle is not technically a lobbyist. "If you're not registered to lobby, you can't be a lobbyist," explains White House spokesman Robert Gibbs. And Daschle, the former Senate Democratic leader who is up for the top health post in the Obama Cabinet, never filled out the paperwork to register.

That distinction matters quite a bit because Barack Obama promised during his campaign that lobbyists "would not get a job in my White House." On his first full day in office, that pledge turned into the new President's first official policy, when he signed an Executive Order banning lobbyists from serving in his Administration. The order did come with some fine print, however — a waiver process that the White House counsel could invoke at will in the name of the "public interest," allowing an undetermined number of former lobbyists to effectively violate the new policy. (See members of Obama's White House.)

To date, a handful of these waivers have been proposed, including, most controversially, one for William Lynn, a former lobbyist for defense contractor Raytheon who has been tapped to serve in the No. 2 job at the Pentagon. But the controversy over the waivers, which have been criticized by both Democratic and Republican Senators, is just one of the perception problems dogging Obama's new ethics policy. Another issue stems from the people nominated to the Administration who have worked in the lobbying business but are not technically lobbyists — people, in other words, like Daschle or former Senator George Mitchell, the new Middle East peace envoy who previously served as chairman of a law firm that has done lobbying and legal work for many clients in the region, including the leader of Dubai.

Although he never registered, Daschle, in fact, made millions of dollars after he left government doing stuff that looks, smells and tastes a lot like lobbying — work that led to the taxes flap that forced him to apologize to his former colleagues on Monday for what he called a "completely inadvertent" mistake. And while that failure to pay more than $128,000 in back taxes and interest has briefly marred his confirmation as Secretary of Health and Human Services (HHS), it's the ethical gray area Daschle's advisory work represents that has called into question Obama's promise of changing the culture in Washington.

Daschle, for instance, was a high-paid "policy adviser" at Alston & Bird, a lobbying firm with dozens of brand-name pharmaceutical and health-services clients. "Senator Daschle focuses his services on advising the firm's clients on issues related to all aspects of public policy," boasts the firm's website. One of Alston's clients, EduCap, a nonprofit student-loan company that spent six figures lobbying to change federal loan laws, took Daschle on two cushy overseas trips, one to the Bahamas for a board meeting and another to the Middle East to meet with foreign leaders.

During his time at Alston, a wide range of for-profit enterprises with interests in influencing government health policy — including giants like UnitedHealth, GE Healthcare and the Health Industry Distributors Association — paid Daschle five-figure sums for speeches. UnitedHealth was also a "client" of Daschle's at Alston, as was the Great Plains Indian Gaming Association, a trade group representing tribes with casinos in the upper Midwest. And then there is Leo Hindery Jr., the former chairman of the cable-television industry's lobbying group, who hired Daschle as an adviser on a new investment firm and gifted him more than $100,000 in car services from Hindery's limousine driver, which the former South Dakota Senator failed to pay taxes on.

On Monday, Daschle's spokeswoman, Jenny Backus, told the Associated Press that his work on behalf of health-care clients did not constitute a conflict of interest for his job at HHS. "He welcomed every opportunity to make his case to the American public at large and the health-care industry in particular that America can't afford to ignore the health-care crisis any longer," Backus said. Under the Obama ethics rules, Daschle will be barred from dealing with "specific parties that is directly and substantially related to my former employer or former clients," unless he is granted a waiver.

While working at Alston, Daschle never technically lobbied anyone, even though he worked for a lobbying firm, made money from lobbying clients and become business partners of those investing in heavily regulated industries. He was able to skate through by exploiting an undefined middle ground in the way influence is brokered in Washington. Under the law, there is a distinction between "lobbying contacts," which only lobbyists can do, and "lobbying activities," which can be done by both lobbyists and non-lobbyists.

"The lobbying disclosure law applies to organizations and individuals who make lobbying contacts," explains Fred Wertheimer, a good-government lobbyist for Democracy 21. "It does not apply to sitting down and strategizing about how to win a battle in Congress." Furthermore, the lobbying law applies only to those who spend more than 20% of their professional time making contacts.

Ironically, Wertheimer and a group of other public-interest lobbyists made a push in 2007 to bar former members of Congress, like Daschle, from participating in the non-lobbying coordination of lobbying efforts for a preset "cooling-off period" of two years. The chief sponsor of that effort happened to be Senator Obama. "Obama was the one who really became excited about the whole idea," says Craig Holman, a lobbyist for Public Citizen, a group that helped write the bill. "We lost that on the House side, initially. It was largely the committee chairmen who didn't want that in there."

White House aides say the important thing is not to focus on the holes in the lobbying rules but on their positive effect. The new Obama policy, according to several outside groups, remains the most expansive ban on the revolving door between lobbyists and public service in Executive Branch history. The exceptions aside, White House spokesman Gibbs says he is convinced that the American people will not lose sight of the forest for a few trees.

"There is no doubt that there is a series of expectations that came with what we ran on and how we were elected," Gibbs explained Sunday, when asked about the criticism. "I think people will be able to look, though, in three months and see quite obviously that change has come to Washington." In the short term, however, the trees loom front and center, as the White House tries to get people like Daschle confirmed by the U.S. Senate so he can help change a lobbying culture he has long called his own.

See pictures of Obama's historic Inauguration.