Lobbyists Banned, but Big Donors Play Major Transition Roles

President-Elect Obama's real test on transparency is yet to come.

November 13, 2008 — -- He's banned lobbyists from the transition team and stopped companies from giving money to the effort – some of the boldest limitations on money in a presidential transition.

But big donors -- particularly bundlers -- still play a key role in his transition efforts. And good government groups say the real test for whether President-elect Barack Obama will change the culture of lobbying depends on whether he can address the broader question of special interests funding campaign donations.

"They are important for sending a signal but let's not confuse the low hanging fruit with the real hard fruit," said Meredith McGehee, policy director of the Campaign Legal Center.

Congressional law allocates some federal funding for all presidential transition efforts and Obama is expected to receive up to $8.5 million, according to the General Services Administration.

But most transition teams rely on private funding for about half their spending. Obama's will be no different, yet the self-imposed changes to the funding rules for the transition efforts are indeed significant.

"What president elect Obama has done to date represents a serious effort to demonstrate and show that the game is changing in Washington for lobbyists," said Fred Wertheimer, president of Democracy 21.

Among the new rules: Obama has limited who can donate by banning lobbyists, corporations and PACs from giving money. And while Obama banned lobbyists from working for the campaign, he is letting them play a role in his transition efforts – with a key caveat: they are not allowed to work on policy for any issue they have lobbied for.

(Of course, Obama is not the first to limit the role of lobbyists in a transition. The Clinton transition team also banned lobbyists from working on areas that would appear to have a conflict with their business efforts.)

The Obama team has also pledged to make disclosure of private donations timelier. Since 1988 transition teams have been required to disclose all private donations in order to receive federal funding for the effort. But those reports are only due 30 days after the inauguration. Now, Obama has said he will disclose donors on a monthly basis.

Bundlers Play a Role in the Transition

Public Citizen has identified at least five members of the transition team so far who raised upwards of $50,000 for the Obama campaign, including Valerie Jarrett, a transition co-chair; Susan Rice, a senior fellow at the Brookings Institute; Julius Genachowski, managing director of Rock Creek Ventures; Donald Gips, a vice president of Level 3 Communications; and Michael Froman, a Citigroup managing director.

Their involvement, says Stephen Weissman of the Campaign Finance Institute, "raises then the questions not only of large donors but of bundlers' influence on the new administration as it considers appointments and priorities."

And exactly how Obama's transition will conduct its fundraising is unclear. The transition's press office (still beefing up its staff just a few days after the campaign) could not yet explain who would run the fundraising efforts or if there would be any limitations on bundlers.

What's more, say McGehee, even if there are disclosures of private donations, "anytime you have people in positions of power in the position of raising money from private sources there are dangers that lurk," she said. "There's always a question of what they are seeking in return."

During the George W. Bush transition in 2000, the transition raised $4.7 million in private funds while the Bill Clinton transition took in $5.3 million, according to disclosures to the General Services Administration. (The Bush team took $7.1 million in public funds. The Clinton team used $5 million.)

For now, though, watchdogs are keeping close tabs that future changes will be in the air in both the inauguration committee and the formation of the next administration.

"It's a very significant step and if he stays with that kind of policy in the formation of his administration it would have tremendous impact," said Craig Holman, legislative representative for Public Citizen.

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