Michael Herson in the News

(Reuters) – With as much as $1.5 trillion in federal funds hanging in the balance, the mammoth healthcare and defense industries are scrambling to lobby a special congressional committee tasked with slashing the deficit — but in markedly different ways.

The 12-member bipartisan joint “super committee” is expected to focus heavily on both pricey government health insurance programs such as Medicare and Medicaid, and the Pentagon budget, which accounts for about half of non-mandated federal spending.

But the similarities end there.

The Pentagon is warning of Doomsday if the committee fails to act through a combination of spending reductions and revenue increases, triggering automatic cuts of about $600 billion each in defense and non-defense accounts.

Some health care groups, by contrast, might even prefer the committee to fail, reasoning that spending cutbacks are a fact of life and known reductions are preferable to unknown ones. They’ll seek instead to ensure key interests are protected.

The differing approaches by two major sectors of the U.S. economy reflect their divergent circumstances and histories. Health care groups are used to being on the firing line; the Defense Department has seen a decade of handsome budget increases since the 9/11 attacks.

The ultimate winners and losers may owe the outcome partly to the persuasive power of public relations experts, campaign-style coalition-building and lobbyists, some of the most formidable forces on Capitol Hill.

Under the bitterly fought deal that raised the U.S. debt ceiling, the Pentagon is already getting a $350 billion haircut over the next 10 years, a roughly 6 percent reduction relative to current Congressional Budget Office spending projections.

Lawmakers will be forced to weigh the national security impact of further trims in security spending against the interests of vulnerable elderly, disabled and poor Americans. Inflicting pain on either side of this equation will come with a significant political cost.

HEALTH POLICY IS BUDGET POLICY

Health care groups are used to seeing their programs on the chopping block. That’s a consequence of growing recognition of the funding problems for federal entitlement programs such as Medicare — which provides health insurance to 47 million elderly and disabled Americans.

Left unreformed, Medicare, along with Social Security and Medicaid — the federal health program for the poor — will devour 100 per cent of all tax revenues by 2047, according to the nonpartisan Government Accountability Office.

“As we’ve seen, health policy is now budget policy,” said Licy Do Canto, health care lobbyist and head of the Docanto Group. “It’s not a question of when; it’s a question of how much.”

Many groups with a stake in health care spending said their lobbying will focus on the impact that entitlement cuts would have on seniors, the disabled and the families that care for them. One tactic will be to encourage patients to present their own stories directly to committee members.

But these groups may diverge in what programs they’d like to see cut. Insurers, drug and device companies, and providers such as hospitals and doctors — the main health care players — have traditionally had opposing interests.

Some don’t see disaster in the committee’s automatic trigger mechanism, which would ordain a $1.2 trillion cut in federal spending starting in 2013 if the panel’s 12 members can’t come up with their own plan. The trigger option will not touch Medicaid.

“People fear the unknown much more than the known, particularly because the sequester limits and caps the liability of these health interests,” said Chris Jennings, co-director of the Bipartisan Policy Center’s health project.

DOOMSDAY MECHANISM

For the Defense Department, on the other hand, the automatic trigger is a “doomsday mechanism,” Defense Secretary Leon Panetta said earlier this month.

With so much at stake, military suppliers have banded together more closely than ever through their chief trade group for a stepped-up effort to save defense programs — and jobs.

“American leadership in aerospace and defense is being threatened by forces in Congress and the administration,” says a web site sponsored by the Aerospace Industries Association, or AIA, which represents U.S. makers of everything from military and civil aircraft to space systems.

The site, www.SecondtoNone.org, is to be unveiled formally in coming weeks as part of a drive to build long-term support for the industry — with a special eye on the super committee.

The broad outlines of the stepped-up campaign emerged from a consensus of the trade group’s 16-member executive committee, which includes executives from such top Pentagon suppliers as Lockheed Martin Corp, Boeing Co, and Northrop Grumman Corp.

AIA has retained LMG Inc, a Washington public affairs firm, to help develop its messages and strategy. It is also drawing on the Heritage Foundation, a conservative public policy group, and the Center for Strategic and Budgetary Assessments, a policy research institute, to boost the campaign’s intellectual firepower.

“This is do or die,” said Michael Herson, president of American Defense International (ADI), a Washington-based government affairs consultancy. Herson, whose clients include Northrop Grumman, Raytheon Co and United Technologies Corp UTX.N>, said he had never seen the industry come together for such a concerted campaign.

“We believe this environment will persist for some time,” said Fred Downey, AIA’s vice president for national security, emphasizing that the effort would not just target the special “supercommittee.”

Efforts to persuade are likely to include appealing to supporters in Congress, state governors and constituents at home.

However, blurry rules about financial disclosures and general transparency may be keeping some lobbyists in a holding pattern for now.

Sen. David Vitter of Louisiana introduced legislation in early August to require the 12 panel members to disclose donations of more than $1,000 while serving on the committee, complicating matters for lobbyists.

“The lobbyist who gets a face-to-face meeting with a panel member for 10 minutes will be rare,” said Ike Skelton, a former chairman of the House Armed Services Committee.

(Additional reporting by David Alexander and Andrew Seaman; editing by Warren Strobel and Cynthia Osterman)