The National Association of Home Builders, one of the top 10 corporate donors to politicians, has stopped contributing to congressional candidates after it failed to get what it wanted in recent anti-recession legislation.
The powerful lobby said Tuesday that it was taking the unprecedented action of halting its campaign-giving to protest Washington's failure to address "the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward." The group did not mention any specific initiatives.
The association had unsuccessfully pressed lawmakers to adopt a provision to reduce the tax liability of home builders by allowing them to offset their past profits with future losses. The lobby had also pushed to expand a program that allows states and localities to issue tax-exempt bonds that finance low-rate mortgages. Although both proposals were included in the economic stimulus package approved by the Senate Finance Committee late last month, neither was part of the final bill signed by President Bush yesterday.
Election experts said the lobby's move illustrated how closely interest groups tie their donations to the decisions they hope lawmakers will take on their behalf -- a connection that usually goes unspoken.
"This demonstrates in a starker fashion than we're used to seeing how groups use political contributions to promote their positions in Congress," said Kenneth A. Gross, a campaign finance lawyer at Skadden, Arps, Slate, Meagher & Flom.
The association's president, Brian Catalde, said in a statement that the group's political action committee, BUILD-PAC, had halted all disbursements to federal congressional candidates "until further notice." The statement added, "More needs to be done to jump-start housing and ensure the economy does not fall into a recession."
The association issued its statement soon after it praised the Bush administration for bringing six major lenders together for a program called Project Lifeline, which is designed to help prevent home foreclosures by giving some distressed owners a 30-day reprieve to work out alternatives.
"Lobbies like to pretend that congressional action and their donations aren't tied, " said Melanie Sloan of Citizens for Responsibility and Ethics in Washington. "But the home builders just confirmed that they are."
Ethics lawyers routinely warn interest groups to avoid saying or implying that the money they provide to candidates compensates them for taking a position on a particular piece of legislation. Such quid pro quos could be considered illegal gratuities or bribes.
The association's decision was the subject of ridicule among some veteran lobbyists and trade-group executives yesterday. One long-time association head said via e-mail that the home builders' statement showed the "political instincts of spoiled children." The e-mail continued: "One would think that a savvy staff would have kept them from something that will make them the laughing stock of Washington."
The home builders' statement avoids any reference to specific legislation. "I don't think there's any basis to say that there's a violation of law here," said Robert K. Kelner, a campaign finance attorney at Covington & Burling.
But lawmakers do not like to be reminded in public that lobbyists offer them money in hopes of receiving favorable treatment. "Many PACs use a carrot-and-a-stick approach," Gross said. "But just a stick can boomerang."
The home builders' announcement also explodes the oft-repeated assertion by politicians that lobbyists deal with them only at arm's length. "How many members of Congress have you heard say, 'People donate to me, but it has no effect at all'?" Sloan said. "What the home builders have done is expose the underbelly of the connection between money and politics."
Others cheered the association's choice. "This is what more industries should do," said Cleta Mitchell, an ethics lawyer at Foley & Lardner. "Stop supporting officeholders who don't support their views."
A spokesman for the association declined to elaborate on Catalde's written statement.
Home building has been one of the industries hardest hit by the recent economic slowdown. The credit crunch that began last year, prompted by the subprime mortgage mess, squeezed money available for new home purchases and reduced capital available for home building.
Last month, the Commerce Department reported that sales of new single-family houses nationwide dipped 4.7 percent in December from November. Sales in 2007 plummeted 26.4 percent from 2006, the biggest year-to-year drop since the agency began keeping track in 1963.
Even so, the National Association of Home Builders has remained a potent Washington lobby, and its political donations have been robust.
Its BUILD-PAC is the nation's 17th-largest political action committee as well as the seventh-largest corporate PAC, according to the nonpartisan Center for Responsive Politics. In the current election cycle, BUILD-PAC has collected more than $2 million and dispensed $1.5 million to candidates, 55 percent to Republicans and 45 percent to Democrats.
It still has $826,669 available to spend.