Free Lunch (16 page)

Because of Cassidy's long success, and the many who have come along emulating
his approach, Robert G. Kaiser made him the focus of a 25-part
Washington Post
series on how lobbying really works. The series showed how there is only one party in Washington, the party of money. Cassidy
allowed that it was not worth arguing whether the influence of the rich has grown mightily in Washington, while there are no
lobbies for the migrant farm workers he had once championed, no lobbyists with big expense accounts to lobby for Joe and Jane
Sixpack and their kids.

That an overabundance of money changes what matters was shown
with Cassidy's reaction to part 17 of Kaiser's series. The installment had little to do with lobbying. It had a lot to do with bragging
rights among those who measure themselves by how many zeros and commas adorn their net worth statement. Cassidy &
Associates was sold in 1999 to Interpublic Group, a worldwide firm with 43,000 workers who seek to influence the public and
governments through advertising, lobbying, polling, and public relations. Kaiser reported that Interpublic paid about $60 million for
Cassidy & Associates. Cassidy was insulted, writing that the famously thorough and evenhanded Kaiser was both dumb and
sensationalist. Why, as Cassidy complained, he got more like $80 million for his firm!

As the
saying goes, many come to Washington hoping to do good and end up doing well. The federal government spends about $5
million per minute. Arranging to divert even a few seconds of this spending to a client will justify a job, and one who can capture a
few minutes will live very well indeed. And, as we have seen, vast sums can be directed without any appropriation, just a rule or a
policy that alters the flow of money through the economy.

In part because of Cassidy's
pioneering approach, Capitol Hill staffs are now thick with people coming to Washington just to do well. The part about doing good
is, for some, quaint. They want to work for a Capitol Hill committee or a lawmaker or an agency head just long enough to learn the
ropes and get hired by the lobby trade. Starting pay is often $300,000. Expense accounts for those who make their clients rich off
Uncle Sam are virtually limitless.

Cassidy operates in a very practical world, as Abramoff soon
learned. As the long-simmering Abramoff scandals boiled over, the once popular lobbyist suddenly became a mess to be avoided.
Anyone who was shown to have been close to Abramoff might be voted out of office. A few of his pals, like Congressman Ney,
eventually went to prison. Cassidy got some nasty feedback about his new rainmaker. Senator Daniel Inouye, the Hawaii Democrat,
told Cassidy he was not welcome so long as Abramoff was on his payroll. Three months after signing on with Cassidy &
Associates, Abramoff got the boot.

David Ewald has had a very different career in lobbying, a
trade he joined in 1986. He was 26 years old. He joined a firm started four years earlier by his father, Doug, a four-term Republican
legislator. Ewald Consulting is not in Washington. Its offices are far down the political food chain in Minneapolis, the forty-eighth
largest city in America. Still, the firm employs 30 professionals, some of whom manage trade associations too small to afford their
own executive director and staff. But David Ewald spends most of his time lobbying for corporate clients.

For the past few years Ewald has crisscrossed the country to talk to state legislators, small-town mayors, and
other local officials. But Ewald is no Cassidy wannabe, no provincial version of the Great Lobbyist seeking earmarks and handouts
for clients. Ewald is the anti-Cassidy.

David Ewald's main job for the past few years has been
stopping subsidies for Cabela's and Bass Pro. It has proved to be a very hard sell, so willing are politicians at every level to give
away that which is not theirs.

He does this work not for some group of do-gooders, but for a
corporation whose executives and key owners think more like Adam Smith and not at all like the Cabela family and Johnny Morris
of Bass Pro. They are eager to compete, but on a level playing field, not one tilted in favor of corporate socialists who pose as
capitalists.

The company paying Ewald to oppose subsidies is Gander Mountain. It ranks third
among the hunting/camping/fishing chains in total sales. Unlike its two larger competitors, Bass Pro and Cabela's, Gander
Mountain does not have a mail-order operation. Gander Mountain's retail store sales are greater than Cabela's retail sales. Gander
Mountain has more than 100 stores, six times as many as Cabela's and more than twice as many as the privately owned Bass
Pro.

What distinguishes Gander Mountain is not just management's ardent opposition to
handouts, but also its willingness to spend shareholder dollars to fight giveaways to its competitors. The company came to this
view after a brief flirtation with subsidies in Minnesota and Texas. The latter prompted an offer of free money so lavish that the
allure could have blinded Mark Baker, the chief executive, to how chasing the free money could ruin the rest of the
business.

When Gander Mountain moved its corporate headquarters into vacant office space
in Minneapolis it got a modest subsidy. And it got another modest one when it opened an 88,000-square-foot store in Corsicana,
Texas, an hour south of Dallas, in 2004. Then the developer of the Texas property said he could get Gander Mountain a great deal if
it would open a store out west in Reno. And on the theory that more people than are already drawn by the casinos there would
flock to Reno, the locals were willing to give away $54 million.

“It was crazy money,” Baker
said. It made absolutely no economic sense for the locals, even for a 150,000-square-foot store and even if it did draw more people
across the border from California. The subsidy would be $360 per square foot, while the cost of construction would be perhaps
$230.

The prospect of such money got Baker, who had spent years as the chief operating
officer at the Home Depot, thinking about how subsidies distort business decisions. He had a plan for Gander Mountain and for the
time being it was to open stores from the East and Gulf Coasts west to the Rockies.

“Reno was
way outside our footprint,” he said. “We had no distribution center to serve Reno, we had no recognition out there, and it would
undo the plan for expansion.”

It also got Baker thinking about how economic decisions
should be made. “Why should some mayor or group representatives of some city or county decide who the right retailer is for their
town?” he asked. “Government is not in charge of commerce. People should be making those decisions, not government.
Customers get to vote every day and if you take care of customers they vote for you and if you don't then they vote for someone
else. People have become totally confused about the role of government.”

Baker told Gander
Mountain's new developer, Oppidan Investment Company, to find someone to fight subsidies for Cabela's and Bass Pro. Oppidan
chose Ewald.

Any thoughts Ewald had that this would prove an easy task vanished as soon as
he hit the road. The city fathers who had a Cabela's or a Bass Pro on the hook were not just willing to give away millions, they were
downright eager.

“You get in the back room with these guys,” Ewald recalled, “and what they
say is that they have to do it.” One of the town fathers in Greenwood, Indiana, on the verge of a vote to give Cabela's $18 million for
a store that would be just across a highway from an existing Gander Mountain store, told Ewald he had no choice. “Look, I totally
agree with you,” Ewald said he was told. “I wish we didn't have to do this, but otherwise we are going to lose this Cabela's to a
town down the street.”

Even in New Hampshire, a state famous for its antitax politics, Ewald
found ending subsidies a hard sell. In one town there was a popular vote and, by a slim margin, subsidies won.

Ewald found himself astonished by this. These subsidies were not for research centers that would bring in
people at high salaries or manufacturing plants with family wage jobs and lots of ancillary support. These were subsidies for retail,
the end of the line for business where even if everything turned as claimed, the bang for the buck hardly qualified as a pop.
Pay Cabela's to open a store and maybe you'll get a gas station and an Applebee's,
Ewald
thought.

The economic insanity of it made the work fun, but Ewald found it the most
challenging assignment in his 21 years on the job. He had to devise clear arguments to counter the polished presentations by
Cabela's and the developers representing Bass Pro. Ewald organized independent sporting goods stores, showing them how
subsidies could wipe them out the way Jim Weaknecht had been, even if they owned several large stores with many tens of
thousands of square feet of floor space. And he needed hard facts.

One idea was to question
Cabela's claims about how many people would come if they built it. Sam Kennedy, a reporter for the Allentown
Morning Call,
came up with a simple way to test Cabela's claim that its store would draw 6
million visitors to Hamburg, Pennsylvania. On an October Saturday in 2004, a year after the store opened and on what should have
been a busier than normal day, Kennedy counted cars in the parking lot. There were just 308 and only 68 of them had out of state
tags. Even if people came four to a car, the store would have to attract an average of more than 4,100 cars per day to log 6 million
people a year.

Two years later Ewald hired college students to check every Cabela's retail
store. He picked November 4, a Saturday during deer-hunting season that should be just about the busiest day of the year for an
outdoor sporting goods store. The results were nothing less than astonishing. Even assuming the stores were as busy every
weekend as this peak season Saturday, and half as busy on weekdays, the study estimated just 2.5 million annual visitors to
Cabela's Hamburg store, less than half the promised 6 million.

The average for the 17 Cabela's
stores opened at the time was less than 1.5 million visitors per year. Ewald did a more detailed check of one of Cabela's Minnesota
stores, counting both cars and people for an entire day. Based on the peak day study the store should have had a bit more than 1.4
million visitors per year. But the more thorough study from a normal day suggested only half as many visitors. In response
Cabela's questioned the validity of the study and said that those customers with out of state tags on their cars spent far more than
their numbers would suggest. Cabela's said in Hamburg that Pennsylvania residents accounted for less than a third of its sales, a
claim that cannot be checked because in giving the subsidies to Cabela's most of the state and local governments did not require
proof of success or an audit trail to check up on the claims.

Slowly Ewald began to record
some successes. The governor of South Carolina vetoed a bill that officials said was drafted to lure a Bass Pro. Some politicians in
Georgia, Kentucky, and Minnesota have started asking hard questions. And Ewald's client has stuck to its guns. Gander Mountain
not only turned down several subsidy offers, it gave a million dollars back in Roanoke, Virginia.

The independent storeowners whom Ewald organized have also begun to complain about their tax dollars
being used to finance competitors. Jeff Poet, whose family owns two large sporting goods stores in Michigan's Lower Peninsula, is
trying to block any more giveaways in that state to Cabela's, which got $40 million for a store in Dundee. “It's just not fair,” Poet
said.

When Poet first talked to state economic development officials they were unimpressed.
After all, giving away money is their job. So Poet and other storeowners adopted a three-pronged strategy. They told the public
such giveaways were not fair. Then they complained to state lawmakers. And they made connections to people on the state boards
that give the money away, or are crucial to such gifts, and started building relationships to make sure their side of the story was
heard.

Yet the subsidies continue. Cabela's and Bass Pro each have tentative deals in the
works for hundreds of millions of dollars of subsidies for “destination” stores that in many cases are only an hour or three from
another such store.

The size of the subsidies keeps growing. The Reno store that Gander
Mountain rejected, walking away from a $54 million gift, had by the summer of 2007 grown into a proposed gift of $83.7 million for
Cabela's.

In Memphis, Bass Pro was negotiating to put one of its stores into the iconic glass
pyramid that is supposed to connect the Tennessee city with its namesake on the Nile. Bass Pro is seeking tens of millions of
dollars even though it already has a store just 20 miles away. “That the city is even talking about this is an indication of the
desperation of local government politicians,” said Tom Jones of Smart City Consulting. In Memphis and many other cities, Jones
said, officials fear that the young will move away and time will pass their town by, so they will listen to anyone who promises to
save them, no matter how foolish the plan or how senseless the economics.

Nowhere is that
desperation more evident than in Buffalo, which blossomed when the Erie Canal opened in 1825, connecting Chicago and New
York by water. But for the past half century Buffalo, an industrial city that relied on its strategic location on the Great Lakes, has
been in decline. Bass Pro is negotiating to build a store there, though some locals think their city is just a pawn for some other deal.
It would be built on the waterfront, right at the mouth of the historic Erie Canal, on land created when piles were driven into the mud
in the months before Andrew Jackson became president. Who knows what costs lurk in such a spot.