By DAVE MICHAELS / The Dallas Morning News
dmichaels@dallasnews.com

WASHINGTON – Led by former Republican leader Dick Armey, the conservative group FreedomWorks has attacked the Washington establishment this year, challenging bailouts, health care legislation and other policies that violate the group’s free-market ideology.

But for more than six years, FreedomWorks’ own chairman flourished at the heart of that establishment, earning $750,000 a year to lobby for banks, green-energy producers and companies trying to shape the stimulus package that FreedomWorks opposed.

Even Armey acknowledges that his lobbying career was part of a “curious model.” While FreedomWorks is often “antagonistic to politicians of both parties … the general disposition of the lobbyist is to be sweet to officeholders,” he said.

“This is always a problem, and people have struggled with it in Washington,” the former North Texas representative said. “Few have mastered it as I have.”

A review of lobbying reports and interviews reveals that Armey and his former firm, DLA Piper, sometimes lobbied on behalf of legislation that FreedomWorks would have opposed.

While FreedomWorks asked lawmakers to pledge to stop seeking earmarks, DLA Piper represented clients seeking them. And while Armey represented a New England wind farm seeking tax credits in the stimulus, he wrote on FreedomWorks’ Web site that “billions of dollars in taxpayer subsidies have done little to make alternative energy sources more practical.”

“That sort of exposes the contradiction of him being a high-priced, high-powered lobbyist at the same time he’s positioned himself and FreedomWorks as the representatives of the angry, anti-Washington populism,” said Peter Montgomery, senior fellow at the liberal group People for the American Way.

“At least until the arrangement blew up under some scrutiny, it seemed to be working well for him to play both sides of the street,” he said.

Armey says he took pains to make sure his lobbying never contradicted the policies he preached at FreedomWorks. DLA Piper, he insisted, never asked him to represent clients whose requests were “inconsistent with who I am.”

Armey has said he’d like to seek another lobbying job in the future but says he’s now so preoccupied with fighting President Barack Obama’s “major push for big-government liberalism” that he doesn’t know if he’ll return to lobbying.

Quitting DLA Piper in August caused him to give up his salary of $750,000 a year, which he earned on top of the $550,000 he was paid by FreedomWorks in 2008.

“I hated to walk away from that kind of money,” said Armey, who now lives in Bartonville, near Flower Mound. “How many times in your life, or anybody’s life, do they have an opportunity to earn that kind of money when they are 69 years old?”

But even fellow lobbyists say Armey’s “curious model” was bound to cause problems for FreedomWorks and DLA Piper.

“There are inherent conflicts in running a grass-roots organization and representing clients professionally,” said Vin Weber, a well-known Republican lobbyist who served in Congress with Armey.

“Presumably your grass-roots organization is motivated by principles, ideology and the people who give $25 and $50 or larger sums and believe the decisions are being made based on a commitment to an ideological agenda. When you lobby professionally for a client, that is not necessarily the case. You are motivated by the clients’ interests.”

Armey joined FreedomWorks as its co-chairman and began lobbying for DLA Piper, then Piper Rudnick, in 2003, shortly after he retired from Congress as House majority leader. His House portrait hangs in FreedomWorks’ conference room in a building equidistant from the Capitol and the White House. (The group says Democrats exiled another Armey portrait from the Capitol to the Library of Congress after they took over in 2007.)

His need to “firewall” the two jobs, as he calls it, was tested early. Throughout 2004, Armey and DLA Piper had lobbied for Equitas, a British insurer that managed asbestos claims and lobbied to shape legislation creating a trust fund for people suffering from asbestos-related diseases. (FreedomWorks president Matt Kibbe says Equitas supported the bill.)

But Armey also voiced radio ads for FreedomWorks that urged people to ask senators to oppose the legislation.

“It was one of those conflicts,” Kibbe said, describing FreedomWorks’ position being at odds with DLA Piper’s advocacy. “Asbestos was a big fight for us. It was a huge new entitlement. It was a bailout for the trial lawyers and, frankly, for companies.”

When it came to other bailouts – of the financial sector in 2008 – Armey and Freedom Works again opposed the legislation, known as TARP. The group called it “unconstitutional” because the law delegated so much power to the executive branch to make over the financial sector.

But between 2005 and 2008, Armey lobbied for Citizens Financial Group, the U.S. banking arm of the Royal Bank of Scotland, which received about $34.5 billion from the British government in October 2008, a few months before it posted the largest loss in U.K. corporate history.

Senate lobbying reports indicate Armey lobbied for Citizens Financial on legislation related to student lending and housing, including a law that created a program to help troubled homeowners refinance their mortgages. Some banks, seeking to cut their losses on bad mortgages and related investments, supported the housing legislation.

A spokesman for Citizens Financial said the bank “monitored” the housing legislation but didn’t take a position on it. FreedomWorks strongly opposed the housing legislation, equating it to a bailout of irresponsible borrowers.

In an interview, Armey said he didn’t recall his work for Citizens Financial. “I was very careful with the work I did,” he said. “I just simply don’t remember in any detail what work I did, if any, on behalf of that client.”

DLA Piper reported that its lobbyists, including Armey, lobbied on the $700 billion bailout on behalf of Raytheon. A Raytheon spokesman declined to comment about any of the company’s lobbying efforts.

Armey and others also reported lobbying for Cape Wind, a planned offshore wind farm, on tax matters in the stimulus. In February, FreedomWorks said the stimulus was too expensive and would fail to revive the U.S. economy. Soon after Congress approved the $787 billion stimulus package, the conservative group belittled the legislation with “bailout bucks” it distributed on Capitol Hill.

A Cape Wind spokesman declined to talk about Armey’s lobbying for the project, but it appears the company was interested in the stimulus because it extended a valuable tax credit that helped provide financing to many wind-energy developers.

In fact, the credit was often claimed by Wall Street investors who provided capital for the projects. With many of these investors wiped out by the recession, Congress converted the credit to a cash grant in the stimulus. Armey said his lobbying on the issue didn’t run afoul of FreedomWorks’ position because the group always advocates “reducing the burden of taxation on all persons who pay taxes.”

When liberals pounced on FreedomWorks’ involvement in health care town halls in August, they charged that FreedomWorks was a tool of Armey’s clients at DLA Piper. MSNBC host Rachel Maddow criticized Armey for fanning protests on behalf of corporate clients, charges that originated on a liberal blog, Think Progress, in April.

Those allegations led him to resign from DLA Piper in late August.

In fact, DLA Piper’s health care clients appear to have mostly cooperated with the White House and congressional Democrats who are writing the bill. Armey’s biggest client at DLA Piper, New Jersey drug maker Medicines Co., lobbied mostly to extend a patent on its blood thinner Angiomax, according to lobbying reports and corporate records.

Nonetheless, Armey said he decided to quit DLA Piper to spare the firm and its clients from Maddow’s attacks. He said the firm never asked him to leave, and that officials of the Medicines Co. even pressed him to stay.

“When somebody is firing on the innocent, you do what you can to relieve them of this threat,” Armey said. “Even within firewalls, I had a responsibility to the firm and its clients, and those responsibilities did not include clients of the firm suffering abuse by maliciously inaccurate reporting.”

As nonprofit groups, FreedomWorks Foundation and its affiliate, FreedomWorks Inc., don’t have to disclose where they get funding. Kibbe says most of its $10 million in annual donations this year will come from individuals, and less than 20 percent from corporations. The corporate money mostly flows to FreedomWorks Inc., which is allowed to lobby the government.

Kibbe said that FreedomWorks has “consciously” sought to wean itself off corporate money as it came to view its agenda as unpopular with many businesses that lobby Washington for goodies.

“The biggest supporter of the stimulus was the big business community,” he said. “The biggest supporter of health care is the health care industry. The biggest supporter of cap and trade is, frankly, the energy industry.”

The Medicines Co. said in August that it “has not opposed any of the pending health care reform bills.”

Lately, Armey and FreedomWorks have boosted their profiles by helping to organize a loose network of conservative activists known as Tea Party Patriots. Last month, Armey played a star role in a Taxpayer March on Washington that attracted tea partiers and other protesters to the National Mall. FreedomWorks says the march attracted “hundreds of thousands.”

While some liberal critics charged that FreedomWorks orchestrates tea party turnouts, Armey countered that tea party activism has been spontaneous and triggered solely by outrage over government bailouts and growing federal deficits.

Democrats “can’t conceive of that – putting 1,000 people together in one place, let alone tens of thousands on a Saturday, without some organization like ACORN that is living off federal dollars paying everybody’s way and giving them some kind of a bonus buck for being there,” Armey said a few days before the Sept. 12 march. “They just can’t understand that. It’s not part of their experience.”

Kibbe describes FreedomWorks’ relationship with the tea parties as a budding alliance. FreedomWorks distributes material such as talking points and calendars of congressional town halls to Tea Party activists, who form a kind of loose federation that helps to boost FreedomWorks’ fundraising and membership.

Some tea party activists laud Armey as a latter-day Ronald Reagan and credit FreedomWorks with helping them to organize rallies and get out their message. But others say they don’t have any relationship with him.

“Dick Armey and his group do not and will not represent the tea party movement, and they will not take ownership of it,” said Phillip Dennis, a Little Elm resident and co-coordinator of the Texas Tea Party Patriots. “Too close to the boys in the RNC,” or Republican National Committee, he said.

Yet Armey’s recent actions belie that criticism. Last week, he endorsed a conservative, third-party candidate in a New York congressional race who is likely to siphon votes from the Republican candidate. Other tea party-inspired candidates have declared they’ll run against incumbent Republicans such as Reps. Mike Conaway of Midland and Kay Granger of Fort Worth.

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