When the Government Lobbies Itself
“National Public Radio (NPR) is paying the lobbying firm Bracy, Tucker, Brown & Valanzano to defend its taxpayer funding stream in Congress, according to lobbying disclosure forms filed with the Secretary of the Senate,” reports Matthew Boyle at the Daily Caller. Once again, a government-funded entity is using its taxpayer funds to lobby to get more money from the taxpayers.
When the bailouts and takeovers started in 2008-9, I noted that there was lots of outrage in the blogosphere over revelations that some of the biggest recipients of the federal government’s $700 billion TARP bailout had been spending money on lobbyists. And I wrote:
It’s bad enough to have our tax money taken and given to banks whose mistakes should have caused them to fail. It’s adding insult to injury when they use our money — or some “other” money; money is fungible — to lobby our representatives in Congress, perhaps for even more money.
Get taxpayers’ money, hire lobbyists, get more taxpayers’ money. Nice work if you can get it.
At the same time, Dan Mitchell wrote that companies that received government money and then lobbied for more “deserve a reserved seat in a very hot place.” Taxpayer-funded lobbying is a scandal, but it’s a scandal that has been going on for decades:
As far back as 1985, Cato published a book, Destroying Democracy: How Government Funds Partisan Politics, that exposed how billions of taxpayers’ dollars were used to subsidize organizations with a political agenda, mostly groups that lobbied and organized for bigger government and more spending. The book led off with this quotation from Thomas Jefferson’s Virginia Statute of Religious Liberty: “To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical.”
The book noted that the National Council of Senior Citizens had received more than $150 million in taxpayers’ money in four years. A more recent report estimated that AARP had received over a billion dollars in taxpayer funding. Both groups, of course, lobby incessantly for more spending on Social Security and Medicare. The Heritage Foundation reported in 1995, “Each year, the American taxpayers provide more than $39 billion in grants to organizations which may use the money to advance their political agendas.”
In 1999 Peter Samuel and Randal O’Toole found that EPA was a major funder of groups lobbying for “smart growth.” So these groups were pushing a policy agenda on the federal government, but the government itself was paying the groups to lobby it.
Taxpayers shouldn’t be forced to pay for the very lobbying that seeks to suck more dollars out of the taxpayers. But then, taxpayers shouldn’t be forced to subsidize banks, car companies, senior citizen groups, environmentalist lobbies, labor unions, or other private organizations in the first place.
The Market for ‘Pull’ on Capitol Hill
Economists can actually measure the value of insider connections:
[L]obbyists connected to US Senators suffer an average 24% drop in generated revenue when their previous employer leaves the Senate. The decrease in revenue is out of line with pre-existing trends, it is discontinuous around the period in which the connected Senator exits Congress and it persists in the long-term. … Measured in terms of median revenues per ex-staffer turned lobbyist, this estimate indicates that the exit of a Senator leads to approximately a $177,000 per year fall in revenues for each affiliated lobbyist.
The fall is steeper, the researchers find, when the departing member of Congress sat on a powerful committee such as Appropriations, Senate Finance, or (on the House side) Ways and Means. Lobbyists who are ex-staffers are also more likely to quit the lobbying business once “their” member departs office. Incidentally, actual per-lobbyist revenue is lower than you might assume from the above figures, because many lobbying contracts are shared out among several participants with each individual getting only a portion of the proceeds. (Jordi Blanes i Vidal, Mirko Draca, and Christian Fons-Rosen, “Revolving Door Lobbyists,” via Alex Tabarrok).
If you needed another reason to vote against that unsatisfactory incumbent this fall, reflect that by doing so you’ll also be dimming the stars of his or her unsatisfactory ex-staffers.
Your Health Insurance, Designed by Lobbyists
Christopher Weaver of Kaiser Health News has an excellent article in today’s Washington Post on the various government agencies that will now be deciding what health insurance coverage you must purchase, and how many of those decisions will ultimately fall to lobbyists and politicians:
For years, an obscure federal task force sifted through medical literature on colonoscopies, prostate-cancer screening and fluoride treatments, ferreting out the best evidence for doctors to use in caring for their patients. But now its recommendations have financial implications, raising the stakes for patients, doctors and others in the health-care industry.
Under the new health-care overhaul law, health insurers will be required to pay fully for services that get an A or B recommendation from the U.S. Preventive Services Task Force…[which] puts the group in the cross hairs of lobbyists and disease advocates eager to see their top priorities — routine screening for Alzheimer’s disease, diabetes or HIV, for example — become covered services.
And it’s not just the USPSTF that will be deciding what coverage you must purchase:
[P]lans must also cover a set of standard vaccines recommended by the Advisory Committee on Immunization Practices, as well as screening practices for children that have been developed by the Health Resources and Services Administration in conjunction the American Academy of Pediatrics. Health plans will also be required to cover additional preventative care for women recommended under new guidelines that the Department of Health and Human Services is expected to issue by August 2011.
The chairman of the USPSTF says the task force will try “to stay true to the methods and the evidence… the science needs to come first.” A noble sentiment, but as my colleague Peter Van Doren likes to say, “When politics and science conflict, politics wins.” Witness how industry lobbyists have killed or neutered every single government agency that has ever dared to produce useful comparative-effectiveness research. (You’re next, Patient-Centered Outcomes Research Institute!)
When government agencies are making non-scientific value judgments–e.g., are these studies reliable enough to merit an A or B recommendation? what should be the thresholds for an A or B recommendation? will the benefits of mandating this coverage outweigh the costs?–politics does even better. Witness Sen. Barbara Mikulski (D-Md) overruling a USPSTF recommendation when she “inserted an amendment in the [new] health-care law to explicitly cover regular mammograms for women between 40 and 50. ”
Speaking of value judgments, the one flaw in Weaver’s article is that it inadvertently conveys a value judgment as if it were fact. He writes that the mandate to purchase coverage for preventive services is “good news for patients” and that 88 million Americans “will benefit.” Whether the mandate is good news for patients depends on whether patients value the added coverage more than the additional premiums they must pay. (The administration estimates that premiums for affected consumers will rise an average of 1.5 percent. One insurer puts the average cost at 3-4 percent of premiums. Naturally, some consumers will face above-average costs.) Whether the benefits outweigh the costs is ultimately a subjective determination. (The best way to find out, as it happens, is to let consumers make the decision themselves.)
It’s Summer in Washington and the Livin’ Is Good
“According to a new Regional Income Earnings Index developed by the Martin Prosperity Institute, Greater Washington, D.C. is the nation’s metropolitan region with the highest income,” writes Richard Florida, author of The Rise of the Creative Class.
Washington, which produces rules, regulations, and political consulting services, ranks just ahead of San Jose and Stamford, Connecticut, where people invest their own money to produce software and allocate capital for a complex economy.
Even before the Obama administration started concentrating job creation on the federal sector, the Washington Post was reporting –
The three most prosperous large counties in the United States are in the Washington suburbs, according to census figures released yesterday, which show that the region has the second-highest income and the least poverty of any major metropolitan area in the country.
Rapidly growing Loudoun County has emerged as the wealthiest jurisdiction in the nation, with its households last year having a median income of more than $98,000. It is followed by Fairfax and Howard counties, with Montgomery County not far behind.
This of course reflects partly the high level of federal pay, as Chris Edwards has been detailing. And it also reflects the boom in lobbying as government comes to claim and redistribute more of the wealth produced in all those other metropolitan areas.
To slightly amend a ditty I posted a few years ago,
Mamas, don’t let your babies grow up to be cowboys,
Don’t let ‘em make software and sell people trucks,
Make ‘em be bureaucrats and lobbyists and such.
Business Roundtable: We Love/Hate Big Government
What is surprising, however, is that representatives of that organization now have the chutzpah to complain about a “hostile environment for investment and job creation.” Equally galling, the group has published a document called “Policy Burdens Inhibiting Economic Growth.” We’ve all heard the joke about the guy who murders his parents and then asks the court for mercy because he’s an orphan. The Business Roundtable has adopted that strategy, except this time taxpayers are the butt of the joke. Here’s an excerpt from the Washington Post report:
The chairman of the Business Roundtable, an association of top corporate executives that has been President Obama’s closest ally in the business community, accused the president and Democratic lawmakers Tuesday of creating an “increasingly hostile environment for investment and job creation.” Ivan G. Seidenberg, chief executive of Verizon Communications, said that Democrats in Washington are pursuing tax increases, policy changes and regulatory actions that together threaten to dampen economic growth and “harm our ability . . . to grow private-sector jobs in the U.S.” …The final straw, said Roundtable president John Castellani, was the introduction of two pieces of legislation, now pending in Congress, that the group views as particularly bad for business. One, a provision of the administration’s financial regulation overhaul, would make it easier for shareholders to nominate corporate board members. The other would raise taxes on multinational corporations. The rhetoric accompanying the tax proposals has been particularly harsh, Castellani said, with Democrats vowing to campaign in this fall’s midterm elections on a platform of punishing companies that move jobs overseas. …Seidenberg polled the members of the Business Roundtable and a sister organization, the Business Council. The result was a 54-page document, delivered to Orszag on Monday, chock full of bullet points about actions taken or considered by a wide array of executive agencies, including the White House Middle Class Task Force and the Food and Drug Administration. We believe the cumulative effect of these proposals will help defeat the objectives we all share — reducing unemployment, improving the competitiveness of U.S. companies and creating an environment that fosters long-term economic growth,” Seidenberg wrote in a cover letter for the document, titled “Policy Burdens Inhibiting Economic Growth.”
Lobbying R Us
Think Washington lobbying is just for the big-money interests? Think you could never afford a lobbyist yourself? Well, think again! At Crazy Eddie’s Lobbying Service, our prices are insane!
The firm is actually called Keys to the Capitol. It was started not by Crazy Eddie or Sy and Marcy Syms, but by Paul Kanitra, who’s happy to call it McLobbying. Keys to the Capitol
targets small towns, humble associations and others of modest means that can’t even consider signing the $10,000-a-month retainers required by many top Washington firms. Instead, Kanitra’s company offers contracts starting at $995, month-to-month agreements and prices and other details spelled out on the company’s Web site.
Want some government money? Want to regulate your competitors? Come on down to Keys!
Now of course it might be that the new, low-priced, easy-to-understand lobbying firm would be helping people get government off their backs. Sort of a “leave us alone” lobbyist for Tea Party times.
Get real. What do you think those small towns want? They’re not hiring a Washington lobbyist, even a cheap one, to get government off their backs. They want a piece of that stimulus money, or that Race to the Top money, or that highway money, or whatever. And take a look at the Washington Post‘s description of one of Keys’s first clients,
the aptly named Louie Key, national director of the 3,000-member Aircraft Mechanics Fraternal Association of Aurora, Colo. Key was shopping around for a lobbyist to help his union on several federal issues, including persuading lawmakers to tighten oversight of repair stations that use unlicensed mechanics.
That’s right. This little ol’ association just wanted a nice simple law to impose new regulatory burdens on their cheaper competitors. That’s Washington in a nutshell. As long as the government has favors to hand out, people will pay lobbyists to get access. So come on down and get yours!
Obama’s Populism a Hoax: ObamaCare Is a Sop to Big PhRMA
From the invaluable Tim Carney:
The Obama team regularly dismisses opponents as industry lackeys. The Democratic National Committee blasted out e-mails this week warning that “for every member of Congress, there are eight anti-reform lobbyists swarming Capitol Hill” and “Congress is under attack from insurance lobbyists.”
But drug industry lobbyists, according to Politico, spent the weekend “huddled with Democratic staffers” who needed the drug lobby to “sign off” on proposals before moving ahead. Meanwhile, we learn that the drug lobby is buying millions of dollars of ads in 43 districts where a Democratic candidate stands to suffer for supporting the bill. The doctors’ lobby and the hospitals’ lobby are also on board with the Senate bill.
So the battle at this point is not reformers versus industry, as Obama would have you believe. Rather, it is a battle between most of the health care industry and the insurance companies.
(And the insurers are not opposed to the whole package. On the bill’s central planks — limits on price discrimination, outlawing exclusions for pre-existing conditions, a mandate that employers insure their workers and a mandate that everyone hold insurance — insurers are on board. They object mostly that the penalty is too small for violating the individual mandate.)
Dr. Frankenstein on His Creation: It’s All The Monster’s Fault
As I have explained on numerous occasions, supporters of the Student Aid and Fiscal Responsibility Act (SAFRA) – which would end federal guaranteed student loans, turn everything into lending direct from Uncle Sam, and spend the resulting savings and way much more — have often shamelessly promoted the bill as a boon to taxpayers when it will almost certainly cost them tens-of-billions. Where they have generally been right is in rebutting criticisms that SAFRA would be a federal takeover of a private industry. With lender profits all but assured under federal guaranteed lending, the vast majority of student loans haven’t been truly private for decades.
Unfortunately, SAFRA advocates are just as clueless — or, more likely, rhetorically unbridled — about what constitutes a private entity as are status-quo supporters. Case in point, an article in today’s Huffington Post that, along with U.S. Secretary of Education Arne Duncan, attempts to portray the suddenly rocky road ahead for SAFRA as a result of evil lender lobbyists dropping boulders in the selfless legislation’s way:
Taking aim at Sallie Mae, the largest student lender in the country and a driving force behind the lobbying effort, Education Secretary Arne Duncan on Tuesday accused the company of using taxpayer funds to lobby and advertise, and cast its executives as white-collar millionaires uninterested in serious education reform.
“Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists — the backbone of the new economy — face crushing debt because of runaway college tuition costs,” Duncan said.
Here Sallie Mae is painted in the same ugly hues as Lehman Brothers, AIG, and all the other supposedly rapacious, unscrupulous companies whose unchecked greed, we’re told, brought the American economy to its knees. (We also get the baseless but obligatory pronouncement about “crushing debt” for teachers and other toilers for the “public good.”)
But wait! Doesn’t ”Sallie Mae” sound a lot like”Fannie Mae” and “Freddie Mac”? Of course! That’s because just like Fannie and Freddie, Sallie was created by the federal government, only with Sallie’s job being to furnish lots of cheap college loans. And guess what? Just like Fannie and Freddie, Sallie became by far the biggest kid on her block because her huge federal creator fed her and protected her for decades, not setting her off on her own until 1996. But that part of her story doesn’t fit anywhere into the evil corporation narrative, so it’s just not mentioned. All we need to know is Sallie is private, her owners and employees make a lot of money, and that is why she is evil and dangerous.
And so the politics of demonization and denial, a staple of the recession blame game, continues. Private institutions are portrayed as malevolent predators and government as a warm, pure, protective father-figure. But there is much more accurate imagery possible when it comes to Sallie Mae: Egomaniacal Dr. Frankenstein furiously blaming the monster he created for doing exactly what he built it to do.
And some wonder why there’s such widespread outrage — the real reason SAFRA is in trouble – about ever-expanding federal power?
Thursday Links
- Nat Hentoff: If you’re looking for reform in Cuba, don’t rest your hopes on Raul Castro.
- Tim Carney, author of Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses gives the inside scoop on why big government is good for big business.
- The Patriot Act: What should go, and what should stay?
- Dear Poor People- “Please remain poor.” Sincerely, Obamacare.
- Podcast: “Obamanomics in Health Care” featuring Tim Carney.
Thursday Links
- The populists have it wrong. Why free trade and globalization are great blessings to Americans and poor families around the world.
- How Obama’s plan for health care will affect medical innovation in America: “Imposing price controls on drugs and treatments–or indirectly forcing their prices down by means of a ‘public option’ or expanded public insurance programs–would reduce the incentive for innovators to develop new treatments.”
- Register now for the upcoming Cato forum featuring author Tim Carney and his new book, Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses. Buy the book, here.
- Podcast: “Shoes, Undies and Airplane Security” featuring Jim Harper.
Boom Time on K Street
Advocates of health care reform and other big government programs, this is the business you have chosen:
Main Street has had a tough year, losing jobs and seeing little evidence of the economic revival that experts say has already begun.
But K Street is raking it in.
Washington’s influence industry is on track to shatter last year’s record $3.3 billion spent to lobby Congress and the rest of the federal government — and that’s with a down economy and about 1,500 fewer registered lobbyists in town, according to data collected by the Center for Responsive Politics….
Plenty of sectors have scaled back their K Street spending, including traditional big spenders like real estate and telecommunications. But Obama’s push for legislation on health reform, financial reform and climate change has compensated for the grim economic times.
And that’s after Obama kicked off the year with a massive economic stimulus package — and every major business sector tried to get a piece of the action. …
“If lobbying the federal government did not work, people wouldn’t spend money doing it,” [Dave Levinthal, a spokesman for CRP] said.
Lay out a picnic, you get ants. Hand out more wealth through government, you get lobbyists. As Craig Holman of the Ralph Nader-founded Public Citizen says: “the amount spent on lobbying . . . is related entirely to how much the federal government intervenes in the private economy.”
More on the lobbying bonanza in President Obama’s Washington here. Back in 2001 David Laband and George McClintock tried to estimate the total costs to society of efforts to effect forced transfers of wealth in their book The Transfer Society.
Breaking: Economics 101 Still in Effect
Dairy farmers are working lobbying hard to ensure they get their hands on more of your money. Apparently, changes made last year to the Milk Income Loss Contract — mainly to take account of rising feed costs — were not enough to stem the losses.
The Senate recently voted to give the USDA an extra $350 million for dairy farmers’ support. The House left dairy support out of its appropriations bill, so the two chambers are working on the compromise now (prediction: the taxpayer will get screwed).
Here’s an ironic quote from a Brownfield news post yesterday (linked to above). It’s Missouri Dairy Association Chairman Larry Purdom on how to bring prices back up:
“Our feeling is that if [USDA] would buy some cheese and product that’s in storage…hanging over our heads, depressing prices,” Purdom tells Brownfield from his farm at Purdy, Missouri, “we feel like the prices would start moving on their own if we didn’t have this surplus.”
More on U.S. dairy policy here.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
