Tag: lobbying

Corrupt Obamacare Waiver Process Is Like a Scene from Atlas Shrugged

In a column about the revolving door between big government and the lobbying world, here’s what the irreplaceable Tim Carney wrote about the waiver process for folks trying to escape the burden of government-run healthcare.

Congress imposes mandates on other entities, but gives bureaucrats the power to waive those mandates. To get such a waiver, you hire the people who used to administer or who helped craft the policies. So who’s the net winner? The politicians and bureaucrats who craft policies and wield power, because this combination of massive government power and wide bureaucratic discretion creates huge demand for revolving-door lobbyists. It’s another reason Obama’s legislative agenda, including bailouts, stimulus, ObamaCare, Dodd-Frank, tobacco regulation, and more, necessarily fosters more corruption and cronyism.

This seemed so familiar that I wondered whether Tim was guilty of plagiarism. But he’s one of the best journalists in DC, so I knew that couldn’t be the case.

Then I realized that there was plagiarism, but the politicians in Washington were the guilty parties. As can be seen in this passage from Atlas Shrugged, the Obama Administration is copying from what Ayn Rand wrote – as dystopian parody – in the 1950s.

Nobody professed to understand the question of the frozen railroad bonds, perhaps, because everybody understood it too well. At first, there had been signs of a panic among the bondholders and of a dangerous indignation among the public. Then, Wesley Mouch had issued another directive, which ruled that people could get their bonds “defrozen” upon a plea of “essential need”: the government would purchase the bonds, if it found proof of the need satisfactory. there were three questions that no one answered or asked: “What constituted proof?” “What constituted need?” “Essential-to whom?” …One was not supposed to speak about the men who, having been refused, sold their bonds for one-third of the value to other men who possessed needs which, miraculously, made thirty-three frozen cents melt into a whole dollar, or about a new profession practiced by bright young boys just out of college, who called themselves “defreezers” and offered their services “to help you draft your application in the proper modern terms.” The boys had friends in Washington.

This isn’t the first time the Obama Administration has inadvertently brought Atlas Shrugged to life. The Administration’s top lawyer already semi-endorsed “going Galt” when he said people could choose to earn less money to avoid certain Obamacare impositions.

So if you want a glimpse at America’s future, I encourage you to read (or re-read) the book. Or at least watch the movie.

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.

Lobbying Wolves on the Prowl

The other day I noted that the budget cuts agreed to last week contained lots of familiar faces. Many of the agencies and programs getting a trim were also cut in 1995 in a rescissions package put together by Gingrich Republicans. In the fifteen intervening years, federal spending exploded across the board, which means that an occasional trim job doesn’t accomplish much if the goal is to limit government.

The reason why is that if the scope of government activities isn’t curtailed, the cuts will be short-lived. As long as the agencies and their programs remain, special interests won’t stop agitating Congress to continue, or more likely, increase, funding.

A recent article in The Hill reports that lobbyists are already hard at work:

Groups that advocate for everything from more foreign aid to bolstering the nation’s transportation system saw several of their favorite government programs suffer deep spending cuts in the fiscal year 2011 budget deal.

With millions of dollars now axed from what they consider key federal initiatives, groups are planning to redouble their efforts and lobby to restore as much funding as possible in next year’s budget.

(Note to reporter: A lot of adjectives could be used to describe the spending cuts. “Deep” is not one of them.)

A fellow who lobbies for foreign aid argues that cutting it won’t balance the budget and that “We need to be planting the seeds for future economic prosperity around the world.” It’s true that even eliminating foreign aid wouldn’t balance the budget, but every little bit helps. But what’s striking is his arrogant pronouncement that “we” (taxpayers) need to be forced by the federal government to send our money abroad for the causes he fancies.

A lobbyist with the National League of Cities is relieved that the GOP didn’t get the small cut in local handouts that were originally proposed, but is nonetheless concerned about the “anti-spending climate in Washington”:

‘We’re talking about staff layoffs at the city level. Cities are also going to have completely reorganize their budgets mid-year and prioritize some things out.’

‘In this environment, the numbers from fiscal year 2011 might be the new baseline but our message isn’t going to change,’ Wallace said. ‘We’re focusing on those local programs that create jobs and spur economic growth.’

Cities prioritizing spending? Heaven forbid. Suck more money out of the private sector in order to save bureaucratic deadweight in local government? That doesn’t sound like a recipe for economic growth to me. (See here for more on the problems with federal subsidies to state and local governments.)

Then there are the transportation lobbyists. These folks would probably argue that a giant escalator to nowhere would be a wise use of taxpayer money:

Dean’s group is lamenting spending cuts made to the high-speed rail program, transit security grants as well as funding for “fixed guideway” projects, which include commuter trains, cable cars and ferryboats among other public transit systems.

For the fans of The Simpsons who didn’t catch the escalator reference, see this link for my feelings on government-funded rail projects. (Fans and non-fans should check out these essays on urban transit subsidies and high-speed rail.)

In Washington, it’s the squeaky wheel that gets greased. Lobbyists for government programs exist to make sure that Congress hears their wheel squeaking. Yes, the deck is stacked against those who are forced to foot the bill, but if taxpayers want federal agencies and their programs to get more than a trimming every fifteen years or so, now is the time to make a lot more noise.

Your Tax Dollars at Work (1)

The District of Columbia pays outside lobbyists hundreds of thousands of dollars, but its top in-house lobbyist, who heads a staff of nine, doesn’t know about them:

The District pays outside lobbyists, who were hired when Adrian M. Fenty (D) served as mayor, but their work has attracted little notice.

U.S. Senate records show that Mitch Butler — a former Interior Department official in the Bush administration — has lobbied on behalf of the District since October 2009 on “public lands issues” and “land development.” Through the end of 2010, the city paid Butler at least $100,000 for his efforts.

Separately, the D.C. Office of the Deputy Mayor for Planning & Economic Development has paid the firm Van Ness Feldman $200,000 since November 2009 for “Anacostia Waterfront Initiative appropriations, St. Elizabeths development matters and federal land transfers,” according to registration forms.

Neither [Del. Eleanor Holmes] Norton nor Janene D. Jackson, the director of the District’s Office of Policy and Legislative Affairs, was aware the city had lobbyists on the payroll until they were informed by a reporter.

Maybe if nobody knows about them, the city could save a few bucks by terminating their contracts. But then again, maybe the best lobbyists are the ones who slip money silently out of the appropriations process and then melt away in the night, drawing no attention to themselves.

Tax Lawyers, Tax Complexity, and the Broader Problem of a Self-Serving Legal Profession

The Internal Revenue Code is nightmarishly complex, as illustrated by this video. Americans spend more than 7 billion hours each year in a hopeless effort to figure out how to deal with more than 7 million words of tax law and regulation.

Why does this mess exist? The simple answer is that politicians benefit from the current mess, using their power over tax laws to raise campaign cash, reward friends, punish enemies, and play politics. This argument certainly has merit, and it definitely helps explain why the political class is so hostile to a simple and fair flat tax.

But a big part of the problem is that tax lawyers dominate the tax-lawmaking process. Almost all the decision-making professionals at the tax-writing committees (Ways & Means Committee in the House and Finance Committee in the Senate) are lawyers, as are the vast majority of tax policy people at the Treasury Department and the Internal Revenue Service.

This has always rubbed me the wrong way. Yes, some lawyers are needed if for no other reason than to figure out how new loopholes, deductions, credits, and other provisions can be integrated into Rube-Goldberg monstrosity of existing law.

But part of me has always wondered whether lawyers deliberately or subconsciously make the system complex because it serves their interests. I know many tax lawyers who are now getting rich in private practice by helping their clients navigate the complicated laws and regulations that they helped implement. For these people, the time they spent on Capitol Hill, in the Treasury, or at the IRS was an investment that enables today’s lucrative fees.

I freely admit that this is a sour perspective on how Washington operates, but it certainly is consistent with the “public choice” theory that people in government behave in ways that maximize their self interest.

There’s now an interesting book that takes a broader look at this issue, analyzing the extent to which the legal profession looks out for its own self interest. Written by Benjamin H. Barton, a law professor at the University of Tennessee, The Lawyer-Judge Bias in the American Legal System explains that the legal profession has self-serving tendencies.

Glenn Reynolds, of Instapundit fame, interviews Professor Barton about his new book.

I freely confess that I’m looking at this issue solely through my narrow prism of tax policy. But since Barton’s thesis meshes with my observations that tax lawyers benefit from a corrupt tax system, I’m sympathetic to the notion that the problem is much broader.

One of the most qoted lines from Shakespeare’s Henry VI is, “let’s kill all the lawyers.” But rather than making lawyer jokes, it would be a better idea to figure out how to limit the negative impact of self-serving behavior - whether by lawyers or any other profession that might misuse the coercive power of government.

This is one of many reasons why decentralization is a good idea. If people and businesses have the freedom to choose the legal system with the best features, that restrains the ability of an interest group - including lawyers - to manipulate any one system for their private advantage. This new study by Professors Henry Butler and Larry Ribstein is a good explanation of why allowing “choice of law” yields superior results.

One for the Annals of Rent-Seeking

An article at HealthPolicySolutions.org (“a project of the Buechner Institute for Governance at the School of Public Affairs at the University of Colorado Denver”), about how ObamaCare is causing Colorado’s child-only health insurance market to implode, contains this startling admission by the top lobbyist for Colorado’s health insurance companies:

“Requiring all the carriers to sell this sort of plan creates a level playing field,’’ said Ben Price, executive director of the Colorado Association of Health Plans. “This is one of those unusual situations where we’re asking for more competition. If everyone else is in the market, the risk is spread across the entire market. Each company can afford to take on more risk.”

Catch that?  A lobbyist who admits that his job is to restrict competition, effectively stealing from consumers for the benefit of his clients!  How refreshing!

Wait, it gets better.

The legislation he’s advocating would tell any carrier that wants to sell insurance directly to Colorado consumers that they must also sell child-only coverage – despite the losses that ObamaCare’s price controls are likely to cause them in that sub-market.  The legislation would actually reduce competition in Colorado’s individual market, because it would place an additional (and costly) requirement on market entry.

In other words, this guy is so good at his job, he keeps lobbying for less competition even when says he isn’t.  Bravo, sir.  Bravo.

No Recession in Washington

Forbes looks at new data on household income in different metro areas:

Median family incomes across the country decreased dramatically from 2008 to 2009, and no region was left untouched by the recession. But despite shrinking paychecks nearly across the board, some cities still stand out for their bigger-than-average salaries.

To find the places where Americans earn the most, we looked at median family income data for 2009, as reported by the U.S. Census Bureau. In September, as part of its annual American Community Survey, the Census released updated data for several hundred Metropolitan Statistical Areas — geographic entities defined by the U.S. government that roughly correspond to major cities.

The place with the highest median family income is the Washington, D.C., metro area, which includes the nation’s capital, as well as wealthy suburbs in Virginia and Maryland. In 2009 families in this region earned a median income of $102,340, a 0.7 percent increase from 2008. D.C. also boasts a better than average unemployment rate of 5.9 percent, far below the September’s 9.2 percent national average.

As we’ve reported here before, these trends began even before the Obama administration started concentrating job creation on the federal sector. In the middle of the Bush bubble, the Washington Post reported:

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 and Tad DeHaven have 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.