Tag: lobbying

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.

Tech Lobbying, Entrepreneurship, and the Innovation Economy

Adam Thierer’s lead article in the most recent Cato Policy Report is called “The Sad State of Cyber-Politics.” It goes through so many ways tech and telecom companies are playing the Washington game to win or keep competitive advantage.

It’s a nice set-up to a Washington Post opinion piece from this weekend in which TownFlier CEO Morris Panner talks about the growing riches accruing to Washington influencers:

We are creating so much regulation - over tax policy, health care, financial activity - that smart people have figured out that they can get rich faster and more easily by manipulating rules on behalf of existing corporations than by creating net new activity and wealth. Gamesmanship pays better than entrepreneurship.

Thierer sees some hope for the tech sector, for a few reasons:

Smaller tech companies have thus far largely resisted the urge [to engage with Washington]. Hopefully that’s for principled reasons, not just due to a shortage of lobbying resources. Second, the esoteric nature of many Internet and digital technology policy discussions frustrates many lawmakers and often forces them to lose interest in these topics. Third, the breakneck pace of technological change makes it difficult for regulators to bottle up innovation and entrepreneurialism.

Panner’s broader piece calls for “a national campaign to create transparency in our legislation and a national moratorium on the creation of commissions, regulators and czars. It is time for Congress to do the hard job of saying what lawmakers mean in clear and easy-to-understand language.” He continues, “We should reject bills that are thousands of pages or that delegate vast authority to unelected regulators.”

That would be a start.

Why Some People Think NPR Exhibits Bias

Listening to NPR on the way into work, I twice heard a reporter refer to Meredith McGehee, a champion of (ahem) campaign finance reform, as a “good-government lobbyist.”

Got that?  If you disagree with McGehee’s lobbying agenda — if, say, you think campaign finance reform is an unconstitutional attempt by the Left to restrict political speech that they don’t like — then you are against making government better.

But did you catch the more subtle form of bias?  I maintain there is no such thing as good government. (Call it Cannon’s First Law of Politics.)  And I’m not alone.  ”Government, even in its best state,” wrote Thomas Paine in Common Sense, “is but a necessary evil.”  Not good.  Less evil than the alternative, to be sure.  But still, evil.  Others disagree.  The reporter, like many others and probably without even realizing it, took sides in that long-standing debate too.

Earmarked for Corruption

Florida Times-Union reporter Matt Dixon deserves kudos for his detailed exposé of Congresswoman Corrine Brown’s (D-FL) corruption-tainted earmarking. Since 2008, Brown has sought millions for a non-profit in Jacksonville that employs a lobbying outfit that just happens to have Brown’s daughter Shantrel on its staff.

Brown and her daughter have tried to secure $1.1 million for “streetscape improvements and renovations” at a plaza leased by the non-profit. Rep. Brown is currently requesting a direct appropriation of $1 million for it, but interestingly says on her website that “I certify that neither I nor my spouse has any financial interest in this project.” Okay, but what about her daughter?

As the article explains, this isn’t the first time the Browns have collaborated at taxpayer expense:

The Community Rehabilitation Center is not the only client of her daughter’s that Brown has helped.

In 2006, she traveled to the Republic of Georgia shortly before natural gas importer Itera had stopped supplying portions of the country with gas due to $6 million in non-payments. Over an eight-month period that year, Itera paid Shantrel Brown and one other Alcalde and Fay lobbyist more than $80,000 to work on “international debt issues,” lobbying reports indicate.

The Russian company, which has its U.S. headquarters in Jacksonville, has filed 31 separate federal lobbying reports since 2005. It used Shantrel Brown only during the eight months in 2006.

In a separate 1999 incident involving her daughter, Brown was investigated by an ethics subcommittee after a $50,000 Lexus purchased by African banker Karim Pouye wound up registered in Shantrel’s name. Corrine Brown had lobbied to keep Pouye’s boss, West African millionaire Foutanga Dit Babani Sissoko, out of federal prison after he was accused of stealing $240 million from a bank in the United Arab Emirates. The money wound up in Miami bank accounts controlled by Sissoko. The subcommittee took no action, but in its written report was critical of the Lexus.

According to the article, the non-profit had $4.6 million in total revenue in 2009. Of that amount, $2.1 million came from Medicaid and another $1.6 million came from “government contributions.” Where the money is going should raise eyebrows:

In [2008 and 2009], employee salaries made up nearly 40 percent of the center’s overall expenses. In 2008, $1.6 million of the center’s $4.5 million in total expenses was tied to salaries. The following year, the salary number jumped to $1.8 million of the center’s total $4.5 million in expenses. It is unclear how many employees the Community Rehabilitation Center employed during those years.

As a Cato essay on special-interest spending explains, earmark apologists are wrong when they argue that earmarks aren’t a big deal since they constitute a tiny portion of overall federal spending:

The problem is that earmarking has contributed to a general erosion of fiscal responsibility in Washington. Earmarks have exacerbated the parochial mindset of most members of Congress, who spend their time appeasing state and local interest groups rather than tackling issues of broad national concern. Many politicians complain about the soaring federal deficit, yet their own staff members spend most of their time trying to secure earmarks in spending bills.

Corrine Brown takes this parochial mindset to a new level by using her power to enrich her own family at taxpayer expense.