lobbying

Estate Tax Lobbying

Pundits of every political persuasion decry corporate lobbying in Washington, and a major tax bill is a great opportunity for businesses to gain benefits if they convince members of Congress to help them out. However, battles over tax provisions are sometimes not what they appear on the surface.

For years, liberal pundits have characterized efforts to repeal the estate, or death, tax as the plutocrats pulling the levers of power on the Republican side of the aisle. But a new investigative piece at Daily Caller by Richard Pollock exposes the lobbying that is undermining good policy on estate taxation.

I favor estate tax repeal, for numerous reasons, as I laid out here. One reason is the large waste of resources spent on paperwork and avoidance. I noted:

The estate tax is probably the most inefficient tax in America. It has a high marginal rate and is very difficult for the government to administer and enforce. It has also created a large and wasteful estate planning and avoidance industry. The industry overflows with high-paid lawyers and accountants doing paperwork, litigation, asset appraisals, and creating financial structures to minimize the tax burden using trusts, life insurance, and private foundations.

Lobbying in Trump’s Washington: New Names, Old Game

In The New York Times Magazine, Nicholas Confessore writes about the new lobbying stars in Washington. A new president always creates opportunities for new players. When that president is a non-politician without an established Washington entourage, there’s a lot of uncertainty. Who knows the new president? Who knows the people who know the president?

Confessore tells great stories about newly famous Trumpists such as one-time campaign manager Corey Lewandowski and about “Washington backbenchers, B-listers and understudies” who suddenly realized they knew somebody who had been part of the Trump campaign.

USA Today has reported on people close to Vice President Pence who have opened or expanded lobbying businesses this year.

It’s a sordid story of how fixers and their handsome fees survive even in an administration that came in promising to “drain the swamp.” But how much has really changed? As Confessore reviews:

There are about 10,000 registered lobbyists in Washington — roughly 20 for every member of Congress — and thousands more unregistered ones: consultants and ‘‘strategic advisers’’ who are paid to help shape government policy but do not disclose their clients. By whatever name, they are the people companies and countries hire to help roll back regulations, unstick bids, tweak legislation or get meetings. Lobbying is at once Washington’s most maligned, enduring and essential industry. Underpaid young politicos and retiring lawmakers depend on Beltway lobby shops — known as ‘‘K Street’’ after the city boulevard that once housed many of them — for the high-six-figure salaries that will loft them into Washington’s petite aristocracy… .  But the private sector needs lobbyists the most. The modern federal government is so sprawling and complex that it practically demands a specialized class of middlemen and -women.

Over the decades, lobbying has evolved from a niche trade of fixers and gatekeepers to a sleek, vertically integrated, $3-billion-a-year industry.

Total reported spending on lobbying peaked in 2009 and 2010, the first two years of President Barack Obama’s administration, when trillions of dollars were being handed out or moved around by the stimulus package, the omnibus spending bill, the Dodd-Frank financial regulation bill, the Affordable Care Act, and an ultimately unsuccessful 1200-page energy bill stuffed with taxes, regulations, loopholes, and subsidies. The Washington Post found that “more than 90 organizations hired lobbyists to specifically influence provisions of the massive stimulus bill.” Well-connected Democratic lobbyists like former House majority leader Richard Gephardt and Tony Podesta, the brother of Obama transition director John Podesta, did especially well.

NY MTA to APTA: Quit Wasting Our Money

The New York Metropolitan Transportation Authority (MTA) has formally quit its membership in the American Public Transportation Association (APTA), the nation’s principle transit lobby. In a harshly worded seven-page letter, MTA accused APTA of poor governance, an undue focus on small transit agencies, and having an embarrassingly large compensation package to APTA’s president.

The MTA and its affiliates, Metro North, the Long Island Railroad, and New York City Transit, together carry 35 percent of all transit riders in America. Since MTA’s ridership has been growing while transit elsewhere has declined, this percentage is increasing.

Yet APTA’s focus has been on lobbying for increased funding for smaller agencies, including building new rail transit lines in cities that haven’t had rail transit and extending transit service in smaller cities and rural areas that have had little transit at all. As a result, says the letter, MTA has been short-changed by roughly a billion dollars a year in federal funding that it would have received if funds were distributed according to the number of transit riders carried.

This accords with the finding of a Cato policy analysis that found that New York has been shorted half a billion dollars a year in discretionary transit funds. Since discretionary funds make up less than half of all federal transit funds, it is easy to imagine that the nation’s largest urban area is losing a billion dollars a year to smaller cities that are not making effective use of those funds.

How to Get a Piece of the Taxpayers’ Money

Two articles in the same section of the Washington Post remind us of how government actually works. First, on page B1 we learn that it pays to know the mayor:

D.C. Mayor Muriel E. Bowser has pitched her plan to create family homeless shelters in almost every ward of the city as an equitable way for the community to share the burden of caring for the neediest residents.

But records show that most of the private properties proposed as shelter sites are owned or at least partly controlled by major donors to the mayor. And experts have calculated that the city leases­ would increase the assessed value of those properties by as much as 10 times for that small group of landowners and developers.

Then on B5 an obituary for Martin O. Sabo, who was chairman of the House Budget Committee and a high-ranking member of the Appropriations Committee, reminds us of how federal tax dollars get allocated:

Politicians praised Mr. Sabo, a Norwegian Lutheran, for his understated manner and ability to deliver millions of dollars to the Twin Cities for road and housing projects, including the Hiawatha Avenue light-rail line and the Minneapolis Veterans Medical Center.

Gov. Mark Dayton (D) said Minnesota has important infrastructure projects because of Mr. Sabo’s senior position on the House Appropriations Committee.

We all know the civics book story of how laws get made. Congress itself explains the process to young people in slightly less catchy language than Schoolhouse Rock:

Solyndra: A Case Study in Green Energy, Cronyism, and the Failure of Central Planning

Back in 2011 I wrote several times about the failure of Solyndra, the solar panel company that was well connected to the Obama administration. Then, as with so many stories, the topic passed out of the headlines and I lost touch with it. Today, the Washington Post and other papers bring news of a newly released federal investigative report:

Top leaders of a troubled solar panel company that cost taxpayers a half-billion dollars repeatedly misled federal officials and omitted information about the firm’s financial prospects as they sought to win a major government loan, according to a newly-released federal investigative report.

Solyndra’s leaders engaged in a “pattern of false and misleading assertions” that drew a rosy picture of their company enjoying robust sales while they lobbied to win the first clean energy loan the new administration awarded in 2009, a lengthy investigation uncovered. The Silicon Valley start-up’s dramatic rise and then collapse into bankruptcy two years later became a rallying cry for critics of President Obama’s signature program to create jobs by injecting billions of dollars into clean energy firms.

And why would it become such a rallying cry for critics? Well, consider the hyperlink the Post inserted at that point in the article: “[Past coverage: Solyndra: Politics infused Obama energy programs]” And what did that article report?

Why Are Environmental Policy Conflicts So Intractable?

On Earth Day the op-ed pages remind me of “Groundhog Day.”  Environmentalists argue we need stricter environmental regulation.  Business interests argue such regulations reduce economic growth and cost the economy jobs.  Each also invokes “sound science” as an adjudicator of the conflict.  Environmentalists invoke “science” in the case of CO2 emissions and effects while business interests invoke “science” in the case of traditional pollution emissions.  Each year we wake up and the same movie plays out.

The scientific validity of people’s preferences plays no role in the market’s delivery of private goods.  Markets can and do supply organic lettuce regardless of whether it is really “better” for your health.  The scientific validity of people’s preferences is irrelevant.

Air- and water-quality environmental disputes are more challenging to analyze than the supply of organic lettuce for two reasons.  First, while property rights exist for lettuce, they often do not exist for air and water.   Thus, environmental politics involves continuous struggle over implicit property rights and the wealth effects that flow from such rights.  Second, both conventional air and water quality are “local” public goods (club goods) rather than private goods, thus individual differences in consumption, the primary method of reducing conflict associated with private goods, are not possible.  Instead, everyone’s varied preferences for environmental goods can only result in one jointly consumed outcome.

One possible impediment to the implementation of market-like solutions to air and water quality is that the initial ownership of property rights to air or water emissions not only has wealth but also efficiency effects.  That is those particular property rights (the right to a pristine environment) are so valuable relative to other assets that their initial allocation alters the willingness of people to pay for them and thus affects how much pollution exists.  In such cases the initial distribution is the whole ballgame because it determines the resulting air- and water- quality levels.

Lobbyists Deal — Easily — with a Changing Congress

On NPR’s “Morning Edition,” Peter Overby discusses the way lobbyists are adjusting to the new Republican Congress. Some are hiring former Republican lawmakers and congressional staff. Some are reminding clients that there are still two parties, as in this nice ad for superlobbyist Heather Podesta, former sister-in-law of White House eminence John Podesta:

OVERBY: Even in a Republican Congress, lobbyists will need to court Democrats, too. Heather Podesta is happy to point that out. She runs her own small Democratic firm.

HEATHER PODESTA: The power of the Congressional Black Caucus has really grown.

OVERBY: In fact, she says CBC members are expected to be the top-ranking Democrats on 17 House committees and subcommittees.

PODESTA: Corporate America has to have entree into those offices. And we’re very fortunate to have the former executive director of the Congressional Black Caucus as part of our team.

After every election, the lobbyists and the spending interests never rest. The challenge for the tea party and for groups such as the National Taxpayers Union is to keep taxpayers even a fraction as engaged as the tax consumers.

In the last analysis, as I’ve written many times before – and in my forthcoming book The Libertarian Mind – the only way to reduce the influence of lobbyists is to shrink the size of government. 

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