Chapter 17: Make Congress wear NASCAR patches

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Make Congress wear NASCAR patches

When I was starting and building small businesses, I never relied on a member of Congress or a government agency to do me a favor or bend the rules. I have never given campaign contributions to politicians in hopes of getting favors that would help my business. I have never hired a lobbyist to try to amend laws that would serve my financial interest. And this is generally true of all the hundreds of thousands of sole proprietors and partnerships and small businesses across America.

But that is not how big-time corporate America operates. To them making large campaign contributions and spending millions of dollars each year on lobbyists is just another investment that pays off handsomely. Their motto (in behavior, if not in fact) is You’ve got to pay to play.

This flood of corporate money and influence in our government makes for a decidedly uneven playing field for businesses as well as taints and corrupts our government. Unfortunately, the trend is moving in the direction of allowing even more money to encroach into our politics, thanks to the Supreme Court. The absolutely necessary solution here is to bring honesty and transparency to our politics.

Former House Speaker Texas Republican Tom DeLay famously took all sorts of goodies from lobbyists when he was a Republican leader in the House of Representatives, ranging from campaign contributions to a golf trip to St. Andrews in Scotland, the (incredibly expensive) “home” of the sport. His major patron was Jack Abramoff, lobbyist, businessman, head of conservative organizations—and criminal, sentenced to prison for felonies related to defrauding Indian tribes and plying politicians with gifts in exchange for political favors.

DeLay even went beyond just taking money and favors from lobbyists. He famously told lobbying firms on K Street in Washington, D.C., that they shouldn’t even bother to show up at his office looking for favors if they had any Democrats working in their offices. In 2005, DeLay was charged with violations of campaign finance laws and money laundering, while two of his former aides were convicted in the Abramoff scandal.

Similarly, former Republican senator Phil Gramm took a few million dollars over the years (and his wife, on Enron’s board of directors, took somewhere between $900,000 and $2 million) from the financial services and energy industries. And then, while still a senator, he slipped into the must-pass 2000 omnibus spending bill a sweet little feature, the 262-page Commodity Futures Modernization Act of 2000 (CFMA), which came to be known as the “Enron loophole.”

The CFMA allowed Enron to squeeze an estimated $40 billion out of California consumers, creating an energy crisis in the state in 2000 and 2001 and a political crisis for Governor Gray Davis that led to his replacement in 2003 by Republican Arnold Schwarzenegger (nominated for the job after he had a private and largely secret meeting with Enron CEO Ken Lay). It also opened the doors for Wall Street to use the new law to “create” what they called “new financial instruments” like credit default swaps, leading directly to the near-worldwide crash of the banking system in 2008.

After leaving Congress, Gramm followed in the footsteps of more than 100 of his colleagues in the past five decades and became a lobbyist himself in 2002, immediately going to work for UBS, a massive Swiss bank that is the world’s second-largest manager of “wealth assets.” In 2009, UBS was accused of helping American millionaires and billionaires evade taxes. The IRS filed a lawsuit in February 2009 alleging that 52,000 Americans secretly held up to $14.8 billion in accounts at UBS to avoid paying U.S. income taxes.[ccxxviii]

As the cases of DeLay and Gramm show (and there are hundreds of similar congressional examples), campaign contributions and lobbying produce healthy returns for major corporations and very rich individuals and families, national or international. Invest a few million, make a few billion. Putting money into the careers of members of Congress, past or present, it turns out, is among the most consistently lucrative investments in the world.

As I noted in my book Unequal Protection, as of 2009 there were roughly 64 registered lobbyists for every member of Congress—more than 34,750 in total—and 138 of them are former members of Congress. Include state lobbyists, and there are more than 60,000 (because of variations in state laws on what is or isn’t a lobbyist, and who and how they should register, this may well be a significant underestimate: nobody really knows the true number).[ccxxix]

Senator Bernie Sanders noted on my radio show during the Senate debates on financial services industry regulation about a decade ago that the banking industry was spending more than $1 million per day on lobbying and had hired more than 250 former members of Congress to lobby their peers, including people who had previously been considered to have highly ethical and spotless reputations like former Democratic presidential candidate Dick Gephardt.

As Jeffrey H. Birnbaum noted in the Washington Post in June 2005, “The number of registered lobbyists in Washington has more than doubled since 2000 to more than 34,750 while the amount that lobbyists charge their new clients has increased by as much as 100 percent. Only a few other businesses have enjoyed greater prosperity in an otherwise fitful economy.”

He added that “lobbying firms can’t hire people fast enough” and that salaries started at $300,000 per year. “Big bucks lobbying is luring nearly half of all lawmakers who return to the private sector when they leave Congress,” Birnbaum noted, citing a study by Public Citizen’s Congress Watch.[ccxxx] The situation has only gotten worse since then.

One of the primary goals of lobbyists is to affect legislation—introduce new bills or amendments, slip in key provisions, kill bills, and so on. But just as important is to affect regulations being considered by myriad federal agencies that could have huge financial impacts on the lobbyists’ corporate clients. So when the lobbyists have friends in the White House, as they did with George W. Bush and Dick Cheney, they actually get to take over the regulatory agencies through appointments.

During the Bush Jr. administration, more than a hundred very well paid lobbyists decided to forsake their big incomes for relatively paltry civil service paychecks for a year or two to become the actual regulators of the agencies they used to lobby.

J. Steven Griles, for example, moved from a $585,000-per- year paycheck as a lobbyist for oil and gas interests to become the number two person in the Department of the Interior, right under Interior Secretary Gale Norton, accepting a salary of $150,000 (a pay cut of $435,000 per year). His department then opened 8 million acres of western lands for oil and gas exploration and gave $2 million in no-bid contracts to one of Griles’s former clients – while Griles continued to receive a four-year $284,000-per-year bonus from his former employer.[ccxxxi]

Griles was also helping Jack Abramoff at the Interior Department (a government prosecutor said Griles was “Abramoff ’s guy at the Interior”); he eventually pleaded guilty to lying to the Senate about his relationship with Abramoff and was sentenced to 10 months in prison and a $30,000 fine.[ccxxxii]

The Denver Post in 2004 looked into the revolving-door phenomenon in the Bush administration, tallying more than 100 “high-level officials under Bush who helped govern industries they once represented as lobbyists, lawyers or company advocates.” The newspaper reported:

“In at least 20 cases, those former industry advocates have helped their agencies write, shape or push for policy shifts that benefit their former industries. They knew which changes to make because they had pushed for them as industry advocates. The president’s political appointees are making or overseeing profound changes affecting drug laws, food policies, land use, clean-air regulations and other key issues.”[ccxxxiii]

Government watchdogs call it a disturbing trend, not adequately restrained by existing ethics laws.

Among the cases the article identified were Charles Lambert, a 15-year lobbyist for the meat industry in its effort to block labeling and mad cow disease investigations, who went to work for the U.S. Department of Agriculture, where he officially determined that mad cow disease wasn’t a threat and shouldn’t be investigated and that meat shouldn’t be labeled with regard to its safety.

Then there was Daniel E. Troy, a lawyer who worked for a lobbying firm representing Pfizer Inc., Eli Lilly & Co., and others in Big Pharma. In 2001 he left the lobbying firm and became the chief counsel for the Food and Drug Administration. Mysteriously, the main focus of the FDA’s position on regulating the drug companies moved “to discourage frivolous lawsuits, which drive up costs,” making it harder for consumers damaged by prescription drug side effects to sue Troy’s former employers.

The Denver Post story also pointed out the case of Thomas A. Scully, a lobbyist who represented HCA, a huge hospital corporation once run by Florida Republican Senator Rick Scott. HCA and Scott were embroiled in a fraud investigation by the federal Centers for Medicare and Medicaid Services (the largest in the history of Medicare), started by a whistleblower. In 2001 Scully left his job to head the CMS. By coincidence, eight months later, the agency worked out a $250 million settlement—which critics said was far too lenient—that kept the feds from looking further into HCA’s books and kept the Justice Department away.

Under pressure from some members of Congress, the settlement was delayed and eventually HCA ended up paying the $250 million plus $631 million in civil penalties. Scully then left the Centers for Medicare and Medicaid Services and went back to work again as a lobbyist for Medicare providers.

Then there was the case of lobbyist Jeffrey Holmstead, who worked at a law firm that represented big utility companies and which had proposed 12 paragraphs of changes in Environmental Protection Agency (EPA) regulations affecting those utilities. Holmstead then went to work for the EPA as a regulator overseeing the air pollution division, and soon thereafter those 12 paragraphs—which would have given a pollution exemption to 168 of 232 western-based power plants—appeared in proposed EPA rules changes.

The case was so blatant that 45 U.S. senators—including three Republicans—and 10 states’ attorneys general wrote a letter asking the EPA to void the proposed rule because of “undue industry influence.” Their complaints were largely ignored by the Bush administration.

Given how lucrative lobbying is as an investment, it’s become a huge business. In February 2010 the Center for Responsive Politics laid out which industries had invested how much in Congress the previous year. Overall it found that in 2009 the number of registered lobbyists who actively lobbied Congress was 13,694 and the total lobbying spending was a whopping $3.47 billion—a 240 percent increase since 1999.

The report showed that the top federal lobbying spending was carried out in 2009 by the health-care sector ($543.9 million); followed by the finance, insurance, and real estate sector ($465 million); and energy and natural resources ($408.9 million). Among the biggest lobbying clients were the U.S. Chamber of Commerce ($144.5 million), ExxonMobil ($27 million), and the pharmaceutical industry group PhRMA ($26 million).

Another example of the toxic and pernicious influence of industry in government was the Deepwater Horizon/BP/ Transocean/Halliburton oil spill in the Gulf of Mexico in April 2010—the largest marine oil spill in history. Both Norway and Brazil allow companies to engage in deep-water offshore drilling, but both of those countries also require by law that companies put blowout preventer devices on all oil wells that can be remotely activated in the event of a catastrophic failure.

When Dick Cheney’s Energy Task Force (comprising Cheney, a few hand-picked bureaucrats, and executives from the fossil fuels industry, meeting in secret behind closed doors) reviewed a suggestion that the United States put into our regulations a similar provision, they dismissed it as “too expensive.” The cost for one of those devices is a paltry $500,000 per well.

It wasn’t always this way. Consider this old Wisconsin statute, broadly representative of laws virtually every state had up until the rise of the robber barons—railroad magnates and other businessmen who became wealthy using anti-competitive and unfair business practices—in the 1880s:

“Political contributions by corporations. No corporation doing business in this state shall pay or contribute, or offer consent or agree to pay or contribute, directly or indirectly, any money, property, free service of its officers or employees or thing of value to any political party, organization, committee or individual for any political purpose whatsoever, or for the purpose of influencing legislation of any kind, or to promote or defeat the candidacy of any person for nomination, appointment or election to any political office.”[ccxxxiv]

The penalty for an individual (representing a corporation) violating such a law was not just a fine but a prison term; and if the corporation itself was found to be violating the law, the penalty could even include the corporate death penalty: dissolution of the corporation.

Reflected in that law (and in similar laws across the nation at the time) is a healthy skepticism of corporate interests and motives and an assumption that those interests are often contrary to the larger public interest.

We’ve gone the wrong way since then, and it’s helped destroy the American Dream for millions.

What we have lost is the moral and ethical view of our civic life and replaced it with a story that says that anything is acceptable so long as it is legally permitted. Campaign contributions, lobbyist wining-and-dining, and revolving-door careers—all are seen as legally permissible and that’s that, end of story, even though these unethical and immoral acts interfere with our fundamental democratic process and are therefore really crimes against the public good.

While lobbying isn’t explicitly illegal in the United Kingdom, it’s seriously frowned upon, particularly when done by former members of the government. In March 2010 the Sunday Times and Britain’s privately owned Channel 4 TV ran a sting operation on former cabinet ministers and members of Parliament by pretending to be a U.S. lobbying firm. The reporters-lobbyists approached 20 former members of Parliament (MPs) altogether, 13 from the Labour Party and seven Conservatives, and used hidden cameras to record the conversations. The offer was for the former MPs to try to influence their associates and to do so for 3,000 to 5,000 British pounds per day in payment as lobbyists.[ccxxxv]

Two out of 20 agreed to do so. No money was paid, no work was done, but the politicians simply agreed to work as lobbyists and use their connections to advance the interests of the (fake) American firm.

When the story hit the newspaper and the hidden camera clips were aired, all hell broke loose. The scandal rocked London. “Ex-ministers in ‘Cash for Influence’ Row under Fire” screamed the headline on the BBC’s Web site, noting that other ministers “have condemned ex-cabinet colleagues who were secretly filmed apparently offering to try to influence government policy in return for cash.”

The day after the story hit, the Labour Party suspended three of the cabinet ministers involved in the investigation. The Guardian newspaper reported:[ccxxxvi]

“Three former cabinet ministers, Geoff Hoon, Stephen Byers and Patricia Hewitt were suspended from the Parliamentary Labour party last night in an unprecedented crack down on sleaze.

“The move was implemented by the party’s chief whip, Nick Brown, and fueled by backbench revulsion at claims that the trio had been using their ministerial experience to seek profit- able lobbying consultancies.”

What’s important to note is the absolute shock expressed by everyone at the basic idea—something we take for granted in America—that politicians would even consider using their connections to make money as lobbyists. The BBC noted in its article that this behavior shocked and horrified even the most senior financial officer in the prime minister’s cabinet. Alistair Darling, the chancellor of the Exchequer (similar to Treasury secretary in the United States), told the BBC:

“The best answer when you get a call like that is to put the receiver back down again. It’s obvious…. But really, what on earth did they think they were doing? And equally for a company, you don’t need a lobbyist. If you’ve got something to say, go directly to the government department and make your case. It’s just ridiculous.”[ccxxxvii]

So how is it that lobbying is widespread in the developing world (where it’s often referred to as “bribery”) but rare in developed countries—except for the United States? The answer has much to do with five corrupt Republicans’ on the U.S. Supreme Court’s interpretation of the “rights” of corporations and its interpretation of our First Amendment, which forbids the government from limiting “free speech,” particularly interpreted to mean political free speech.

Supreme Court rulings notwithstanding, this is definitely not what the Founders of this nation or the Framers of the Constitution had in mind. Numerous legislative solutions to corporations’ corrupting politicians with money or influence have been offered over the years, from the Tillman Act of 1907 to the Bipartisan Campaign Reform Act of 2002, commonly known as McCain-Feingold. All have been weakened or even struck down, in whole or in part, by the corrupt Republicans on the Supreme Court in its defense of the free-speech rights of very wealthy individuals and corporations.

The most powerful lever that lobbyists have is the campaign contribution, since it costs a member of Congress more than $1 million every two years to get reelected and a senator around $6 million (and far more in the very large states).

So for years now, reform efforts have focused on transparency and limits on campaign contributions and on pushing a system of publicly financing elections to take money out of politics. But all of that has been negated by the Supreme Court, and its latest ruling pretty much puts a nail in the coffin of public financing of campaigns. In 2010 in the Citizens United v. Federal Election Commission case, the Supreme Court ruled that corporations—even foreign corporations—and wealthy individuals can spend unlimited amounts of money to influence elections; they just have to spend it independently of the candidate’s or party’s official campaign.

So now if a candidate wants a few million dollars spent for his campaign, all he has to do is get the commitment (informally, of course) from a corporation that it’ll do it. Assuming the corporation keeps its word, this blows up pretty much every strategy anybody has come up with so far to clean up the elections mess in the United States and will probably lead, over the next few years, to an entirely corporate-controlled and beholden Congress.

Because the Supreme Court (with corporate lawyers like John Roberts and former Monsanto attorney Clarence Thomas, with Thomas’s wife working at the corporate- and rich-guy-funded think tank Heritage Foundation) has completely jumped into bed with corporations with the Citizens United ruling, about the only real solutions to this are either amending the Constitution or changing the composition of the Court (through attrition over time in the hopes of a Democrat in the White House or through impeachment, which is extremely unlikely).

But there are other things that we can fix, starting with how we handle our money. Some of this will be helped by having an honest White House and Congress, but other things we can do ourselves right now.

One of the biggest private sectors funneling money into politics these past few years—and causing the revolving door to rotate ever faster—is the financial services industry. As a joint report in late 2009 showed:

“Since the beginning of 2009, organizations in the financial services sector—including banks, investment firms, insurance companies and real estate companies—have commissioned 940 former federal employees as federal lobbyists, Public Citizen’s analysis of data provided by the Center for Responsive Politics shows….”[ccxxxviii]

It is no surprise that financial services corporations are extremely interested in influencing government these days. The financial systems of the United States have been as badly corrupted by corporate influence as have most of our politicians.

Bottom line: Americans could demand that, like NASCAR drivers, our politicians wear corporate logos on their suits as long as the Supreme Court’s Citizens United decision stands. At least we’d know then whose interests they really represent.