Lying, Cheating, and Stealing in the Political System

PART 1: CORRUPTION IN CONGRESS

As promised in the first installment of this blog, we are going to examine the vast tsunami of lying, cheating, and stealing in America. 

It’s a huge topic.  All of our systems--economic, educational, political, etc.--are flooded with corruption.  Our political system is especially vulnerable to corruption, and public approval of Congress is already in single digits, so why not start there?

Members of Congress openly admit that the game is rigged.  Take the financial services industry, for example. One Senator said in a 2009 radio interview that the financial firms are “the most powerful lobby on Capitol Hill. And they, frankly, own the place.”[i]  The financial services industry spent $2.5 billion on federal campaign contributions in the period from 1990 to 2010, more than was spent by the health care, defense, agriculture, and transportation industries all combined, making our Congress today “a forum for legalized bribery.”[ii]

It takes a lot of money to run a campaign in twenty-first-century America. (More on that in Part II.) And after the elections, it takes even more money to keep the dogs in the pen.  Without a continued infusion of greenbacks, a maverick congressperson here or there might stray from the needs of those who put him or her in office and poop somewhere on the carefully manicured political lawn. To make sure that does not happen, an army has assembled: an army of lobbyists.

In 2010, there were 1,900 lobby firms in Washington, DC, with more than 11,000 lobbyists. They earned $3.5 billion that year.[iii]  According to Senate candidate Elizabeth Warren, there are 30 companies that in 2010 spent more on lobbying than they did on their taxes. (Ironically, much of that money was spent trying to reduce tax rates.)[iv]

This is all legal, or at least most of it is, so long as you don’t get caught with a bag of cash in your freezer.  But as a former chairman of the Senate Finance Committee said: “The distinction between a campaign contribution and a bribe is almost a hairline’s difference. You can hardly tell one from the other.”[v]

Possibly the best explanation of how and why all this takes place comes from the insiders. Take, for example, Jimmy Williams, a former Senate staffer and then lobbyist for the National Realtors Association. Williams came clean on the NPR show Planet Money in January 2012.  You can listen to his fascinating tale live here on the NPR podcast.

Lying, cheating and stealing  and managing other kinds of corruption have become essential skills in Congress.  Early in his career, House Speaker John Boehner was known to wander around the house floor passing out checks from the tobacco lobby.  He was finally persuaded that this did not look appropriate.  In his scathing critique, journalist Matt Taibbi said that Boehner was endowed  with all the necessary talents: “He's a five-tool insider who can lie, cheat, steal, play golf, change his mind on command and do anything else his lobbyist buddies and campaign contributors require of him to get the job done.”[vi]

Demonstrating how the experts can corrupt the Congress with consummate skill are two quasi-governmental institutions, known as Fannie and Freddie. The complex and wildly successful efforts by Fannie Mae to control its own destiny through manipulation of Congress and weak regulatory oversight have been the subject of a raft of news articles and books.  The level of control over Congress exerted by Fannie Mae and Freddie Mac--and their benighted allies in the housing lobby--for decades has probably never been surpassed by any other interest group.[vii] They were pathfinders who showed the rest of the business community how complete control over your legislative destiny can be arranged.  For a fee, of course.

In his book, Republic Lost, Harvard Law School Professor Lawrence Lessig argues that corruption in Congress has become so normalized that it is practiced now by otherwise decent people. The average run-of-the-mill congressional representative now actually thinks that corrupt behavior is the standard and necessary way to get things done, so long, of course, as no laws are broken. No longer do we have hidden bribery. Instead, Lessig says, we have influence peddling “transparent to all….which draws democracy away from the will of the people…We have created instead an engine of influence that seeks simply to make those most connected rich.”[viii]

Washington Post reporter Dana Milbank points to an egregious example of what Lessig describes.  Charlie Rangel, a senior New York Democrat, was censured early in 2011 by the House of Representatives for 11 ethics violations.  Less than a year later, in November of 2011, he held a $5,000-a-plate fundraiser for his reelection. The entire Democratic leadership of Congress--Pelosi, Hoyer, Clyburn and many others--attended the event.  These same leaders had pledged only a few years earlier to clean out the stables in the House.  The message of Charlie’s rapid rehabilitation, said Milbank, was: “it’s all just routine.”[ix]

A blatant kind of corruption involves government  grants, loans and contracts.  Members of Congress on the Armed Services Committees can invest in defense contractors and then help ensure that those contractors are first in line for the big contracts. This ploy is not much more sophisticated than hiding cash from bribes in your freezer a la Congressman William Jefferson.

Bribes are passe. Why play footsie with blatant criminal behavior when you can make so much more legally? As a former Tammany Hall politico once said, “There is so much honest graft in this town that [we] would be fools to go in for dishonest graft.”[x]

Making money on investments is all a matter of timing.  If you buy or sell a stock with knowledge that others do not have, you can make a lot of money when the stock rises or falls. If you play the options market, you can make big bets on a rise or fall with little cash outlay.  This works best if you have information available only to you and a few others. This is insider trading when done by brokers and bankers and corporate executives, and it is criminal activity.

On the other hand, members of Congress like former House Speaker Nancy Pelosi were free to invest in a Visa initial public offering while the Congress was considering credit card reform.

Congressman Spencer Bacchus denies that he made options investments based on confidential information gleaned from the Secretary of the Treasury in an urgent confidential briefing, but either he was much smarter than other options investors or he had access to inside information.[xi]

Insider trading by politicians is prohibited by law in Great Britain and the European Union.[xii]  But in the USA, it is legal. Congress considers itself exempt from the SEC’s insider trading rules. Martha Stewart goes to jail for insider trading and our Congressmen go to the bank for the same thing. When a few muckrakers began complaining about the practice, Congress finally started lumbering towards a small "reform."[xiii]

When they do go to the bank, people elected to Congress have a much more peasant trip than ordinary Americans.  They have an uncanny ability to make money, even in bad economic times and despite no increase in their congressional salaries. According to the Washington Post, the median wealth of House Members grew two and a half times between 1984 and 2009 while the wealth of the average American family declined slightly.[xiv] Investigator Peter Schweitzer notes that House Speaker Hastert went from  assets of $170,000 to $11,000,000 during his tenure as Speaker, and in only two years between 2004 and 2006 all members of Congress saw an astonishing increase in wealth of 84%.[xv]

At least one of our founding fathers looked down on this kind of outcome.  Thomas Jefferson wrote that “I have the consolation of having added nothing to my private fortune during my public service, and of retiring with hands as clean as they are empty.”[xvi]  Not many politicians can say that anymore.

The notorious lobbyist Jack Abramoff took corrupting Congressmen to dizzying new heights. He pushed the edge just a little bit too far, however, and wound up in prison. Emerging from prison, Abramoff authored a book explaining how easy it was to manipulate Congressmen and their staffs. All one had to do, he said, was hold out the prospect to Congressional staffers of a future job for them in the lucrative lobbyist world, and they would immediately fall all over themselves to do his bidding.[xvii]

Abramoff  briefly became a media celebrity by telling the story about how Congress really works; in 2011 he threw a huge party to celebrate his new book exposing his corrupt schemes and blowing the whistle on other lobbyists.[xviii]  Abramoff describes in gruesome detail in his book just exactly how Congressmen shake down business people who come in seeking legislative assistance.[xix]  He explained that that he, and everyone else in Washington, clearly realizes that “contributions from parties with an interest in legislation are really nothing but bribes.”[xx] It was routine, he says, for his lobbyist staff to return from meetings with Congressmen with blatant requests for contributions to the Congressman’s favorite charities and even to their reelection campaigns.[xxi]

Clearly the meter is in the red zone when it comes to lying, cheating, and stealing in Congress. Given this level of corruption, it is ironic that so many of the solutions proposed for our national problems rely on Congress to enact curative legislation, but more on that later.

Next:  Part II -- A Broken Electoral System

[i] As reported by Thomas Friedman, NY Times, Oct. 29, 2011.

[ii] Id.

[iii] Thomas Friedman and Michael Mandebaum, That Used to Be Us (2011). See also Robert G. Kaiser, So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government.

[iv] Elizabeth Warren on The Daily Show in an interview with John Stewart, January 24, 2012.

[v] Sen. Russell Long, as quoted in Friedman and Mandebaum, That Used to be Us.

[vi] Matt Taibbi, “The Crying Shame of John Boehner,”  Rolling Stone , Jan 20, 2011.

[vii] The most thorough analysis appears in the book by Gretchen Morgenson and Johua Rosner, Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon.

[viii] Lawrence Lessig, Republic Lost (2011).

[ix] Washington Post, Nov 20, 2011. P. A 23.

[x] Schweizer, Peter, Throw them All Out, (2011). Schweitzer’s book is a virtual treatise on insider trading and other corrupt activities by members of congress who are part of the crony capitalism syndrome.

[xi] On Nov 12, 2011, 60 Minutes  aired an article on insider trading by Members of Congress. Some legal scholars argue that Congress is covered by  SEC rules prohibiting insider trading (Report by Kimberly Kindy in the Washington Post, December 1, 2011, on the testimony of Professor Donna M. Nagy).  Congresswoman Louise Slaughter has sponsored legislation to prohibit insider trading by Members of Congress.  A version of that legislation is finally under consideration by Congress today.

[xii] Schweizer, Ibid.

[xiii] USA Today, Nov 21, 2011, p. 2A.

[xiv] Peter Whoriskey, “Congress Looks Less Like the Rest of America,” Washington Post, Dec. 27, 2011.

[xv] Peter Schweizer, Throw Them All Out.

[xvi] Id.

[xvii] Jack Abramoff, Capitol Punishment, 2011.

[xvii] Washington Post, Nov 17, 2011. P. C2.

[xix] Abramoff, Capitol Punishment, p.65. Abramoff has a wonderful description of how Majority Leader Tom Delay shook down Microsoft in 1995.

[xx] Id. p.90

[xxi] Id., p. 206.

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