Hogs at the Trough…

Fund-raisers held by members of the conference committee during the tax reform debate were hot tickets for tax lobbyists, who eagerly forked over a few hundred — or even a few thousand — dollars for face time with lawmakers who controlled the fate of valued loopholes.


Some sadly business-as-usual quotes from a Times article on the behind the scenes efforts of Washington lobbyists around the Republican 2017 tax bill.


In all, more than half of the 11,000 registered lobbyists in Washington reported working on tax-related issues through the first nine months of the year, according to a report released this month by the nonprofit group Public Citizen.

No matter how convincing the policy analysis or how steady the constituent pressure, though, personal and financial connections to policymakers remained among the most important currency on K Street during the tax debate, as has been the case in legislative battles for decades.

Fund-raisers held by members of the conference committee during the tax reform debate were hot tickets for tax lobbyists, who eagerly forked over a few hundred — or even a few thousand — dollars for face time with lawmakers who controlled the fate of valued loopholes.

Mr. Portman has held fund-raisers in recent weeks, and has another one scheduled for next week at the fashionable Charlie Palmer Steak restaurant across the street from the Capitol. Attendees are being asked to donate $1,000 each through their political action committees or $250 in personal funds, according to an invitation, which bills the event as a “birthday breakfast” for Mr. Portman, whose birthday is the day before the event.

A Republican who attended a fund-raiser late last month for another member of the conference committee, Senator John Cornyn of Texas, said several lobbyists asked the senator about tax reform. Mr. Cornyn kept his responses vague, telling attendees that he was hopeful that the process could be completed before Christmas.

Source: NYTimes 12/16/17.


Self-Dealing Elites

one important factor is the capture of the American political system by powerful insiders — big businesses, elite professionals, wealthy homeowners — that use it to entrench their own economic power.

Charles Nast - Boss Tweed

Our predicament of slow growth and sky-high inequality has many causes, but one important factor is the capture of the American political system by powerful insiders — big businesses, elite professionals, wealthy homeowners — that use it to entrench their own economic power. In so doing, they protect themselves from competition, fatten their bank accounts with diverted wealth and slow the creative destruction that drives economic growth.

Four key policy areas shed light on the growth of this political-economic swamp — financial regulation, intellectual property, occupational licensing and zoning.

NYTimes  11/26/17.

Self-Dealing by the Professional Class (Quelle Surprise!)

Christopher Hayes’ Twilight of the Elites surveyed American elites’ – corporate leaders, government, professionals such as lawyers and doctors, and the media — self-dealing and failure to live up to their claims to be “acting on behalf of all citizens.”  While his critique of the hypocritical claims of various elite groups rings true, his remedies were pale and under-powered for the problem.  Nevertheless, we clear evidence of elite self dealing from this NYTimes article.

Importantly, “elites” are potentially a broader slice of the income hierarchy than the 1%. Richard Reeves argues that the top-20% are leaving the rest of American behind.

Based on an analysis of the “top 1%” of industrial countries, the only place where the top-1% has gained more since 1980 relative to the rest of the population is the kleptocracy, Russia (see charts below).

Where 1 Percent have gained most NYT 2017-11-24

“Almost all of the growth in top American earners has come from just three economic sectors: professional services, finance and insurance, and health care, groups that tend to benefit from regulatory barriers that shelter them from competition.

The groups that have contributed the most people to the 1 percent since 1980 are: physicians; executives, managers, sales supervisors, and analysts working in the financial sectors; and professional and legal service industry executives, managers, lawyers, consultants and sales representatives.

Without changes in these largely domestic services industries — finance, health care, the law — the United States would look like Canada or Germany in terms of its top income shares.”

Others are noticing these trends. A new book, “The Captured Economy” by Brink Lindsey and Steven Teles, argues that regressive regulations — laws that benefit the rich — are a primary cause of the extraordinary income gains among elite professionals and financial managers in the United States and of a reduction in growth.

This year, the Brookings Institution’s Richard Reeves wrote a book about how people in the upper middle class have shaped both legal and cultural norms to their advantage. From different perspectives, Joseph Stiglitz, Robert Reich and Luigi Zingales have also written extensively about how the political power of elites has undermined markets.”


Problems cited by these analysts include subsidies for the financial sector’s risk-taking; overprotection of software and pharmaceutical patents; the escalation of land-use controls that drive up rents in desirable metropolitan areas; favoritism toward market incumbents via state occupational licensing regulations (for example, associations representing lawyers, doctors and dentists that block efforts allowing paraprofessionals to provide routine services at a lower price without their supervision).

These are just some of the causes contributing to the 1 percent’s high and rising income share. Reforming relevant laws can make markets more efficient and egalitarian, and in contrast with trade, immigration and technology, the political causes of the 1 percent’s rise are directly under the control of citizens.

Elite Professional Premium - NYT - 2017-11-24

Leaky Democracy

Pipe Leak

If we could trust our elites, then we can all probably agree that leaking is bad. The problem is we cannot trust our elites and the institutions of our democratic society.

Leaks hurt the powers that be, who run our government. Leaks can help our enemies, who wish us ill or harm.  Regardless of the leaker’s intentions, the leaked information can take on a life of its own with unintended (positive or negative) consequences.

In my lifetime there have been several cases that illustrate the tension between the legitimate right of a state to maintain secrets in a dangerous world and that same democratic state’s citizens’ rights to transparency into what their agents are doing.  A short-list appears at the bottom of this post.

The John Raines’ obituary in the 11/19/17 New York Times describes one such leak, the leakers’ intentions, and the ramifications.   John Raines, professor at Temple University, anti-Vietnam war activist, burglar, disseminator of secret information, and a central actor in revealing the falsity of our nation’s mid-century inherent trust in government institutions.

A short list of leaks that demonstrate the tension between secrecy and democracy.

  • (1971) Daniel Ellsberg releasing the Pentagon Papers – a Pentagon-sponsored secret history of the US involvement in the Vietnam war, that made clear US policy makers had been lying to the American public for years.
  • (1971) Unnamed Anti-war Burglars who broke into a suburban Philadelphia FBI office, copied the files on the FBI’s domestic spying efforts, and revealed the COINTELPRO program that led to the US Senate Church Committee on Foreign and Military Espionage, exposed the J. Edgar Hoover’s FBI’s dirty tricks campaign against US civil rights and anti-war groups and bungling spy efforts, such as colluding with US mafia figures to hire hit men to assassinate Fidel Castro.
  • (1972) Watergate.  “Deep Throat“, who turned out to be an Deputy Director of the FBI, leaking investigative information to the Washington Post reports Woodward and Bernstein, to further the investigation of President Richard Nixon’s White House “Plumbers” dirty tricks and illegal slush fund activities.
  • (1996) Iran-Contra affair was revealed by foreign and domestic leaking of information about the Reagan administration’s secretly transfer of arms for cash with our sworn enemies the Iranians to fund their illegal efforts to support the US-backed Contra rebels in Nicaragua.
  • (2003) Seymour Hersch’s articles on US military prisoner torture at Abu Ghraib, resulting in the exposure of unethical and illegal practices by US military and intelligence agency operatives on our “war on terror”.
  • (2005) Warrantless Wiretapes – a subversion of our Fourth Amendment protections against illegal searches and seizures – was revealed by a leaker, who later turned out to be a Justice Dept. official.
  • (2011) Chelsea Manning released thousands of documents to Wikileaks, that documented a far higher level of civilian casualties in the war than the Pentagon was acknowledging publicly. This included aerial footage of a US military missile strike and killing of a TV news crew.  Deaths the Pentagon had previously denied.
  • (2013) Edward Snowden’s leaking National Security Agency (NSA) surveillance program information, revealing the breadth of US intelligence agency foreign and domestic electronic eavesdropping.


Where the Big Money Comes From

[Contributors] are overwhelmingly white, rich, older and male….

Just 158 families, along with companies they own or control, contributed $176 million in the first phase of the campaign….

They are overwhelmingly white, rich, older and male, in a nation that is being remade by the young, by women, and by black and brown voters. Across a sprawling country, they reside in an archipelago of wealth, exclusive neighborhoods dotting a handful of cities and towns. And in an economy that has minted billionaires in a dizzying array of industries, most made their fortunes in just two: finance and energy.

This New York Times article analyzed major early campaign contributors (individuals and PACs).  The graphic of Monopology houses shows the distribution of these interests.wealthy-campaign-contributors


And below is a map of where those wealthy donors come from. If money = influence, then the map below demonstrates that influence ≠ votes.


And what do the rich donors get for their access and influence?  One answer appears to be an generous tax code rewrite, as suggested in the below chart and more fully discussed in this article, that starts with a statement that would only shock the naive and the corrupt:

The very richest are able to quietly shape tax policy that will allow them to shield billions in income.