“How ‘Public Servant’ Hastert Got His Riches”: An Indictment Of D.C.’s “Revolving Door” Money Culture
Not-so-frequently Asked Questions About the Hastert Indictment.
It’s clear that the indictment of Dennis Hastert has raised more questions than it’s provided answers. But I suspect a lot of people are asking the wrong ones. Hastert’s “misconduct” may turn out to be of sexually predatory nature, in which case talk of how much his reputation is worth is picayune compared the nature of the crime. But there are questions about what he did that are applicable to the entire industry he represents.
The most obvious question, that’s also the least relevant for most Americans: What is the “misconduct” that Hastert is alleged to have been trying to cover up?
This is an important question, to be sure, but indicting Hastert on the financial charges and lying to investigators rather than on whatever misconduct occurred seems to indicate that those charges were the best investigators could come up with. Presumably, if the misconduct was illegal, they’d have mentioned that—and indicted him for it. If the conduct was sexual abuse, as sources are saying, then the statute of limitations has run out. It follows that Hastert wasn’t paying hush money to stay out of jail, he was protecting his reputation.
A better question, and one that many Washington watchdogs leapt on quickly: How did Hastert happen to have enough money lying around that paying out $3.5 million was even within the realm of possibility?
Hastert’s ability to participate in the blackmail is, after all, itself a general indictment of D.C.’s “revolving door” money culture, in which former lawmakers move easily from government into lobbying. In Hastert’s case, the ability to profit off of one’s legislative position is especially galling: While in office, Hastert used the earmarking process to turn his investment in some Illinois farmland into a profit of 140 percent when a federal highway project just happened to make its way through those very fields. Indeed, it was this instance of a completely legal form of insider trading that helped prompt Congress to end earmarks.
And, of course, Hastert made even more money once he was out of office. One study found that, on average—and when the information is publicly available—former lawmakers get a 1,425 percent raise when they make the jump from Capitol Hill to K Street. Hastert, who was worth between $4 million and $17 million when he left Congress, was making $175,000 as a representative. His K Street bump would be to almost $2.5 million a year.
Okay, he made his money as a lobbyist, doing presumably sneaky lobbyist things. That raises the next question: How can Hastert’s reputation even be worth $3.5 million?
Hastert is a former member of Congress known to have profited off of a shady land deal and he’s a registered lobbyist—these are already the two professions that Americans regard as the most disreputable careers available. They are literally last (lobbyist) and second-to-last (congressman) on Gallup’s list of what jobs Americans regard as “honest” and “ethical.” What would one have to do to be thought even less of?
Given the ickiness of what has been reported, it might not be good to think about that question too hard, so let’s turn that question on its head: What kind of reputation could be worth spending $3.5 million to protect?
To consider $3.5 million a reasonable sum to spend on protecting one’s reputation, presumably it has to be worth a lot more than that. And, indeed, in the context of the lobbying world, $3.5 million just isn’t that much money. Especially considering that Hastert was apparently making pay-offs over time. Special interest groups spent almost 1000 times that—$3.2 billion—in 2015 alone. If Hastert viewed protecting his reputation as a kind of investment in future earnings, $3.5 million is on the scale of buying an alarm system for your home, not buying a whole other house.
And, it’s important to remember, what Hastert was covering up with that hush money was not a “reputation” as an average citizen might conceive of it: something akin to honor or trustworthiness or fidelity. A lobbyist’s reputation, after all, actually hinges on his or her established lack of principles. A lobbying client for someone who is a former member of Congress is paying a premium for that person’s willingness to engage in barely-legal favor-trading. A lobbyist’s prices go up the more corrupt he is. Who wants to hire an honest one?
By: Ana Marie Cox, The Daily Beast, May 30, 2015
“Peddling Even More Influence”: Blackwater Lobbyist Will Manage The House Intelligence Committee
After lobbyist-run SuperPACs and big money efforts dominated the last election, legislators are now appointing lobbyists to literally manage the day-to-day affairs of Congress. For the House Intelligence Committee, which oversees government intelligence operations and agencies, the changing of the guard means a lobbyist for Academi, the defense contractor formerly known as Blackwater, is now in charge.
Congressman Devin Nunes (R-CA), the incoming chairman of the Intelligence Committee when the House reconvenes in January, announced that Jeff Shockey will be the new Staff Director of the committee. As a paid representative of Academi, Shockey and his firm have earned $80,000 this year peddling influence on behalf of Academi.
In previous years, the House Intelligence Committee has investigated Blackwater over secret contracts with the Central Intelligence Agency. Now, the shoe is on the other foot. As Staff Director, the highest position on a committee for a staff member, Shockey will oversee the agencies that do business with his former employer.
Shockey also represents a number of other companies with business before defense agencies: General Dynamics, Koch Industries, Northrop Grumman, United Launch Alliance, Innovative Defense Technologies and Boeing.
The role reversal, for lobbyists to take brief stints in Congress after an election, has become normalized. In a previous investigation for The Nation, we found that some corporate firms offer employment contracts with special bonuses for their staff to return to government jobs, ensuring the paycut they receive for passing through the revolving door to become public servants doesn’t have to alter their K Street lifestyle.
Other committees are also hiring lobbyists. Congessman Jason Chaffetz (R-UT), Darrell Issa’s (R-CA) replacement as chair of the Oversight Committee, just hired Podesta Group lobbyist Sean McLaughlin as his new Staff Director. McLaughlin’s client list includes the Business Roundtable, a trade association for corporate CEOs of large firms. Sen. Rob Portman (R-OH) also hired a new chief of staff, Mark Isakowitz, who represents BP.
By: Lee Fang, Public Report, December 19, 2014
“Reared In The Game”: On Our Highest Court, A Former Lobbyist Guts Campaign Finance Reform
For a large and bipartisan majority of Americans, the increasing power of money in politics is alarming, but not for the conservative majority of the United States Supreme Court, whose members appear to regard the dollar’s domination of democracy as an inevitable consequence of constitutional freedom — and anyway, not a matter of grave concern. Expressed in their decisions on campaign finance, which continued last week to dismantle decades of reform in the McCutcheon case, the Court’s right wing sees little risk of corruption and little need to regulate the flamboyant spending of billionaires.
Given the behavior of certain conservative justices, such as Antonin Scalia, Clarence Thomas, and Samuel Alito – who flout the rules that govern partisan behavior among lower-court judges – it is easy to regard their rulings as partisan cynicism. But there is also an element of willful naiveté when the conservatives claim, for instance, that corrupt donations will be exposed by the instant transparency of publication on the Internet. Any reporter who has covered elections can attest that there are dozens of ways for wealthy donors to avoid public scrutiny until it is much too late to matter.
But if right-wingers like Scalia and Thomas are simply pursuing ideological objectives, what about Anthony Kennedy, the Reagan appointee from California who was long seen as a moderating influence and a “swing vote”? On the issue of campaign finance, Kennedy has marched along with the majority, seeming just as fervent in his urge to destroy every regulation and protection against the “malefactors of great wealth” erected since the days of Theodore Roosevelt.
It was Kennedy who wrote the majority opinion in Citizens United, which dismissed the notion that corruption will arise from unlimited political campaign contributions because they will all be disclosed. “Citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests …and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way,” he wrote. “This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”
But if any Supreme Court justice knows how ridiculous that sounds, it must be Kennedy – whose own background as a corporate lobbyist and son of a lobbyist has been forgotten in nearly three decades since his Senate confirmation in 1987.
Yes, Kennedy was a respected appellate court judge before Reagan appointed him to the high court. But before that, he grew up and then worked as an attorney in Sacramento, where his father became a “legendary” lobbyist in a state capital renowned as “freewheeling” (a polite term that means “routinely corrupt”).
His father, Anthony “Bud” Kennedy, was a backslapping, hard-drinking partner in a powerful lobbying law firm run by one Arthur “Artie” Samish, “the “secret boss of California” who finally went to prison on tax charges in the mid-1950s, while young Tony was studying to enter law school. Samish liked to brag that he had amassed more power than anyone else in the state, including the governor, that he could buy any legislator with “a baked potato, a bottle, or a broad,” and that he was able to “unelect” any lawmaker who didn’t vote his way.
The major clients of Samish and Kennedy were racing, entertainment, and liquor interests, notably including Schenley Industries, then run by J. Edgar Hoover’s mobbed-up pal Lewis Rosenstiel. When Bud Kennedy died suddenly in 1963, young Tony was only two years out of law school. But he went into the family business and inherited his late father’s clientele.
While Kennedy always insisted that lobbying was only a “sideline” in his law practice, his billings were substantial – the equivalent of hundreds of thousands or more in today’s dollars. In 1974, he pushed through a bill for Capitol Records that saved the company (and cost the state) millions in sales taxes.
How did he do it? The same way that special interests work their will today – by doling out huge wads of cash to lawmakers on behalf of his clients. The single largest recipient of Kennedy lobbying largesse, according to the Los Angeles Times, was a legislator who introduced a bill to benefit the opticians’ lobby that Kennedy himself had drafted (it passed). He gave that guy alone about $6,500 in campaign contributions over six years, or roughly $40,000 in today’s dollars.
So if anybody on the Court knows how the political and legislative process is greased in this country, that would be Anthony Kennedy. After all, he was reared in the game. And it shouldn’t deceive anyone when he sounds as if he doesn’t understand how things work or who wins in that perverse process – and how everyone else loses.
By: Joe Conason, Editor in Chief, The National Memo; Author, Big Lies: The Right-Wing Propaganda Machine and How It Distorts the Truth; Published in The National Memo, April 4, 2014
“Phony Experts On Retainer”: Fight Over Minimum Wage Illustrates Web Of Industry Ties
Just four blocks from the White House is the headquarters of the Employment Policies Institute, a widely quoted economic research center whose academic reports have repeatedly warned that increasing the minimum wage could be harmful, increasing poverty and unemployment.
But something fundamental goes unsaid in the institute’s reports: The nonprofit group is run by a public relations firm that also represents the restaurant industry, as part of a tightly coordinated effort to defeat the minimum wage increase that the White House and Democrats in Congress have pushed for.
“The vast majority of economic research shows there are serious consequences,” Michael Saltsman, the institute’s research director, said in an interview, before he declined to list the restaurant chains that were among its contributors.
The campaign illustrates how groups — conservative and liberal — are again working in opaque ways to shape hot-button political debates, like the one surrounding minimum wage, through organizations with benign-sounding names that can mask the intentions of their deep-pocketed patrons.
They do it with the gloss of research, and play a critical and often underappreciated role in multilevel lobbying campaigns, backed by corporate lobbyists and labor unions, with a potential payoff that can be in the millions of dollars for the interests they represent.
“It is the way of Washington now — and that is unfortunate,” said John Weaver, a Republican political consultant who has helped run several presidential campaigns. “Because if it’s not dishonest, it’s at least disingenuous.”
In this case, the policy dispute is over whether increasing the minimum wage by nearly 40 percent to $10.10 an hour within two and a half years would reduce poverty or further it.
Even if the legislation never passes — and it is unlikely to, given the political divide in Congress — millions of dollars will be spent this year on lobbying firms, nonprofit research organizations and advertising campaigns, as industry groups like the National Restaurant Association and the National Retail Federation try to bury it. Liberal groups, in turn, will be spending lots of money as they try to make the debate a political issue for the midterm elections.
The left has its own prominent groups, like the Center for American Progress and the Economic Policy Institute, whose donors include nearly 20 labor unions, and whose reports, with their own aura of objectivity, consistently conclude that raising the minimum wage makes good economic sense. But none has played such a prominent and multifaceted role in recent months as the conservative Employment Policies Institute.
The Employment Policies Institute, founded two decades ago, is led by the advertising and public relations executive Richard B. Berman, who has made millions of dollars in Washington by taking up the causes of corporate America. He has repeatedly created official-sounding nonprofit groups like the Center for Consumer Freedom that have challenged limits like the ban on indoor smoking and the push to restrict calorie counts in fast foods.
In recent months, Mr. Berman’s firm has taken out full-page advertisements in The New York Times and The Wall Street Journal and plastered a Metro station near the Capitol with advertisements, including one featuring a giant photograph of Representative Nancy Pelosi, the California Democrat who is a proponent of the minimum wage increase, that read, “Teens Who Can’t Find a Job Should Blame Her.”
These messages, also promoted on websites operated by Mr. Berman’s firm, including minimumwage.com, instruct anyone skeptical about the arguments to consult the reports prepared by the Employment Policies Institute, most often described only as a “nonprofit research organization.”
But the dividing line between the institute and Mr. Berman’s firm was difficult to discern during two visits last week to the eighth-floor office at 1090 Vermont Avenue, a building near the White House that is the headquarters for both.
The sign at the entrance is for Berman and Company, as the Employment Policies Institute has no employees of its own. Mr. Berman’s for-profit advertising firm, instead, “bills” the nonprofit institute for the services his employees provide to the institute. This arrangement effectively means that the nonprofit is a moneymaking venture for Mr. Berman, whose advertising firm was paid $1.1 million by the institute in 2012, according to its tax returns, or 44 percent of its total budget, with most of the rest of the money used to buy advertisements.
Disclosure reports filed by individual foundations show that its donors in recent years have included the Lynde and Harry Bradley Foundation, a longtime supporter of conservative causes. Mr. Berman and Mr. Saltsman would not identify other donors, but did say they included the restaurant industry. But its tax return shows that the $2.4 million in listed donations received in 2012 came from only 11 contributors, who wrote checks for as much as $500,000 apiece.
Mr. Saltsman, 30, who has an undergraduate degree in economics from the University of Michigan and previously worked for the federal Bureau of Labor Statistics, drafts dozens of letters to the editor and opinion articles for newspapers, arguing that increasing the minimum wage would hurt more than help. Other special institute projects included a recent survey of lawmakers who support the minimum wage increase asking if they pay their interns — a report The Daily Caller, a conservative online publication, then released, calling out the lawmakers with unpaid interns as hypocrites.
The major reports released by the institute are prepared by outside academics, like Joseph J. Sabia, an associate professor of economics at San Diego State University, who has collected at least $180,000 in grant money from Mr. Berman’s group over the last eight years to deliver seven separate reports, each one concluding that increasing the minimum wage has caused more harm than good — or at least no significant benefit for the poor.
“There is never a good time to raise the minimum wage,” Mr. Sabia said at a briefing in the Longworth House Office Building late last month that was co-sponsored by the institute, as he laid out the findings of his newest report to Capitol Hill staff members and reporters. “You are not reaching the poor workers you want to help.”
Mr. Sabia said in an interview late last month that his research conclusions were developed independently. “I don’t write advocacy policy briefs,” he said. His papers are also submitted to academic journals, which publish them after a peer-review process — a standard, he noted, that publications put out by left-leaning groups like the Economic Policy Institute often do not meet.
What is clear is that the reports by the Employment Policies Institute are a critical element in the lobbying campaign against the increase in the minimum wage, as restaurant industry groups, in their own statements and news releases, often cite the institute’s reports, creating the Washington echo chamber effect that is so coveted by industry lobbyists.
“Once you have the study, you can point to it to prove your case — even if you paid to get it written,” said one lobbyist, who asked not to be named because his clients rely on him to use this technique.
But some questions have been raised about the institute-funded work. Saul D. Hoffman, a professor of economics at University of Delaware, examined the employment data Mr. Sabia used for a 2012 paper funded in part by the institute. Mr. Hoffman concluded that the narrow cut of data Mr. Sabia picked was perhaps unintentionally skewed, and once corrected, it would have showed that the 2004 increase in New York State’s minimum wage had no negative impact on employment — the opposite of the conclusion the institute had proclaimed in its news releases.
Mr. Berman, 71, a onetime auto mechanic turned labor lawyer and restaurant industry executive, rejected any suggestion that his reports were based on bias or faulty data.
“I get very upset when people say we are putting out junk science and twisted economics, because that happens to be our criticism of other people,” Mr. Berman said in an interview at his office. Yet internal company documents show that members of Mr. Berman’s team — at least when they have been involved in some of the other corporate-backed projects — have discussed ways to massage academic data to change outcomes.
For example, an academic study published by researchers at the University of Southern California concluded that soda had higher concentrations of high-fructose corn syrup than advertised. Mr. Berman’s team, hired by the corn refining industry to defend its sweeteners, mobilized staff at his Center for Consumer Freedom to challenge the results.
“If the results contradict U.S.C., we can publish them,” said an email sent to Mr. Berman and other staff in October 2010 from a Berman employee at the time, referring to the University of Southern California report. The exchange became public recently as a result of a lawsuit between the sugar and corn refining industries. “If for any reason the results confirm U.S.C., we can just bury the data.” Mr. Berman said that the employee who wrote that email left more than a year ago and that such practices were not allowed at the institute.
Left-leaning groups like the Citizens for Responsibility and Ethics in Washington have filed legal complaints, arguing that the large payments to Mr. Berman’s for-profit firm may violate the law, an accusation that Berman and Company strongly disputes.
What is most important, said Lisa Graves, the executive director of an organization responsible for the online publication PR Watch, is that newspapers detail Employment Policies Institute’s corporate ties when they cite research it publishes. Such disclosure happened in less than 20 percent of the cases over a three-year period, an analysis by PR Watch found.
“They are trying to peddle an industry wish list, but mask it as if they are independent experts,” she said. “They are little more than phony experts on retainer.”
By: Eric Lipton, The New York Times, February 9, 2014
“Boy, How Things Have Changed”: We Will All Be Represented By Lobbyists Someday
Today, former Bush operative and tobacco lobbyist extraordinaire Ed Gillespie confirmed he is going to challenge Virginia Senator Mark Warner. This comes on the heels of news Monday that David Jolly, another lobbyist, had won the GOP primary in a special congressional election in Florida. And let’s not forget the victory of Terry McAuliffe, the Democratic lobbyist and second-worst candidate in the Virginia gubernatorial race.
Three examples makes it a trend. But what, if anything, does it herald for the future of American politics? Will Congress eventually be dominated by empty-eyed, gladhanding walking grins whose only skills are flattering the rich and powerful, and raising obscene amounts of money?
The short answer: Yes, so we might as well get used to it.
Congress was never a place where high idealism triumphed. On the contrary, for most of American history it has been dysfunctional, foolish, racist, in thrall to special interests, awash in money, and often stunningly corrupt. But, at the risk of romanticizing the past, it used to be a place that basically functioned, if you define “functioning” as “passing enough legislation to keep the country tottering along, usually after every other possibility was exhausted, and maybe even making things a little better for people every once in awhile.” It was exciting, for boring people at least, a place where ambitious strivers came for a career in political adventure and accomplishment.
But things have changed. Increasingly Congress has stopped doing anything at all, let alone anything positive, and became a place where not blowing up the world financial system for no reason is a success, and passing a budget like responsible countries do on a routine basis counts as a major accomplishment. And even then, everyone hates you for it anyway. Congress has rarely been well-liked, but it keeps setting new records in unpopularity—in November its approval rating was a record-low nine percent. Which only prompted one question: Who are these nine percent of people?
What’s more, the stupendous sums needed for a modern campaign, driven by Citizens United and the unintended consequences of the McCain-Feingold campaign finance reform law, have turned our representatives’ daily lives into one of endless begging for money. After the election, Ryan Grim and Sabrina Siddiqui wrote about the grim experience awaiting newly elected congressmen:
The daily schedule prescribed by the Democratic leadership contemplates a nine or 10-hour day while in Washington. Of that, four hours are to be spent in “call time” and another hour is blocked off for “strategic outreach,” which includes fundraisers and press work. An hour is walled off to “recharge,” and three to four hours are designated for the actual work of being a member of Congress — hearings, votes, and meetings with constituents. If the constituents are donors, all the better…It is considered poor form in Congress — borderline self-indulgent — for a freshman to sit at length in congressional hearings when the time could instead be spent raising money…
“What’s my experience with it? You might as well be putting bamboo shoots under my fingernails,” said Rep. John Larson (D-Conn.), a high-ranking Democrat.
Terry McAuliffe might not be terribly principled. But one thing he can do better than all but a handful of living humans is raise money—thanks to his utter shamelessness. Consider the time he, by his own admission, left his wife and literally newborn son in the car to raise money for the Democrats:
We got to the dinner and by then Dorothy was in tears, and I left her with Justin and went inside. Little Peter was sleeping peacefully and Dorothy just sat there and poor Justin didn’t say a word. He was mortified. I was inside maybe fifteen minutes, said a few nice things about Marty, and hurried back out to the car. I felt bad for Dorothy, but it was a million bucks for the Democratic Party and by the time we got home and the kids had their new little brother in their arms, Dorothy was all smiles and we were one big happy family again. Nobody ever said life with me was easy.
If the lobbyist-turned-politician trend continues, how much will it actually change on the Hill? After all, parties are getting better and better at enforcing ideological discipline. Devoid of any principle except their own advancement, lobbyists will serve as little more than a precisely calibrated measurement of the political influence of various interest groups and pressure groups. So to the extent that the country is well-served by actual ideological competition, lobbyist-politicians will be a reasonable proxy.
That’s the sunniest interpretation imaginable, anyway. Realistically, more lobbyist-politicians means more looted taxpayer cash stuffing plutocrats’ pockets. These brave new politicians won’t, by themselves, destroy the republic, but a Congress dominated by these money vacuums will probably be hell for the American people. Just wait until a grinning President McAuliffe signs the Chinese Lead-Based Toy Deregulation Act of 2024.
By: Ryan Cooper, The New Republic, January 16, 2014
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