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Posts Tagged ‘Sleaze’

I very much suspect Obama partisans and Trump partisans won’t like this column, but the sad reality is that both Obamacare and Trump’s protectionism have a lot in common.

  • In both cases, government is limiting the freedom of buyers and sellers to engage in unfettered exchange.
  • In both cases, the fiscal burden of government increases.
  • In both cases, politicians misuse statistics to expand the size and scope of government.

Today, let’s add another item to that list.

  • In both cases, the Washington swamp wins thanks to increased cronyism and corruption.

To see what I mean, let’s travel back in time to 2011. I wrote a column about Obamacare and cited some very persuasive arguments by Tim Carney that government-run healthcare (or, to be more accurate, expanded government control of healthcare) was creating a feeding frenzy for additional sleaze in Washington.

Congress imposes mandates on other entities, but gives bureaucrats the power to waive those mandates. To get such a waiver, you hire the people who used to administer or who helped craft the policies. So who’s the net winner? The politicians and bureaucrats who craft policies and wield power, because this combination of massive government power and wide bureaucratic discretion creates huge demand for revolving-door lobbyists.

I then pointed out that the sordid process of Obamacare waivers was eerily similar to a passage in Atlas Shrugged.

Wesley Mouch…issued another directive, which ruled that people could get their bonds “defrozen” upon a plea of “essential need”: the government would purchase the bonds, if it found proof of the need satisfactory. …One was not supposed to speak about the men who…possessed needs which, miraculously, made thirty-three frozen cents melt into a whole dollar, or about a new profession practiced by bright young boys just out of college, who called themselves “defreezers” and offered their services “to help you draft your application in the proper modern terms.” The boys had friends in Washington.

Well, the same thing is happening again. Only this time, as reported by the New York Times, protectionism is the policy that is creating opportunities for swamp creatures to line their pockets.

The Trump administration granted seven companies the first set of exclusions from its metal tariffs this week and rejected requests from 11 other companies, as the Commerce Department began slowly responding to the 20,000 applications that companies have filed for individual products. …several companies whose applications were denied faced objections from American steel makers. …companies that have applied for the exclusions criticized the exercise as both long and disorganized. “This is the most screwed-up process,” said Mark Mullen, president of Griggs Steel, a steel distributor in the Detroit area. “This is a disservice to our industry and the biggest insult to our intelligence that I have ever seen from the government.”

From an economic perspective, it certainly is true that this new system is “disorganized” and “a disservice” and an “insult to our intelligence.” Those same words could be used to describe the welfare state, the EEOC, farm subsidies, the tax code, and just about everything else the government does.

But there’s one group of people who are laughing all the way to the bank, The lobbyists, consultants, fixers, and other denizens of the swamp are getting rich. Whether they’re preparing the applications, lobbying for the applications, or lobbying against the applications, they are getting big paychecks.

And the longer this sordid protectionist process continues, we will see a repeat of what happened with Obamacare as senior-level people in government move through the revolving door so they can get lucrative contracts to help clients manipulate the system (yes, Republicans can be just as sleazy as Democrats).

Washington wins and we lose.

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Ordinary Americans have a low opinion of Washington, but they’re underestimating the extent of the problem.

The nation’s capital is basically a playpen for special interests. It’s now the richest region of the country, with lobbyists, bureaucrats, contractors, politicians, and other insiders and cronies getting fat and happy thanks to money that is taken from people in the productive sector of the economy.

Republicans play the game and Democrats play the game, with both sides getting undeserved wealth at our expense.

Let’s take an up-close look at how this sordid game is played.

Here are some excerpts from a column by Catherine Rampell in today’s Washington Post.

The GOP is no longer the Party of Reagan. It’s the Party of Michael Cohen. …the Cohen blueprint for achieving the American Dream: Work minimally, if you can, and leverage government connections whenever possible. …following Donald Trump’s unexpected presidential victory, Cohen cashed in. …Cohen told companies that he could provide valuable “insights” into the new administration. Huge multinational corporations lined up to purchase these “insights,” dumping millions into Essential Consultants LLC… Cohen is hardly the only prominent Trumpster invoking White House connections… Cabinet members and other senior government officials, too, have enjoyed a sweetheart apartment deal, lobbyist-arranged vacations and private jet rides. These are not amenities secured through brains, honesty and hard work, the virtues that Republicans traditionally say are required for upward mobility and financial comfort. They are the fruits of luck, cronyism and a loose approach to ethical lines.

This is disgusting. Republicans often come to Washington claiming they’re going to “drain the swamp.” Many of them, however, quickly decide it’s a hot tub.

But don’t forget that sleaze is a bipartisan activity in Washington.

Here are excerpts from a Wall Street Journal report about influence-peddling on the other side of the aisle.

Tony Podesta was in line to be king of K Street. His lobbying firm ended 2015 as the third largest in Washington, D.C., with nearly $30 million in revenue from more than 100 clients, spanning Alphabet Inc.’s Google to Wells Fargo & Co. With his longtime friend Hillary Clinton expected to win the White House, 2016 promised to be even better. Mr. Podesta…hosted lawmakers and power brokers at his flat in Venice during the Art Biennale. It was one of many homes around the globe, including the Washington mansion where he displayed a collection of museum-grade artwork. In early 2016, he was ready to buy a $7.4 million condo overlooking Madison Square Park in New York City. …At age 59, he married Heather Miller, a congressional staffer 26 years younger. …Mrs. Podesta started her own lobbying firm, Heather Podesta + Partners, and they emerged a Washington power couple. …Mr. Podesta drew an annual salary of more than $2 million and made millions more in commissions and bonuses. …The Podesta Group grew from the 20th largest lobbying firm to third in three years, in terms of domestic and foreign lobbying revenues, propelled by business during President Barack Obama’s first term.

But this story of graft and corruption has a happy ending.

Then he fell, a calamitous collapse… The Podesta Group lost its banker over news the firm did work for the U.S. subsidiary of a Russian bank under sanctions. …Mrs. Clinton’s…victory would go a long way to fixing many of his problems. She lost…and Mr. Podesta, like many who had banked on her victory, did too. Clients who had hired him for access to a new Clinton administration fell away. By the end of the year, the departures cost the firm more than $10 million in annual business… the Podesta Group did public relations work in 2015 for Raffaello Follieri, an Italian businessman who had pleaded guilty to swindling millions of dollars from an investment fund run partly by Mr. Clinton, one of Mr. Podesta’s early patrons. …Before closing the firm’s doors, Mr. Podesta gave himself an advance on his lobbying commissions.

The common theme, as explained by Karen Tumulty for the Washington Post, is that D.C. is an utterly corrupt place.

…the game in Washington never really changes. The only things that shift from election to election are the most sought-after players. …When Trump won, the traditional rosters of lobbyists — ex-congressmen, lawyers from white-shoe firms, former congressional staffers — were of little use in figuring out and gaining access to a band of outsiders who came to town vowing to demolish the old order. Cohen was not the only Trump insider to see a chance to cash in… The president’s former campaign manager, Corey Lewandowski, along with former Trump aide Barry Bennett, also opened a consulting firm, which quickly had more business than it could handle. “It was like shooting fish in the barrel,” Bennett told The Post. …Nor is Team Trump unique in seizing these opportunities. President Barack Obama had not been in office a month before his 2008 campaign manager, David Plouffe, was paid $50,000 to give a speech in Azerbaijan to a group with close ties to that repressive government. …Washington continues to have a most durable ecosystem: The swamp is never drained; it just gets taken over by different reptiles.

Utterly nauseating.

But allow me to point out that lobbying isn’t inherently bad. And neither are campaign contributions. It all depends on the reason.

If a company hires a lobbyist or give cash to a politician because it wants handouts or government intervention that will produce unearned profit, that’s wrong. Sort of like being a co-conspirator to a crime.

However, if a company hires a lobbyist and donates money because it is fighting tax hikes or new regulatory burdens, that’s noble and just. Sort of like engaging in an act of self-defense.

But wouldn’t it be wonderful if there wasn’t a need for either the bad type of lobbying or the good type of lobbying?

Richard Ebeling, a professor at the Citadel, offers a very good solution in a column for the Foundation for Economic Education. He starts by explaining that government and corruption have always been connected.

The corruption of government officials seems to be as old as recorded history. …the ancient Roman senate passed laws against such political corruption in the first century, B.C. …Emperor Constantine issued one of the strongest decrees against corruption during this time in A.D. 331. …Today, high levels of political corruption remain one of the major problems people confront around the world. …Political corruption, clearly, is found everywhere around the world… Why?

Richard answers his own question, pointing out that big government is a major enabler of corruption.

Part of the answer certainly…can be found in the relationship between the level of corruption in society and the degree of government intervention in the marketplace. In a generally free market society, …government officials have few regulatory or redistributive responsibilities, and therefore they have few special favors, privileges, benefits, or dispensations to “sell”… The smaller the range of government activities, therefore, the less politicians or bureaucrats have to sell to voters and special interest groups. And the smaller the incentive or need for citizens to have to bribe government officials to allow them to peacefully go about their private business and personal affairs. …On the other hand, the…interventionist state…taxes the public and has huge sums of money to disburse to various programs and projects. It imposes licensing and regulatory restrictions on free and open competition. It transfers great amounts of income and wealth to different groups through sundry “redistributive” schemes. …Those in the government who wield these powers hold the fate of virtually everyone in their decision-making hands. It is inevitable that those drawn to employment in the political arena often will see the potential for personal gain… The business of the interventionist state, therefore, is the buying and selling of favors and privileges. It must lead to corruption because by necessity it uses political power to harm some for the benefit of others, and those expecting to be either harmed or benefited will inevitably try to influence what those holding power do with it.

So what’s the bottom line?

Ending global political corruption in its various “petty” and “grand” forms, therefore, will only come with the removal of government from social and economic life. When government is limited to protecting our lives and property, there will be little left to buy and sell politically.

Amen. That’s the message I also shared in this video from the Center for Freedom and Prosperity.

Sadly, Donald Trump’s promises to “drain the swamp” don’t seem to have been very sincere. Earlier this year, he meekly acquiesced to a budget deal that produced a feeding frenzy among the swamp creatures.

How is that any different from what would have happened if Hillary Clinton was in the White House? Big government doesn’t magically become less harmful and corrupt just because Republicans are in charge.

Indeed, there’s some hard evidence the problem actually becomes worse.

As Ms. Tumulty wrote, “Same swamp, different reptiles.”

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Whether I like what’s happening (getting rid of Operation Choke Point) or don’t like what’s happening (expanding civil asset forfeiture), it appears that the Justice Department under Attorney General Jeff Sessions is willing to make decisions.

With one very puzzling exception.

No steps have been taken to reverse the Obama-era policy of stonewalling to hide evidence of IRS scandals. Everything seems to be on auto-pilot.

The Wall Street Journal opined about the issue today and is justifiably frustrated.

The Obama Justice Department dismissed the IRS political targeting scandal as no big deal, and the Trump Administration hasn’t been any better. …These are basic questions of political accountability, even if the IRS has stonewalled since 2013. President Obama continued to spin that the targeting was the result of some “boneheaded” IRS line officers in Cincinnati who didn’t understand tax law. Yet Congressional investigations have uncovered clear evidence that the targeting was ordered and directed out of Washington. Former director of Exempt Organizations Lois Lerner was at the center of that Washington effort, but the IRS allowed her to retire with benefits. She invoked the Fifth Amendment before Congress. One of her principal deputies, Holly Paz, has submitted to a deposition in separate litigation, but the judge has sealed her testimony after she claimed she faced threats. The Acting Commissioner of the IRS at the time, Stephen Miller, stepped down in the wake of the scandal, but as far as anyone outside the IRS knows, no other IRS employee has been held to account. Even if the culprits were “rogue employees,” as the IRS claims, the public deserves to know what happened. …The Trump Administration also has a duty to provide some answers. The Justice Department and IRS have continued to resist the lawsuits as doggedly as they did in the Obama era. Attorney General Jeff Sessions can change that… Seven years is too long to wait for answers over abuses of the government’s taxing power.

This is spot on. It’s outrageous that the Obama Administration weaponized and politicized the IRS. But it’s also absurdly incompetent that the Trump Administration isn’t cleaning up the mess.

I understand why the bureaucrats at the Justice Department instinctively (and probably ideologically) want to protect their counterparts at the IRS. But, as the WSJ stated, there’s no reason why Attorney General Sessions isn’t using his authority to change policy.

The President’s failure to fire the ethically tainted IRS Commissioner is a troubling sign that the problem isn’t limited to the Justice Department.

One of Republicans’ least favorite Obama administration officials remains in his position: IRS Commissioner John Koskinen. Some Republicans lawmakers have asked President Trump to ask for Koskinen’s resignation. The commissioner’s term expires in November, but he has said he would step aside sooner if asked by the president. …Koskinen to lead the IRS in 2013, not long after it was revealed that the agency had subjected Tea Party groups’ applications for tax-exempt status to extra scrutiny and delays. …Many Republicans accuse Koskinen of impeding congressional investigations into the political-targeting scandal. They argue that he made false and misleading statements under oath and didn’t comply with a subpoena. During the last months of Obama’s presidency, some House Republicans pushed for a vote on Koskinen’s impeachment… Since Trump has taken office, there have been calls from GOP lawmakers for Koskinen to step down. Days after Trump’s inauguration, Republican Study Committee (RSC) Chairman Mark Walker (R-N.C.) and more than 50 other lawmakers sent a letter urging Trump to fire Koskinen “in the most expedient manner practicable.” …It’s unclear why Trump hasn’t ousted Koskinen or if he plans to do so in the future.

Very disappointing. I’m not a fan of conspiracy theories, but this almost leads me to wonder whether Koskinen has some damaging information on Trump.

Incidentally, the Justice Department may be dragging its feet and the White House may have cold feet, but the Treasury Department is overtly on the wrong side. And the problem starts at the top, resulting in praise for the Treasury Secretary from the pro-IRS forces at the New York Times.

President Trump’s Treasury secretary, Steven Mnuchin, knows that investing in the Internal Revenue Service yields significant returns… And he’s right: Every dollar spent on the agency returns $4 in revenue for the federal government, and as much as $10 when invested in enforcement activities. …At his confirmation hearings in January, Mr. Mnuchin bemoaned the cuts to the I.R.S. budget over the last seven years. The agency “is under-resourced to perform its duties,” he said, adding that further cuts “will indeed hamper our ability to collect revenue.” He also acknowledged that money spent on the I.R.S. is a good investment: “To the extent that we add resources, we can collect more money.” …his faith in the I.R.S. work force prompted one of his congressional interrogators to call it “refreshing” to hear someone “praise the employees at the Treasury Department.”

Yet should we give more money to a bureaucracy that has a big enough budget to finance this kind of reprehensible behavior?

The Internal Revenue Service has seized millions of dollars in cash from individuals and businesses that obtained the money legally, according to a new Treasury Department inspector general’s report. …individuals and businesses are required to report all bank deposits greater than $10,000 to federal authorities. Intentionally splitting up large sums of cash into sub-$10,000 amounts to avoid that reporting requirement is known as “structuring” and is illegal under the federal Bank Secrecy Act. But many business owners engaged in perfectly legal activities may be unaware of the law. Others are covered by insurance policies that don’t cover cash losses greater than $10,000. Still others simply want to avoid extra paperwork, and keep their deposits less than $10,000 on the advice of bank employees or colleagues. …The reporting requirements were enacted to detect serious criminal activity, such as drug dealing and terrorism.

I’m very skeptical that these intrusive anti-money laundering laws are successful by any metric, but I’m nauseated that the main effect is to give IRS bureaucrats carte blanche to steal money from law-abiding people.

The IRS pursued hundreds of cases from 2012 to 2015 on suspicion of structuring, but with no indications of connections to any criminal activity. Simply depositing cash in sums of less than $10,000 was all that it took to arouse agents’ suspicions, leading to the eventual seizure and forfeiture of millions of dollars in cash from people not otherwise suspected of criminal activity. The IG took a random sample of 278 IRS forfeiture actions in cases where structuring was the primary basis for seizure. The report found that in 91 percent of those cases, the individuals and business had obtained their money legally.

But here’s the part that’s most outrageous.

Innocent people weren’t the byproducts of a campaign to get bad guys. They were the targets.

…the report found that the pattern of seizures — targeting businesses that had obtained their money legally — was deliberate. “One of the reasons why legal source cases were pursued was that the Department of Justice had encouraged task forces to engage in ‘quick hits,’ where property was more quickly seized and more quickly resolved through negotiation, rather than pursuing cases with other criminal activity (such as drug trafficking and money laundering), which are more time-consuming,” according to the news release. In most cases, the report found, agents followed a protocol of “seize first, ask questions later.” Agents only questioned individuals and business owners after they had already seized their money.

In any event, the Trump Administration’s failure to deal with the problem seems to have emboldened the tax collection agency.

Despite promises to Congress, the Internal Revenue Service has yet to take advantage of a red-flag alert system designed to prevent it  from rehiring past employees with blots on their records, a watchdog found. …the Treasury Inspector General for Tax Administration found that more than 200 of 2,000-plus former employees “whom the IRS rehired between January 2015 and March 2016 had been previously terminated or separated from the tax agency while under investigation,” according to a report released on Thursday.

And keep in mind that IRS bureaucrats awarded themselves big bonuses in response to the scandal.

By the way, the problem isn’t limited to the executive branch.

Republicans in 2015 (after they had control of both the House and Senate!) decided that the best response to IRS scandals was to increase the agency’s budget. I’m not joking (and I’m also not happy). At the risk of being redundant, only the Stupid Party could be that stupid.

I sarcastically wrote four years ago that we should be thankful that Obama reminded the American people that the IRS isn’t trustworthy. Little did I realize that Republicans would fumble a golden opportunity to deal with the mess once they got power.

P.S. I’ve certainly done my part to explain why the IRS bureaucracy deserves scorn.

P.P.S. I don’t want to end on a sour note, so here’s more examples of IRS humor from my archives, including a new Obama 1040 form, a death tax cartoon, a list of tax day tips from David Letterman, a cartoon of how GPS would work if operated by the IRS, an IRS-designed pencil sharpener, two Obamacare/IRS cartoons (here and here), a sale on 1040-form toilet paper (a real product), a song about the tax agency, the IRS’s version of the quadratic formula, and (my favorite) a joke about a Rabbi and an IRS agent.

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When I write about the actions of state governments, it’s usually to highlight a specific bad policy. As you can imagine, states like California, Connecticut, Illinois, New York, and New Jersey give me a never-ending amount of material.

But I frequently run across things that are happening in the states that don’t really merit an entire column, but they nonetheless are worthy of attention since they symbolize the venality and incompetence of politicians.

So I’ve decided that it’s time for a series on “great moments in state government” to augment my already well-developed series on “great moments in local government.”

Let’s start by looking at a truly bizarre example of occupational licensing from Tennessee.

A decade ago, Martha Stowe founded True Equine, an equine-services company, a few miles south of Nashville, Tenn., in Williamson County. After earning a certificate in equine myofascial release, a massage technique that releases tension and pain in a horse’s body, Martha soon acquired a large clientele. …In April 2016, however, Stowe’s well-established business was upended when she received a threatening letter from the Board of Veterinary Medical Examiners, a board within Tennessee’s Department of Health. Only licensed veterinarians are permitted to massage horses, the board’s attorney explained, and if Stowe continued to practice myofascial release, she could be fined up to $500 and receive a six-month jail sentence. …The board also sent the letter to fellow Williamson County resident Laurie Wheeler, a professional jazz musician and licensed massage therapist who, like Stowe, is certified in equine myofascial release. …Upon receiving the veterinary board’s letter, Wheeler was stunned — after all, she was certified, and not only that, she had never even accepted money for her services. But, she says, the government threatened to “fine me and put me in jail for voluntarily working on animals.” For Wheeler, helping horses is more than a volunteer position or an occupation; it’s a call to duty.

But there is some good news.

A pro-market think tank is helping the women fight back.

Both women disregarded the veterinary board’s warnings and subsequently looked to the Beacon Center of Tennessee, a free-market think tank, for legal representation. According to Braden Boucek, director of litigation for the Beacon Center, the board’s decision to allow only licensed veterinarians to massage horses is a violation of the U.S. Constitution’s equal-protection clause. Moreover, because the Constitution protects private property, which in turn protects the right to acquire property and the right to earn a living, the board’s decision violates the 14th Amendment. …Threatening to jail an individual for massaging a horse is absurd. These women aren’t giving medical advice to owners, or surgically operating on horses, or doing anything that only a licensed veterinarian could do. Remember, this kind of massage is not even taught in veterinary school. Under Tennessee’s logic, why shouldn’t massage therapists who practice exclusively on people be required to hold a medical degree? The veterinary board ought to take the necessary steps to begin updating this illogical statute. If it doesn’t, it will need to explain in court why it’s permissible to deprive Stowe and Wheeler of their fundamental constitutional rights.

Amen. I admire Tennessee for not having an income tax. It’s time, though, for the Volunteer State to extend economic freedom to horse masseurs.

Now let’s shift to Wisconsin, where we have another example of cronyism.

State lawmakers may be brave when it comes to curtailing special privileges for government employees, but they like special protections for private industry.

Wisconsin state regulators…[are]…banning state grocery stores from selling one of the Emerald Isle’s most popular (and tasty) products: Kerrygold butter. Never mind that Wisconsinites have been buying Kerrygold for years with no problems. Or that it remains legal in the 49 other states. Badger State bureaucrats, trying to protect the state dairy industry, are suddenly enforcing a 1970 law that requires all butter sold in the state to go through a complicated evaluation by a state panel. This is the same state that once banned margarine because it was a competitive threat to local dairies. …as a result of the ban, Kerrygold-loving Wisconsinites have been forced to make butter runs across the state border, bringing back suitcases stuffed with the import. In Ireland, meanwhile, the ban is leading to headlines such as this in the Irish Mirror: “Shopkeepers in Wisconsin could face JAIL if they sell Kerrygold butter.”

Maybe butter consumers in Wisconsin can fly to Norway and learn how to get around misguided policies that make butter a black-market commodity.

Remember, if you outlaw butter, only outlaws will have butter.

Now let’s look at some onerous government intervention in my state of Virginia. And this one is personal since I don’t like the hassle of annual vehicle inspections.

…my annual Virginia motor vehicle safety inspection was due in a month. I knew my car wouldn’t pass and that I wouldn’t be allowed to stay on the road with that light on. Never mind that the light has nothing to do with the safe operation of the vehicle. And also never mind that in a 2015 study the Government Accountability Office “examined the effect of inspection programs on crash rates related to vehicle component failure, but showed no clear influence.” AAA Public Affairs Vice President Mike Wright said, “Nobody can prove with any degree of certainty that spending the money, suffering the inconvenience of getting your vehicle inspected, actually produces desired results.” …Virginia has a personal vehicle safety program overseen by the state police that cannot be shown to enhance public safety. The people who perform inspections are often the same people who fix any identified deficiencies. …A government program that requires the purchase of a good or service in return for a nonexistent public benefit is illiberal and anti-consumer. Two-thirds of states see no need to impose the burden of annual personal vehicle safety inspections on their citizens; Virginia should end its inspection requirement.

For what it’s worth, the People’s Republic of the District of Columbia doesn’t have this requirement. Kind of embarrassing that Virginia is more interventionist.

Our final example come from Illinois, where a local newspaper has a superb editorial on a sordid example of wasteful sleaze in the state budget.

Let’s eliminate the Illinois Arts Council Agency from the state budget. They must have taken lessons on government efficiency from our local townships, spending $1 million on staff and overhead in 2016 to hand out $834,900 in grants. The council is chaired by Shirley Madigan, who has been in that position since 1983. Funny, her husband, Mike, has been Illinois House Speaker since then, too. …guess who gets the money? Their well-heeled friends. Madigan’s alma mater received $95,100, another board member’s employer received $165,650 and yet another board member’s pet opera company received $503,000. Surprise! …Illinois Gov. Bruce Rauner has an opportunity to let someone else be a matron of the arts and appoint a majority of board members dedicated to either eliminating the council or at least making it a transparent organization that helps local artists rather than makes your taxes a minor revenue source for well-connected, large arts institutions.

Needless to say, the first option (eliminating the council) is the superior choice, just like we should shut down the National Endowment for the Arts in D.C.

But let’s set that aside. I’m still scratching my head about a bureaucracy that spends $1 million to give away $834.9 thousand. Though that’s actually efficient if you compare it with the German tax that resulted in €30 euros of government expense for every €1 collected.

To conclude, there’s a common thread in these four stories. In each case, politicians at the state level have policies to enable unearned wealth to flow to the pockets of their friends and allies.

In other words, the First Theorem of Government doesn’t just apply to what’s happening in Washington.

P.S. I’ve only had a few previous “great moments” for state governments. One from Florida involved a felony arrest of some luckless guy who was simply trying to impress his girlfriend by releasing some balloons, and the other from Virginia involved three misdemeanors for the horrid crime of rescuing a wounded deer.

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I’ve written before about Hillary Clinton’s unethical and (presumably) illegal actions, both in terms of her email server and the Clinton Foundation.

We’ve probably only seen the tip of the iceberg, but one thing that can be said with confidence is that there is strong scent of corruption, cronyism, and insider dealing that surrounds Mrs. Clinton.

Every day seems to bring new evidence. Writing for the Wall Street Journal, Kimberly Strassel puts it in blunt terms.

A Hillary Clinton presidency will be built, from the ground up, on self-dealing, crony favors, and an utter disregard for the law. This isn’t a guess. …It comes in the form of a memo written in 2011 by longtime Clinton errand boy Doug Band, who for years worked simultaneously at the Clinton Foundation and at the head of his lucrative consulting business, Teneo. It is astonishingly detailed proof that the Clintons do not draw any lines between their “charitable” work, their political activity, their government jobs or (and most important) their personal enrichment. Every other American is expected to keep these pursuits separate, as required by tax law, anticorruption law and campaign-finance law. For the Clintons, it is all one and the same—the rules be damned. …Any nonprofit lawyer in America knows the ironclad rule of keeping private enrichment away from tax-exempt activity, for the simple reason that mixing the two involves ripping off taxpayers. Every election lawyer in the country lives in fear of stepping over the lines governing fundraising and election vehicles. The Clintons recognize no lines. Here’s the lasting takeaway: The Clintons…know the risks. And yet they geared up the foundation and these seedy practices even as Mrs. Clinton was making her first bid for the presidency. They continued them as she sat as secretary of state. They continue them still, as she nears the White House. This is how the Clintons operate. They don’t change. Any one who pulls the lever for Mrs. Clinton takes responsibility for setting up the nation for all the blatant corruption that will follow.

Let’s look at some examples.

And we’ll start with the example of a Swiss bank that was being wrongfully persecuted by the American government for the supposed crime of protecting the privacy of clients (i.e., for following Swiss law inside Switzerland).

In other words, I’m very sympathetic to the bank. But I’m not a big fan of the Clintons using the bank’s legal woes as an opportunity to raise a bunch of money in exchange for a favorable disposition. Yet that’s exactly what happened, as reported by the U.K.-based Guardian.

In February 2009, the IRS sued UBS and demanded that it disclose the names of 52,000 possible American tax evaders with secret Swiss bank accounts. …On 19 August 2009, it was announced that UBS would pay no fine and would provide the IRS with information about 4,450 accounts within a year. Since the deal was struck, disclosures by the foundation and the bank show the donations by UBS to the Clinton Foundation growing “from less than $60,000 through 2008 to a cumulative total of about $600,000 by the end of 2014”… The bank also teamed up with the foundation on the Clinton Economic Opportunity Initiative, creating a pilot entrepreneur program through which UBS offered $32m in loans to businesses, the newspaper reported. Other UBS donations to the Clinton Foundation include a $350,000 donation from June 2011 and a $100,000 donation for a charity golf tournament. Additionally, UBS paid more than $1.5m in speaking fees to Bill Clinton between 2001 and 2014, the newspaper reported.

James Freeman, in a column for the Wall Street Journal, cites two other examples of Clinton-style pay-to-play. The first example deals with Morocco.

We now know from emails published by WikiLeaks that before Mrs. Clinton formally launched her campaign, she arranged for the king of Morocco to donate $12 million to Clinton Foundation programs. What’s significant about the Morocco case is that for years the Clintons peddled the fiction that donors write checks simply to support wondrous acts of Clintonian charity. But that cover story isn’t available here. Mrs. Clinton’s trusted aide Huma Abedin put it in writing: The Moroccans agreed to the deal on the condition that Mrs. Clinton would participate at a conference in their country. Panicked Clinton-campaign aides persuaded Mrs. Clinton to avoid such a trip before launching her candidacy—and the foundation got the king to settle for Bill and Chelsea Clinton. But the record is clear. The king wanted the access, influence and prestige that all strongmen crave from legitimate democracies.

The second example comes from Kazakhstan.

This wasn’t the first time the Clintons satisfied such a desire while collecting megadonations. When it comes to human rights, Kazakhstan’s dictator, Nursultan Nazarbayev, makes Morocco’s king look enlightened. In power since 1991 and never freely elected, Mr. Nazarbayev must have enjoyed the sensation of Mr. Clinton endorsing him to lead an international election-monitoring group in 2005. The Kazakh strongman knows how to return a favor, and he granted valuable mining concessions to Clinton Foundation donors. The donors then built a global uranium powerhouse that was eventually sold to the Russians in a deal that required the 2010 approval of a U.S. government committee that included Mrs. Clinton’s State Department.

There’s a lot more material I could share, but the purpose of today’s column isn’t to demonstrate Hillary’s recent unethical behavior.

Instead, I want to show how she has a decades-long pattern of using government for self-advancement and self-enrichment. And I’ll follow by drawing (what should be) a very obvious lesson about public policy.

To keep today’s column manageable, let’s review just two examples.

First, let’s go back more than 20 years to the early days of Bill Clinton’s presidency. Peggy Noonan explains Hillary’s attempt to replace the career professionals at the White House travel with cronies from Arkansas.

Why don’t people like Hillary Clinton? …Why, when some supposed scandal breaks and someone says she’s hiding something, do people, including many of her supporters, assume it’s true? …the scandals stretch back…all the way to her beginnings as a national figure. …It was early 1993. …It was the first big case in which she showed poor judgment, a cool willingness to mislead, and a level of political aggression that gave even those around her pause. It was after this mess that her critics said she’d revealed the soul of an East German border guard.

Let’s look at what happened.

On May 19, 1993, less than four months into the administration, the seven men who had long worked in the White House travel office were suddenly and brutally fired. The seven nonpartisan government workers, who helped arrange presidential trips, served at the pleasure of the president. But each new president had kept them on because they were good at their jobs. A veteran civil servant named Billy Dale had worked in the office 30 years and headed it the last 10. He and his colleagues were ordered to clear out their desks and were escorted from the White House, which quickly announced they were the subject of a criminal investigation by the FBI. They were in shock. So were members of the press, who knew Mr. Dale and his colleagues as honest and professional. A firestorm ensued. Under criticism the White House changed its story. They said that they were just trying to cut unneeded staff and save money. Then they said they were trying to impose a competitive bidding process. They tried a new explanation—the travel office shake-up was connected to Vice President Al Gore’s National Performance Review. (Almost immediately Mr. Gore said that was not true.) The White House then said it was connected to a campaign pledge to cut the White House staff by 25%. Finally they claimed the workers hadn’t been fired at all but placed on indefinite “administrative leave.”

Noonan continues.

Why so many stories? Because the real one wasn’t pretty. It emerged in contemporaneous notes of a high White House staffer that the travel-office workers were removed because Mrs. Clinton wanted to give their jobs—their “slots,” as she put it, according to the notes of director of administration David Watkins—to political operatives who’d worked for Mr. Clinton’s campaign. And she wanted to give the travel office business itself to loyalists. There was a travel company based in Arkansas with long ties to the Clintons. There was a charter travel company founded by Harry Thomason, a longtime friend and fundraiser, which had provided services in the 1992 campaign.

Unsurprisingly, Mrs. Clinton lied about her efforts to turn the travel office into a goodie for a crony.

All along Mrs. Clinton publicly insisted she had no knowledge of the firings. Then it became barely any knowledge, then barely any involvement. When the story blew up she said under oath that she had “no role in the decision to terminate the employees.” She did not “direct that any action be taken by anyone.” In a deposition she denied having had a role in the firings, and said she was unable to remember conversations with various staffers with any specificity. A General Accounting Office report found she did play a role. But three years later a memo written by David Watkins to the White House chief of staff, recounting the history of the firings, suddenly surfaced. (“Suddenly surfaced” is a phrase one reads a lot in Clinton scandal stories.) It showed Mrs. Clinton herself directed them.

By the way, the most disgusting part of this scandal is the way Hillary sicced the government on Mr. Dale.

The White House pressed the FBI to investigate, FBI agents balked—on what evidence?—but ultimately there was an investigation, and an audit. …Billy Dale was indicted on charges including embezzlement. The trial lasted almost two weeks. …The jury acquitted him in less than two hours.

In other words, expect to see more Lois Lerner-type scandals if Hillary reaches the White House. There should be little doubt that she will use the power of government to attack her political opponents.

Now let’s go back even further in time, to the late 1970s when Hillary Clinton somehow managed to turn a $1,000 “investment” into $100,000 is less than one year. The New York Times reported on this rather implausible story back in 1994.

…in 1978 Hillary Rodham Clinton invested $1,000 in commodities futures and that the investment grew in 10 months of trading in the notoriously volatile market into a gain of nearly $100,000. Seeking to dispel suggestions that the trades were risk-free and improperly arranged by an Arkansas lawyer who represents one of the state’s most powerful companies, the White House issued a statement this afternoon that said the First Lady had put up her own money and that she bore all of the financial risks in a marketplace where three out of four investors lose money. The officials also released a year’s worth of brokerage statements from one of Mrs. Clinton’s two accounts. …Mrs. Clinton based her trades on information in The Wall Street Journal.

In other words, we’re supposed to believe that Mrs. Clinton, a complete novice, with no experience in the private sector or the investment business, suddenly decided to sink money into a very complex type of speculation.

And we’re supposed to believe that she made a series of very clever market-timing decisions and turned small amount of money into a big pile of money.

Needless to say, even the reporter for the New York Times couldn’t help but express skepticism and doubt. Particularly since nobody was willing to back up Mrs. Clinton’s story.

The White House insisted today that Mrs. Clinton received no improper financial assistance on the trades from the lawyer, James B. Blair, a close friend who at the time was the top lawyer for Tyson Foods of Springdale, Ark., the nation’s biggest poultry company. Mr. Blair has said that he had suggested that she get into the commodities market, and that he used his knowledge of trading to guide her along the way. During Mr. Clinton’s tenure as Governor, Tyson benefited from several state decisions, including favorable environmental rulings, $9 million in state loans, and the placement of company executives on important state boards. …brokers in the Springdale office of Refco where Mrs. Clinton executed the trades, including the one she describes as her personal broker, said in interviews in recent weeks that they have no recollection of ever talking with her about the trades. Mrs. Clinton and Mr. Blair have said that they used Robert L. (Red) Bone, the broker who founded the Springdale office of Refco, a Chicago commodities firm, to execute the trades. But Mr. Bone, who worked at Tyson for 13 years until 1973, insisted in several interviews this month that he has no recollection of ever trading for Mrs. Clinton or talking to her about commodities trades.

Here’s the bottom line. Back when this scandal surfaced in the 1990s, I talked to several people in the financial markets, every one of whom was 99.99 percent certain that Hillary was the beneficiary of a gift (if they were favorable to her) or a bribe (if they were unfavorable to her). And they all agreed that somebody on the inside arranged to give her, after the fact, the winning side of trades in order to make it look like she was simply a good investor.

Moreover, every single Democrat that I talked to admitted (but only off the record) that she was the recipient of a gift or a bribe.

And she hasn’t changed in the past 38 years. Government is a vehicle for personal advancement and personal enrichment.

Now let’s conclude by bring public policy into the discussion. Corrupt politicians are able to amass lots of power and money because government is big and powerful.

And I’m not making a partisan argument. Indeed, here are the same bullet points I used when pointing out the empty futility of Trump’s plan to “drain the swamp” and end DC corruption.

All I’m saying is that Hillary Clinton both supports big government and profits from big government. And as the public sector gets larger, don’t be surprised when you find out that Hillary and her cronies have figured out additional ways of feathering their own nests.

P.S. By the way, I do recognize that there’s an infinitesimally small possibility that Hillary’s story about cattle futures is accurate.

I also recognize, for what it’s worth, that there’s a greater-than-zero possibility that aliens will invade the earth tomorrow.

But neither of these hypotheses is remotely plausible (though if I had to pick, I’d go with the alien invasion for the simple reason that it would bring great joy to Paul Krugman).

P.P.S. Plenty of Republicans will get rich as well as Hillary expands government. If you don’t believe me, just consider how many of them collect campaign cash in exchange for votes in favor of ethanol and the Export-Import Bank.

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The polls are not looking good for Donald Trump. Indeed, I suspect my most recent prediction for the 2016 race gives him too many states.

With time running out, he now faces pressure to come up with some new idea or a new narrative to change the likely outcome.

Which may explain why he just unveiled a new plan to “drain the swamp” in Washington with new ethics rules. Such initiatives tend to be popular with voters, who view Washington as a corrupt mess. And an ethics-reform agenda may be an effective way of reminding voters that Hillary Clinton has major problems with corruption.

But let’s consider whether his plan actually would work. Taken directly from his campaign website, here’s what Trump is proposing.

As you can see, he basically wants to make it harder for Washington insiders to go through the revolving door.

And to augment his lobbying restrictions, Trump also has embraced congressional term limits.

Donald Trump added a new proposal to his recently unveiled ethics reforms package on Tuesday, promising to pursue a constitutional amendment that would impose term limits on members of Congress should he win the election on Nov. 8. …Establishing term limits at the federal level would help “break the cycle of corruption” that has plagued Washington and “give new voices to change so that we can have a government that works again and can function properly,” Trump argued.

For what it’s worth, I suspect many voters will like what Trump is saying.

If you look at Chapman University’s “Survey of American Fears,” the most commonly cited concern is “corruption of government officials.”

For people in the political world, the obvious follow-up issue is whether a popular issue/agenda actually will attract voters. In other words, will people concerned about Washington corruption rally to Trump simply because he highlights the issue.

Beats me.

I’m much more concerned with a different follow-up issue, which is whether his five points (six if you include term limits) would actually work if they were adopted.

To be blunt, I’m not holding my breath. And the reason for my concern is that Trump isn’t proposing to actually drain the swamp. There’s rampant sleaze in Washington because politicians and bureaucrats have massive powers to give undeserved wealth to those with political connections.

In other words, the “swamp” is big government. And since Trump isn’t proposing to shrink the size and scope of Washington, the incentives that currently exist to get unearned wealth via government coercion will still remain.

If you look at Trump’s proposals, what he’s really talking about is a plan to make it somewhat more difficult for certain people to wade into the swamp.

I have no objection, by the way, to additional rules that hinder the ability of politicians, congressional staffers, and presidential appointees to cash in on the connections they’ve made.

But I’m also not naive enough to think that this will reduce Washington sleaze. The policies that Trump is proposing are like pressing down on one part of a balloon and somehow hoping that other parts of the balloon won’t expand. Indeed, that’s the message of my video on the very strong link between the size of government and the amount of corruption.

P.S. Let me add a technical point that is very important in this discussion. Lobbying occurs when someone asks a politician to vote “yes” or “no” on a piece of legislation. It’s not lobbying, however when someone tells a politicians that an idea is good or bad (which is what I often do as part of my job).

But if Trump can change the definition of lobbying for former government officials (the third point in his five-point plan), that might disrupt the status quo for certain people (assuming it could be effectively enforced).

But so long as the size and scope of government isn’t curtailed, that kind of change won’t eliminate the incentive of interest groups to hire people who are allowed to lobby. The only way to reduce corruption is to reduce government.

P.P.S. By the way, restrictions on campaign donations also won’t work.

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My main problem with Hillary Clinton is that she not only supports the bloated and enervating welfare state that already exists, but she wants to make it even bigger. Indeed, there’s only a very small gap between her and crazy Bernie Sanders when you examine their voting records.

There’s only a trivially small difference…between Hillary Clinton’s lifetime rating of 10.6 from the National Taxpayers Union and Bernie Sanders’ lifetime rating of 9.4. They both earned their failing grades by spending other people’s money with reckless abandon.

That being said, I’m disgusted and outraged by her dishonest and corrupt behavior.

The rule of law is one of the most important building blocks of a just and prosperous society, so it’s both morally nauseating and economically destructive when members of the elite enjoy special treatment.

Josh Barro definitely isn’t a member of the vast right wing conspiracy, so his list of Hillary’s ethical lapses should carry extra weight.

It’s possible that Clinton and Lynch were just catching up — “a social meeting,”… Similarly, it’s possible foreign governments donated to the Clinton Foundation because they viewed it as the most efficient available philanthropic opportunity, without regard for the favorable impression it might make on Bill and Hillary Clinton. It’s possible Goldman Sachs paid Hillary Clinton $675,000 for three speeches because they thought she would be really interesting, not because they thought the payment might help the bank make a favorable impression on a potential future president. It’s possible a major Clinton donor ended up on a State Department nuclear advisory board for perfectly innocent reasons, and that there were no untoward effects from top Clinton staffers being simultaneously on State Department and private payrolls. …The list goes on and on. …the Clintons have no apparent concern for appearances of impropriety, as long as they believe their actions cannot get them in trouble with the law.

And the Clintons get away with things that would land ordinary Americans in jail, so you have to give them credit for knowing how to exploit their political connections and power.

And that has a lot of people legitimately upset. The Washington Examiner opined about Hillary’s free pass from the FBI.

The Founding Fathers embraced principles that transcended their own human weaknesses and those of their posterity. They created a system in which process and law could check base personal ambition, favoritism and other low and common temptations. The idea was to put in place a system that would survive incompetent and corrupt leaders. …the public witnessed what happens when the system fails. Special people receive special treatment. Equal protection under the law turns out to be a fancy fiction. Some people are more equal than others. …An average government official who spent five years breaking the rules to frustrate the Freedom of Information Act, and who recklessly compromised classified information (more than 100 times), including top secret information (eight times), would serve time in federal prison. But Hillary Clinton is almost certain to suffer no consequences at all.

But what about Hillary supposedly having no bad intent, as the FBI Director offered up as a distraction?

This is bunk. Intention is something this law does not require. “Gross negligence” alone is sufficient grounds for prosecution because the officials to which it applies are entrusted with secrets that bring greater obligations than average citizens must bear. Precisely because of that greater risk of prosecution, high-ranking government officials who handle classified information, including Clinton, sign agreements that spell out their legal jeopardy.

Jacob Sullum of Reason also addresses this topic.

…one of the statutes guiding the FBI’s investigation, 18 USC 793, makes it a felony to “mishandle classified information either intentionally or in a grossly negligent way” (emphasis added), as Comey himself notes… Former New York City Mayor Rudy Giuliani, …who was the U.S. attorney for the Southern District of New York during the Reagan administration, says Comey’s description of Clinton’s behavior plainly qualifies as a violation of 18 USC 793(f). …Giuliani told NBC’s Brian Williams yesterday, “because he clearly found a direct violation of 18 United States Code, Section 793, which does not require intent. It requires only gross negligence in the handling of anything relating to the national defense. …The definition of gross negligence under the law is extreme carelessness. It’s the first definition that comes up in the law dictionary. …So that is a clear, absolutely unassailable violation of 18 United States Code, Section 793, which is not a minor statute. It carries 10 years in prison.”

For those who think Rudy Giuliani is perhaps exaggerating because of his support for Trump, then consider the views of former Attorney General Michael Mukasey, who is part of the #neverTrump camp.

It is a felony for anyone entrusted with lawful possession of information relating to national defense to permit it, through “gross negligence,” to be removed from its proper place of custody and disclosed. “Gross negligence” rather than purposeful conduct is enough. …As an example of the kind of information at stake, he described seven email chains classified at the Top Secret/Special Access Program level. These were the emails that the government had said earlier are so sensitive that they will never be disclosed publicly. …To be “extremely careless” in the handling of information that sensitive is synonymous with being grossly negligent.

Needless to say, ordinary Americans would never get this kind of preferential treatment.

David French, a former military officer, explains what would happen to someone in the armed forces who treated national security with the same degree of disdain.

I served ten years as an Army lawyer, and one of my responsibilities was advising the command on matters of military justice, including incidents where soldiers mishandled classified information. And if Hillary Clinton was a soldier, she would lose her security clearance, face administrative action, and face the specter of criminal prosecution. I’ve not only seen the pattern, I’ve also participated in the process. …If Hillary were Captain Clinton instead of the presumptive Democratic nominee and wife of a disbarred former president, the following things would occur, more or less simultaneously. First, the command would immediately suspend her security clearance. …Next, her commander would probably draft an administrative reprimand. …a career-killer if placed in an officer’s permanent file…Finally, the command would consider criminal charges. …the officer would in all likelihood not only violate the Espionage Act (the same statute at issue in Clinton’s case) but also the Uniform Code of Military Justice. …In other words, her actions would have ended her military career, and she would have been fortunate to resign in lieu of enduring a court-martial. In her post-military civilian life, she would have been unemployable in any serious government position… To say that Hillary Clinton is unfit to be commander-in-chief is to give her too much credit. It implies that she might be fit for other positions of responsibility. She’s not fit to be POTUS, and she’s not fit to be a private.

But there is a silver lining to the dark cloud of Hillary favoritism.

We can enjoy some dark humor while the rule of law is further eroded.

The clever folks at Reason TV put together this video showing how Hillary Clinton has blatantly lied about her actions.

By the way, Hillary’s negligence and disdain for national security is just the tip of the iceberg.

She already has engaged in countless other shady acts, such as allowing her top aide, Huma Abedin, to be on the government payroll while simultaneously getting payoffs as an influence peddler.

Or consider the Clinton Foundation. Investor’s Business Daily makes a compelling case that it’s nothing but a racket.

…the Clinton Foundation gathered some $100 million from a variety of Gulf sheikhs and billionaires, not to mention taking in millions of “donations” from private businesses that later benefited from their supposed “charitable” largesse. Some of those who gave big bucks to the Clintons had interests that were, to put it mildly, not in keeping with U.S. interests. …now comes a more serious, far-reaching question: Is the entire Clinton Foundation so full of conflicts of interest and questionable dealings that it amounts to little more than a massive fraud intended solely to enrich its presidential namesake and his family? Charles Ortel, a Wall Street financial analyst, who pored over the Clinton Foundation’s books, filings and records, thinks so. He concluded that “a substantial portion of Clinton Foundation activities is certainly not ‘charitable’ or ‘tax-exempt’ in the accepted legal senses…” the nonprofit watchdog Charity Navigator removed the Bill, Hillary and Chelsea Clinton Foundation from its list of charities because of its “atypical business model.” …Getting rich isn’t a crime. But it might be if you did it in the guise of being a tax-free humanitarian charity, interested only in the betterment of humankind.

The Washington Examiner also has looked at the Clinton Foundation’s dodgy finances and activities.

The Clinton Global Initiative has a curious record of leaving its projects unfinished, despite receiving multiple large donations from foreign interests that could benefit if Hillary Clinton is elected president (and may have already benefited from her service at the State Department). …the initiative has completed fewer than half of the commitments made since 2005. Thirty-six percent of them are listed as being “in progress.” Many others are listed as “stalled,” “unfulfilled,” or haven’t had any progress reported in at least two years. This may just be a sign of bad timing or ineffective philanthropy, but when combined with the rest of the information available about the Clintons’ philanthropic activities, it hints at something more sinister. …accepted a great deal of money in donations from businesses and foreign governments that had a lot to gain from her help.

Here one of the examples that certainly seems tawdry, if not sinister.

In one well-known case, a group of Canadian mining magnates made millions in undisclosed donations to the Clinton Foundation, and a Russian bank closely linked to the Kremlin paid Bill Clinton $500,000 to give a single speech in Moscow. All of these parties involved in funneling money to the Clintons and their enterprises were part of a large mining deal that required approval from a government panel on which Clinton sat.

We also have the Clintonian equivalent of Trump University, as outlined by Professor Jonathan Turley.

Donald Trump has been rightfully criticized and sued over his defunct Trump University. There is ample support for claiming that the Trump University was fraudulent in its advertisements and operations. However, the national media has been…sidestepping a scandal involving the Clintons that involves the same type of fraud allegations. The scandal involves a dubious Laureate Education for-profit online college (Walden) and entails many of the common elements with other Clinton scandals: huge sums given to the Clintons and questions of conflicts with Hillary Clinton during her time as Secretary of State.

Here are some of the sordid details.

Laureate Education was sued over its Walden University Online offering, which some alleged worked like a scam designed to bilk students of tens of thousands of dollars for degrees. Students alleged that they were repeatedly delayed and given added costs as they tried to secure degrees, leaving them deeply in debt. …The respected Inside Higher Education reported that Laureate Education paid Bill Clinton an obscene $16.5 million between 2010 and 2014 to serve as an honorary chancellor for Laureate International Universities. …Various sites have reported that the State Department funneled $55 million in grants during Hillary Clinton’s tenure to groups associated with Laureate’s founder.  That would seem a pretty major story… The Wall Street Journal reported that Laureate was able to “skirt” regulations on reporting “gainful employment” due to its large number of schools and students outside of the country… Laureate has come up in the Clinton email scandal.  In her first year as Secretary of State, Clinton is quoted as directly asking that Laureate be included in a high-profile policy dinner — just months before the lucrative contract was given to Bill Clinton. …the size of the contract to Clinton, the grants from State and the complaints over alleged fraud should warrant a modicum of attention to the controversy.

Let’s close with one final example of Clintonesque sleaze. She apparently thinks insider trading is a good idea so long as the insiders are members of her family.

In 2012, Mezvinski, the husband of Chelsea Clinton, created a $325 million basket of offshore funds under the Eaglevale Partners banner through a special arrangement with investment bank Goldman Sachs. The funds have lost tens of millions of dollars predicting that bailouts of the Greek banking system would pump up the value of the country’s distressed bonds. …newly released emails from 2012 show that she and Clinton Foundation consultant, Sidney Blumenthal, shared classified information about how German leadership viewed the prospects for a Greek bailout. Clinton also shared “protected” State Department information about Greek bonds with her husband at the same time that her son-in-law aimed his hedge fund at Greece. …sharing such sensitive information with friends and family would have been highly improper. Federal regulations prohibit the use of nonpublic information to further private interests or the interests of others. The mere perception of a conflict of interest is unacceptable. …monitoring Greece was part of Clinton’s job description, but, ethically, that does not mean that a family member should make bets that depend upon the actions of another family member.

The point of all this is not that Hillary Clinton is sleazy and corrupt, though that’s one obvious conclusion.

Instead, as I’ve demonstrated over and over again, the real lesson is that Washington is filled with people like her.

And the reason that sleazy people gravitate to Washington is that we have Leviathan-sized government that enables politically well-connected people to obtain vast amounts of unearned and undeserved wealth.

Including lots of Republicans, so this isn’t a partisan argument.

Moreover, the problem almost certainly won’t get solved by electing different people. The only real solution is shrinking the size of government so there’s less opportunity for graft.

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In hopes of learning some lessons, let’s take a tour through the dank sewer of government, the place where malice is rewarded and malfeasance is a stepping stone to success.

Writing for the Washington Post, Professor Stephen Medvic argues that America’s political system is mostly clean.

…there is very little political corruption in the United States. …According to Transparency International’s 2015 Corruption Perceptions Index, a survey of expert opinion about the level of corruption in 167 countries, only 15 countries were judged to be cleaner than the United States. …our score of 76 (out of 100) was considerably higher than the average score of 67 in the European Union and Western Europe.

But before concluding that Mr. Medvic is a crazy crack addict, he is using a very narrow definition of corruption in the above excerpt, focusing on politicians who trade votes for under-the-table money that goes into their personal bank accounts.

Using a broader definition, there’s a different conclusion.

…corruption happens whenever there is a privileging of private interests over the public good in the policymaking process. Under this interpretation, while elected officials may not be reaping private benefit from their positions of power, they are placing the (private) interests of some subset of the public above the collective interests of the people as a whole. When a politically powerful industry gets public subsidies or a well-connected corporation receives a special tax break, it suggests to some that the system has been corrupted.

And from this perspective, corruption is rampant.

Here are six examples.

First, Veronique de Rugy of the Mercatus Center describes how a Louisiana politician (gee, what a surprise) wants to use government coercion to hinder competition in the market for contact lenses.

An estimated 40 million Americans wear contact lenses. That’s a $4 billion industry. Thanks to the heavy-handed government regulation of all things health care, contacts already cost more than they should. However, if an ongoing effort to reduce competition through government cronyism were to succeed, costs might soon rise even more. …a bill was introduced by Sen. Bill Cassidy, R-La., called the Contact Lens Consumer Health Protection Act of 2016, which would place pointless and costly new mandates on sellers and eliminate market competition. …it would require dedicated phone lines and email addresses for prescribers to communicate questions to sellers about the prescriptions the sellers need them to verify before the sellers are allowed to fill orders. …With this move, these special interests demonstrate that they would rather avoid the grind of competition, which requires that companies deliver high-quality goods at low prices to consumers. Instead, they’re trying to rig the system to force consumers into paying more for less.

Paying more for less? Maybe that should be Washington’s motto, though it’s hard to argue with the existing motto.

Second, Mike Needham of Heritage Action exposes how a shoe company cut a sleazy deal with the Obama White House.

Currently, new Army and Air Force recruits can use a one-time stipend to choose from about a dozen different shoes from multiple manufacturers. …shoe choice is exceedingly important for not only comfort, but also to prevent injury. Despite the differences that exist among the military’s roughly 250,000 new recruits every year, there is an effort afoot to force those recruits to wear shoes made by just one company. During last month’s mark up of the National Defense Authorization Act (NDAA), Massachusetts Democrat Niki Tsongas added language that would effectively force the Department of Defense (DoD) to provide only New Balance athletic shoes for new military recruits. …This alone reeks of the revolving door politics the political left is usually swift to condemn, but it gets even worse. Last month, New Balance revealed the company disengaged from the fight over the Trans-Pacific Partnership last year because it had cut a secret deal with the Obama administration. …Using the legislative process to limit choice and competition is par for the course in our corrupt political system, but doing so at the expense of America’s brave sons and daughters outrageous.

Unfortunately, wasting money is a Pentagon tradition.

Third, here’s a typical story of insider dealing in the bureaucracy.

A Department of Veterans Affairs manager who steered a $4 million contract to a relative was promoted to the second-highest position in the hospital weeks after she was caught and exposed in the national media. …The hospital evaluated 16 plots, five of which were owned by relatives of Gillis. A committee ranked them by suitability, and a non-Gillis plot was determined to be best. But in an “unusual” move, the VA selected land owned by William Gillis instead, and paid him $4.25 million. …Within three months, in June 2015, Gillis was put on a detail to serve as acting associate director, the second-highest position in the hospital, The Daily Caller News Foundation has learned. The elevation was a big promotion considering the fact that others were more senior and higher-ranked.

I suspect Gillis was one of the VA bureaucrats to also get a fat bonus despite shoddy treatment of America’s veterans.

Fourth, a former Senator is now lobbying to help H&R Block stifle competition for mom and pop tax preparers.

Former Sen. Jon Kyl (R-Ariz.) has registered to lobby on behalf of the tax preparation company H&R Block. Kyl and a colleague at his new employer, Covington & Burling, will advocate on behalf of H&R Block in favor of the “creation of minimum standards for paid tax preparers,” according to a registration form. …H&R Block has also hired another firm, Fierce Government Relations, that it is lobbying on “oversight of tax preparation” for the company. Forbes-Tate and Rock Creek Counsel also lobby for H&R Block, and the company has its own in-house lobbyists.

Yet another example of a Republican advocating bigger government to line his own pockets.

Fifth, here’s another probable example of insider dealing.

U.S. Sen. Diane Feinstein’s husband Richard Blum won the first-phase construction contract for California’s high-speed rail. …If I didn’t witness the insanity and corruption in politics every day, I wouldn’t have believed this. “The Perini-Zachary-Parsons bid was the lowest received from the five consortia participating in the bidding process, but “low” is a relative term,” the Laer Pearce, author of Crazifornia wrote. ”The firms bid $985,142,530 to build the wildly anticipated first section of high speed rail track that will tie the megopolis of Madera to the global finance center of Fresno. Do the division, and you find that the low bid came in at a mere $35 million per mile.”

Wasting money on a high-speed rail boondoggle is bad enough, but steering the contract to the spouse of a senior politician adds insult to injury.

Sixth, let’s look at how a former Obama appointee is getting rich because of regulations he oversaw while in government.

Even progressives need to make a living. …Some of them are even smart enough to do it by exploiting the regulations they pushed while in government. …Jim Shelton, the deputy secretary of education in 2013 and 2014…became “chief impact officer” at 2U, a publicly traded company that caters to public and nonprofit colleges and universities. …it’s especially notable that Mr. Shelton has joined 2U because its for-profit online business model allows it to circumvent the onerous regulation that the Department of Education promoted to punish for-profit schools during Mr. Shelton’s tenure. …This rule…has forced even the best for-profit schools to shrink enrollments. Students who have suffered the most tend to be low-income and minorities… The rule has one giant loophole. It doesn’t apply to nonprofit or public universities, and it also largely exempts community colleges. Many of these have graduation rates or loan default rates that are as bad or worse than for-profits… Which works out beautifully now for Mr. Shelton and 2U, which can work around the gainful-employment rule and still make a buck. 2U’s customers don’t have to meet the rule.

Sounds like a scene out of Atlas Shrugged, right?

So what’s the solution to all this sleaze in the Washington Favor Factory?

Returning to the column from Prof. Medvic, he seems to think that the problem is money.

The real problem is…that economic elites and business organizations have a greater impact on policy outcomes than do groups representing average citizens. …the playing field is tilted toward those with money. …the problem with money in politics is that it undermines an essential principle of democratic government.

That’s wrong. Laughably wrong.

The problem is that government has too much power. If we want to reduce sordid dealmaking (and the six examples listed above are a very tiny tip of a very large iceberg), then we need to reduce the size and scope of Washington.

Which is the message of this video.

I suppose the easy thing to do at this stage is to attack politicians for constantly expanding the size and scope of government. And I certainly have done that. A lot.

But let’s not overlook the role of culture. The crowd in Washington gets away with lots of venal behavior because an ever-larger share of the population is losing the spirit of self reliance and personal responsibility.

With that in mind, there’s very little reason for optimism once people decide that it’s okay to steal from their neighbors so long as they use government as a middleman.

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I’m a big fan of Estonia.

According to both the Fraser Institute and the Heritage Foundation, it has considerable economic freedom.

It has a low-rate flat tax, meaning that investors, entrepreneurs, and small-business owners aren’t punished for contributing more to the nation’s economic output.

It responded to the 2008 crisis by cutting spending rather than engaging in a Keynesian spending binge (which also led to an exploding cigar for Paul Krugman).

Now I have another reason to like Estonia.

It’s a role model for how to reduce corruption by shrinking the size and scope of government.

First, some background.

Neil Abrams and Professor Steven Fish have a column in the Washington Post about the seemingly intractable problem of boosting the rule of law in developing and transition economies.

Western aid agencies and scholars agree that the rule of law is required before developing countries can reduce poverty and corruption. For decades, they have supported aid programs designed to help developing countries establish law-based states. …In a rule-of-law state, the rules apply even to the rulers, not just the ordinary folks. The rule of law is not the same as democracy. Scores of developing countries have demonstrated that establishing democracy is the easy part. The rule of law is harder to attain. From India and the Philippines to Argentina, democracy coexists with endemic corruption, and elites remain largely exempt from the rules.

They then explain that its well-nigh impossible to create the rule of law in a society that has a big government.

…our research suggests that they have the sequence backward. Before urging governments to adopt the rule of law, they must first advise reformers to take one key step: eliminating the government subsidies that sustain criminal elites and replacing the compromised bureaucrats who patronize them.

Now for the big takeaway from their column: Estonia is the role model for how this can happen.

Our research shows that a few good policies can pave the way for the rule of law. For instance, Estonia’s clean and capable state administration represents a model of post-communist success. But this was not always the case. In 1991, when communism collapsed, Estonia, like other post-Soviet countries, had almost no working institutions and a burgeoning class of economic predators, nor was Estonia economically privileged. In the early post-Soviet years, its income per capita was only 10 to 20 percent higher than that of Russia and Romania and 20 to 30 percent lower than that of Croatia, Slovakia and Hungary. But Estonian leaders acted boldly. …early Estonian governments ended practically all subsidies to state and private enterprises. …in developing countries, state subsidies almost always benefit corrupt elites more than ordinary people. This policy cut off the budding economic criminals who profit from state largesse rather than entrepreneurial aptitude — and made it possible for real entrepreneurs to thrive. Deprived of subsidies, old-guard enterprise directors and crony capitalists could not muster enough political influence to hold governments hostage.

Sadly, other nations are not copying Estonia, in part because the international bureaucracies and national agencies that dispense foreign aid don’t support policies to shrink government in recipient nations.

Unfortunately, Estonia is the exception and not the rule. That’s  not for lack of trying on the part of the West. The United States, the European Union, the World Bank, the European Bank for Reconstruction and Development and the United Nations have spent billions of dollars for the express purpose of helping countries build a rule of law. …But they’re stumbling. The Western effort assumes that the rule of law will flourish only if developing countries receive enough education, guidance, training and money. In fact, a growing body of research throws such optimism into doubt.

In other words, foreign aid – at best – is useless. And it may be harmful by financing a bigger role for recipient governments.

The authors close by emphasizing the need (assuming genuine rule of law is the goal) to prune the bureaucracy and public sector.

Scholars often treat the rule of law as a prerequisite for market-oriented economic policies such as liberalizing prices and trade and eradicating wasteful subsidies. They’re getting it backward. Instead, first eliminate the subsidies and purge the compromised bureaucrats who stand in the rule of law’s way. This is hard to do. It will provoke tremendous resistance from those who profit from the status quo. But it’s far more realistic and effective than simply encouraging countries to adopt the rule of law.

So what are the implications of this analysis for the United States?

Given that America now ranks below Estonia for rule of law, and given that rule of law is gradually eroding in the United States, the obvious lesson is that the public sector in America needs to shrink.

The real challenge, though, is convincing politicians to give up power.

Professor Glenn Reynolds of the University of Tennessee Law School explains in USA Today that a larger government is good for politicians because it creates opportunities for graft.

The explanation for why politicians don’t do all sorts of reasonable-sounding things usually boils down to “insufficient opportunities for graft.” And, conversely, the reason why politicians choose to do many of the things that they do is … you guessed it, sufficient opportunities for graft. That graft may come in the form of bags of cash, or shady real-estate deals, or “consulting” gigs for a brother-in-law or child, but it may also come in broader terms of political support.

Glenn notes that there’s an entire school of thought in economics that analyzes this unfortunate tendency of politicians to conspire with interest groups at the expense of taxpayers and consumers.

…there’s a whole field of economics based on this view, called “Public Choice Economics.” Nobel prize winning economist James Buchanan referred to public choice economics as “politics without romance.” Instead of being selfless civil servants motivated solely by the public good, public choice economics assumes that politicians are, like other human beings, heavily influenced by self-interest. …You pick a car because it’s the best car for you that you can afford. Politicians pick policies because they’re the best policies — for them — that they can achieve. …the entire system is designed — by politicians, naturally — to make it harder for voters to keep track of what politicians are doing. The people who have a bigger stake in things — the real estate developers or construction unions — have an incentive to keep track of things, and to influence them.

Having received my Ph.D. from George Mason University, home of the Center for the Study of Public Choice, I echo Glenn’s comments about the value of this theory.

So what’s the moral of the story?

As summarized by Professor Reynolds, bigger government means more corruption and smaller government means less corruption.

The more the government does and the more decisions that are relegated to bureaucrats, “guidance” and other forms of decisionmaking that are far from the public eye, the more freedom politicians have to pursue their own interest at the expense of the public — all while, of course, claiming to do just the opposite.

Now let’s look at some real-world examples from Washington.

By the way, I’m not writing to specifically condemn Obama and his team, even though I’m quite confident that the Chicago machine produces people who excel at unethical behavior.

Republicans also get their hands dirty by steering undeserved wealth to special interests, as explained here, here, and here.

That being said, most Washington corruption today seems associated with the Democrat Party for the simple reason that Democrats control the bureaucracy.

For instance, here are some of the key points from a New York Times report.

The State Department, under Secretary Hillary Rodham Clinton, created an arrangement for her longtime aide and confidante Huma Abedin to work for private clients as a consultant while serving as a top adviser in the department. Ms. Abedin did not disclose the arrangement — or how much income she earned — on her financial report. It requires officials to make public any significant sources of income.

To be blunt, this stinks to high heaven.

…the picture that emerges from interviews and records suggests a situation where the lines were blurred between Ms. Abedin’s work in the high echelons of one of the government’s most sensitive executive departments and her role as a Clinton family insider. While continuing her work at the State Department, in the latter half of 2012, she also worked for Teneo, a strategic consulting firm, which was founded by Doug Band, a former adviser to President Bill Clinton. Teneo has advised corporate clients like Coca-Cola and MF Global, the collapsed brokerage firm run by Jon S. Corzine, a former governor of New Jersey.

The Daily Caller also has been doing some first-rate work on the cronyism and corruption inside Washington.

One of their stories, for instance, exposed the left-wing connections of the supposedly “apolitical” bureaucrat at the heart of the IRS scandal.

IRS Exempt Organizations Division director Lois G. Lerner, who has been described as “apolitical” in mainstream press coverage of the IRS scandal, is married to tax attorney Michael R. Miles, a partner at the law firm Sutherland Asbill & Brennan.

And why does that matter?

The 400-attorney firm hosted an organizing meeting at its Atlanta office for people interested in helping with voter registration for the Obama re-election campaign. …Lerner personally signed the tax-exemption approval for a shady charity run by Obama’s half-brother, after an inexplicably brief one-month application process.

Time to wrap this up.

I enjoy Mark Steyn for his biting humor, but he makes a very serious and relevant point is his latest column.

A civil “civil service” requires small government. Once government is ensnared in every aspect of life a bureaucracy grows increasingly capricious. The U.S. tax code ought to be an abomination to any free society, but the American people have become reconciled to it because of a complex web of so-called exemptions that massively empower the vast shadow state of the permanent bureaucracy. Under a simple tax system, your income is a legitimate tax issue. Under the IRS, everything is a legitimate tax issue: The books you read, the friends you recommend them to. There are no correct answers, only approved answers.

I made a similar point, arguing that you can’t have a competent government unless it’s a small government.

But as the public sector expands, effective management becomes much harder.

And, as discussed in an interview with John Stossel, you also get corruption, mixed with incompetence and thuggery.

Let’s close by re-issuing my video explaining how big government enables pervasive corruption. It’s never been more timely and appropriate.

P.S. There are some countries with big governments that are not plagued by corruption. The Nordic nations, for instance, rank at or near the top in many economic indications, including high-quality rule of law. Though it’s worth noting that these jurisdictions scored highly in these areas before the burden of government was expanded.

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Once again, I threw myself on a proverbial grenade. Yes, that means I watched politicians last night as part of the Cato Institute’s live-tweeting about issues that were raised (or not raised) in the CNN Townhall featuring Bernie Sanders and Hillary Clinton.

Although painful, this exercise enabled me to share my thoughts on topics such as corporate inversions, Planned Parenthood, government-run healthcare, Obamanomics, and the morality (or lack thereof) of government-coerced redistribution.

But one issue I neglected was campaign finance, which was an oversight since both Sanders and Clinton made a big deal about the ostensibly corrupting mix of money and politics.

I confess that their arguments were somewhat seductive. After all, corrupt ethanol handouts and the cronyist Export-Import Bank only exist because politicians easily can raise tens of thousands of dollars by voting yes for these boondoggles.

Moreover, a law professor from the University of Minnesota made “The Conservative Case for Campaign-Finance Reform” yesterday in the New York Times. Here’s some of what Richard Painter wrote.

…big money in politics encourages big government. Campaign contributions drive spending on earmarks and other wasteful programs — bridges to nowhere, contracts for equipment the military does not need, solar energy companies that go bankrupt on the government’s dime… When politicians are dependent on campaign money from contractors and lobbyists, they’re incapable of holding spending programs to account. Campaign contributions also breed more regulation. Companies in heavily regulated industries such as banking, health care and energy are among the largest contributors. Such companies donate with the hope of winning narrowly tailored exceptions to regulations that help them and disadvantage their competitors. …conservatives…need to drive the big spenders out of the temples of our democracy.

I have no idea if Mr. Painter actually is a conservative, but he makes a superficially compelling case.

But then I remind myself of a very important point. The sun doesn’t rise because roosters crow. It’s the other way around. What Mr. Painter fails to understand is that there’s a lot of money in politics for the simple reason that government has massive powers to tax, spend, and regulate.

Politicians in Washington every year redistribute more than $4 trillion, so interest groups have an incentive to “invest” money in campaigns so they can get some of that loot. Those politicians have created a 75,000-page tax code that is a Byzantine web of special preferences, so interest groups have an incentive to “invest” money in campaigns so they get favorable treatment. And the politicians also have created a massive regulatory morass, so interest groups have an incentive to “invest” so that red tape can be used to create an unlevel playing field for their advantage.

By the way, I’m not saying that campaign contributions are improper, or even necessarily bad.

After all, political speech (and the money that makes it meaningful) is protected by the 1st Amendment. Moreover, some people give money simply for reasons of self defense. They’re not looking for handouts of favoritism, but rather are giving money in hopes that politicians will leave them alone.

Instead, I’m simply making the point that big government is what encourages unseemly and/or corrupt political contributions.

If I’m allowed to shift to a new metaphor, Sanders and Clinton make the mistake of putting the cart of campaign finance in front of the horse of big government.

There’s a great column in today’s Wall Street Journal on this topic. It’s motivated by corruption scandals in New York, but the lessons apply equally to Washington. Here’s some of what Tom Shanahan wrote.

…whenever a public official is found guilty of wrongdoing, there’s a call for new laws. Logic cannot explain the impulse. …If they’re not obeying the laws we already have, what makes anyone believe new statutes will change that? …a host of “good government” groups, such the New York Public Interest Research Group, proposed making the legislature a “full-time job” by limiting outside income.

Mr. Shanahan suspect these reforms will backfire.

That’s a major problem for limiting the size of government. An analysis of “The Length of Legislative Sessions and the Growth of Government” byMwangi S. Kimenyi and Robert D. Tollison, in a 1995 article in Rationality and Society, demonstrated that the more time Congress spent in session, the more bills were enacted, and the more expensive government grew. …A legislator with other work also has a better understanding of the economic conditions confronting the public than one who subsists on a government check. …Legislators with outside incomes are less susceptible to the pay-to-play temptation of campaign contributions. When your sole source of income is the public office you hold, the incentive is far greater to do anything necessary to get re-elected.

So here’s the bottom line is that there’s no reason to think new laws will reduce corruption. Indeed, more rules will probably lead to more sleaze since politicians will have an even greater incentive to exploit their positions of power.

The people who will get hurt, however, are the ordinary citizens who already lose out from the current system.

New York continues to suffer a net migration of citizens to other states, as people flee a growing tax burden. The last thing the state needs is a legislature working full time to spend even more taxpayer money.

By the way, I’m not under the illusion that “money in politics” is a solution. I’m simply saying that new rules about campaign finance and ethics won’t have any impact on sleaze and corruption.

Which is my message in this video from the Center for Freedom and Prosperity.

Allow me to make one final point on this issue. I think the proponents of further regulation and control in some cases have good intentions, but they are being extremely naive. Why would anybody think that politicians would approve rules unless the net effect was to increase the powers of incumbency?

Since I shared my video on the topic, I’ll close by strongly recommending that you watch this George Will video.

P.S. I warned last month that governments were engaged in a war on cash. Well, the Germans are planning a Blitzkrieg.

The German government is considering introducing a limit of 5,000 euros ($5,450) on cash transactions in an effort to combat money laundering and financing of terrorism. Deputy finance minister Michael Meister said Wednesday that…there’s “…we also have the problem of how to clear up money-laundering offenses properly” when large transactions are conducted anonymously. …Opposition Green Party lawmaker Konstantin von Notz tweeted that trying to limit cash payments “is a new fundamental attack on data protection and privacy.”

Since criminals will be modestly inconvenienced – at best – by such an initiative, it’s important to understand the real goal is easier tax collection. Indeed, I suspect Herr von Notz will change his tune once he realizes that the German government will get more money to waste if cash is restricted.

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Two years ago, I wrote that Washington’s parasite class was having a very merry Christmas.

But I wasn’t mocking welfare recipients, many of whom actually deserve sympathy for getting trapped in the web of government dependency.

Instead, I was referring to the unearned wealth being accumulated by Washington’s gilded class of bureaucrats, cronyists, lobbyists, contractors, politicians, and other insiders.

To cite a truly horrifying statistic, the redistribution of money from America to Washington has made it the nation’s richest metropolitan region.

And it’s getting worse.

Let’s look at what Tim Carney just wrote in the Washington Examiner about Christmas on K Street.

It’s that magical season when Republicans and Democrats come together to look after the needs of corporate America, K Street lobbyists, and the U.S. Chamber of Commerce. …The highway measure is a huge win for industry while a loss for good governance. Far worse, however, is the…provision reviving the defunct Export-Import Bank, a corporate-welfare agency…K Street lobbied incessantly to revive Ex-Im, backed by President Obama, Hillary Clinton and nearly every Democratic lawmaker. …As a corporate cherry on top, the bill repeals a recent minor cut in federal crop insurance subsidies, a program that benefits financial firms… Congressional leaders are currently negotiating another year-end legislative package, the notorious annual tax extenders bill. …the bill will extend (at least for a short-time) green-energy subsidies: The Production Tax Credit for wind and the Investment Tax Credit for solar. …Almost all of them are crucial for some special interest and the revolving-door lobbyists they employ.

Tim points out that the feeding frenzy is bipartisan, which some people think is a measure of good policy.

Like me, though, Tim isn’t impressed when the Evil Party and the Stupid Party both conspire to produce bad policy.

As this legislation — the highway bill, the energy bill, the tax extenders, plus the omnibus spending bill—pass through both houses, expect hosannas to the “bipartisanship” and “compromise” involved. …there’s one common theme here: Corporate lobbyists win in almost every case.

But catering to the interests of K Street lobbyists is probably not a good strategy for Republicans.

Republican leaders are probably confused about why all their accomplishments and imminent accomplishments, including the highway bill, tax extenders and appropriations, haven’t dragged Congress’s approval out of the gutter—after all, everyone they talk to thinks Congress is doing a bang-up job.

Now let’s look at what Kevin Williamson recently wrote for National Review. His article is primarily about corruption in Chicago, but his observations apply just as well to how Washington operates.

Bill and Hillary Clinton, Barack Obama, Rahm Emanuel, Al Gore, and the rest of that sorry lot aren’t trying to get rich — they’re already rich, some of them wildly rich. They are building a patronage society. And building a patronage society costs a lot of money… The horrifying fact is that Barack Obama can make you a rich man — if you’re the right kind of man. If you operate a politically connected business, the government can direct the better part of $1 billion straight into your coffers… At the other end of the spectrum, a federal tormenter can be the end of your enterprise: Ask those Tea Party groups illegally targeted by Barack Obama’s IRS. Ask a voting-reform advocate who was targeted by the ATF in spite of not being in any business related to A, T, or F.

But it’s not just a case of undeserved goodies getting steered to political cronies.

Yes, that’s a problem, but the economic concern is that this type of economic model misallocates resources and leads to stagnation.

The Clintons’ game isn’t enjoying the $100 million in their checking account — it’s making use of the $44 trillion in American-owned assets as if they owned them themselves. Barack Obama doesn’t want a garage full of Rolls Royces — he wants a world in which Rolls Royce has to ask his permission before building a car or selling one.

In effect, a nation slowly but surely becomes Greece as more and more people either rely on benefits or have jobs in the bloated bureaucracies that dispense goodies.

…you cannot build a patronage society on patrons alone: You need clients. And that’s where the ever-growing public sector comes in. …There is effectively no one working at your local DMV, public school, police station, or IRS office who could earn even 80 percent of his government compensation in a private-sector job. …the really nefarious dependency agenda isn’t focused on the people who cash welfare checks, but on the people who write them, the vast bureaucracies of overpaid functionaries… Get enough of those and you have effective control over the entire economy — Chávez-style socialism without the nasty business of formal expropriation.

By the way, it’s not just libertarian types who worry about bloated government and cronyism.

Here’s an excerpt from a recent column by Robert Samuelson that succinctly captures an inherent problem with government. Writing about the reasons for diminishing productivity growth, he cites the work of Mancur Olson.

Olson revolutionized thinking about the political power of interest groups. …conventional wisdom held that large groups were more powerful than small groups in pursuing their self-interest — say, a government subsidy, tax preference or a protective tariff. …Just the opposite, Olson said in his 1965 book “The Logic of Collective Action.” With so many people in the large group, the benefits of collective action were often spread so thinly that no individual had much of an incentive to become politically active. The tendency was to “let George do it,” but George had no incentive either. By contrast, the members of smaller groups often could see the benefits of their collective action directly. They were motivated to organize and to pursue their self-interest aggressively.

Samuelson continues, elaborating on Olson’s insight about concentrated benefits and dispersed costs.

Here’s an example: A company and its workers lobby for import protection, which saves jobs and raises prices and profits. But consumers — who pay the higher prices — don’t create a counter-lobby, because it’s too much trouble and the higher prices are diluted among many individual consumers. Gains are concentrated, losses dispersed. This was Olson’s great insight, and it had broad implications, he said. In a 1982 book, “The Rise and Decline of Nations,” he argued that the proliferation of special-interest concessions could reduce a society’s economic growth. “An increase in the payoffs from lobbying . . . as compared with the payoffs from production, means more resources are devoted to politics and cartel activity and fewer resources are devoted to production,” he wrote.

The last part of the excerpt is crucial.

When we get to the point when businesses are focused on harvesting favors from Washington (such as bailouts, export subsidies, special tax preferences, etc), that is a very depressing indication of a cronyist economy rather than a capitalist economy. Of being Argentina rather than Hong Kong.

If you’re not already sufficiently depressed, my colleague Chris Edwards has a very good description of the lawmaking process. You should read the whole thing, but here are a few excerpts as a teaser.

In a romantic view of democracy, legislators act with the interests of the general public in mind. They grapple with policy issues, work toward a broad consensus, and pass legislation that has strong support. To ensure that funds are spent wisely, they frequently reevaluate existing programs and prune the low-value and harmful ones. They put citizens first and carefully limit their actions to those allowable under the U.S. Constitution. The problem with this “public interest theory of government” is that it has little real-world explanatory power. …we can better understand congressional actions by looking at incentives.

And when you look at how the process really works, you learn it is dominated by “rent seeking,” which is academic jargon for interest groups obtaining undeserved benefits via government coercion.

Members…seek federal benefits for their states because most of the costs will fall on other states. This is a major factor causing federal failure. The structure of Congress leads members to support programs that benefit their states but that are losers for the nation as a whole. …There is no built-in check—no invisible hand, as in markets—to guide members to make value-added decisions… Special-interest groups dominate policy discussions. Most witnesses to congressional hearings favor the programs being examined, and they focus on program benefits, not the costs. Most visitors to member offices on Capitol Hill are there to plead for special benefits. …Washington is teaming with lobbyists seeking special benefits—subsidies, regulations, trade protections—that come at the expense of the general public. …rent seeking is a two-way street. Jonathan Rauch of Brookings noted, “In the public’s mind, the standard model of lobbying in Washington involves special interests buying influence, in a sort of legalized bribery. In fact, the process more often involves politicians shaking down special interests.”

If you’ve read this far, you probably want to go take a shower and wash away the stench of Washington corruption.

But there’s one tiny glimmer of hope. If we can somehow figure out how to shrink the size and scope of government, we can reduce the problem. That’s the message of this video.

While we know the solution, our real challenge is that we can only shrink government by convincing politicians to change policy. Yet asking politicians to reduce government is like asking burglars to be in favor of armed homeowners.

And based on everything I wrote above, we know politicians generally have bad incentives.

But it’s not hopeless. While I certainly enjoy mocking politicians, they’re not totally immoral or even amoral people. Many of them do understand there’s a problem. Indeed, I would argue that recent votes for entitlement reform are an example of genuine patriotism – i.e., doing the right thing for the country.

So is there a potential solution?

Maybe. Let’s use an analogy from Greek mythology. Many politicians generally can’t resist the siren song of a go-along-to-get-along approach. But like Ulysses facing temptation from sirens, they recognize that this is a recipe for a bad outcome. So they realize that some sort of self-imposed constraint is desirable. And that’s why I’m somewhat hopeful that we can get them to impose binding spending caps.

We know there are successful reforms by looking at the evidence. And we know there is growing support from fiscal experts. And we even see that normally left-leaning international bureaucracies such as the OECD and IMF acknowledge that spending caps are the only effective fiscal rule.

So if Ulysses can bind himself to the mast and resist the sirens, perhaps we can convince politicians to tie their own hands with a Swiss-style spending cap.

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Washington is a horribly corrupt city. The tax code is riddled with special favors for politically powerful interest groups. The budget is filled with handouts and subsidies for well-connected insiders. The regulatory apparatus is a playground for cronyism.

I’ve previously explained that shrinking the size and scope of government is the most effective way of curtailing corruption. Simply stated, people won’t try to get favors and politicians won’t have the ability to sell favors if government doesn’t have power to redistribute income and dictate behavior.

To be sure, this isn’t a recipe for zero corruption. There doubtlessly was corruption in the 1700s and 1800s when Washington was just a tiny fraction of its current size. But it’s a matter of scale. A smaller government means less opportunity for mischief.

Some folks argue that campaign finance laws would be an effective way of curtailing sleaze in Washington. And there are some compelling arguments for this approach.

After all, would we have unsavory examples of corruption like the Export-Import Bank if wealthy insiders from big companies weren’t able to generate buckets of campaign cash for politicians?

But let’s be realistic. So long as politicians have the power to provide subsidies for big business, they’ll have an incentive to offer those handouts. And companies will have an incentive to seek those handouts.

Campaign finance laws might cut back on one pathway to buy and sell favors, but the incentive to cut deals will still exist. Sort of like pressing down on one part of a balloon simply causes another part of the balloon to expand.

But, you may ask, isn’t it worth taking such steps in hopes of at least creating some roadblocks to graft in Washington.

Perhaps in theory, but let’s not forget that it’s very naïve to think that politicians will enact laws that reduce their power or weaken their chances of being reelected. That’s about as likely as burglars being in favor of armed homeowners.

As such, we actually should be concerned that new laws and rules somehow would be structured to make things worse rather than better.

That’s the message of this superb video from Prager University. Narrated by George Will, the video explains why so-called campaign finance rules are not the answer (unless, of course, the question is “how can we give more power to the entrenched political class?”).

Let me add something that wasn’t addressed in the video. Incumbent politicians like the idea of limiting campaign contributions because they start each election cycle with a giant advantage. They already are well known in their states or districts. They’ve already curried favor with voters by engaging in taxpayer-financed “constituent service.” They already get themselves in front of cameras at every opportunity when there’s a ribbon cutting for a new bridge or road project. And they’ve already built relationships with the power brokers in each community.

Challengers, for all intents and purposes, need to spend a lot of money – potentially millions of dollars depending on the electorate – simply to create a level playing field. But if there are laws that limit total spending or restrict contribution amounts, it makes it a lot harder to conduct a credible campaign.

No wonder incumbent politicians so often pontificate about “getting money out of politics.” What they’re really saying is “let’s make it impossible for anybody to threaten my reelection.”

The bottom line is that limits on campaign contributions and other restrictions on political speech make elections less fair.

And they don’t solve the bigger issue of graft, corruption, and sleaze. No wonder they’re willing to impose dozens – if not hundreds – of laws governing public malfeasance and campaign finance. They know that such rules are largely ineffective because much of what happens in Washington is legalized forms of corruption.

Which brings us back to the real issue. If you want less sleaze in Washington, reduce the size and scope of the federal government.

Everything else is window dressing.

P.S. The most pervasive form of corruption in Washington (and, sadly, in many other parts of America) is the moral corruption that exists when people think it’s perfectly acceptable to steal from their neighbors so long as 51 percent of the people approve of the theft. That’s why social capital is very important.

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I’ve explained, over and over and over again, that big government is the mother’s milk of corruption.

Simply stated, a convoluted tax code, bloated budget, and regulatory morass create endless opportunities for well-connected insiders to obtain unearned and undeserved wealth.

Is this evidence that Washington is broken?

In a column for Real Clear Politics., Mike Needham of Heritage Action suggests that the conventional wisdom is wrong. Washington actually works very well, but not for the American people.

Washington isn’t broken. It is a well-oiled machine that works for the well-connected and responds to the well-heeled. This corrupt nexus of favoritism and cronyism tends to leave hardworking Americans behind. …as we’ve seen with Obamacare, the bigger the government, the bigger the Bigs become.

Is he right? Well, let’s look at some evidence. We already know Obamacare has been a boon for hacks from the Democratic Party.

But did you know that lots of GOP insiders also are cashing in because of Obamacare?

Let’s not limit our analysis to Obamacare.

There are many other examples of how the folks in Washington live on Easy Street at our expense. For instance, they enjoy lavish junkets. Here’s what the Washington Post reported back in September.

As Congress returned Tuesday…, some 14 House members were resting up from a week-long trip to Hawaii. …It sounded like a fine journey via military jet (business class) to stay at the oceanfront Sheraton Waikiki in Honolulu. Dinners were planned at the famous Hy’s Steak House — the superb porterhouse is always worth the $88.95 — and the upscale Roy’s Hawaii with its great fusion menu. (We hope they tried the lobster pot stickers.) …The schedule thoughtfully included substantial “executive time” in the afternoons. This, as Loop Fans know, is often a thinly veiled euphemism for some fine lounging at the pool, or exploring beautiful Hawaii.

This boondoggle was especially irksome to me since I was in Hawaii at the same time. But I had to pay my own way! And my hotel was right next to Hy’s Steak House, which had a very appealing menu, but I didn’t go because taxpayers weren’t financing my meals.

Speaking of integrity in D.C., here’s a story from the Washington Post that belongs in the is-anyone-actually-surprised category.

The Honest Tea firm, which makes organic iced tea, set up a stand offering bottles of its tea at 27 cities throughout the country, including D.C., and used the honor system by asking people to leave $1 in a box when they took a tea. But in the District’s Dupont Circle neighborhood, someone stole money from the box. Executives at Honest Tea wouldn’t say exactly how much was in the box but said it ranged between $5 to $20. The theft happened in the early morning, officials believe, and they did not report it to police. It was the first time in the six years that the company has been doing its experiment that someone has actually stolen money from the collection box, officials with Honest Tea said.

By the way, Dupont Circle is a ritzy part of town, not a low-income ghetto.

I’m guessing the thief is a lobbyist or bureaucrat, someone who already has a track record of taking other people’s money.

But if you really want to see Washington at its most unseemly, the Clinton machine symbolizes the corrupt nexus of big government and cronyism. Here are some passages from a report by Politico.

A spring 2012 email to Hillary Clinton’s top State Department aide, Huma Abedin, asked for help winning a presidential appointment for a supporter of the Clinton Foundation, according to a chain obtained by POLITICO. The messages illustrate the relationship between Clinton’s most trusted confidante and the private consulting company that asked for the favor, Teneo — a global firm that later hired Abedin. Abedin signed on with the company while she still held a State Department position, a dual employment that is now being examined by congressional investigators. …Abedin also worked as an adviser to the Clinton Foundation, the nonprofit founded by former President Bill Clinton.

This is amazing. Working for an influence-peddling company while on the government payroll as well?!?

And speaking of influence peddling, check out these excerpts from another Politico story.

Campaigns are required to file reports detailing registered lobbyists who round up donations, but that number is only a small slice of the fundraisers who work in some capacity in Washington’s vast influence industry… A quarter of the “Hillblazers” who bundled $100,000 or more for Clinton work at lobbying firms or public affairs agencies lobby at the state level or otherwise make their living from influencing the government on behalf of special interests… Clinton received at least $5.4 million from professional influencers, compared with $3.2 million from registered lobbyists disclosed to the FEC. For Bush, the equivalent figures are $1.02 million and just under $408,000.

The Hill also has a story about D.C. insiders flocking to Hillary Clinton.

K Street is banking on Hillary Clinton, with more than twice as many Washington lobbyists donating to the former secretary of State’s presidential campaign than any other candidate.  Clinton — the frontrunner for the Democratic nomination — received at least $625,703 from 316 registered lobbyists and corporate PACs during the first half of the year, according to disclosure forms. …Former Florida Gov. Jeb Bush ranks as a distant second in the influence industry, collecting $444,500 from 140 lobbyists.

And why are lobbyists coughing up cash?

For the simple reason that they want access. And with access to politicians, that means they get access to other people’s money.

…support from K Street can not only help boost a candidate, but also put lobbyists in good standing with the candidate in the event he or she takes the White House. …lobbyists have hedged their bets by supporting several candidates, sometimes at the request of clients, they told The Hill, asking for anonymity.

Though keep in mind that Ms. Clinton and her cronies are just the tip of the iceberg.

She’s more guilty than most for the simple reason that she actively wants to expand government, which would create even more opportunities for mischief.

Let’s also be fair in acknowledging that this problem exists in other countries. Indeed, it’s probably worse elsewhere.

Vote buying in India, for instance, can be especially challenging. Check out these passages from a Reuters report.

Village bachelors in northern India are demanding brides for votes in state polls next month because of a shortage of women after decades of illegal abortions of female fetuses, the Mail Today reported on Thursday.

Though it appears that some Indian politicians actually are willing to say no to voters.

Politicians have dismissed the demand, the report said.

Of course, it’s quite possible that the politicians are saying no in public and then somehow trying arrange brides behind the scenes.

Time to conclude with some excerpts from a story about our ruling class in Washington.

Thousands of clients using the affair-oriented Ashley Madison website listed email addresses registered to the White House, top federal agencies and military branches, a data dump by hackers revealed. The detailed data, released Tuesday, will likely put Washington, D.C., on edge. The nation’s capital reportedly has the highest rate of membership for the site of any city. Indeed, more than 15,000 of the email addresses used to register accounts were hosted on government and military servers.

The key words above are “highest rate of membership.” Yup, these are the people who think they should tell us how to live our lives. These are the clowns who think they can spend our money better than we can. These are the buffoons who want to direct and control the private economy.

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In the past, I’ve identified the world’s most misleading headlines and I’ve also identified the world’s least surprising headline.

Today, I’m going to share the world’s most disappointing headline.

When I first saw this story in USA Today, I thought it was time to celebrate.

Wow, I thought, what a great outcome. I’ve always wanted a restoration of federalism, but I never thought this is how it would occur.

So I decided to read the story to find out what’s causing DC’s well-deserved disappearance.

Alas, none of those reasons apply for the simple reason that the headline is an absurd exaggeration.

I hate to burst anyone’s bubble, but Washington isn’t really going away. Here’s what’s actually in the story.

…new research from the U.S. Geological Surveyand the University of Vermont shows that the land in the district — where the Lincoln Memorial was built on silt dredged from the Potomac River — is expected to fall 6 inches or more during the next 100 years.

Sigh, how disappointing.

In other words, we’re going to have to rely on old-fashioned methods if we really want to cut Washington down to size. Since it’s not going to disappear on its own, we’ll need tax reform, deregulation, and program terminations if we want to solve the problem.

And one fringe benefit of this approach, as pointed out by the Wall Street Journal, is that a smaller government means fewer lobbyists and special interest groups.

Businesses have no choice but to lobby a government that can cripple them with a single new regulation. …The real problem is the opportunities for corruption and special dealing that a too-large government provides. Every new regulation or twist of the tax code is an opening for some powerful Member to assist the powerful. But the solution is to reduce the size and scope of the regulatory state and to reform the tax code.

Amen. I’ve been arguing for years that big government means big corruption. I even narrated a video making that point.

But I think I said it best in this CNBC interview when I equated big government to a dumpster in an alley.

So we may not be able to sink Washington, but we can make it less of an unseemly nuisance by reducing the size and scope of the federal government.

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I don’t like former House Speaker Dennis Hastert. But not because of any personal interactions. I don’t think I’ve every even been in the same room as him, much less ever met him.

But I know that he did nothing to restrain the reckless expansion of government when he had power during the Bush years. Indeed, he fought against those who tried to throw sand in the gears.

So I’ll admit a certain Schadenfreude now that he’s in legal trouble. But I’m also irked. He’s being charged with something that shouldn’t be a crime, while getting (at least so far) a free pass for the bad things that he has done.

As is so often the case, Tim Carney has the right perspective. Here’s some of what he wrote for the Washington Examiner.

If the the stories that have leaked in the media are true, the true sin Hastert committed is unspeakable, but possibly unprosecutable. There is one aspect of the Hastert scandal, however, that reflects a problem that is more troubling than “structuring” bank withdrawals… How in the world could a school-teacher-turned lawmaker afford to pay, reportedly, $3.5 million in hush money?

Tim answers his own question, citing the government’s corrupt ban on incandescent light bulbs.

Hastert monetized his public service into a lucrative lobbying career — largely by increasing government. One telling episode begins in May 2007. Hastert at that time was a chief cosponsor of the “light bulb ban,” the law that effectively outlawed the traditional incandescent bulb, forcing consumers to buy more expensive fluorescent bulbs and LEDs. …in March 2008, Hastert joined Polybrite “as a strategic advisor,” according to a company press release. A year later, after he had joined K Street lobbying firm Dickstein Shapiro, Hastert officially registered as a lobbyist for Polybrite… Hastert’s first lobbying work for Polybrite…was his job to try to get stimulus money for Polybrite.

Hmmm… I wonder is Polybrite was part of the $27 bulb stimulus scandal?

But nanny-state light bulbs are just the tip of the iceberg. Here’s another example.

Ethanol subsidies were another Hastert special. In the first three months of 2015, the ethanol industry lobby group, Fuels America, paid Dickstein Shapiro $60,000 for ethanol-mandate lobbying by Hastert and another lobbyist. All the House members Hastert had rewarded with committee assignments, earmarks and co-sponsorships were now taking phone calls from their former commander on behalf of green-tinted subsidy sucklers. This is part of how Washington turned a school teacher into a millionaire.

In other words, Hastert is a poster child (along with Harry Reid, Bob Dole, and countless others) for the proposition that Washington is basically a giant scam operated for the benefit of insiders who get rich by taking money from earners and producers and giving it to those with political connections.

Which is my message in this video from the Center for Freedom and Prosperity.

But now let’s return to the main topic. Hastert wasn’t charged with being a sleazy insider who used connections to pillage money from taxpayers and steer it to corrupt clients.

Instead, he’s being charged with violating “money laundering” laws that shouldn’t even exist. Here’s some of what Warren Coats (a colleague on the Editorial Board of the Cayman Financial Review) wrote on this topic.

Mr. Hastert is being charged with violating our Anti Money Laundering (AML) laws. These laws allow arresting and convicting people for moving money (as Mr. Hastert was doing) that the government thinks was the proceeds of crime (not the case with Mr. Hastert, his crime was failing to report what he planned to with his money), when they are not able to prove that there was a crime in the first place. As far as I know, paying a blackmailer (which is what Mr. Hastert apparently did) is not a crime, though demanding and receiving such money is. The United States has pushed such legislation and the new bureaucracies needed to enforce it all over the world at the cost of billions and billions of dollars (that could have been used for poverty reduction or other more pressing things) with very little if any benefit to show for it. Charging Dennis Hastert with AML violations is a rare exception. Wow, what a benefit for such intrusions into our private lives. I consider AML laws more than a costly waste of money. They are another expansion of the arbitrary power of governments that can be used for good or ill with limited oversight.

For more information, here’s the video I narrated on why it’s inefficient and intrusive to require banks to spy on their customers.

I suppose the bottom line is that Dennis Hastert is a bad person who did bad things, so he deserves some payback. And that’s exactly what he’s getting.

But I can’t help but wish he was punished for the right reason.

P.S. Like most fans of the New York Yankees, I’m not a big fan of the irrelevant quasi-Major League team on Long Island.

But I confess my allegiances are just an accident of birth, family, and geography.

However, I now have a policy reason to dislike the Mets.

The New York Mets have become the first sports team to join the nationwide anti-gun campaign, aligning with celebrities like Piers Morgan and Chicago Mayor Rahm Emanuel to back today’s National Gun Violence Awareness Day. Sponsored by the Michael Bloomberg-backed Everytown for Gun Safety, people with some 200 organizations are wearing orange to draw attention to the issue. According to the group, the Mets even dressed in orange to show their support.

It’s both amazing and disappointing that there were no real Americans on the team who refused to participate in this attack on the Constitution.

To offset this bad news, here’s some anti-gun control humor to brighten your day.

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In the past week, I’ve written two columns (here and here) extolling the benefits of federalism.

So I now feel compelled to warn that my support for decentralization is not motivated by some Pollyannish view of sub-national governments.

State and local government officials are perfectly capable of adopting policies that lead to the absurd waste of taxpayer money and grotesque abuse of citizens.

And they also are just as proficient at sleaze as their cousins in Washington.

Politico has a sobering report on pervasive state-level corruption. They start with a rundown of what’s been happening with the criminal class in the Empire State.

Other states have plenty of corruption, but it’s hard to beat New York when it comes to sheer volume. The criminal complaint Monday against Dean Skelos, the state Senate majority leader, and his son Adam came just three months after charges were brought against Sheldon Silver, then the Assembly Speaker. Having the top leaders in both chambers face criminal charges in the same session is an unparalleled achievement, but Skelos is now the fifth straight Senate majority leader in Albany to face them. …Senate Republicans are standing by Skelos, but if they decide to make a change, they probably won’t turn to Thomas Libous, the chamber’s Number Two leader. He faces trial this summer on charges of lying to the FBI… All told, more than two dozen members of the New York state legislature have been indicted or resigned in disgrace over the past five years.

New York seems to breed corruption, probably because it is a profligate state and there is a well-established relationship between the size of government and the opportunities for malfeasance.

But other states are doing their best to show corruption and government go hand in hand.

Silver was one of four state House Speakers to face criminal charges over the past year (Alabama, Rhode Island and South Carolina are home to the others). In Massachusetts, three Speakers prior to current incumbent Robert DeLeo all resigned and pleaded guilty to criminal charges. When Dan Walker died last week, it was hard for obituary writers not to note that he was one of four Illinois governors over the past five decades who ended up in prison. …Give any U.S. attorney a year and 10 FBI agents and he or she can probably come back from the state capital with a passel of indictments.

At some point, even non-libertarians need to recognize that 2+2=4. In other words, the evidence is overwhelming that the public sector is a breeding ground for corruption because it is premised on buying votes with other people’s money.

Which is the basic message of my First Theorem of Government.

By the way, I’m not making a partisan point. It should be obvious from the story cited above, but I’ll reiterate that Republicans are just as capable of venal behavior as their opponents.

And don’t delude yourself into thinking that “principled” Democrats are immune to sleazy behavior.

Here’s the video I narrated explaining how bloated government enables corruption.

P.S. You can enjoy some government corruption humor here, here, here, here, and (my personal creation) here.

P.P.S. If you’re a fan of Barack Obama, you may be pleased to know that we’re setting records as a result of his policies.

We already know America has experienced a record drop in labor force participation.

And we also have a new record for weakest recovery since the Great Depression.

As well as a record for declining household income.

Now we have a new record. More Americans than ever before have decided to give up U.S. citizenship. Here are some of the details from a Bloomberg report.

More Americans living outside the U.S. gave up their citizenship in the first quarter of 2015 than ever before, according to data released Thursday by the IRS. The 1,335 expatriations topped the previous record by 18 percent, according to data compiled by Bloomberg. Those Americans are driven to turn in their passports in part because of laws that have expanded bank reporting and tax compliance requirements for expatriates. The increase in early 2015 follows an annual record in 2014, when 3,415 Americans gave up their citizenship. An estimated 6 million U.S. citizens are living abroad, and the U.S. is the only country within the Organization for Economic Cooperation and Development that taxes citizens wherever they reside.

Here’s one example from the story.

“The cost of compliance with the complex tax treatment of non-resident U.S. citizens and the potential penalties I face for incorrect filings and for holding non-U.S. securities forces me to consider whether it would be more advantageous to give up my U.S. citizenship,” Stephanos Orestis, a U.S. citizen living in Oslo, wrote in a March 23 letter to the Senate Finance Committee. “The thought of doing so is highly distressing for me since I am a born and bred American with a love for my country.”

There are two lessons from this story.

  • First, it is absurd that our tax laws are so onerous (even worse than France in this regard) that some people feel compelled to give up American citizenship.
  • Second, while there are lots of ordinary Americans who are being pushed to give up their passports (folks married to foreigners, for instance), the average expatriate presumably has above-average income and is an asset to be welcomed rather than a burden to be repelled.

But such considerations don’t matter to politicians who like to demagogue about the supposed pot of gold at the end of the rainbow of overseas Americans. So we get awful laws like FATCA.

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As an economist, my primary objection to excessive government is – or at least should be – based on foregone growth. After all, government spending (whether it is financed by taxes or borrowing) diverts resources from the productive sector of society and results in the misallocation of labor and capital.

Based on my blood pressure, though, I get even more upset about the perverse unfairness of Washington. It galls me that well-connected insiders obtain undeserved wealth by using the coercive power of government.

And I get especially agitated when I think about ordinary Americans, most of modest means, who have less income and lower living standards because of DC’s corrupt profligacy.

So when I write about shutting down the Export-Import Bank, closing the Department of Housing and Urban Development, and reforming the tax code, I make the standard economic arguments for smaller government. But I also explain that reform is a way of dealing with political sleaze.

Heck, insider corruption is so pervasive that it even causes problems in those rare instances when government is doing sensible.

Let’s look at the example of the EB-5 program that was set up to attract wealthy foreigners to America if they create jobs.

This should be a feel-good story. After all, everyone presumably agrees that these are best type of immigrants since there’s no danger that they’ll wind up on the welfare rolls.

In theory, the program is very simple. As explained by Wikipedia, “individuals must invest $1,000,000…, creating or preserving at least 10 jobs for U.S. workers.”

In reality, though, the program is a bureaucratic mess because…well, simply because that’s the way government operates.

And that means plenty of opportunities for corrupt insiders to work the system.

Here are some of the unseemly details of one example. As reported by the Washington Post, it involves an Obama appointee, the Governor of Virginia, and the brother of Hillary Clinton.

The now-No. 2 official at the Department of Homeland Security intervened on behalf of politically connected favor seekers — including Democrat Terry McAuliffe not long before he was elected Virginia governor, a new report from the department’s inspector general has found. The intervention, on behalf of McAuliffe’s GreenTech Automotive company, “was unprecedented,” according to the report… The long-anticipated report reviewed Mayorkas’s management of the EB-5 program, which allows foreign nationals who create jobs in the United States to obtain green cards. The report concluded that Mayorkas’ actions “created an appearance of favoritism and special access.’’ …McAuliffe’s company was working Gulf Coast Funds Management, a firm that specializes in obtaining EB-5 visas for investors. Gulf Coast was led by Anthony Rodham, brother of then-Secretary of State Hillary Rodham Clinton. …In addition to the case involving McAuliffe’s car company, the inspector general focused on actions Mayorkas took on behalf of a film project in Los Angeles and construction of a casino in Las Vegas, the latter supported by Nevada Democrat Harry Reid, who was Senate majority leader at the time.

Speaking of Senator Reid, the Washington Free Beacon exposes his sordid – and extended – efforts to use the power of his office to get special treatment for donors…and to line the  pockets of his son.

The Senate’s top Democrat was more deeply involved than previously known in an effort to secure U.S. visas for Chinese investors in a Las Vegas casino despite the concerns of career federal officials, according to an inspector general report released on Tuesday. …Executives at the casino’s parent company, a client of Reid’s son Rory, donated thousands of dollars to Reid’s campaign after he helped speed consideration of its applications for visas for its Chinese investors. That expedited consideration came despite warnings from career USCIS officials that applicants had forged paperwork, tried to conceal the sources of their investment, and, in one case, had ties to a child pornography business. …new details in the inspector general’s report reveal that his involvement was deeper and more prolonged. Reid requested and received regular updates from then-USCIS director Alejandro Mayorkas on the status of SLS’ EB-5 applications, agency employees told the IG. The IG report criticized Mayorkas for creating an “appearance of favoritism” in the EB-5 application process. …the senator also had connections to Stockbridge/SBE Holdings, the company behind the SLS project. His son Rory, then an attorney at Lionel Sawyer & Collins, a Nevada law firm, represented SBE Entertainment, one of its parent companies. …USCIS employees interviewed for the IG report described the process as unfair and overly political.

By the way, notice how both examples feature a relative of a powerful politician. Why is that? Because if you’re related to a DC bigwig, donors and special interest groups figure you have inside access to the favor factory in Washington.

A very odious form of nepotism, I think you’ll agree.

Ugh, I feel like I need to shower after writing about this topic.

But now let’s step back and consider the big picture. In most cases, eliminating an agency or shutting down a program is the simple way to deal with DC corruption.

What’s the right approach, though, when government is actually doing something that’s theoretically useful.

Remember, the underlying theory of the EB-5 program is very admirable. Indeed, many nations have similar “economic citizenship” programs because it makes sense to attract successful investors to your country.

Big nations such as the United Kingdom, Australia, and Spain have policies similar to America’s EB-5 program, as do little countries such as Latvia, St. Kitts and Nevis, Cyprus, Dominica, Malta, and Antigua and Barbuda.

So why is America’s system a mess? In part, the answer is that it’s not a simple system. Unlike other nations, where a simple cash payment or property purchase qualifies an investor for residency, the U.S. system requires the creation of 10 jobs. As you can imagine, it’s not necessarily a simple matter to measure job creation, particularly if an investor is putting money into a business that’s already in operation.

And this means the bureaucrats who oversee the program have a reason to drag their feet. Which means an opportunity for well-connected insiders to manipulate the system to the advantage of their friends, cronies, donors, and clients.

Moreover, all nations require some form of background check to weed out criminals. That’s a good thing, of course, but it also gives bureaucrats another excuse to avoid quick approvals. And this creates an opportunity for lobbyists and other members of the political class to use their political pull to get their clients quick and favorable treatment.

All of which means the rule of law is eroded and replaced by discretionary and arbitrary enforcement.

By the way, I spoke at an economic citizenship conference earlier this month in Dubai. My role was to warn that greedy governments would try to hinder the mobility of investors and entrepreneurs, particularly as the welfare state gets closer to collapse.

But it was also very interesting to hear reports from various nations about the operation of their programs. Most of them have shortcomings, to be sure, but it does appear that politicians in America have made our system one of the least effective.

For further background on the seemingly unbreakable link between big government and corruption, here’s a video I narrated for the Center for Freedom and Prosperity.

P.S. Government corruption is also a problem at the state level.

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I’ve pointed out that Washington is a cesspool of legal corruption. But if you don’t believe me (and you have a strong stomach), feel free to peruse these posts, all of which highlight odious examples of government sleaze.

But occasionally elected officials cross the blurry line and get in trouble for illegal corruption.

For those of you who follow politics, you may have seen news reports suggesting that Robert Menendez, a Democratic Senator from New Jersey, will soon be indicted for the alleged quid pro quo of trying to line the pockets of a major donor.

Attorney General Eric Holder has signed off on prosecutors’ plans to charge Menendez, CNN reported on Friday. …A federal grand jury has been investigating whether Menendez improperly used his official office to advocate on Melgen’s behalf about the disputed Medicare regulations when he met with the agency’s acting administrator and with the secretary of Health and Human Services, according to a ruling by a federal appeals court that became public last week. The ruling also said the government was looking at efforts by Menendez’s office to assist a company Melgen partly owned that had a port security contract in the Dominican Republic.

I certainly have no interest in defending Senator Menendez, but I can’t help but wonder what’s the difference between his alleged misbehavior and the actions of almost every other politician in Washington.

Here’s what I assume to be the relevant part of the criminal code, which I downloaded from the Office of Government Ethics (yes, that’s a bit of an oxymoron).

Stripped of all the legalese, it basically says that if a politician does something that provides value to another person, and that person as a result also gives something of value to the politician, that quid-pro-quo swap is a criminal offense.

Now keep this language from the criminal code in mind as we look at some very disappointing behavior by Republican presidential candidates at a recent Iowa gathering.

As Wall Street Journal opined, GOPers at the Ag Summit basically competed to promise unearned benefits to the corporate-welfare crowd in exchange for political support (i.e., something of great value to politicians).

Iowa is…a bad place to start is because it’s the heartland of Republican corporate welfare. Witness this weekend’s pander fest known as the Ag Summit, in which the potential 2016 candidates competed to proclaim their devotion to the Renewable Fuel Standard and the 2.3-cent per kilowatt hour wind-production tax credit. The event was hosted by ethanol kingpin Bruce Rastetter… Two of the biggest enthusiasts were Rick Santorum and Mike Huckabee… The fuel standard “creates jobs in small town and rural America, which is where people are hurting,” said Mr. Santorum, who must have missed the boom in farm incomes of recent years.

But it’s not just social conservatives who were promising to swap subsidies for political support.

Self-styled conservative reformers may be willing to take on government unions, which is laudable, but they get timid when dealing with moochers in Iowa.

Scott Walker, who in 2006 said he opposed the renewable fuel standard, did a switcheroo and now sounds like St. Augustine. He’s for ethanol chastity, but not yet. The Wisconsin Governor said his long-term goal is to reach a point when “eventually you didn’t need to have a standard,” but for now mandating ethanol is necessary to ensure “market access.”

And establishment candidates also tiptoed around the issue, suggesting at the very least a continuation of the quid pro quo of subsidies in exchange for political support.

Jeb Bush at least called for phasing out the wind credit, which was supposed to be temporary when it became law in 1992. But he danced around the renewable standard, which became law when his brother signed the energy bill passed by the Nancy Pelosi-Harry Reid Congress.

Geesh, maybe this is why Bush won’t promise to oppose tax hikes.

And there are more weak-kneed GOPers willing to trade our money to boost their careers.

Chris Christie wouldn’t repudiate the wind tax credit, perhaps because in 2010 the New Jersey Governor signed into law $100 million in state tax credits for offshore wind production. He also endorsed the RFS as the law of the land…, but what voters want to know is what Mr. Christie thinks the law should be. Former Texas Governor Rick Perry sounded somewhat contrite for supporting the wind tax credit, which has been a boon for Texas energy companies.

The only Republican who rejected corporate welfare (among those who participated) was Senator Ted Cruz.

The only Ag Summiteer who flat-out opposed the RFS was Texas Senator Ted Cruz , who has also sponsored a bill in Congress to repeal it. In response to Mr. Rastetter’s claim that oil companies were shutting ethanol out of the market, he noted “there are remedies in the antitrust laws to deal with that if you’re having market access blocked.”

Though even Cruz deviated from free-market principles by suggesting that anti-trust bureaucrats should use the coercive power of government to force oil companies to help peddle competing products.

Sigh.

By the way, I don’t mean to single out Republicans. Trading votes for campaign cash is a bipartisan problem in Washington.

But it is rather disappointing that the politicians who claim to support free markets and small government are so quick to reverse field when trolling for votes and money.

At least politicians like Obama don’t pretend to be a friend before stealing my money.

P.S. Normally I try to add an amusing postscript after writing about a depressing topic.

I’m not sure whether this story from the U.K.-based Times is funny, but it definitely has an ironic component.

Judge Juan Augustín Maragall, sitting in Barcelona, ruled that prostitutes should be given a contract by their employers, who should also pay their social security contributions. …In giving his verdict in the civil case, brought over a breach of labour regulations, the judge went further than expected, ruling that the women’s rights had been flouted by the management and forcing the company to pay the social security payments of three prostitutes backdated to 2012. Because of the ruling all brothels will be forced with immediate effect to issue contracts to staff and pay their social security contributions.

Now here’s the ironic part.

The ruling will generate tax revenue even though it’s actually illegal to employ prostitutes!

…it is against the law to make money from pimping, which carries a four-year jail term.

I guess the Judge could have ruled that the customers were the employers, but somehow I suspect it would have been difficult to extract employment taxes from those men.

Just like it would be difficult to extract employment taxes from the women.

Though the hookers won’t mind getting unemployment benefits so long as someone else is paying the taxes.

Conxha Borrell, of the Association of Sex Professionals, welcomed the ruling.

I guess we should add this to our great-moments-in-human-rights series.

Though maybe I should start a great-moments-in-economic-ignorance series since the prostitutes will be the ones who bear the burden of the tax even if the pimps are the ones writing the checks to the government (just as workers bear the burden of the “employer share” of the Social Security payroll tax).

P.P.S. Maybe Spanish hookers should reclassify themselves as porn artists who allow audience participation? That way, they can take advantage of Spain’s preferential tax rate for smut.

P.P.P.S. The Germans at least have figured out an efficient way to tax prostitutes.

P.P.P.P.S. Though maybe prostitutes should become politicians. The business model is quite similar, and I suspect you can “earn” more income selling access to other people’s money rather than selling sex to men who have to use their own money.

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When I write about the “inbred corruption of Washington” or “Washington’s culture of corruption,” I’m not merely taking pot-shots at the political elite.

I’m trying to make a very serious point about the way in which big government enables immoral behavior by both elected officials and various interest groups.

Heck, in many ways, government has morphed into a racket designed to enrich the lobbyists, insiders, contractors, bureaucrats, and politicians.

They play, we pay.

Jay Cost of the Weekly Standard has an entire new book on this topic and he highlights how big government-enabled corruption harms the middle class in a column for National Review.

A comprehensive strategy to boost the middle class has to include an aggressive assault on political corruption. Every year, the government wastes an obscene amount of money through corrupt public policies.

He makes the key point that corruption isn’t just about illegal behavior in Washington.

If we think of corruption merely as illegal activity, we’re defining it too narrowly. …the better way to understand it is as James Madison might have. In Federalist 10, he worried about the “violence of faction,” which he defined as a group “united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community.” This is all too common in public policy. From farm subsidies to Medicare, regulatory policy to the tax code, and highway spending to corporate welfare, our government does violence to the public interest by rewarding the interest groups that lobby it aggressively.

Cost then explains that this corruption-fueled expansion of government is very damaging for the middle class.

…corruption is a loser for the middle class. Middle-class Americans do not have the money to pay for lobbyists to make sure they are getting a piece of the action. They don’t usually contribute to political candidates, and when they do, it is typically for a presidential candidate whose ideas they think are sound. They do not subsidize the otherwise obscure subcommittee chairman with oversight on a critical policy. And, of course, they cannot offer politicians seven-figure employment opportunities for post-government life. And yet the middle class foots the bill. Average Americans pay higher taxes to subsidize this misbehavior… But beyond  that, corruption distorts the economy and limits the nation’s potential for growth. For instance, any time Congress creates a tax loophole, it shifts the flow of capital from some otherwise productive outlet to the tax-preferred end. And this is true not just of tax policy; any dollar spent by the government corruptly is a dollar better spent somewhere else. There are, in other words, substantial opportunity costs to be paid, mostly by the middle class.

While I definitely agree with the thrust of Cost’s analysis, I might quibble with the last part of this excerpt.

To be sure, I agree that the middle class foots the majority of the overall bill, but I actually wonder whether the poor suffer the most. At least on an individual basis. After all, the people on the bottom rungs of the economic ladder presumably have the most to lose if growth is sluggish or non-existent.

Which also explains why I get so upset about Obama’s class-warfare policies. High tax rates facilitate corruption and it’s the less fortunate who wind up suffering.

But enough nit-picking and digressing.

Cost’s column is right on the mark, particularly his point about properly defining corruption to capture what’s immoral as well as what’s illegal.

That’s one of the main points I made in this video from the Center for Freedom and Prosperity.

Now let’s take this analysis, both from Cost’s article and my video, and apply it to Obama’s new budget.

Professor Jeffrey Dorfman, an economist at the University of Georgia, has a column for Real Clear Markets entitled, “Obama’s Budget Is All About Whom You Know.”

He starts by citing some examples of how Obama wants government to manipulate our choices.

President Obama wants to control everyone’s behavior using the federal government as both his carrot and stick. …the President is in favor of both parents working and either strangers or government employees raising children as much as possible. …The President proposed nothing to help people save for college or to make it more affordable in any manner other than a government handout. …All of these higher education policies suggest government is your friend and personal responsibility is a bad idea.

Dorfman doesn’t explicitly state that this micro-management by big government is corrupt, but what he’s describing fits in perfectly with Cost’s analysis about average people suffering as D.C. insiders keep expanding government and getting more power over our lives.

If you put this all together, the President is clearly stating that increasing government dependence is a priority. People are offered more financial assistance through the government so as to build support for larger government. …President Obama is only interested in helping some Americans, in rewarding the Americans who behave the way he thinks they should. He believes that the government, that he, should have the power to pick winners and losers. His vision is not one in which everyone wins, rather it is one where those he favors gain at the expense of those he seeks to punish for either their success or their actions. …government is now taking sides.

Needless to say, when government is taking sides and picking winners and losers, that is a process that inevitably and necessarily favors the politically well-connected insiders.

That’s good news for Washington parasite class (and their children), but it’s not good for America.

P.S. Some folks in Louisiana have a pretty good suggestion for dealing with political corruption.

P.P.S. By the way, you don’t solve the problem of government-facilitated corruption by restricting the 1st Amendment rights of people to petition their government and participate in the political process.

P.P.P.S. While this column focuses mostly on the immoral corruption of Washington rather than the illegal variety, there’s also plenty of the latter form of corruption in programs such as Medicare, Medicaid, welfare, job training, food stamps, disability, etc.

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I’ve periodically cited the great 19th-century French economist, Frederic Bastiat, for his very wise words about the importance of looking at both the seen and the unseen when analyzing public policy.

Those that fail to consider secondary or indirect effects of government, such as Paul Krugman, are guilty of the “broken window” fallacy.

There are several examples we can cite.

A sloppy person, for instance, will think a higher minimum wage is good because workers will have more income. But a thoughtful analyst will think of the unintended consequence of lost jobs for low-skilled workers.

An unthinking person will conclude that government spending is good for growth because the recipients of redistribution have money to spend. But a wiser analyst will understand that such outlays divert money from the economy’s productive sector.

A careless person will applaud when government “creates” jobs. Sober-minded analysts, though, will wonder about the private jobs destroyed by such policies.

It’s time, though, to give some attention to another important contribution from Bastiat.

He also deserves credit for the pithy and accurate observation about government basically being a racket or a scam.

And what’s really amazing is that he reached that conclusion in the mid-1800s when the burden of government spending – even in France – was only about 10 percent of economic output. So Bastiat was largely limited to examples of corrupt regulatory arrangements and protectionist trade policy.

One can only imagine what he would think if he could see today’s bloated welfare states and the various ingenious ways politicians and interest groups have concocted to line their pockets with other people’s money!

Which brings us to today’s topic. We’re going to look at venal, corrupt, wasteful, incompetent, and bullying government at the federal, state, and local level in America.

We’ll start with the clowns in Washington, DC.

Remember when the unveiling of the Obamacare turned into a cluster-you-know-what of historic proportions?

Well, the Daily Caller reports that the IRS has just signed an Obamacare-related contract with an insider company that recently became famous for completely botching its previous Obamacare-related contract.

Seven months after federal officials fired CGI Federal for its botched work on Obamacare website Healthcare.gov, the IRS awarded the same company a $4.5 million IT contract for its new Obamacare tax program. …IRS officials signed a new contract with CGI to provide “critical functions” and “management support” for its Obamacare tax program, according to the Federal Procurement Data System, a federal government procurement database. The IRS contract is worth $4.46 million, according to the FPDS data.

Just one more piece of evidence that Washington is a town where failure gets rewarded.

And CGI is an expert on failure.

A joint Senate Finance and Judiciary Committee staff report in June 2014 found that Turning Point Global Solutions, hired by HHS to review CGI’s performance on Healthcare.gov, reported they found 21,000 lines of defective software code inserted by CGI. Scott Amey, the general counsel for the non-profit Project on Government Oversight, which reviews government contracting, examined the IRS contract with CGI. “CGI was the poster child for government failure,” he told The Daily Caller. “I am shocked that the IRS has turned around and is using them for Obamacare IT work.” Washington was not the only city that has been fed up with CGI on healthcare. Last year, CGI was fired by the liberal states of Vermont and Massachusetts for failing to deliver on their Obamacare websites. The Obamacare health website in Massachusetts never worked, despite the state paying $170 million to CGI.

For a company like this to stay in business, you have to wonder how many bribes, pay-offs, and campaign contributions are involved.

Now let’s look at an example of state government in action.

Kim Strassel of the Wall Street Journal has a column about a blatantly corrupt deal between slip-and-fall lawyers and the second most powerful Democrat in the Empire State.

New York Assembly Speaker Sheldon Silver was last week arrested and accused by the feds of an elaborate kickback scheme. …Mr. Silver is alleged to have pocketed more than $5 million in a set-up in which he directed state funds to the clinic of an asbestos doctor, who in turn provided him with patients who could be turned into jackpot plaintiffs. Weitz & Luxenberg, a class-action titan, paid Mr. Silver huge referral fees for these names, off which the firm stands to make many millions. …when the Silver headlines broke, Weitz & Luxenberg founder Perry Weitz said he was “shocked”… The firm quickly put the Albany politician on “leave.”

A logical person might ask “on leave” from what? After all, he didn’t do anything.

But he did do something, even if it was corrupt and sleazy.

…here’s the revealing bit. Queried by prosecutors as to what exactly the firm did hire Mr. Silver to do—since he performed no legal work—Weitz & Luxenberg admitted that he was brought on “because of his official position and stature.” In other words, this was transactional. Weitz & Luxenberg gave Mr. Silver a plum job, and Mr. Silver looked out for the firm—namely by blocking any Albany bills that might interfere with its business model.

So workers, consumers, and businesses get screwed by a malfunctioning tort system, while insider lawyers and politicians get rich. Isn’t government wonderful!

Just one example among many of how state governments are a scam. Perhaps now folks will understand why I’m not very sympathetic to the notion of letting them take more of our money.

Last but not least, let’s look at a great moment in local government.

As we see from a report in USA Today, a village in New Jersey is dealing with the scourge of…gasp…unlicensed snow removal!

Matt Molinari and Eric Schnepf, both 18, also learned a valuable lesson about one of the costs of doing business: government regulations. The two friends were canvasing a neighborhood near this borough’s border with Bridgewater early Monday evening, handing out fliers promoting their service, when they were pulled over by police and told to stop. …Bound Brook, like many municipalities in the state and country, has a law against unlicensed solicitors and peddlers. … anyone selling goods and services door to door must apply for a license that can cost as much as $450 for permission that is valid for only 180 days. …Similar bans around the country have put the kibosh on other capitalist rites of passage, such as lemonade stands and selling Girl Scouts cookies.

Though, to be fair, it doesn’t seem like the cops were being complete jerks.

Despite the rule, however, Police Chief Michael Jannone said the two young businessmen were not arrested or issued a ticket, and that the police’s concern was about them being outside during dangerous conditions, not that they were unlicensed. “We don’t make the laws but we have to uphold them,” he said Tuesday after reading some of the online comments about the incident. “This was a state of emergency. Nobody was supposed to be out on the road.”

But the bottom line is that it says something bad about our society that we have rules that hinder teenagers from hustling for some money after a snowstorm.

Just like these other examples of local government in action also don’t reflect well on our nation.

Let’s close with my attempt to re-state Bastiat’s wise words. Here’s my “First Theorem of Government.”

And if you think what I wrote, or what Bastiat wrote, is too cynical, then I invite you to check out how politicians are bureaucrats are squandering money on Medicare, the Veterans Administration, the Agriculture Department, Medicaid, the Patent and Trademark Office, the so-called Consumer Financial Protection Bureau, the National Institutes of Health, Food Stamps, , the Government Services Administration, unemployment insurance, the Pentagon

Well, you get the idea.

Which is why this poster is a painfully accurate summary of government.

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So what should libertarians, Reagan conservatives, and other advocates of smaller government think of the “cromnibus” spending bill?

The answer depends on your benchmark. If you dislike insider deals, pork-barrel spending, and you think the federal government should be limited to the enumerated powers put in the Constitution by our Founding Fathers, then the cromnibus is an abomination.

But if you look at where we are right now and you think victory is achieved whenever we can shrink the burden of government spending and limit Washington’s power over the nation, then the cromnibus is a victory.

So is the glass half full or half empty?

Let’s start by looking at the optimistic case, which is ably summarized in what Peter Roff wrote for U.S. News and World Report.

…the “cromnibus” legislative vehicle to fund most of the federal government through September 30, 2015 is a major victory for the conservatives…the combined continuing resolution and omnibus funding bill [hence the term “cromnibus”] maintains the Ryan-Murray spending caps of $521 billion for defense and $492 billion for non-defense spending. …It blocks funding of the risk corridors that, under the Affordable Care Act, could lead to a government bailout of the insurance companies…while cutting the funds for the Independent Payment Advisory Board (which is the body that would be recommending any rationing of health care) by $10 million. The bill also cuts funding for the U.S. Environmental Protection Agency by $60 million, which is the fifth consecutive year the agency’s budget has been cut and may finally convince the bureaucrats who run the place they cannot go beyond what they are legally authorized to do without congressional approval. And it hits the Internal Revenue Service particularly hard, cutting its allocation of federal dollars by $345.6 million, prohibiting it from targeting organizations because of the way they chose to exercise their First Amendment rights or on an ideological basis… There’s more, but the general drift of the thing is toward smaller, leaner, more transparent, more honest government than has been the case over the last six years.

There’s a lot to like in what Peter wrote. I like the spending caps, even if they’re too high. And I unambiguously like imposing some fiscal restraint on the EPA and IRS.

But now let’s shift to a pessimistic assessment. Tim Carney of the Washington Examiner is a leading crusader against corporate welfare and he is appropriately disgusted that the annual spending bill became a vehicle for special-interest favors

Cromnibus was a fruit basket of special-interest provisions that K Street had been requesting for years. If you read to the very end of the bill — page 1,602 of 1,603 — you would find a section titled “Modification of Treatment of Certain Health Organizations.” This provision would provide protection from an Obamacare provision for exactly one entity: Blue Cross Blue Shield.Or look at page 1,153, which reauthorizes a federal agency whose job is to subsidize American-owned foreign businesses and the banks that finance them. The Overseas Private Investment Corporation extends taxpayer-backed loans and guarantees to U.S. companies when they set up shop overseas. OPIC is naked corporate welfare.Bills like Cromnibus, crafted in darkness and presented as must-pass legislation, allow the special interests to get what they want. A free and open debate on these issues is what the country needs.

These examples are just the tip of the iceberg. Tim is completely correct about the cromnibus being business-as-usual sleaze and corruption. There’s no question that a bunch of lobbyists were big winners.

So who’s right about the cromnibus, Peter or Tim?

I hate to sound like a mealy-mouth, finger-in-the-wind politician, but they’re both correct.

The cromnibus fight turned out like the appropriations fight of 2011, the debt limit fight of 2011, and the fiscal cliff fight of 2012, all of which had some disappointing features and some encouraging features.

In other words, we’re dealing with the reality of divided government. Even next year, when Harry Reid no longer controls the Senate, it will be very difficult to win big victories.

Let’s say that Republicans decide to pursue aggressive policies such as fundamental tax reform and genuine entitlement reform.

I’ll definitely applaud, but – at the risk of stating the obvious – does anybody think such legislation would attract enough support to overcome a veto from the White House?

The bottom line is that the cromnibus was a typical kiss-your-sister compromise and people, after weighing the pros and cons, probably like or dislike the outcome depending on the issues that matter most to them.

If you first and foremost don’t like lobbyist deals, then you are going to be unhappy. Likewise, you won’t be happy if your main goal is stopping the President’s executive amnesty.

But if your big issue areas are reining in the EPA or IRS, then you’ll presumably be – on net – cheerful. Similarly, if you care about preserving spending caps, you’ll view cromnibus as a win.

My view, for what it’s worth, is that Republicans did a decent job, but could have achieved much more if they were willing to hold firm on certain issues, even if it meant Obama and/or Reid decided to shut down the government.

But for reasons I still don’t understand, GOP bigwigs think they lost the shutdown fights of 1995 and 2013. And so long as they hold to that view, they’ll be limited in what they can achieve.

P.S. Since I mentioned that the cromnibus contains some long-overdue cuts to the IRS budget, here’s an amusing cartoon from Jerry Holbert that reminds us why they don’t deserve more of our money.

Definitely something to add to our collection of IRS humor.

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I’ve argued that the crowd in Washington profits by plundering America, but that’s just part of the equation.

There are also plenty of big companies that have their snouts in the public trough.

No wonder many people have become disgusted

Writing for the Wall Street Journal, James Freeman points out that a growing number of Americans think the system is rigged against them and he links this disillusionment to an ever-expanding federal government.

According to the latest Wall Street Journal/NBC News poll, a full 56% of Americans agree with this statement: “The economic and political systems in the country are stacked against people like me.” This disillusionment index has been rising for more than a decade and coincides with an explosion in the size of the federal government. …The last time Americans had this little faith in the country’s political and economic systems was for a brief period in 1992, in the aftermath of President George H.W. Bush’s breaking of his no-new-taxes pledge in a deal with Congressional Democrats that enabled more spending. …more government enables people to get rich through political favoritism. In the era of the Beltway boom, no wonder so many people feel the deck is stacked against them.

So is this just empty anti-government rhetoric?

I don’t think so.

Consider the way a select handful of big companies use the Export-Import Bank to obtain undeserved profits.

Or look at the way the major pharmaceutical companies and big insurance companies got into bed with the White House to line their pockets via Obamacare.

And examine how big financial firms pillaged taxpayers as part of the sleazy TARP bailout.

How about the way big agri-businesses rip off consumers with the ethanol scam.

Don’t forget H&R Block is trying to get the IRS to drive competitors out of the market.

Big Sugar also gets a sweet deal by investing in politicians.

Another example is the way major electronics firms enriched themselves by getting Washington to ban incandescent light bulbs.

Needless to say, we can’t overlook Obama’s corrupt green-energy programs that fattened the wallets of well-connected donors.

And General Motors became Government Motors thanks to politicians fleecing ordinary Americans.

After looking at that list, I’m surprised that 100 percent of Americans haven’t concluded that the system is rigged for corrupt insiders.

But just in case you think that list is inadequate, let’s look at some new examples.

But first, allow me to reiterate my view on markets.

Simply stated, I believe in genuine unfettered capitalism within a system that protects life, liberty, and property (in other words, “unfettered capitalism” obviously doesn’t include the right to hire a hit man to kill your mother-in-law).

Within those boundaries, I have no objection to people taking risks, accumulating wealth, or losing all their money. Heck, it’s not just that I have “no objection.” I welcome such a system since it means the maximum freedom and prosperity for people, particularly the less fortunate.

But I don’t want people to get rich(er) because they have political allies who will adopt cronyist policies that tilt the playing field in favor of well-connected insiders.

And that’s exactly what’s happening in my two new examples.

First, we have the case of a big Democratic donor who invested a lot of money in a short sell position on Herbalife, which means he will profit if the stock falls in value.

Nothing wrong with that, at least in theory. Short selling can be a very economically beneficial way of correcting markets when something is over-valued. Heck, we would all be much better off today if there had been some short selling to pop the housing bubble before it got so big.

But as Tim Carney explains in a column for the Washington Examiner, this short-selling insider isn’t relying on market forces. Instead, he is asking his buddies in the Obama Administration to use coercive government to hurt the company and lower its value.

Here are some excerpts.

Politically connected hedge-funder Bill Ackman…shorted the nutritional supplement company Herbalife in late 2012… After Ackman’s announcement, Herbalife shares fell from $46 to $27. Ackman kept hammering away, taking his compelling slide show on the road to convince the investing public that Herbalife was a house of cards. But after the initial drop, Herbalife stock rebounded… But Ackman had another weapon in his arsenal. Namely: Big Government. Ackman lobbied congresswoman Linda Sánchez, D-Calif., to sic the Federal Trade Commission on Herbalife. Sanchez complied. Ackman also…“paid civil rights organizations at least $130,000 to join his effort by helping him collect the names of people who claimed they were victimized by Herbalife in order to send the leads to regulators…” Ackman’s firm, Pershing Square Capital Management, hired an army of K Street lobbyists — paying a combined $14,000 a month to three firms that disclose lobbying for him — to turn the government against Herbalife.

What reprehensible behavior on the part of Ackman.

I have no idea whether Herbalife is a good company or a bad company. And I have no idea whether its stock is over-valued or under-valued.

But I do know that Ackman shouldn’t be getting his political buddies to intervene. As Tim points out, this is a recipe for rampant cronyism.

This is different from ordinary lobbying. Typically, companies lobby to protect or subsidize their business. When hedge funds play Ackman’s game, helping or hurting some other company is the entirety of that business — and so lobbying can become the core of their business plan. We’ve seen it before. Investor Steve Eisman took a short position on for-profit colleges and lobbied Congress and the Department of Education to crack down on them. The Obama administration this month announced new proposed regulations on these colleges.

Now let’s look at another example.

Only this time it involves a big-donor Republican who wants favors from big government.

As the Washington Post reports, Sheldon Adelson doesn’t want his casinos to face competition from the Internet.

Given the more than $100 million that Sheldon Adelson has donated lately to Republican causes, the billionaire casino tycoon is well-positioned to get what he wants from a GOP-dominated Congress. But it turns out that the item on top of Adelson’s wish list — a ban on Internet gambling — is encountering resistance. And it’s not Democrats who stand in his way but a small group of fellow conservatives. …Online betting has been embraced by a number of Adelson’s industry rivals and several states eager for the additional tax revenue it provides….Yet the move to the Internet has also been seen as a threat that could deplete the customer base for Adelson’s brick-and-mortar casino resorts. …Half of the 22 Republican members of the House Judiciary Committee have co-sponsored the Adelson-backed legislation.

So what’s the status of the battle?

…conservative opposition began to emerge. …leaders of the other groups, including the American Conservative Union, did not mention Adelson by name. But their letter follows the publication this week of a fiery online column by former congressman Ron Paul (R-Tex.), the libertarian hero and father of potential presidential candidate Sen. Rand Paul (R-Ky.). He called the bill an example of “crony capitalism” written “for the benefit of one powerful billionaire.” …Adelson called the 2011 Justice Department legal opinion a mistake and has taken steps to rein in online gambling, fighting state-level proposals to authorize it and pushing for the federal ban. A company lawyer penned an initial draft of the Restoration of America’s Wire Act — later refined and introduced last year by Sen. Lindsey O. Graham (R-S.C.) and Rep. Jason Chaffetz (R-Utah) — which would effectively prevent states from authorizing online betting.

Ugh, how nauseating.

Though I’m glad to see that there is opposition inside the GOP to Adelson’s self-serving proposal.

I realize we can’t say for sure whether opponents are motivated solely by good principles of non-intervention and federalism. Perhaps they’ve received money from interest groups on the other side, but at least there is resistance and presumably some of that opposition is for the right reasons.

By contrast, I’m not aware of any Democrats who are opposed to Ackman’s cronyist attack on Herbalife.

The moral of the story is that big government enables insider corruption. Which is the message of this video from the Center for Freedom and Prosperity.

But if you don’t want to watch the video, just remember the simple lesson of today’s column, which is that all the examples of sleazy cronyism we discussed (both the new ones and the old ones) were only possible because government had the power to trump free markets.

Now let’s return to where we started. Yes, a growing number of Americans are getting disillusioned, and with good reason. But will the good people in Washington appeal to them with a principled campaign against corporate welfare and other policies that help insider fat cats?

Or will it be business as usual, with GOP cronyists replacing Democrat cronyists?

Even worse, will statists latch onto the issue and say the solution is to impose higher tax rates? That presumably would take some money from rich insiders, but it also would penalize folks who earn money honestly.

And it means the money that consumers lose because of cronyism winds up in the pockets of politicians.

Wouldn’t it be better to simply get rid of the bad subsidies and handouts and solve the real problem?

P.S. Since today’s column looks at capitalism vs cronyism, here’s the famous example of how you can explain various economic systems using two cows.

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The internal revenue service has allowed itself to become a tool of the White House. To be more specific, bureaucrats at the tax-collection agency sought to undermine a free and fair political process by stifling political speech. And now the IRS is lying about its activities and trying to cover its tracks.

This should be deeply horrifying to all Americans, regardless of political affiliation or philosophy.

Particularly since the partisan Democrat appointed by Obama to head the IRS refuses to even apologize for the agency’s rogue behavior.

There are several appropriate responses to the IRS scandal, including some genuine budget cuts. But you probably won’t be surprised to learn that some people think the IRS instead should be rewarded with even more money.

Here are some excerpts from a column in today’s Washington Post.

…this is an especially strange time to stick up for the agency, given the suspicious disappearance of a few thousand key e-mails that Congress wants to see. But right now, the IRS desperately needs a champion. …the IRS has been laboring…with fewer resources. Since 2010, when Congress first began hacking away at discretionary spending, the bureau’s funding has fallen 14 percent, in inflation-adjusted terms… These cuts have come even though the agency’s responsibilities and workload have increased, thanks to new laws such as the Affordable Care Act and the Foreign Account Tax Compliance Act… Now House Republicans want to hobble it even more. Last week, the House Appropriations Committee voted to slash the bureau’s budget by another $340 million.

It’s true that both Obamacare and FATCA grant new powers and obligations to the IRS, but we can solve that problem by repealing those misguided laws.

But since that won’t happen while Obama is in the White House, let’s consider whether “fewer resources,” “hobble,” and “hacking away” are accurate ways of describing what’s been happening to the IRS’s budget.

The Office of Management and Budget has detailed tables showing spending by agency. And if you look at the administrative portions of IRS spending (culled from lines 2491-2533 of this massive database), it turns out that spending has increased dramatically over time.

Yes, it’s true that IRS spending has declined slightly since 2010, but the agency’s budget is still about twice as big as it was 30 years ago. And these numbers are adjusted for inflation!

In other words, it’s very misleading to focus merely on the post-2010 budgetary data (just as Krugman was being deceptive when he looked only at post-2007 data when writing about Estonia’s economic performance).

Looking at the historical data reveals that the IRS budget is much bigger than it’s been in the past.

There are a couple of additional points in the column that deserve some attention. The author argues that people who care about the budget deficit should be delighted to give more money to the IRS because it produces a “darn good return on investment.”

If you care about narrowing the budget deficit — as Republicans generally say they do — gutting your chief revenue- collection agency makes little sense. …The IRS generates way more money than it spends, after all. For every dollar appropriated to the IRS in the 2013 fiscal year, the agency collected $255, according to the national taxpayer advocate’s office. That’s a darn good return on investment.

Wow, what a scary mindset. Based on this thinking, why don’t we simply give the government carte blanche to seize our bank accounts? After all, they could probably collect hundreds of thousands of dollars for every dollar spent. That would be an even better “return on investment.”

As an aside, this is an example of why I get so agitated when supposed fiscal conservatives focus on deficits and debt. It creates an opening for people who want to push bad policy. But if you focus on the real problem of government spending, that problem disappears.

But I’m digressing. Let’s get back to the column. There’s one other point that cries out for correction. The author claims that a bigger IRS budget will reduce tax evasion and that this will keep tax rates from going higher.

Some of that money comes from going after tax cheats, and…rampant tax evasion has a tendency to drive statutory tax rates higher so that the government can extract more money from those poor saps still obeying the law.

The only problem with this assertion is that it is grossly inconsistent with the facts.

We have very powerful evidence that politicians lowered tax rates during periods when there were substantial flows of money to so-called tax havens.

Why? Because they felt competitive pressure to implement less onerous tax rates in order to keep even more money from escaping.

And now we have strong evidence that tax rates are going up as opportunities to escape bad tax policy have decreased.

Why? Because the politicians now feel that taxpayers have fewer escape options.

To summarize this post, the IRS needs and deserves more money in the same way that Charles Manson needs and deserves a group hug.

Here’s one last bit of humor to augment the cartoons I’ve already included. It’s PG-13, so don’t read too closely if you get easily offended.

P.S. Wouldn’t it be wonderful if we could junk the tax code and replace it with a simple and fair flat tax? That would eliminate almost every possible conflict with the IRS and also take away the agency’s discretionary power.

Not a bad fantasy to have, at least for a policy wonk.

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When I wrote recently that the IRS was corrupt, venal, and despicable, I didn’t realize that I was bending over backwards to be overly nice.

Every new revelation in the scandal shows that the agency is beyond salvage.

Writing for Real Clear Markets, Diana Furchtgott-Roth of the Manhattan Institute is appropriately skeptical of the IRS.

Coincidentally, Lerner’s computer crashed 10 days after Congress expressed concern about possible targeting of conservative groups. Emails between January 2009 and April 2011 were lost. Her computer is not available for examination, because it has already been recycled by the IRS. In a further coincidence, or not, a backup tape of agency emails made by the IRS was erased after 6 months. …As Georgia Republican Rep. Doug Collins said, the story sounds more and more implausible.

Diana then explains why this matters, using Obamacare as an example of why we should worry about a corrupt and politicized IRS.

Why should we care about missing emails from 2009 to 2011? As former Secretary of State Hillary Clinton said in a 2013 hearing about Benghazi, “What difference at this point does it make?” It is not just that Americans’ basic trust in the IRS is being called into question. Over the past five years the IRS has been concentrating its power, giving the agency increased opportunities to pick on people and groups it dislikes. …Sarah Hall Ingram, who was commissioner of the IRS’s Tax-Exempt and Government Entities Division from 2009 to 2012 during the Lois Lerner scandal, now heads the IRS Affordable Care Act Office. …Do Americans trust the IRS to calculate these subsidies and refunds impartially? The IRS already made a power grab in May 2012 by extending premium subsidies to the 34 states with federal exchanges.

She also points out that the IRS is carrying water for the President’s attempt to stifle opposing views.

…the IRS proposed regulations that would allow the agency to regulate the free speech of President Obama’s political opponents, while leaving the political activities of his friends untouched. …The regulations were targeted at tax-exempt organizations that file under 501(c)(4) of the IRS code… Under the new rules these groups would not be allowed to engage in voter education that mentions a candidate within two months of a general election or one month of a primary. Left untouched by the proposed regulations were unions, which file under 501(c)(5) of the Internal Revenue Code.

Stan Veuger of the American Enterprise Institute also is not persuaded by the IRS’s deceitful excuses.

The Internal Revenue Service (IRS) and the administration have consistently spouted lies and half-truths about the IRS scandal. The latest development in the controversy is that crucial emails have conveniently gone missing – is there any reason to believe that it is, as the administration claims, a mere accident? …This effort to keep conservative 501(c)(4) organizations from attempting to prevent president Obama’s reelection was, of course, hidden from the public. Ms. Lerner was careful to try and structure the IRS’ targeting in such a way that would not be appear to be a “per se political project,” in her own words, and denied in meetings with, and letters to, congressional oversight staff in 2012 that conservative groups were treated exceptionally or that the IRS’ ways of evaluating 501(c)(4)s had ever changed. The claims were false… In her response to a planted question from the audience at an American Bar Association tax conference, Ms. Lerner blamed the targeting of conservative groups on “our line people in Cincinnatti.” This has also turned out to be false. …non-Tea Party groups were never subjected to the same delays and investigations as Tea Party groups were. This once more suggest that obfuscation and dishonesty were central to the IRS’ approach to their targeting practices.

He even crunches some numbers to show that the claims from the IRS are utterly implausible.

It would be very helpful to see what communications took place between IRS officials and other Democrats. And this is where the missing emails come in. …They are gone, they now tell us, hard drives crashed and tapes were erased. Should we believe that? Of the 82 IRS employees tied to the targeting operation, 7 had their email disappear, or 8.5%. According to IRS commissioner John Koskinen, the industry standard is 3 to 5%. Under reasonable statistical assumptions, that makes the IRS scandal disappearance rate about as likely as the emails having been eaten by unicorn, with a probability far smaller than 1%. Given the IRS’ track record in this affair, that is way beyond anything that would justify giving the IRS and Lois Lerner the benefit of the doubt.

Amazingly, 12 percent of Americans believe the IRS. Here’s some polling data that Phil Kerpen shared on his twitter feed.

I’m particularly happy that younger people are more skeptical. They’re more tech-savvy and realize that the IRS’s excuses are a bunch of….well, a bunch of stuff that comes out of male cows.

And here are some good cartoons on the topic, starting with Eric Allie’s gem.

I like how he includes a representative of the 12 percent of deliberately gullible Americans.

And here’s another contribution from Allie.

And here’s Steve Kelley’s cartoon on the topic.

He’s right, needless to say. It would be better if the IRS was merely squandering money rather than seeking to subvert the democratic process.

Last but not least, here’s an evergreen cartoon about the IRS from Glenn McCoy.

Oh, and let’s not forget two other items.

The political hack who now heads the IRS is a partisan leftist.

IRS Commissioner John Koskinen contributed more than $85,000 to Democratic candidates and committees…with a $5,000 donation to President Obama in 2012 and $19,000 to the Democratic National Committee from 1988 to 2008.

And the political hack who was forced out of the IRS actually wanted to target a US Senator.

…the Internal Revenue Service’s (IRS) targeting of conservative individuals includes a sitting United States Senator. According to emails reviewed by the Committee under its Section 6103 authority, …Lois Lerner sought to have Senator Chuck Grassley (R-IA) referred for IRS examination.

There are more horror stories to share, but this is enough for one day.

Suffice to say, you can understand why my fantasies involve tax reform rather than supermodels.

P.S. I can’t resist one more comment. Don’t forget that the corrupt and partisan IRS is in charge of Obamacare enforcement, but the bureaucrats want to be exempt from that government-run healthcare system. Just like politicians.

The moral of the story: Washington is even worse than you think. It’s a racket for insiders, but a burden for the rest of us.

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Some statements are so lame that they now serve only as punch lines.

Nobody, after all, would ever claim to a teacher that “the dog ate my homework.”

Moreover, surely few if any people ever actually assert to bill collectors that “the check is in the mail.”

And I have to imagine that no guy would be dumb enough to think a girl would fall for the line that “I’ll still love you in the morning.”

But we now have a new champion in the contest for the most laughable and pathetic assertion ever made.

But first some background. Congressional investigators have been trying to figure out the level of criminality and malfeasance in the IRS’s campaign to interfere with the 2012 election by targeting Tea Party groups. Much of the attention has focused on the activities of Lois Lerner, a left-wing ideologue at the center of the scandal.

And it is because of this investigation that we have a winner in the most-preposterous excuse contest. The political hacks at the IRS are now claiming, with straight faces, that they can’t turn over thousands of emails sent and received by Lois Lerner because of a “computer mishap.”

Here’s some of what’s been reported by the Washington Times.

The IRS has told Congress that it has lost some of former employee Lois G. Lerner’s emails from 2009 through 2011, including those she sent to other federal agencies… Rep. Dave Camp, chairman of the Ways and Means Committee, said he was stunned… “The fact that I am just learning about this, over a year into the investigation, is completely unacceptable and now calls into question the credibility of the IRS’s response to congressional inquiries,” Mr. Camp said. “There needs to be an immediate investigation and forensic audit by Department of Justice as well as the Inspector General.” …the emails lost were “critical years” from the beginning of the targeting of conservative groups.

At this point, I suppose I should acknowledge that there’s an infinitesimally tiny chance that the IRS is being honest. Maybe, just maybe, the IRS’s immense computer infrastructure and multiple levels of redundant back up happened to fail. And, by an amazing coincidence, they can recover everything except the emails from Lois Lerner that were sent at precisely the time she was instrumental in the IRS’s harassment campaign.

Yeah, right, there’s a chance the IRS is being honest. Just like the Nixon White House could have accidentally erased 18-1/2 minutes of tape.

That being said, there’s a chance I’ll be playing center field next month for the New York Yankees. And an even bigger chance that the models from Victoria’s Secret will invite me for a weekend orgy (and just in case the Princess of the Levant is reading this, I naturally would say no).

Let me now detour into the world of public policy.

The IRS’s venal and corrupt behavior is only possible because the tax code is a Byzantine nightmare of about 75,000 pages. And that doesn’t even include all the tax court decisions and IRS letter rulings that also govern the internal revenue code.

It is this thicket of special-interest sleaze that enables hacks like Lois Lerner to wield unjustified power.

So if we want to actually reduce the chances of similar malfeasance in the future, then action is needed.

But I’m not just talking about prison for the crooks who tried to misuse the power of government.

We also need to rip up the internal revenue code and replace it with a simple and fair flat tax.

As you can see in this video, I’m mostly a fan of tax reform because it will help the American economy. But I’m also delighted the flat tax will reduce the discretionary power of politicians and bureaucrats.

In the long run, of course, it would be even better if we shrank the federal government so much that we didn’t need any broad-based tax of any kind.

 

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No matter how much I pontificate about Washington corruption, there’s no way I can get across the true extent of the DC establishment’s self-serving behavior.

Washington is rich because government is big and the beneficiaries of this system are enjoying their status as America’s new gilded class.

It’s even gotten to the point where children and other family members also put their hands in the cookie jar.

I guess we can call this a system of hereditary corruption. Heck, maybe we can even create hereditary titles for this new elite. The Duke of Pork. The Earl of Sleaze. The Marquise de Cronyism.

Just in case you think I’m exaggerating, check out these blurbs from a Daily Beast article.

Connected children of political families catching a break is something we Americans are plenty used to—there would be no Kennedy or Bush dynasties without the public’s acceptance… But it might be that Americans are less aware of political family power plays when they’re not accompanied by gripping and grinning and kissing our babies for cameras and votes. …“Members of Congress basically are profit centers for their entire families,” says Melanie Sloan, Executive Director of Citizens for Responsibility and Ethics in Washington.

The article cites examples of this unseemly process.

Nathan Daschle, son of former Senate majority leader Tom Daschle, …did a stint at a D.C. firm before heading to the Democratic Governor’s Association (where he eventually served as Executive Director), and now works for Clear Channel Media as its Executive Vice President for Political Strategy. …then there are the lobbyists—that professional amalgam of business and politics—the litany of which reads something like an Old Testament family tree. There’s Andy Blunt, son of Senator Roy Blunt and brother of former governor Matt Blunt; Andrew Coats, son of Senator Dan Coats; Scott Hatch, son of Senator Orrin Hatch; David Roberts, son of Senator Pat Roberts; Shantrel Brown Fields, daughter of Rep. Corinne Brown; Giliane Carter, daughter of Representative John Carter; Sean King, son of Rep. Peter King; Clark Mica, son of Rep. John Mica.

As you might expect, this incestuous system produces spectacular examples of wasteful and counterproductive spending.

…sometimes there is trouble in the paradise where business and politics and family meet. There’s the case of Brad Enzi, son of Mike, Senator from Wyoming. Enzi the younger has been overseeing the building of the Two Elk Power Plant in Wyoming for North American Power Group. …Senator Enzi pushed for Department of Energy funds to go towards clean coal research projects in his state and Brad Enzi’s company benefitted from them; it received nearly $10 million in funding to drill a well to study the site surrounding the plant, and Enzi himself earned $128,000 in compensation from the federal money. …Chaka Fattah Jr., son of Pennsylvania Congressman Chaka Fattah, has similarly felt the double-edged blade of intertwining family, business, and political ties. The management consulting company he founded was paid $450,000 by an education firm with lucrative contracts with the Philadelphia City School District—turns out Chaka’s father requested a $375,000 earmark for the firm from a 2009 transportation bill. Both father and son are currently under federal investigation.

Keep in mind, by the way, that these examples are just the tip of the iceberg.

For every bit of scandal and pork that gets publicized, you can be confident that there are hundreds of equally sordid deals that haven’t been exposed.

For all intents and purposes, big government in Washington has created a niche market for insiders who learn the specialized skill of transferring money from those who earned it to those with political pull.

And these insiders pass along this “skill” to their children.

…a hereditary specialized group of people who perform certain necessary social functions and because they have families, they’re going to gradually monopolize the functions they perform.” And in 2014, the place that’s increasingly being chosen as a place to call home by American “elites” happens to be Washington, D.C. The city’s greater metropolitan area boasts the largest number of “Super Zips”—those areas with the highest combined wealth and level of education—in the country.

They get the “super zips” while the rest of the country is treated as “super chumps.”

No wonder the Washington metropolitan area is now the richest part of the United States.

If that sounds like we’re becoming Argentina or some other cesspool of cronyism, then you understand the problem.

By the way, none of this should be interpreted to suggest that parents shouldn’t try to help their kids. Or even to give them some help joining the family business. That’s a normal part of life.

The problem exist when the “family business” is big government and income is obtained by facilitating the coercion and oppression of other people.

In a genuinely free market, by contrast, you get rich by serving other people.

P.S. Some people argue that the solution is to ban family members from lobbying or to otherwise impose restrictions on the political process. But until you deal with the underlying problem of Washington being a favor factory, all of these efforts will be akin to playing whack-a-mole.

This video explains.

P.P.S. On a totally separate issue, it appears that our right to keep and bear flamethrowers has been eroded in North Dakota.

Here are some excerpts from a Fargo news report.

Local resident Todd Fox has been detained for “reckless endangerment” and “illegal use of high-powered fire-breathing weaponry” for attacking snow with his flamethrower. …Fox stated that he was simply “fed up with battling the elements” and that he did not possess the willpower necessary to move “four billion tons of white bull [expletive deleted].” Police say that Fox surrendered his efforts immediately upon their arrival and that his front yard “looked like a hydrogen bomb had gone off.” They think he was just happy to be done with snow removal, even if it did mean a trip to jail.

I have two reactions to this story.

First, does Fargo really have a local ordinance governing the use of “high-powered fire-breathing weaponry”? I’m skeptical.

Second, isn’t this a great country? There probably aren’t many places in the world where citizens are allowed to own flamethrowers. Makes me proud to be American.

And we’re even allowed to own tanks and machine guns.

On the other hand, we do have a problem letting children possess pencils and pop tarts, so we obviously have some flaws to fix.

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Last year, while writing about the sleazy and self-serving behavior at the IRS, I came up with a Theorem that explains day-to-day behavior in Washington.

It might not be as pithy as Mitchell’s Law, and it doesn’t contain an important policy prescription like Mitchell’s Golden Rule, but it could be the motto of the federal government.

Simply stated, government is a racket that benefits the DC political elite by taking money from average people in America

I realize this is an unhappy topic to be discussing during the Christmas season, but the American people need to realize that they are being raped and pillaged by the corrupt insiders that control Washington and live fat and easy lives at our expense.

If you don’t believe me, check out this map showing that 10 of the 15 richest counties in America are the ones surrounding our nation’s imperial capital.

Who would have guessed that the wages of sin are so high?

But even though the District of Columbia isn’t on the list, that doesn’t mean the people actually living in the capital are suffering.

Here are some interesting nuggets from a report in the Washington Business Journal.

D.C. residents are enjoying a personal income boom. The District’s total personal income in 2012 was $47.28 billion, or $74,733 for each of its 632,323 residents, according to the Office of the Chief Financial Officer’s Economic and Revenue Trends report for November. The U.S. average per capita personal income was $43,725.

Why is income so much higher? Well, the lobbyists, politicians, bureaucrats, interest groups, contractors, and other insiders who dominate DC get much higher wages than people elsewhere in the country.

And they get far higher fringe benefits.

In terms of pure wages, D.C., on a per capita basis, was 79 percent higher than the national average in 2012 — $36,974 to $20,656. …Employee benefits were 102 percent higher in D.C. than the U.S. average in 2012, $7,514 to $3,710. Proprietor’s income, 137 percent higher — $9,275 to $3,906. …The numbers suggest D.C. residents are living the high life.

Now let’s share a chart from Zero Hedge. It uses median household income rather than total personal income, so the numbers don’t match up, but what’s noteworthy is how DC income grew faster than the rest of the nation during the Bush years and then even more dramatically diverged from the rest of the country during the Obama years.

In other words, policies like TARP, the fake stimulus, and Obamacare have been very good for Washington’s ruling class.

Want some other concrete examples of profitable Washington sleaze? Well, here are some excerpts from Rich Tucker’s column for Real Clear Policy.

The real place to park your money is in Washington, D.C. That’s because the way to get ahead isn’t to work hard or make things; it’s to lobby Washington for special privileges. Look no further than the sweet deal the sugar industry gets. It’s spent about $50 million on federal campaign donations over the last five years. So that would average out to $10 million per year. Last year alone, the federal government spent $278 million on direct expenditures to sugar companies. That’s a great return on investment.

Big Corn may get an even better deal than Big Sugar.

Then there’s ethanol policy. Until 2012, the federal government provided generous tax credits to refiners that blended ethanol into gasoline. In 2011 alone, Washington spent $6 billion on this credit. The federal government also maintains tariffs (54 cents per gallon) to keep out foreign ethanol,and it mandates that tens of billions of gallons of ethanol be blended into the American gasoline supply. Nothing like a federal mandate to create demand for your product. How much would you pay for billions of dollars worth of largesse? Well, the ethanol industry got a steep discount. In 2012, opensecrets.org says, the American Coalition for Ethanol spent $212,216 on lobbying.

Rich warns that the United States is sliding in the wrong direction.

What makes Washington especially profitable is that its only products are the laws, rules, and regulations that it has the power to force everyone else to follow. …we seem to be sliding toward what the authors term “extractive” institutions. That means government using its power to benefit a handful of influential individuals at the expense of everyone else.

And let’s not forget that some people are getting very rich from Obamacare while the rest of us lose our insurance or pay higher prices.

This Reason TV interview with Andrew Ferguson explains that there is a huge shadow workforce of contractors, consultants, and lobbyists who have their snouts buried deeply in the public trough.

I particularly like his common sense explanation that Washington’s wealth comes at the expense of everyone else. The politicians seize our money at the point of a gun (or simply print more of it) to finance an opulent imperial city.

So if you’re having a hard time making ends meet, remember that you should blame the parasite class in Washington.

P.S. The insider corruption of Washington is a bipartisan problem. Indeed, some of the sleaziest people in DC are Republicans.

P.P.S. Though scandals such as Solyndra show that Obama certainly knows how to play the game.

P.P.P.S. Making government smaller is the only way to reduce the Washington problem of corrupt fat cats.

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Remember Sandra Fluke, the 30-year old student who got her 15 minutes of fame last year by becoming the poster child for subsidized birth control?

Fluke Birth ControlShe’s fortunately faded away, but the issue is still with us because the courts are being asked to decide whether government has the right to coerce people into decisions that violate their religious values.

But you won’t be surprised that this feature of Obamacare also has important economic and policy lessons.

Statists have tried to scare young people that there’s a fight over whether people have the right to access birth control. They’ll privately admit that this is just empty rhetoric (after all, there were no barriers to birth control in the pre-Obamacare era), but they nonetheless still argue that the mandate is needed for affordability reasons.

But this is utter bunk, as Megan McArdle explains in her Bloomberg column.

Regular, predictable expenses such as birth-control pills cannot be defrayed by insurance; they can only be prepaid, with a markup for the insurer’s administrative costs. The extra cost is passed on by the insurers to your employer, and from your employer to you and your fellow workers, either by raising your contribution or lowering the wage they are willing to offer.

I would take this one step farther. Costs will rise not only because of administrative costs, but also because we’ll have more third-party payer and that will make it much easier for the providers of birth control pills to raise prices.

And that is a perfect segue into the meat of today’s post, which is about the sleazy and corrupt interaction of big business and big government. And the Obamacare birth control mandate is a perfect example.

Tim Carney exposes this issue in his Washington Examiner column. He starts with a hypothesis that corporate cronyism is the real story.

Look at the contraception mandate from almost any angle, and you see the corporatism. Sometimes it’s on the surface, and sometimes it’s implicit in the arguments. The contraception mandate is nakedly a huge subsidy to the industry that most firmly supported Obamacare: the drugmakers. The drug industry has spent more on lobbying under Obama than any other industry.

Tim provides some of the sordid details.

Top Obama bundler Sally Susman oversees the lobbying shop at drug giant Pfizer, which sells $7.6 million a year in name-brand birth control pills, while also selling contraceptive injections and generic drugs. Pfizer’s CEO during the Obamacare debate was Obama donor Jeffrey Kindler. In a corporate filing, the company justified his salary increase by pointing to his Obamacare lobbying. …Merck, which also makes birth control pills, deployed top lobbyist, former Democratic congressional staffer and major Democratic donor Mark Raabe to Capitol Hill and the White House to lobby on “efforts to gain coverage of preventive services,” according to company lobbying filings. The administration uses the “preventive services” provision of Obamacare to justify the contraception mandate. Merck sells implants and other contraceptives — if “sells” is the right word for products that many customers now get for “free,” sticking colleagues and taxpayers with the bill. Conceptus, a company that sells a sterilization procedure, lobbied Congress and the Department of Health and Human Services on “implementation of the preventive services provisions of the Affordable Care Act,” according to lobbying filings. The mandate covers this patented procedure.

Needless to say, drug companies have spent all this money on lobbying and campaign contributions in the expectation that they can artificially increase their revenue as a result of government favoritism.

Obama’s contraception mandate requires all employer-sponsored health care plans to cover 100 percent of the cost of all FDA-approved contraception. That gives customers incentives to choose…name-brand pills, because the entire cost is passed onto employers and thus onto customers and colleagues.

It’s a different topic, but Tim also has some wise words about the Obama Administration’s arguments against the First Amendment.

…liberals argue that the owners of the privately held store Hobby Lobby are not protected by the First Amendment from intrusions of the “free exercise” of religion — and so it must cover the morning-after pill, which can cause a very early-term miscarriage. …It’s not a novel claim, but it’s still a scary one: A person gives up his First Amendment rights when he is acting as a businessman.

And his summary paragraph hits the nail on the head.

Sometimes people think politics is about the collective versus the individual. Most of the time, though, it’s about the state versus civil society. It’s coercion versus voluntary association.

By the way, the drug companies are just the tip of the iceberg. Companies like General Motors and General Electric also are experts at using government to tilt the playing field.

And don’t forget that companies like Boeing and Exxon Mobil use the Export-Import Bank to line their pockets at our expense.

Or what about H&R Block, which lobbies to protect its ability to profit from a corruption-riddled tax system.

The entire ethanol industry, meanwhile, is dependent on favors from Washington, and Fannie Mae and Freddie Mac were created by the government!

And Pizza Hut, joined by other fast food joints, lobbies for food stamps.

The TARP bailout was the epitome of Washington sleaze, which may help explain the revolving door between Wall Street in Washington.

We should also be upset that big corporations sometimes support higher tax rates on their competitors from the small business sector.

Gee, it’s almost enough to make one think Washington is a rat’s nest of corruption. Speaking of which, here’s my video on the link between big government and big corruption. I think you’ll agree that I understated the case.

P.S. Since we started this post by mentioning Sandra Fluke, we may as well close with some jokes at her expense. You can enjoy some laughs with this great Reason video, this funny cartoon, and four more jokes here.

P.P.S. But Sandra Fluke may have the last laugh since the clowns at the United Nations have declared that birth control (almost surely financed by taxpayers) is a human right.

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At the risk of oversimplifying, there are two major challenges to overcome when you’re a pro-freedom policy wonk in Washington.

The first challenge is getting people to connect the dots.

They may understand that the job market is weak and they may understand that redistribution programs are overly generous, but can you help them understand that the job market is weak in part because redistribution programs make work relatively unattractive?

They may understand that the federal government is bloated and they may understand that there’s a big problem with corruption in Washington, but can you make them understand that there’s a lot of sleaze in Washington because government has so much power?

They may understand that the corporate tax burden is very high and they may understand that American companies sometimes aren’t very competitive, but can you help them understand that it’s difficult for firms to compete because they’re saddled with high tax rates?

The second challenge is getting policy makers to do the right thing when doing the wrong thing means more money and power for the political class.

Let’s consider the problem of corruption. And I don’t just mean illegal corruption, though there’s plenty of that in Washington. I’m talking about the everyday graft and sleaze that is perfectly legal, such as when dozens of politicians are caught red-handed supporting legislation that would line their pockets.

Using fiscal policy as an example, how do you get these people to do the right thing? They may understand – at least conceptually – that the United States faces a huge long-run fiscal nightmare because of an ever-growing burden of government spending. They may even vote for the Ryan budget, which theoretically commits them to supporting meaningful entitlement reform.

But the real fight occurs when you ask them to support policies – such as sequestration – that actually slow the growth of Leviathan and require them to say no to lobbyists. Particularly when many lobbyists are their former colleagues and staffers!

To get a sense of what I mean, check out these excerpts from a book review in The Economist.

Washington has always had a permanent establishment of politicians, lobbyists and journalists. But this class has exploded in size in recent decades, and has become more introspective and self-serving. Economist Corruption…The lobbying industry has spent billions greasing the revolving door: in 2009 alone, special interests spent $3.47 billion lobbying the federal government. In 1974 3% of retiring policymakers became lobbyists. Now 50% of senators and 42% of congressmen do. …a “change election” that was supposed to sweep aside the old order and create a politics fit for the 21st century. …But the Washington machine soon took over. …once in the capital, these same figures cashed in on their public service by getting lucrative jobs as lobbyists, bankers or talking heads. David Plouffe, an adviser to the president, joined the jackals at Bloomberg television. Mr Orszag went to Citigroup. Meanwhile, the city’s politicos grew richer while the rest of the country was mired in recession. Washington now has a higher income per person than Silicon Valley.

The final sentence of that passage is very depressing. Or it should be. Do we really want a society where becoming part of the political machine is the easiest path to wealth? Are there any nations that have prospered using that model?

Or is that a symptom of a country on a downward slide?

I don’t know the answer, but it’s very depressing to look at this map and see that 10 of the 15 richest counties in the nation are part of the Washington metropolitan area.

We now have something akin to an imperial capital being supported by coerced tribute from the serfs in the outer provinces.

And as this video explains, all of this unearned wealth is made possible by a bloated budget, a Byzantine tax code, and a maze of complicated regulations.

P.S. The latest example of Washington graft is the way that Obamacare has turned into a get-rich-quick scheme for DC insiders.

P.P.S. Down in Louisiana, Boudreaux and Thibodeaux have a rather sensible view about political corruption.

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Want to know why – as shown by this map – most of America’s richest counties are part of the metropolitan DC region?

Part of the answer is that federal bureaucrats are overpaid. Another part of the answer is that the Washington area is filled with consultants and contractors, and this shadow government workforce also is overcompensated by taxpayers.

But I’m guessing that DC’s vast population of lobbyists and influence peddlers dominate the upper end of the income spectrum.

And that community of back scratchers and deal makers are getting even richer thanks to Obamacare. Here’s some of what The Hill is reporting today.

ObamaCare has become big business for an elite network of Washington lobbyists and consultants who helped shape the law from the inside. More than 30 former administration officials, lawmakers and congressional staffers who worked on the healthcare law have set up shop on K Street since 2010. Major lobbying firms such as Fierce, Isakowitz & Blalock, The Glover Park Group, Alston & Bird, BGR Group and Akin Gump can all boast an ObamaCare insider on their lobbying roster — putting them in a prime position to land coveted clients. …The voracious need for lobbying help in dealing with ObamaCare has created a price premium for lobbyists who had first-hand experience in crafting or debating the law.  Experts say that those able to fetch the highest salaries have come from the Department of Health and Human Services (HHS) or committees with oversight power over healthcare.  Demand for ObamaCare insiders is even higher now that major pieces of the law — including the healthcare exchanges and individual insurance mandate — are being set up through a slew of complicated federal regulations.

You’ll also be happy to know that beltway insiders can expect years and years of undeserved loot thanks to rules, regulation, and red tape that will be unveiled for another seven years.

…the healthcare law has generated steady work — a trend that is likely to continue for years to come. That’s because ObamaCare runs on a long timeline, well into the next administration. Unless the law is severely crippled, the reform’s rules and requirements will be rolling out through at least 2020. That’s good news for lobbyists who want to sign up clients for the long haul.

This is the social science equivalent of a kick-in-the-you-know-what. A bunch of political hacks pass legislation that increases both the fiscal burden and the regulatory burden on the rest of us, but they make it very convoluted so that they can cash in and make big bucks navigating the law for deep-pocket clients.

This is a win-win for the political elite and a lose-lose for America’s productive sector.

And it’s a perfect example of what I was trying to get across in this video I narrated about the link between big government and corruption.

There are lots of specific examples of Obamacare’s corruption.

Michael Barone has exposed the sleaziness of the waiver process, Tim Carney revealed the special deals for politically connected companies, and I suggested the process was eerily similar to a passage from Atlas Shrugged.

But don’t forget Obamacare is just one example of the sleaze that defines Washington. Maybe the best way of understanding the game is to watch Andrew Ferguson explain DC’s parasite economy.

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