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Posts Tagged ‘Sleaze’

What do you do if you’re part of a government bureaucracy that has been caught red-handed engaged in sleazy, corrupt, and (almost surely) illegal targeting of Americans for their political beliefs?

But before you answer, keep in mind that your bureaucracy also has been exposed for wasting huge amounts of money at lavish conferences. What’s the ideal way of dealing with the fallout from that scandal as well?

The answer is simple. Even though you and your pals already are paid more than the peasants in the private sector, give yourself and your cronies giant bonuses!

I’m not joking. Here are some excerpts from an AP report.

The Internal Revenue Service is about to pay $70 million in employee bonuses despite an Obama administration directive to cancel discretionary bonuses because of automatic spending cuts enacted this year, according to a GOP senator. …“The IRS always claims to be short on resources,” Grassley said. “But it appears to have $70 million for union bonuses…” Three congressional committees and the Justice Department are investigating the targeting of conservative groups. And key Republicans in Congress are promising more scrutiny of the agency’s budget, especially as it ramps up to play a major role in implementing the new health care law.

Sort of makes this cartoon self evident.

IRS Trust Cartoon

Indeed, this motivates me to announce “Mitchell’s First Theorem of Government.”

I’ve explicitly expressed this sentiment in the past, and hinted at it here, here, and here.

Now it’s time to make it official.

Mitchell's First Theorem of Government

I hope you’ll agree this is a nice addition to Mitchell’s Golden Rule, Mitchell’s Bleeding Heart Guide, and Mitchell’s Law.

And maybe one of these will catch on and I can be famous like Art Laffer.

P.S. Enjoy some cartoons about the IRS scandals here, here, and here.

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We’ve gotten to the point where you need a guide-book to keep track of all the scandals in Washington.

As a fiscal policy wonk, I focus mostly on the sleaze at the IRS, but I also recognize that the other scandals are equally troubling.

So I’m amused by Lisa Benson’s portrayal of the…um…plumbing problems at the White House.

DC Septic Cartoon

But there’s a theme to all the scandals, regardless of whether they’re happening now under Obama or whether they happened under Bush or during the reign of previous Presidents: Many of them take place solely because government is large, bloated, and involved in areas where it doesn’t belong.

Here’s my video explaining why corruption is much more common when government is bigger.

P.S. You can see some of my favorite Benson cartoons herehere, here, here, here, here, here, here, here, here, here, here, here, herehereherehereherehere, hereherehere, and here.

And here’s my favorite one, which criticized Obama’s class warfare policy and became part of my political cartoon contest.

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I’m happy to bash the IRS, but I usually try to explain that our anger should be focused on the politicians who created the corrupt, 74,000-page tax code.

But sometimes the IRS deserves some negative attention. The tax collection bureaucracy has thieving employees, incompetent employees, thuggish employees, brainless employees, and victimizing employees.

The senior folks at the IRS also deserve scorn for bone-headed decisions such as squandering millions of dollars on a P.R. campaign and a scheme to regulate and control private tax preparers.

Now it seems we have another reason to condemn the tax-collection bureaucracy. The IRS is engaging in Nixon-type political harassment.

Here’s some of what the Associated Press just reported.

The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday. Organizations were singled out because they included the words “tea party” or “patriot” in their applications for tax-exempt status, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups.

Heaven forbid somebody self-identify as being patriotic. Obviously a cause for investigation by the IRS.

And it’s rather ironic that the IRS felt compelled to apologize just a few days after President Obama just told us we shouldn’t listen to “voices” telling us that bad things happen in Washington.

But it’s not just that the IRS targeted groups opposing big government. The bureaucrats also violated the rules designed to protect taxpayers from IRS abuse.

…groups were asked for their list of donors, which violates IRS policy in most cases, she said. “That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate. That’s not how we go about selecting cases for further review,” Lerner said at a conference sponsored by the American Bar Association. “The IRS would like to apologize for that,” she added.

But you can put your mind at ease because senior IRS officials assure us that the targeting of Tea Party groups had nothing to do with political bias.

Lerner said the practice was…not motivated by political bias. …IRS Commissioner Douglas Shulman told Congress in March 2012 that the IRS was not targeting groups based on their political views. “There’s absolutely no targeting. This is the kind of back and forth that happens to people” who apply for tax-exempt status, Shulman told a House Ways and Means subcommittee.

Just like we’re supposed to believe that political bias had nothing to do with all the IRS harassment of conservative groups during the Clinton years. The message from the elites in Washington is “Nothing to see here, move along.”

But as the Wall Street Journal warned at the time, it seems there is a remarkable lack of curiosity about patterns of IRS abuse.

…once we agree that a politicized IRS is a dangerous thing, it is hard to understand the see-no-evil approach taken by the Congress, the press and the judiciary about serious, current allegations of exactly this. …organizations have been using the Freedom of Information Act to find out if there is anything to the extraordinary run of audits that happened to hit a number of tax-exempt organizations that might reasonably be described as Clinton enemies. …we have lots of Clinton enemies who have suffered actual audits, and very little interest in finding out whether this was simply a massive coincidence or the result of something more sinister.

And now we’re going through the same process again.

Maybe, just maybe, there’s a lesson to be learned about the dangers of giving power to politicians and bureaucrats.

Yet another argument for the flat tax. If there’s no charitable deduction, there’s no opening for a politically biased IRS bureaucracy to investigate and harass non-profit groups because of their philosophical beliefs.

P.S. On a lighter note, here’s the IRS version of the quadratic formula, and a cartoon showing how GPS would work if operated by the IRS.

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I did a video several years ago on the link between big government and big corruption, and I periodically revisit the issue by citing disgusting examples of sleaze and cronyism ranging from the Export-Import Bank to the racial spoils scam in Alaska.

The folks at Learn Liberty also have a great video on this topic, explaining how big government creates all sorts of unfair and corrupt advantages for politically connected large corporations.

Amen. Whether we’re talking about TARP bailouts, our loophole-ridden 72,000-page tax code, Obamacare favoritism, or green-energy scams, it seems like the federal government is a giant favor factory.

So why, then, are some people in favor of big government. Is it naiveté or are they part of the racket?

In any event, I highly recommend some other Learn Liberty videos.

I especially like the last video since it echoes many of the points I made in my video series on the economics of fiscal policy.

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One of my very first blog posts was about the link between big government and big corruption.

For the rest of my life, I can now cite the Obamacare travesty as an example.

Here’s some of what Tim Carney wrote for the Washington Examiner.

Chief Justice John Roberts’ judicial sleight of hand, transforming Obamacare’s mandate into a tax, was a fittingly twisted save for a law of such grisly provenance. Born of tawdry liaisons between industry lobbyists and political hacks, passed through naked logrolling and legislative skullduggery, Obamacare wasn’t finalized until Thursday, when the chief justice, in effect, amended the bill so that it would become constitutional.

Tim recounts some of the sleaze and corruption that allowed Obamacare to move through Congress.

…within weeks of his inauguration, Obama started playing the game. An early Obamacare confab was held at the headquarters of the Democratic Senatorial Campaign Committee — showing how this was a political exercise as much as a policy one. At this April 2009 meeting, top lobbyists from the drug industry and White House Deputy Chief of Staff Jim Messina hammered out a deal — exposed by recently released emails — whereby the drug industry would pay for pro-Obamacare ads basically written by the White House. Big Pharma would also spend big to re-elect Democrats who voted for the bill. …The Senate bill was authored mostly by Finance Committee Chairman Max Baucus and Majority Leader Harry Reid, probably the two senators most notoriously cozy with lobbyists. To win over wavering Democrats, Reid loaded the bill up with special favors. Nebraska’s Ben Nelson got the “Cornhusker Kickback,” and Reid bought Mary Landrieu’s vote with the “Louisiana Purchase” — both deals giving those states extra Medicaid money. … Democratic staffers who wrote the bill cashed out to K Street nearly immediately, becoming health industry lobbyists. Democratic Reps. Bart Stupak and Earl Pomeroy, who both lost their seats (Stupak retired, Pomeroy was defeated) thanks to their votes for Obamacare, were also rewarded with lobbying gigs for health care companies.

The combination of a politically motivated Chief Justice and a tawdry legislative process led Tim to this conclusion.

If this is how a bill becomes a law, our kids are going to need new civics textbooks.

Since this is a very depressing topic, we need to add some levity. I already did a post with several good Obamacare cartoons, but I can’t resist adding this one.

Returning to our unpleasant topic, Richard Epstein opined last Friday in the New York Times about the Obamacare decision and explained (as I noted last week as well) that the power to tax does not create a power to spend.

By giving Congress independent powers over taxation and other revenue sources, the Constitution ended that dependency. But as a quid pro quo, the Constitution also restricted the use of these revenues to classical public goods — benefits that must be given to all citizens, if given to any — like paying off national debts and paying for the nation’s defense. General welfare, mentioned in parallel with these two phrases, is best read as covering only matters that advance the welfare of the United States as a whole. The redistribution of income, or “transfer payments” among citizens, like those mandated under the Affordable Care Act, doesn’t qualify for taxation in this originalist reading of the Constitution. Through the early 20th century, the Supreme Court was cognizant of this tight relationship between the power to regulate an activity directly and to the power to tax it. The basic idea relies on a simple economic insight: taxation and regulation are close substitutes, so a limitation on one power matters little if the other power is still available. There is no practical difference between ordering an action, and taxing or fining people who don’t do that same thing. If the Constitution limits direct federal powers, it must also limit Congress’s indirect power of taxation.

Unfortunately, Supreme Court Justices sometimes don’t care what the Constitution says.

P.S. This is the second time the Obamacare Frankenstein monster has appeared on this blog. He was with his twin brother last time.

P.P.S. This is a post about the unseemly genesis of Obamacare, but I’m a fiscal policy wonk, so I want to remind everyone that this new entitlement will be a budget buster.

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One of my first posts on this blog featured this video showing how big government breeds corruption.

I’ve periodically provided examples of how this process works, citing Alaska, Chicago, Wall Street, and Washington.

Here’s another example, explicitly showing how big business and big government get in bed together to rape and pillage taxpayers. The sleazy details have been reported by Bloomberg.

Exxon Mobil Corp. and its partners in a $15 billion Papua New Guinea gas project last year paid the travel expenses for employees of the U.S. Export-Import Bank as it considered whether to help fund the venture. The four workers ran up $97,367 in bills traveling to London, Tokyo and the South Pacific, according to data compiled by the bank. They flew business class, viewed the project’s route by chartered aircraft and were entertained by costumed villagers. Eleven months later, the bank approved $3 billion in financing for the liquefied natural gas facility, the biggest transaction in the agency’s 75 years.

I posted last month about why it’s important to shut down the corrupt subsidies at the Export-Import bank. This story is a good example of why handouts for big companies are a carousel of sleaze.

Pay close attention to this issue. When the votes happen, you’ll be able to tell which Republicans understand the difference between free markets and cronyism – much as a pair of votes last year showed which Republicans believed in free markets instead of government subsidies for well-heeled housing interests.

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I’ve written many times about politicians and bureaucrats screwing taxpayers with lavish compensation packages, but this story from Philadelphia is jaw dropping.

Councilwoman Marian B. Tasco is retiring Friday, but only so she can collect a $478,057 pension check and return to work Monday, when she will be sworn in for her seventh term. Tasco was one of six Council members to enroll in the city’s controversial Deferred Retirement Option Plan, better known as DROP. She did not immediately return a request for comment. …When DROP was introduced during the Rendell administration, it was thought that it would cost little or nothing. But a study by the administration of Mayor Nutter said DROP had cost the city $258 million over 10 years.

Remember stories like this every time ones of these reprehensible politicians claim that spending has been cut to the bone and taxes have to be raised.

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Kevin Williamson of National Review is always worth reading, whether he’s kicking Paul Krugman’s behind in a discussion about the Texas economy, explaining supply-side economics, or even when he’s writing misguided things about taxation.

But I’m tempted to say that anything he’s written to date pales into insignificance compared to his analysis of the corrupt relationship between big government and Wall Street. Here are some excerpts, but read the entire article.

He starts out with a strong claim about the Obama Administration being in the back pocket of Wall Street.

…it’s no big deal to buy a president, which is precisely what Wall Street did in 2008 when, led by investment giant Goldman Sachs, it closed the deal on Barack Obama. For a few measly millions, Wall Street not only bought itself a president, but got the start-up firm of B. H. Obama & Co. LLC to throw a cabinet into the deal, too — on remarkably generous terms. …the real bonus turned out to be Treasury secretary Tim Geithner, who came up through the ranks as part of the bipartisan Robert Rubin–Hank Paulson–Citigroup–Goldman Sachs cabal. Geithner, a government-and-academe man from way back, never really worked on Wall Street, though he once was offered a gig as CEO of Citigroup, which apparently thought he did an outstanding job as chairman of the New York Fed, where one of his main tasks was regulating Citigroup — until it collapsed into the yawning suckhole of its own cavernous ineptitude, at which point Geithner’s main job became shoveling tens of billions of federal dollars into Citigroup, in an ingeniously structured investment that allowed the government to buy a 27 percent share in the bank, for which it paid more than the entire market value of the bank. If you can’t figure out why you’d pay 100-plus percent of a bank’s value for 27 percent of it, then you just don’t understand high finance or high politics.

Since I’ve compared Tim Geithner to Forest Gump, I’m not going to argue with this assessment.

Later in the article, Kevin makes a case that politicians are engaging in widespread insider trading.

Nancy Pelosi and her husband were parties to a dozen or so IPOs, many of which were effectively off limits to all but the biggest institutional investors and their favored clients. One of those was a 2008 investment of between $1 million and $5 million in Visa, an opportunity the average investor could not have bought, begged, or borrowed his way into — one that made the Pelosis a 50 percent profit in two days. Visa, of course, had business before Speaker Pelosi, who was helping to shape credit-card-reform legislation at the time. Visa got what it wanted. The Pelosis have also made some very fortunate investments in gasand energy firms that have benefited from Representative Pelosi’s legislative actions. The Pelosis made a million bucks off a single deal involving OnDisplay, the IPO of which was underwritten by investment banker William Hambrecht, a major Pelosi campaign contributor. …Besting Nancy Pelosi, Rep. Gary Ackerman (D., N.Y.) got in on the pre-IPO action, without putting up so much as one rapidly depreciating U.S. dollar of his own assets, when a political supporter — who just happened to be the biggest shareholder of the firm in question — lent him $14,000 to buy shares in the private company, which he then sold for more than a hundred grand after the firm went public. There wasn’t so much as a written loan agreement. On and on and on it goes: Sen. John Kerry invested aggressively in health-care companies while shaping health-care legislation. Rep. Spencer Bachus (R. Ala.) was a remarkably apt options trader during the days when he had a front-row seat to Congress’s deliberations on the unfolding financial crisis.

I wish I had known these details when I went on TV to discuss congressional corruption earlier this year.

Kevin also explained how Warren Buffett made a boatload of money thanks to insider knowledge about bailouts.

…during the financial crisis, a big piece of Goldman Sachs was bought by Warren Buffett, who stacked up a lot of cash when the government poured money into that struggling investment bank with the support of Barack Obama. When the federal government bought into Goldman Sachs, it negotiated for itself a 5 percent dividend. Warren Buffett got 10 percent — on top of the benefit of having Washington inundate his investment with great rippling streams of taxpayers’ money.

No wonder Buffett’s willing to lie in order to help his buddies in Washington raise taxes.

There’s a lot more in the article, but here’s a final excerpt that sums up Kevin’s article.

Wall Street can do math, and the math looks like this: Wall Street + Washington = Wild Profitability. Free enterprise? Entrepreneurship? Starting a business making and selling stuff behind some grimy little storefront? You’d have to be a fool. Better to invest in political favors. …hedge-fund titans, i-bankers, congressional nabobs, committee chairmen, senators, swindlers, run-of-the-mill politicos, and a few outright thieves (these categories are not necessarily exclusive) all feeding at the same trough, and most of them betting that Mitt Romney won’t do anything more to stop it than Barack Obama did. …Free-market, limited-government conservatives should be none too eager to welcome them back, nor should we let our natural sympathy with the profit motive blind us to the fact that a great many of them do not belong in the conservative movement, and that more than a few of them belong in prison.

All of this underscores why TARP was such an unmitigated disaster – and why we should be suspicious of politicians like Romney and Gingrich who supported the bailouts.

Remember, capitalism without bankruptcy is like religion without hell.

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Mark Twain famously observed that, “It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.”

That’s a generalization, of course, but one that makes a lot of sense. Especially since I’ve written about the sleazy practice of swapping earmarks for campaign cash and also about the revolving door between Capitol Hill and the lobbying community.

Indeed, the culture of legal corruption in Washington is so pervasive that even the New York Times had to give credit to Sarah Palin for making it an issue.

Another sign of sleaze in DC is the degree to which politicians manage to get wealthier while in office.

In other words, how is it that some politicians come to Washington with modest amounts of wealth and somehow become multimillionaires? Especially when they are getting richer while the rest of the nation is treading water – even though we know they are some of the nation’s least competent people?

Here’s part of what the Washington Examiner has to say about this phenomenon.

According to an analysis by the Washington Post of congressional financial disclosure data for the period of 1984 to 2009, the median net worth of a member of the House of Representatives, excluding home equity, more than doubled. Over the same period, according to the Post, the wealth of an average American family declined slightly. The Post paints the growing wealth gap between Congress and average Americans as reflecting rising income inequality more generally. But that’s a tough sell in view of other data released yesterday. The New York Times reported that while the median net worth of the richest 10 percent of Americans remained essentially flat from 2004 through 2010, the median net worth of members of Congress rose by 15 percent over that same period. …Why are members of Congress not getting rich? Hoover Institution Fellow Peter Schweizer addressed this question in his recent book, “Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison”. It’s not rising congressional pay because congressional pay has actually fallen in inflation-adjusted dollars over the last 25 years. Members of Congress are getting richer because so many of them are masterful manipulators of their perks and positions in government. For many, that means making lucrative stock deals based on insider information or participation in special Initial Public Offerings. Or it can mean securing an earmark to build a road that doubles the value of a recently purchased piece of property. In short, wealth can come from having the inside connections, specialized information and privileged access that only comes with being a senator or representative.

There are two conclusions to draw from this analysis. The obvious lesson is that big government breeds corruption and illegitimate wealth. Simply stated, politicians wouldn’t be able to accumulate so much unearned riches if government didn’t have so much power and control over the economy.

The second lesson is less obvious, but perhaps more important. As I’ve noted before, perhaps one of the reasons why politicians despise “the rich” and favor confiscatory taxes is that they generalize from their own experiences (as well as from their relationships with powerful special interests) and assume all wealth is obtained immorally.

Indeed, I’ve been mulling this over and think I need to augment Mitchell’s Law and Mitchell’s Golden Rule with something like Mitchell’s Inverse Corollary of Taxation and Illegitimate Wealth. But that’s too wordy, so I’ll have to keep thinking about it.

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Earlier this month, I took part in an online debate for U.S. News & World Report about whether Europe or the United States was in deeper fiscal trouble.

I wrote that Europe faced a bigger mess, though I warned that the United States was making the same mistakes of costly and inefficient welfare-state policies and that we would follow them into fiscal crisis if we didn’t reform programs such as Medicare and Medicaid.

More important (at least to my fragile ego), I asked people to vote for the best presentation and I’m happy to say that I now have a huge lead in the voting.

Now there’s a new debate topic. I have squared off against a statist on the topic of bailouts. Here’s some of what I wrote.

The Bush-Obama policies of bailouts and regulation have been bad for taxpayers, but they’ve also been bad for the economy. A vibrant and dynamic economy requires the possibility of big profits, but also the discipline of failure. Indeed, capitalism without bankruptcy is like religion without hell. …Especially when the government adopts bad policies that cause a housing bubble, such as easy money from the Federal Reserve and corrupt subsidies from Fannie Mae and Freddie Mac. …Some people argue that America had no choice but to bail out Wall Street and the financial services industry. …Either through ignorance or corruption, they falsely assert that company-specific bailouts were necessary to recapitalize the financial sector. Nonsense. It is a relatively simple matter for a government to put a financial institution in receivership, hold all depositors harmless, and then sell off the assets. Alternatively, the government can pay a healthy institution to absorb an insolvent institution. This is what America did during the savings & loan bailouts 20 years ago. It’s also what happened with IndyMac and WaMu during the recent financial crisis. And it’s what the Swedish government basically did in the early 1990s when that nation had a financial crisis. …If this policy makes sense and has worked before, why does the crowd in Washington prefer bailouts? At the risk of being cynical, the politicians don’t like the FDIC-resolution approach because it means no giveaways for shareholders, bondholders, and senior managers. And that would require stiff-arming big campaign contributors.

If you agree, you can vote for me by clicking the “mic” button near the top of the page. And, to be fair, you can also vote for bailouts and regulation on the page featuring my opponent’s article.

The debate just started yesterday and I’m currently trailing 14-12 (as of 8:57 EDT), so get your Chicago voter registration cards and vote early and vote often.

If I can win this debate, it will help ease the trauma of losing the stimulus debate in New York City.

Though I’m not sure what this would say about me. I got a big win last year in my US News & World Report debate on the flat tax, so perhaps the lesson to be learned is that I should only take part in online debates rather than appear in person.

Sort of like having a face for radio, I guess.

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I haven’t paid too much attention to the Solyndra scandal, except to note that waste, corruption and job losses are the inevitable consequences of big government and crony capitalism.

But if you want a withering indictment of the sleaziness of the whole enterprise, a trip to Chicago is very illuminating.

Here’s some of what John Kass of the Chicago Tribune wrote about the “Chicago smell” of this issue.

The Solyndra scandal cost at least a half-billion public dollars. It is plaguing PresidentBarack Obama. And it’s being billed as a Washington story. But back in Obama’s political hometown, those of us familiar with the Chicago Way can see something else in Solyndra — something that the Washington crowd calls “optics.” In fact, it’s not just a Washington saga — it has all the elements of a Chicago City Hall story, except with more zeros. …did you really believe it when the White House mouthpieces — who are also Chicago City Hall mouthpieces — promised they were bringing a new kind of politics to Washington? This is not a new kind of politics. It’s the old kind. The Chicago kind. And now the Tribune Washington Bureau has reported that the U.S. Department of Energyemployee who helped monitor the Solyndra loan guarantee was one of Obama’s top fundraisers. Fundraising? Contracts? Imagine that. …it’s the same old politics, the same kind practiced in Washington and Chicago and anywhere else where appetites are satisfied by politicians. When the government picks winners and losers, who’s the loser? Just look in the mirror, hold that thought, and tell me later.

Kass does a great job of describing how these legal forms of corruption take place.

In Solyndra, like any proper City Hall political scandal, there are similar archetypes. There are the guys who count. The guys who bring the cash. They count because they do the counting. They have leverage. They’re always there at the fundraisers. And so they’re the ones who are allowed to gorge at the public trough. The bureaucrats are the fulcrum so the guys with the leverage can lift great weight without too much effort. And while they might whine privately among themselves, they don’t hold news conferences to blow the whistle. They keep their mouths shut until the deal is done. If anyone gets caught and the problem becomes public, at least they’ve got email to cover their behinds. And they’re doing a good job covering. But there’s one group that doesn’t get their behinds covered. Instead, their behinds are right out there, suspended foolishly, and waiting to get kicked. We’re the taxpayers — in Illinois we call ourselves chumbolones because we’re the ones who stupidly end up covering all the losses. As in the Solyndra mess.

His last point is most important. Taxpayers always wind up with the short end of the stick. Meanwhile, all the politicians, bureaucrats, lobbyists, and interest groups simply shrug their shoulders and move on to the next scam.

That’s why the only solution to this sleaze is smaller government.

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If you want to know why Washington is a cesspool of corruption and graft, you should read this story from the Washington Post about how Capitol Hill staffers use their positions as stepping stones to jobs in the lobbying community.

Nearly 5,400 former congressional staffers have left Capitol Hill to become federal lobbyists in the past 10 years, according to a new study that documents the extent of the revolving door between Congress and K Street. The data published by the online disclosure site LegiStorm found close to 400 former U.S. lawmakers also have made the jump to lobbying. The report…underscores the symbiotic relationship: Thousands of lobbyists are able to exploit experience and connections gleaned from working inside the legislative process, and lawmakers find in lobbyists a ready pool of experienced talent. …The study also documents the reverse movement, finding 605 former lobbyists who have taken jobs working for lawmakers in the past decade. …About 14,000 people work on the Hill, and about 11,700 people are registered to lobby this year, according to the Center for Responsive Politics.

If this sounds like sleaze, that’s because it is. It’s a story about how the political class has created a system that loots the American public and enables the well-connected to skim a good share of the booty.

I explained in a previous post that some of the most despicable people in Washington are Republicans, but this story gives me an opportunity to elaborate.

What happens is that idealistic people come to Washington to work for Congress (also, because they get elected to Congress). They earn good salaries, considerably above the average for the U.S. economy.

But if they want to make big money – and if they have weak morals and an absence of character, they are drawn to the lobbying community.

I have known dozens of good people over the years who have been corrupted by this process. They came to Washington to do good, and they wound up doing well instead.

They began their careers thinking Washington is a cesspool, and they eventually decided it’s a hot tub.

The only solution to this problem is to shrink the size and scope of government, as I explain in this video.

And if we shrink the burden of government, we can return to the good ol’ days when each member of Congress could do their job with 2 or 3 staffers rather than 20 or 30.

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I don’t have strong feelings about Sarah Palin, but I like her anti-establishment attitude.

And, in a case of strange bedfellows, so does the New York Times. Or at least one columnist is honest enough to admit when she makes a compelling argument.

Here’s an excerpt from a column published yesterday, in which the author reports on how Gov. Palin perfectly captures the reprehensible corruption that defines business-as-usual in Washington.

Along with her familiar and predictable swipes at President Barack Obama and the “far left,” she delivered a devastating indictment of the entire U.S. political establishment — left, right and center — and pointed toward a way of transcending the presently unbridgeable political divide.  …She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private). In supporting her first point, about the permanent political class, she attacked both parties’ tendency to talk of spending cuts while spending more and more; to stoke public anxiety about a credit downgrade, but take a vacation anyway; to arrive in Washington of modest means and then somehow ride the gravy train to fabulous wealth. She observed that 7 of the 10 wealthiest counties in the United States happen to be suburbs of the nation’s capital. …Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones. The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs. …“This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk,” she said of the crony variety. She added: “It’s the collusion of big government and big business and big finance to the detriment of all the rest — to the little guys. It’s a slap in the face to our small business owners — the true entrepreneurs, the job creators accounting for 70 percent of the jobs in America.”

Think about the recent controversy about Solyndra, the “green” company that got lots of handouts from the Obama Administration and recently filed for bankruptcy (and got raided by the FBI).

Not that anyone should be surprised, but the money people at the company were big financial backers of Obama.

Let’s be blunt about what happened. They bribed the White House (not in a way that violates the law, we must assume, but does anybody doubt that’s what was happening?). In exchange, the Obama Administration used the coercive power of government to steer undeserved money to the corrupt company.

And we’re not talking about a couple of million dollars. We’re talking about more than one-half of one billion dollars. That’s $535,000,000.00.

And this is presumably just one example of what probably happens dozens of times every day in Washington.

But let me make one thing clear. I don’t think the Obama Administration is an outlier. The same thing happened every day, in all likelihood, during the Bush Administration. And in previous administrations.

Heck, this is almost certainly what happens in state capitals and city governments, and I doubt that it makes much difference what party is in charge.

Indeed, Republicans are probably even worse than Democrats.

The only way to control the festering sleaze is to make government smaller, as I explain in this video.

As I’ve explained before, I hate when rich people use big government to screw poor people.

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A new study revealed that politicians are very good investors, earning significantly above-average returns when they put their own money in financial markets. CNBC interviewed me about this research and asked whether it was a sign of something akin to insider trading.

Regular readers know I’m a big foe of political corruption and have repeatedly made the point that big government facilitates sleazy behavior, but I try to be fair. As such, I warn in the interview that something doesn’t smell right, but that’s not proof of criminal activity.

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Michelle Malkin hits the nail on the head, explaining that ex-Congressman Anthony Weiner is a wretched (but not unusual) example of the modern politician – a life spent mooching from the public, lining his pockets while making life harder for people in the productive sector of the economy. And every time people like Weiner (including many GOPers) expand the burden of government, that further enriches and empowers the political elite at the expense of real America.

Weiner’s life has been nothing but Congress. Nothing but government. Nothing but taxpayer-subsidized self-perpetuation. In other words: the life of a pathetic public leech. …Last year, the now-jobless Weiner joked on former roommate Jon Stewart’s cable comedy show that he didn’t “have a lot of marketable skills.” It’s one of Weiner’s rare truthful utterances over the past year. A protege of fossilized New York Sen. Charles Schumer, Weiner has spent the past 20 years in politics — straight out of college to the present. Through seven consecutive congressional terms, he has stridently advocated job-killing policies in the name of the working class, about which this ruling-class elitist knows nothing. …Weiner served faithfully as one of liberalism’s loudest mouths opposing entitlement and debt reform. Meanwhile, he locked in his public pension and racked up hefty private credit-card bills. (Financial disclosure forms show he owes some $15,000 on an annual salary of less than $200,000.) He married another career political servant, Clinton intimate Huma Abedin, who has worked in government since taking on a White House internship in 1996. Now, they are expecting a child — and he is counting on the Beltway/Big Apple revolving door to put food on the table. History, alas, is on his side. The incumbency racket eternally rewards big spenders and big redistributors of collective wealth. Among all the other sordid lessons Weiner-gate has taught us, it has reminded us that the progressive notion of “public service” is really private-job protectionism on the public’s dime.

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In a column about the revolving door between big government and the lobbying world, here’s what the irreplaceable Tim Carney wrote about the waiver process for folks trying to escape the burden of government-run healthcare.

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. It’s another reason Obama’s legislative agenda, including bailouts, stimulus, ObamaCare, Dodd-Frank, tobacco regulation, and more, necessarily fosters more corruption and cronyism.

This seemed so familiar that I wondered whether Tim was guilty of plagiarism. But he’s one of the best journalists in DC, so I knew that couldn’t be the case.

Then I realized that there was plagiarism, but the politicians in Washington were the guilty parties. As can be seen in this passage from Atlas Shrugged, the Obama Administration is copying from what Ayn Rand wrote – as dystopian parody – in the 1950s.

Nobody professed to understand the question of the frozen railroad bonds, perhaps, because everybody understood it too well. At first, there had been signs of a panic among the bondholders and of a dangerous indignation among the public. Then, Wesley Mouch had 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. there were three questions that no one answered or asked: “What constituted proof?” “What constituted need?” “Essential-to whom?” …One was not supposed to speak about the men who, having been refused, sold their bonds for one-third of the value to other 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.

This isn’t the first time the Obama Administration has inadvertently brought Atlas Shrugged to life. The Administration’s top lawyer already semi-endorsed “going Galt” when he said people could choose to earn less money to avoid certain Obamacare impositions.

So if you want a glimpse at America’s future, I encourage you to read (or re-read) the book. Or at least watch the movie.

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I’m sure I will surrender to temptation and do a couple of posts with Weinergate jokes, but I want to begin on a higher note and make a serious point about Washington’s latest scandal.

Big government means that politicians have a lot of power over the lives of ordinary people. This is bad for all sorts of reasons, but one of the problems is that it means that people who like to wield control over others are drawn to Washington.

And to add injury to insult, these people who like to boss around the rest of us don’t seem to have positive characteristics that offset their personality flaws. I’ve joked during TV interviews that I wouldn’t trust politicians to mow my lawn, so why would we want to give these buffoons more power over our lives and our economy?!?

Here’s what the always-quotable Mark Steyn said in National Review.

…by its nature Big Government will attract strange people drawn to “public service” for the boundless opportunities it offers the otherwise untalented for unearned perquisites and gratifications of one kind or another. …The bigger the state gets, the more the modus operandi of its princelings will tend to the Weinerian.

And here’s part of what my Cato colleague Gene Healy wrote for the Washington Examiner.

There’s nothing wrong with enjoying a good old-fashioned political sex scandal. They’re entertaining, and they may even be edifying — reminding us that self-styled “public servants” are often less responsible, more venal, and just plain dumber than those they seek to rule. …Maybe it’s Weiner’s onetime status as a rising left-wing star that’s made liberal journalists queasy about the pile-on. When sex scandals and partisan loyalties collide, partisans get pious and prissy, lecturing us about America’s “unserious” political culture. But one of the few perks of being a libertarian is that you get to enjoy twice as many scandals. Politics is one big smorgasbord of schadenfreude, and I feel sorry for my Republican friends who root, root, root for the Red Team so ardently that it hampers their enjoyment of the wonderful GOP sex scandals of recent years. …H.L. Mencken thought government as practiced in these United States was “dishonest, insane, and intolerable.” But that never stopped the sage of Baltimore from enjoying what he called “incomparably the greatest show on earth.” In Mencken’s version of American exceptionalism, this great nation had elevated politics to “the plane of undiluted comedy” because “we have clowns in constant practice among us who are as far above the clowns of any other great state as a Jack Dempsey is above a paralytic.” So have a guilt-free laugh about Weinergate. Not only are political sex scandals great fun, they serve an important social purpose. They remind us that we should think twice before we cede more power to these clowns.

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Here’s a stomach-turning story from the Chicago Sun Times about how the political class uses special insider deals to get rich (or richer). What’s remarkable is that there may be nothing technically illegal in this story of crony capitalism and government contracts. But does anyone doubt that being the Mayor’s son was not a relevant (if not the key) consideration?

For years, City Hall maintained that Mayor Richard M. Daley’s son, Patrick Daley, had no financial stake in the deal that brought wireless Internet service to city-owned O’Hare Airport and Midway Airport. But it turns out that the younger Daley still reaped a windfall of $708,999 when Concourse Communications was sold in 2006, less than a year after the Chicago company signed the multimillion-dollar Wi-Fi contract with his father’s administration, company documents obtained by the Chicago Sun-Times show. …Exactly how the deal was structured isn’t clear. Neither Patrick Daley nor his father replied to interview requests. But the amount that Patrick Daley was paid was linked to the sale price of the company, a source with knowledge of the arrangement said: The more the company was sold for, the more Patrick Daley would be paid. The elder Daley — who left office May 16 after deciding not to seek re-election — is now in business with his son. The two Daleys are working out of offices on Michigan Avenue on international business deals. Patrick Daley’s Wi-Fi windfall was part of $1.2 million he was paid as a result of deals he had with Cardinal Growth, a Chicago venture-capital firm that invested in Concourse and other businesses. Among those businesses was a sewer-inspection company that got millions of dollars in no-bid city-contract extensions. In addition to Patrick Daley, Cardinal Growth also has had business dealings in which it made payments to two of his cousins, Robert G. Vanecko and Richard J. “R.J.” Vanecko. …In addition to the $708,999 from those payments linked to the Concourse sale, Cardinal Growth made numerous other payments to Patrick Daley, totaling $543,127, between July 10, 2002, and Oct. 31, 2009, company records show. It isn’t clear what those payments were for.

Chicago has a reputation for this kind of corruption, and I suppose I could make a snarky comment about Obama learning how to be a politician in that environment, but I have little doubt that there are untold versions of this story in every part of government, at all levels of government.

The moral of the story is that big government is the mother’s milk of cronyism, sleaze, unearned wealth, and other forms of corruption. I posted my video on this topic just a few weeks ago, but this is a perfect opportunity to include it again for those who didn’t see it.

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I can’t say I’m surprised, but I’m nonetheless still nauseated to read that Mitt Romney has decided to endorse ethanol subsidies. Here’s a blurb from Fox in DC.

“I support the subsidy of ethanol,” Romney told an Iowa voter. “I believe ethanol is an important part of our energy solution for this country.” …Romney’s renewed support came just days after former Minnesota Gov. Pawlenty officially announced his candidacy and said the nation could no longer afford to subsidize ethanol, a position that he said backed up his claim to be the truth teller in the race.

I’ve written about ethanol subsidies before, noting that they rank as one of the most corrupt and inefficient special-interest programs in Washington. By endorsing ethanol, Romney demonstrates that he is a profoundly flawed candidate.

Indeed, he seems eerily similar to Richard Nixon. Not in the sense of being corrupt, but in his totally amoral approach to public policy.

From a policy perspective, Nixon was a terrible president. He raised taxes, created new government agencies and programs, imposed wage and price controls, and implemented many other policies to expand the burden of government. But he did those things for reasons of political expediency, not because of any set of beliefs.

Romney seems to have the same shallow approach. It appears that he will say anything and do anything to advance his own political ambition. Doing what’s right for America doesn’t seem to be a factor when he makes decisions.

By imposing Romneycare on Massachusetts, Romney paved the way for Obama to impose a similar policy on the entire nation. Now Romney has embraced one of the sleaziest scams in Washington, one that lines the pockets of a rich special interest and screws over taxpayers and consumers.

That does not bade well. If he makes it to the White House, I will predict right now that he would destroy America’s fiscal future with a value-added tax.

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I sometimes assert that the greatest enemies of freedom in Washington are mortgage payments and tuition bills. When people give me a blank stare, I say that I’m joking, but I use the opportunity to explain that the desire for easy wealth (and the lifestyle it enables) lures many Republicans to become lobbyists and to promote policies that they almost surely understand are bad for America.

These GOPers, who do the wrong thing to line their own pockets, are the worst people in Washington. They presumably first got involved in policy because they recognized government is a cesspool, but eventually got corrupted and decide it is a hot tub. To put it mildly, this gets me very agitated. For instance:

I have slammed a former Reagan Administration official for defending earmarks. I think it is morally offensive that he gets rich by facilitating the transfer of money from taxpayers to powerful interest groups.

I have condemned the former Senate Republican leader for defending Obamacare. I think it is disgusting that he puts his lobbying income ahead of America’s best interests.

I have denounced Illinois Republican legislators for killing school choice. I think it is downright nauseating that they condemn inner-city children to terrible schools in exchange for campaign contributions from teacher unions.

So you won’t be surprised to know that I am on the verge of going postal after reading a report from The Hill about all the Republican lobbyists who are getting lucrative contracts to fight against the Tea Party agenda and lobby on behalf of big government. Here are the utterly nauseating details.

A stable of former GOP aides has been hired by public television stations, children’s hospitals and other interest groups that fear they’ll be targeted for spending cuts by the Republican House. Most of the aides left Congress years ago, but many still have close ties to senior Republicans on Capitol Hill, including Speaker John Boehner (Ohio). They’ve been hired to try to convince the new GOP Congress that some public spending is worth continuing and not reducing. An advocacy group for the Association of Public Television Stations, for example, has hired GOP lobbyists John Feehery and Marc Lampkin of Quinn Gillespie & Associates to fight off budget cuts. …A review of lobbying disclosure records by The Hill shows the public television stations are hardly alone in recruiting GOP muscle. A number of associations hoping to retain federal funding have recently added GOP lobbyists with connections to the new majority. The hiring binge indicates Republican lobbyists are earning dividends from their party’s re-taking of the House in November and points to the headaches in store for a Republican House that wants to take a hatchet to public spending. Targets of GOP budget cuts say they need all the help they can get from the coming GOP-led onslaught. “Everyone is going to make their case for government support for their projects,” said one GOP lobbyist. …The California High-Speed Rail Authority has hired Ogilvy Government Relations’ Drew Maloney, a former aide to DeLay, to work on retaining federal grants for high-speed rail. …Williams & Jensen has registered to lobby for AARP to work on senior-citizen issues and President Obama’s deficit commission report. Prominent Republican lobbyist Steve Hart is among those working for the group, which wants to make sure the new healthcare law is not repealed. …The National Association of Children’s Hospitals (NACH) has hired former Rep. Deborah Pryce (R-Ohio) of Clark Lytle & Geduldig to lobby for the reauthorization of the Children’s Hospitals Graduate Medical Education program, which uses $317.5 million in federal funding a year.

Some of my Republican friends sometimes respond by asserting that Democrats are worse, but I grade on a curve. Democrats seek to make government bigger because they believe in statism. So it’s not terribly surprising or philosophically inconsistent for them to become lobbyists and get rich pushing to expand the burden of government (though some Democrats lobby for things that are not completely consistent with a left-wig agenda, such as special tax breaks or defense contracts, so it’s not a black-and-white divide).

Republicans, however, tell voters that they believe in small government and individual liberty. So when GOP politicians and staffers decide to get rich by lobbying for bigger government, that is more disgusting.

Doing the wrong thing is bad. But doing the wrong they when you know it is wrong is even worse.

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The internal revenue code is nightmarishly complex, as illustrated by this video. Americans spend more than 7 billion hours each year in a hopeless effort to figure out how to deal with more than 7 million words of tax law and regulation.

Why does this mess exist? The simple answer is that politicians benefit from the current mess, using their power over tax laws to raise campaign cash, reward friends, punish enemies, and play politics. This argument certainly has merit, and it definitely helps explain why the political class is so hostile to a simple and fair flat tax.

But a big part of the problem is that tax lawyers dominate the tax-lawmaking process. Almost all the decision-making professionals at the tax-writing committees (Ways & Means Committee in the House and Finance Committee in the Senate) are lawyers, as are the vast majority of tax policy people at the Treasury Department and the Internal Revenue Service.

This has always rubbed me the wrong way. Yes, some lawyers are needed if for no other reason than to figure out how new loopholes, deductions, credits, and other provisions can be integrated into Rube-Goldberg monstrosity of existing law.

But part of me has always wondered whether lawyers deliberately or subconsciously make the system complex because it serves their interests. I know many tax lawyers who are now getting rich in private practice by helping their clients navigate the complicated laws and regulations that they helped implement. For these people, the time they spent on Capitol Hill, in the Treasury, or at the IRS was an investment that enables today’s lucrative fees.

I freely admit that this is a sour perspective on how Washington operates, but it certainly is consistent with the “public choice” theory that people in government behave in ways that maximize their self interest.

There’s now an interesting book that takes a broader look at this issue, analyzing the extent to which the legal profession looks out for its own self interest. Written by Benjamin H. Barton, a law professor at the University of Tennessee, The Lawyer-Judge Bias in the American Legal System explains that the legal profession has self-serving tendencies.

Glenn Reynolds, of Instapundit fame, interviews Professor Barton about his new book.

I freely confess that I’m looking at this issue solely through my narrow prism of tax policy. But since Barton’s thesis meshes with my observations that tax lawyers benefit from a corrupt tax system, I’m sympathetic to the notion that the problem is much broader.

One of the most quoted lines from Shakespeare’s Henry VI is, “let’s kill all the lawyers.” But rather than making lawyer jokes, it would be a better idea to figure out how to limit the negative impact of self-serving behavior – whether by lawyers or any other profession that might misuse the coercive power of government.

This is one of many reasons why decentralization is a good idea. If people and businesses have the freedom to choose the legal system with the best features, that restrains the ability of an interest group – including lawyers – to manipulate any one system for their private advantage. This new study by Professors Henry Butler and Larry Ribstein is a good explanation of why allowing “choice of law” yields superior results.

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I’ve always rejected coercive redistribution, particularly when imposed by the federal government.

But some types of redistribution are worse than others, and when big business and big government get in bed together, ordinary people are the ones who get screwed.

This is why Obama’s supposed “move to the center” is a bunch of nonsense.

Tim Carney is the go-to guy on this issue, and his column this morning in the Washington Examiner exposes the real meaning of Obama’s recent appointments of a “banker” and a “CEO.”

Let’s start with Bill Daley, the supposed banker who will be Obama’s new Chief of Staff. Does this signal a move to the right, as some left-wingers fear? That might be the case if Obama had appointed a real banker like John Allison of BB&T, who wants government to get out of the way and believes banks should sink or swim without bailouts or subsidies. But, as Tim explains, that is not the attitude of Bill Daley, who is more akin to Jim Taggart, the rent-seeking businessman in Atlas Shrugged.

Check out Daley’s resume. In the 1990s, he ran Amalgamated Bank, owned by a union and described by the Chicago Sun-Times as “one of the city’s most politically connected financial institutions.” Bill’s brother, Mayor Richard Daley, kept the city’s money on deposit at Amalgamated. Later, Bill held a seat on Fannie Mae’s board, pocketing six-figure compensation from the government-sponsored enterprise that used a housing bubble and an implicit government guarantee to fill a slush fund for well-connected Democrats — until taxpayers bailed it out in 2008. This is Obama’s kind of businessman: a banker who leverages his political connections for profit.

Or what about Obama’s appointment of Jeff Immelt of General Electric? Does this mean Obama wants to unleash the power of free enterprise? That would be welcome news, but GE has morphed into a corrupt company that specializes in fleecing taxpayers (a very sad development since GE once sponsored Ronald Reagan). Once again, Tim hits the nail on the head with a devastating indictment.

GE, which marches in sync with government, pocketing subsidies, profiting from regulation, and lobbying for more of both. …Obama bragged GE would be selling to a power plant in Samalkot, India. That sale is no triumph of free trade — Obama’s Export-Import Bank is providing at least $400 million in subsidized financing to grease the skids. Subsidies are GE’s lifeblood, and Immelt’s own words make that clear. In his op-ed announcing his appointment, Immelt called for a “coordinated commitment among business, labor and government…” He also advocated “partnership between business and government…” This is Immelt’s style. …wherever Obama has led, GE has followed. Obama has championed cap and trade in greenhouse gasses, and GE has started a business dedicated to creating and trading greenhouse gas credits. As Obama expanded subsidies on embryonic stem cells, GE opened an embryonic stem-cell business. Obama pushed rail subsidies, and GE hired Linda Daschle — wife of Obama confidant Tom Daschle — as a rail lobbyist. GE, with its windmills, its high-tech batteries, its health care equipment, and its smart meters, was the biggest beneficiary of Obama’s stimulus. To get these gears in sync isn’t cheap: The company has spent $65.7 million on lobbying during the Obama administration — more than any other company by far. So much for Obama’s war on lobbyists.

In other words, appointing Daley and Immelt does not mean a change in policy. These are people who want a bigger government because these are people who have learned to line their pockets when government has more power. They may have different motives than traditional leftists, but the result is the same. As I’ve noted before, my former Cato colleague Will Wilkinson said it best when he wrote that, “…the more power the government has to pick winners and losers, the more power rich people will have relative to poor people.”

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Tim Carney of the Washington Examiner has a great piece looking at the utterly indefensible panoply of ethanol subsidies and handouts that screw consumers and taxpayers in order to line the pockets of the politically powerful. Unfortunately, several senior GOP lawmakers have unseemly ties to the lobbyists for the industry. So this is a test, but don’t expect a passing grade.

Ethanol fuel (especially ethanol distilled from corn) is subsidized in dozens of ways by governments at all levels. Two of the longest-running subsidies — a 54-cent-per-gallon tariff on imported ethanol, and 45-cent tax credit for every gallon blended with gasoline — expire on Dec. 31, making them a top priority for industry lobbyists during the lame-duck session. …In recent years, Americans have learned about the downsides of ethanol subsidies. The 2005 and 2007 energy bills mandated the use of ethanol, igniting a corn boom, which crowded out other crops, contributing to spikes in food prices. Ethanol was even blamed for tortilla riots in Mexico. Growing and distilling ethanol uses immense amounts water (contributing to river and aquifer depletion) and energy (some scientists argue that more energy goes into making a gallon of ethanol than is contained in that gallon). The added corn demand means more fertilizer production and use, adding to harmful runoff, which is blamed for “dead zones” in the Gulf of Mexico that choke out aquatic life. There are plenty of policy reasons to kill ethanol subsidies, but historically, a powerful lobby has kept them alive. And while the GOP talks about free markets, Republican lawmakers are cozier with the ethanol lobby than Democrats are. Republicans raised more than Democrats from Poet, the nation’s largest ethanol maker. Former Republican Rep. Jim Nussle of Iowa is now the president of Growth Energy, a leading pro-ethanol lobby. Presumptive incoming House Ways & Means Chairman Dave Camp has long supported ethanol subsidies, as has Finance Committee ranking member Chuck Grassley. Republican coziness with corn growers and ethanol distillers could outweigh sound policy considerations.

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I’m an economist, so I should probably be most agitated about the economic consequences of TARP, such as moral hazard and capital malinvestment. But when I read stories about how political insiders (both in government and on Wall Street) manipulate the system for personal advantage, I want to go postal.

Yes, TARP was economically misguided. But the bailout also was fundamentally corrupt (as are so many things when government gets too big). And it was a form of corruption that lined the pockets of the ruling class. I don’t like it when lower-income people use the political system to take money from upper-income people, but I get completely nauseated/angry/disgusted when upper-income people use the coercive power of government to steal money from lower-income people.

Now, to add insult to injury, we’re being fed an unsavory gruel of lies and deception as the political class tries to cover up its sleazy behavior. Here’s a story from Bloomberg about the Treasury Department’s refusal to obey the law and comply with a FOIA request. A Bloomberg reporter wanted to know about an insider deal to put taxpayers on the line to guarantee a bunch of Citigroup-held securities, but the government thinks that people don’t have a right to know how their money is being funneled to politically-powerful and well-connected insiders.

The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request on the grounds that taxpayers ought to know how their money was being used. More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails — none of which Pittman requested. They were so heavily redacted that most of what’s left are everyday messages such as “Did you just try to call me?” and “Monday will be a busy day!” None of the documents answers Pittman’s request for “records sufficient to show the names of the relevant securities” or the dates and terms of the guarantees.

Here’s another reprehensible example of sleazy behavior. The Treasury Department, for all intents and purposes, lied when it recently claimed that the AIG bailout would cost “only” $5 billion. This has triggered some pushback from Capitol Hill GOPers, as reported by the New York Times, but it is highly unlikely that anyone will suffer any consequences for this deception. To paraphrase Glenn Reynolds, “laws, honesty, and integrity, like taxes, are for the little people.”

The United States Treasury concealed $40 billion in likely taxpayer losses on the bailout of the American International Group earlier this month, when it abandoned its usual method for valuing investments, according to a report by the special inspector general for the Troubled Asset Relief Program. …“The American people have a right for full and complete disclosure about their investment in A.I.G.,” Mr. Barofsky said, “and the U.S. government has an obligation, when they’re describing potential losses, to give complete information.” …“If a private company filed information with the government that was just as misleading and disingenuous as what Treasury has done here, you’d better believe there would be calls for an investigation from the S.E.C. and others,” said Representative Darrell Issa, the senior Republican on the House Committee on Oversight and Government Reform. He called the Treasury’s October report on A.I.G. “blatant manipulation.” Senator Charles E. Grassley of Iowa, the senior Republican on the Finance Committee, said he thought “administration officials are trying so hard to put a positive spin on program losses that they played fast and loose with the numbers.” He said it reminded him of “misleading” claims that General Motors had paid back its rescue loans with interest ahead of schedule.

 P.S. Allow me to preempt some emails from people who will argue that TARP was a necessary evil. Even for those who think the financial system had to be recapitalized, there was no need to bail out specific companies. The government could have taken the approach used during the S&L bailout about 20 years ago, which was to shut down the insolvent institutions. Depositors were bailed out, often by using taxpayer money to bribe a solvent institution to take over the failed savings & loan, but management and shareholders were wiped out, thus  preventing at least one form of moral hazard.

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Tim Carney of the Washington Examiner is an expert on corruption and sleaze inside the beltway, and his column this morning is a perfect example. He shows how corrupt insiders in Alaska use something known as the “Rent-an-Eskimo” scam to pull in hundreds of millions of tax dollars from no-bid federal contracts. These insiders, meanwhile, steers big bucks to Washington lobbyists (almost all of whom worked for politicians like Lisa Murkowski), who then provide campaign cash to the corrupt officials who pass the laws that enable the circle of graft to continue. Here are some key passages from Tim’s column.

Sen. Lisa Murkowski’s write-in candidacy is being funded by $100,000 contributions from a handful of Alaska corporations that have been handsomely subsidized by the federal government. These six-figure donors have pulled in billions of taxpayer dollars thanks to special legislative favors from Murkowski and her mentors — the late Sen. Ted Stevens (R), and Lisa’s father, former senator and governor, Frank Murkowski (R). …In late September AST took in $800,000 from nine Alaska Native Corporations — unique, privileged, and politically connected for-profit entities created in the 1970s by legislation written by Stevens.  While the companies are technically owned by the natives, the taxpayer-funded spoils from these contracts accrue to the well-connected nonnative lobbyists, subcontractors, and executives in the “Alaska mafia” made up of aides, friends and donors of Stevens, the Murkowskis, and Rep. Don Young (R). Meanwhile the 130,000 Alaska Natives, who are shareholders in the ANCs, have received $720 million over the last nine years, which comes to $615 per native annually. In effect, the natives are unwitting frontmen for this racket. Critics on Capitol Hill say this is worse than Jack Abramoff’s exploitation of Indian tribes, and, in a dark joke, dub the ANCs with the politically incorrect name “rent-an-Eskimo. …These multimillion-dollar (in some cases billion-dollar) corporations are exempt from competition requirements that cover most federal contracts because they are automatically treated as small businesses from socially and economically disadvantaged populations — although their success in pulling in federal contracts would suggest otherwise. …These overpriced no-bid contracts aren’t welfare for poor natives as much as they are patronage for politically connected lobbyists and executives, most of whom are not natives. …The ANCs highlight the truly corrupt aspect of pork-barrel spending, especially in Alaska. “Bringing home the bacon” is not simply about transferring wealth north from the Lower 48 — it’s often about using taxpayer money to line the pockets of the politically connected, who return the favor in the form of campaign contributions. Much of the pork doesn’t make it all the way to Alaska — it stays right here on K Street.

This is just one example of how big government creates a breeding ground for corruption. The circle of graft is Washington’s version of recycling. Money gets taken from taxpayers and then winds up getting passed back and forth among special interests, lobbyists, and politicians. This video provides more of the sordid details.

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The “appearance of impropriety” is often considered the Washington standard for corruption and misbehavior. With that in mind, alarm bells began ringing in my head when I read this Washington Times report about Jacob Lew, Obama’s nominee to head the Office of Management and Budget. Why did Citigroup decide to hire a career DC political operator for $1.1 million? As a former political aide, lobbyist, lawyer, and political appointee, what particular talents did he have to justify that salary to manage an investment division? Did the presence of Lew (as well as other Washington insiders such as Robert Rubin) help Citigroup get a big bucket of money from taxpayers as part of the TARP bailout? Did Lew’s big $900K in 2009 have anything to do with the money the bank got from taxpayers? Is it a bit suspicious that he received his big windfall bonus four days after filing a financial disclosure? Read this blurb from the Washington Times and see if you can draw any conclusion other than this was a typical example of the sleazy relationship of big government and big business.

President Obama’s choice to be the government’s chief budget officer received a bonus of more than $900,000 from Citigroup Inc. last year — after the Wall Street firm for which he worked received a massive taxpayer bailout. The money was paid to Jacob Lew in January 2009, about two weeks before he joined the State Department as deputy secretary of state, according to a newly filed ethics form. The payout came on top of the already hefty $1.1 million Citigroup compensation package for 2008 that he reported last year. Administration officials and members of Congress last year expressed outrage that executives at other bailed-out firms, such as American International Group Inc., awarded bonuses to top executives. State Department officials at the time steadfastly refused to say if Mr. Lew received a post-bailout bonus from Citigroup in response to inquiries from The Washington Times. But Mr. Lew’s latest financial disclosure report, provided by the State Department on Wednesday, makes clear that he did receive a significant windfall. …The records show that Mr. Lew received the $944,578 payment four days after he filed his 2008 ethics disclosure.

Lest anyone think I’m being partisan, let’s now look at another story featuring Senator Richard Shelby. The Alabama Republican and his former aides have a nice incestuous relationship that means more campaign cash for him, lucrative fees for them, and lots of our tax dollars being diverted to moochers such as the state’s university system. Here are some of the sordid details.

Since 2008, Alabama Sen. Richard Shelby has steered more than $250 million in earmarks to beneficiaries whose lobbyists used to work in his Senate office — including millions for Alabama universities represented by a former top staffer. In a mix of revolving-door and campaign finance politics, the same organizations that have enjoyed Shelby’s earmarks have seen their lobbyists and employees contribute nearly $1 million to Shelby’s campaign and political action committee since 1999, according to federal records. …Shelby’s earmarking doesn’t appear to run afoul of Senate rules or federal ethics laws. But critics said his tactics are part of a Washington culture in which lawmakers direct money back home to narrow interests, which, in turn, hire well-connected lobbyists — often former congressional aides — who enjoy special access on Capitol Hill.

Some people think the answer to these stories is more ethics laws, corruption laws, and campaign-finance laws, but that’s like putting a band-aid on a compound fracture. Besides, it is quite likely that no laws were broken, either by Lew, Citigroup, Shelby, or his former aides. This is just the way Washington works, and the beneficiaries are the insiders who know how to milk the system. The only way to actually reduce both legal and illegal corruption in Washington is to shrink the size of government. The sleaze will not go away until politicians have less ability to steer our money to special interests – whether they are Wall Street Banks or Alabama universities. This video elaborates.

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There’s an article today in the Wall Street Journal showing how already-established companies and their union allies will use the coercive power of government to thwart competition. The article specifically discusses efforts by less competitive supermarkets to block new Wal-Mart stores. Not that Wal-Mart can complain too vociferously. After all, this is the company that endorsed a key provision of Obamacare in hopes its hurting lower-cost competitors. The moral of the story is that whenever big business and big government get in bed together, you can be sure the outcome almost always is bad for taxpayers and consumers.

A grocery chain with nine stores in the area had hired Saint Consulting Group to secretly run the antidevelopment campaign. Saint is a specialist at fighting proposed Wal-Marts, and it uses tactics it describes as “black arts.” As Wal-Mart Stores Inc. has grown into the largest grocery seller in the U.S., similar battles have played out in hundreds of towns like Mundelein. Local activists and union groups have been the public face of much of the resistance. But in scores of cases, large supermarket chains including Supervalu Inc., Safeway Inc. and Ahold NV have retained Saint Consulting to block Wal-Mart, according to hundreds of pages of Saint documents reviewed by The Wall Street Journal and interviews with former employees. …Supermarkets that have funded campaigns to stop Wal-Mart are concerned about having to match the retailing giant’s low prices lest they lose market share. …In many cases, the pitched battles have more than doubled the amount of time it takes Wal-Mart to open a store, says a person close to the company. … For the typical anti-Wal-Mart assignment, a Saint manager will drop into town using an assumed name to create or take control of local opposition, according to former Saint employees. They flood local politicians with calls, using multiple phones to make it appear that the calls are coming from different people, the former employees say. …Former Saint workers say the union sometimes pays a portion of Saint’s fees. “The work we’ve funded Saint to do to preserve our market share and our jobs is within our First Amendment rights,” says Jill Cashen, spokeswoman for the United Food and Commercial Workers Union. Safeway declined to comment. …Mr. Saint says there is nothing illegal about a company trying to derail a competitor’s project. Companies have legal protection under the First Amendment for using a government or legal process to thwart competition, even if they do so secretly, he says.

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Apologies to Star Wars fans for the title, but it seemed very fitting considering the profound amoral mentality of the lobbyists who have launched a public relations campaign to defend earmarks. The key part of the story is excerpted below for your reading pleasure, but let’s focus on the “best” defense of earmarking. I’ve talked to some Republican politicians who argue the practice is legitimate because it means that elected officials rather than faceless bureaucrats are deciding how money is being allocated. That sounds semi-legitimate, but it overlooks three key problems.

1. Earmarking facilitates higher spending. The politicians on the Appropriations Committees allow other members to insert special requests (earmarks) – but only if they agree to vote for the underlying bill. This “log-rolling” practice makes it much more difficult for fiscally responsible members to convince their colleagues to support smaller budgets.

2. Earmarking is naked corruption. In the majority of cases, earmarks are inserted at the request of campaign contributors. In some cases, the contributors are lobbyists representing clients. In other cases, the contributors are the actual earmark beneficiaries. In either case, the process accurately could be described as bribery.

3. Earmarking supports programs and activities that should not exist. The “bridge to nowhere” became a symbol of the earmarking process, but the underlying problem is that members of the Alaska delegation focused on steering as many transportation dollars to their state as possible when they should have been fighting to get rid of the Department of Transportation.

Almost everybody in Washington loves earmarks. Politicians get to raise campaign cash. Lobbyists get rich charging clients. Special interests get money they haven’t earned. Congressional staff facilitate the process so they eventually can become rich lobbyists. The only losers are taxpayers and the Constitution. Anyhow, here’s the nauseating excerpt:

Lobbyists who pursue congressional earmarks are planning a public-relations campaign to defend the practice, as voters signal they no longer want lawmakers to direct millions of federal dollars to pet projects back home. The Ferguson Group, one of the largest earmark lobbying shops in Washington, is seeking donations from other appropriations lobbyists to establish a group that would promote the benefits of earmarks through a media campaign, according to documents obtained by The Hill. …“We have decided to form an informal coalition, tentatively called the Earmark Reform and Education Coalition, with the overall goal being to foster a rational conversation about earmarking among all interested parties, so that we can preserve what works and reform what does not.” …A third option is to partner with the American League of Lobbyists (ALL), according to Ferguson’s memo. Dave Wenhold, ALL’s president and a partner at Miller/Wenhold Capitol Strategies, said the organization has not decided on whether to join the campaign, but he defended earmarks as “the most transparent and accountable form of funding.”

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There are a handful of issues that expose hypocrites on both sides of the philosophical spectrum. Republicans and conservatives love to talk about free markets, for instance, but you often find them voting for completely sleazy and corrupt forms of corporate welfare such as the ethanol subsidy for big agri-business. For Democrats and leftists, a powerful example is education. They claim to want to help the poor, especially minorities, yet all too often they cast aside those people and instead side with the teacher unions by opposing school choice. So kudos to the Philadelphia branch of the ADL, as well as a local Democratic politician, for doing the right thing and putting kids before special interests. Jeff Jacoby explains in his Boston Globe column:

Three months ago, the executive committee of ADL’s Philadelphia chapter voted overwhelmingly in favor of a resolution endorsing vouchers. Now it is urging the entire organization to follow suit.”We believe school choice to be an urgent civil rights issue,’’ the committee argued in a brief being circulated among ADL’s 30 regional offices. Despite decades of increased spending on K-12 education, “the evidence that our public education system is failing to educate our children is staggering.’’ ADL should reverse its longtime position “as a moral imperative,’’ the Philadelphia leadership urges, and “issue a resolution in favor of school choice.’’As it happens, the ADL regional board isn’t the only liberal voice in Philadelphia calling for expanded school choice. State Senator Anthony Williams, a black Democrat and a candidate in Pennsylvania’s gubernatorial primary this week, is the founder of a charter school, a champion of vouchers, and an ardent believer in the power of competition to improve the quality of education. His position puts him sharply at odds with the state’s largest teachers’ union, which opposes choice and has endorsed his main opponent. But Williams — like the local ADL leadership — sees school choice as the great civil rights battle of the day.”Anybody who was for Brown v. Board of Education — it baffles me that they would be against vouchers,’’ he told me last week.

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George Orwell’s Animal Farm is famous for showing how the revolutionary zeal of the animals begins to wane after they take over the farm and the slogan “All animals are equal” is eventually amended by adding “But some animals are more equal than others.” The same is true for the American government. Investor’s Business Daily recently opined about the corrupt favoritism shown by Obama’s education secretary when he was in charge of Chicago’s miserable government school system:

Education Secretary Arne Duncan taught us Orwell this week, showing how some are more equal than others with his VIP list for admission to Chicago’s best schools. …Duncan…didn’t quite persuade that city’s well-connected elites of the value of his reforms, given the number who sought placement in the district’s better schools. Duncan insists it was just an appeals list on which parents could place kids who didn’t make it into the schools they wanted. He says that he didn’t do any lobbying for special placements. …But that argument doesn’t hold water, given that the list was kept secret from the public and Duncan’s initials appeared on 50 placement appeals, along with those of his wife, his mother and other political insiders with the clout to decide who got onto the list. Duncan’s staff also made calls to principals. So those initials wouldn’t carry any weight now, would they? And if they meant nothing, why were they there at all? The Tribune, which broke the story, noted that parents have long suspected Chicago’s public school system of being rigged in favor of the connected, based on experience. The paper found that at least one student placed on the VIP list by Duncan’s pal, former Democratic U.S. Sen. Carol Moseley Braun, made it into an elite school with substandard admissions scores. …Instead of taking on the unions, demanding performance, and shutting down bad schools, Duncan declared victory and permitted special placements to shield his friends from the impact of his liberal policies. Given the government takeovers in the private sector, it’s a sign of a growing problem coming down the pipeline, of two-tier systems to distribute spoils. Special privileges for the cronies, slop for the middle class.

Special access for powerful insiders is inevitable when government has too much power, so Duncan’s corrupt behavior is hardly surprising. James Taranto of the Wall Street Journal applies this lesson to healthcare and poses a very relevant question:

If you and Larry Summers both get sick and need a treatment that the Medicare Advisory Commission (dysphemistically known as the Death Panel) deems too expensive, what are the odds that you’ll find a way to get it anyway and he won’t? How about the other way around? In the Soviet Union, those privileged by political connections were called the nomenklatura. Here, we can call it the Obamaklatura.

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