The Re-Election Money Machine

Most of the people who get elected to Congress are good, decent, dedicated, smart individuals who are genuinely motivated by a desire to serve our country and serve their constituents.  But when they get to Washington something very strange happens.  They find themselves trapped in the re-election money machine.

 

Most Congresspersons, when they first run for office, don't expect to make Congress their career.  They think, "I'll run for office, serve a couple of terms, accomplish something for the folks back home, and then move back home to Spokane, or Denver, or Wichita Falls and get on with my life."  But when they arrive in Washington, they are smacked in the face with the first dirty little secret of life in the Congress:  Seniority controls everything in the Congress of the United States.  A newly-elected Senator or Representative doesn't even get a good office or parking space.  Only the "senior members" get their pick of committee assignments and only the very senior members become the all-powerful "Chairman" of a major committee.  A new legislator learns real fast that without the blessings of your committee Chairman, you don't even think about drafting some new legislation, no matter how much you want to help out "the folks back home."  And if you do rear up on your hind legs and drop some new bill into the legislative hopper, without the blessing of several of the necessary committee Chairmen, your bill is born dead.  No hearings.  No press coverage.  No C-Span or CNN or MSNBC.  Just another dead bill that never made it out of committee.  Every two years the Congress adjourns, old bills die, and the legislative dance starts all over again.

 

So the astute new legislator accepts that if he or she wants to actually accomplish anything in Congress, he or she needs seniority.  And that means he or she must get re-elected.  And that means MONEY.  Lots and lots and lots of money.  It takes millions of dollars to run a congressional re-election campaign.  So you need the support of big money contributors.  A few dollars from "the folks back home" won't do it.  For Democrats, that traditionally means union money, particularly these days, money from public-employee unions, like the teachers.  For Republicans, the primary source of campaign funding traditionally comes from business-related contributors and business associations like the National Association of Manufacturers.  This is not about ideology.  Liberal or conservative, most members of Congress will take the money wherever they can get it. 

 

What do these traditional big money contributors want in exchange for all these millions of dollars?  Access. 

 

They want to be able to send their lobbyist in to see Senator Blat whenever any legislation comes along that they like, or that they don't like.  If some Senator starts talking about charter schools, she'll be getting a lot of visits from the National Education Association.  If some Congressman thinks that maybe America needs some new regulation of asbestos, the Shipyard Owner's Association or the United Brotherhood of Shipyard Workers will be six-deep in the Senator's reception room.  The price of access?  Campaign contributions.

 

So here is the second little secret: Most legislators are reactive.  They are not self-starters.  They introduce new legislation or kill a pending bill because someone--a rich constituent, a trade association or a union--asks them to introduce (or block) the bill.  And all these constituent groups and associations want the same thing.  Access that allows them to manipulate the legislative process to gain some kind of advantage for their particular point of view.  Timber companies want the national forest opened up to more clear-cutting.  The Sierra Club wants clear-cutting banned.  Senior citizens and their lobby, AARP, want social security and medicare benefits increased.  Taxpayer organizations want those expensive "entitlements" reduced. 

 

The lobbyist with the biggest checkbook usually wins.

 

If you agree that money--campaign contributions and the strings that are attached to each dollar--has a corrosive and corrupting influence on American politics, what do we, as ordinary citizens, do about it?  

In my opinion, the first step is to realize that we, the citizens of this country, are responsible for our own governance.  That is the genius of America, the wonderful model that our Founding Fathers left for us.  We don't have a King and we don't need a self-sustaining political aristocracy.  In America, the people rule.   We are the "shareholders" of the enterprise called America.  If the country is running off the rails, it's our responsibility to fix it.  We, the people, need to get off our collective butt and get involved.  We need to start paying attention and become better informed.  Second, we need to reject those politicians and their media supporters who advance themselves by polarizing our society.  I may strongly disagree with your political views, but as Americans we both have more in common than our political differences.  If we allow an uninformed and disinterested ten percent to decide every election because the other ninety percent of us are so evenly and deeply polarized with no recognition of the common ground between us, we will continue to be ruled by the lowest common denominator of our political process.  The "winners" in a divided America are the incumbent class of career politicians who care more about their own reelection than the good of the country.

If we, as citizens, start paying attention I think most of us, of whatever political stripe, will agree on some combination of the following reforms:

• We need strict term limits more than we need career politicians.  
• We need to insist that the seniority system in Congress be reformed.  I want a smart, effective Senator, not an old one.
• We need a shorter campaign season--say four months for national elections--and a lot less media expense for the candidates.
• And, although personally I hate this idea, I've come to believe that we need public financing of elections.  

Without these reforms, we'll continue to have the best Congress that money can buy.  That's not good enough for America.    

(A brief footnote:  In the 2008 presidential election the Obama campaign capitalized on "new media" and "social networking" (Facebook, Twitter, etc.) to raise millions and millions of dollars from non-traditional sources.  Most of the traditional Democratic money was going to Hillary Clinton in the early days of the campaign and Obama worked the new media brilliantly to adapt and overcome.  He mobilized millions of mostly young, tech-savy volunteers and used social networking to vacuum up campaign contributions like an industrial strength Dyson.  This trend will only continue, and no future campaign can succeed without an exceptionally effective social media effort.)

Greg Dahl

Those Idiots In Congress

As an institution, the U.S. Congress has never been so poorly regarded as now.  A well respected public opinion poll now shows Congress's approval rating is 9%, an all-time low.  Ask your friends and neighbors, "What do you think of the Congress?" and the answers will be both definite and scathing.  "Throw the bums out" seems to be the almost universal reply these days.  Why?

In my former life, a long time ago, and far, far away, I worked as counsel for oceans and fisheries on the staff of the US Senate Committee on Commerce, Science and Transportation. My area was NOAA, Fisheries, Maritime Administration, Army Corps-ports and harbors, and a few other odd bits like marine mammal protection and coastal zone management. I actually wrote some of the laws that regulate/protect the US marine environment.
So, from the perspective of a former Washington, D.C. insider, I offer these comments:
Most politicians are reactive. They are not self-starters. They do their legislative dance because someone-usually a constituent- but more often a constituent with money- asks them to do something or solve some problem. Most politicians are honest, dedicated, hard-working. They are not bad people, but they live in a very strange world.
Over the last 30+ years that I have watched this political dance unwind, it seems to me the concept of the "public servant" who goes to Washington to get something done for the folks back home has been replaced by a permanent political class of professional politicians who think they have a vested right to occupy their office. That is our fault. We dislike and disapprove of the congress but we keep reelecting our own particular congressperson. We are passive, spoon-fed, uninvolved and we permit these characters to run amok and just keep getting reelected. Example: Barney Frank and Chris Dodd both pressured Fannie May and Freddie Mac to reduce loan criteria to make home loans more accessible to lower qualified buyers. Barney and Chris are just following the Democratic party line--they are sensitive, caring, good to the poor and want to help the downtrodden.  Oh, and they want to increase the reach of government and make more people dependant on government, because that gets them reelected.  So, under legislative pressure, federal insurance underwriting standards for residential loans (backed by Freddie and Fannie) got real loose, and some lenders started giving 125% of equity "liar loans" to anyone with a pulse. Why not? The loans were insured and before the ink on the loan documents was dry, the bank could bundle them with other loans and sell them.  Other Wall Street "Masters of the Universe" came up with the idea of selling insurance to cover these bundles of risky loans--called mortgage backed derivatives--and big institutional investors bought them by the billions.  Everybody made money. There was no Treasury or SEC oversight of "mortgage backed derivative securities" because the Wall Street types like Paulson believed the market would correct any excesses. And so we get a crash that takes trillions of dollars of value out of middle-class Americans retirement accounts, 401K's and IRA's; bankrupt's the country and throws between 15 and 20 million people out of work. No one, except we sheep, paid much of a price. No one went to jail. Chris Dodd retired, but Barney Frank got reelected. Wall Street bonuses are at all time highs.
But I digress. It takes so much money now to run for office that any statewide office, even in a backwater state like mine (Washington) costs millions. Where is this money spent? TV and Radio advertising, grassroots activists, more advertising, social media, more advertising. The next Presidential campaign is expected to cost each side a billion dollars (yes, with a b, billion).

What can be done to "take back our government" -- IMHO, two things: First, strict and absolute term limits. We have to end the control of our political process by career politicians who only care about their own reelections. Second, public financing of statewide and national campaigns--I hate this idea, but I have come to believe it is the only way to get the influence of big money out of our politics. I would limit the campaign season to some reasonable time like 4 months for national office, less for states, and make the networks (who all broadcast over public frequencies that belong to the people) give some amount of free air time to candidates. In other words, take the huge need for media money out of the equation and the candidates will be less beholden to big money donors. Oh, and if reelection campaign advertising were not such a big revenue item to the TV and other media outlets, would the news divisions of our networks and newspapers be a little more critical of elected officials? A little less cozy with the boys downtown? You bet.
One other reform: public employee unions should not be allowed to collect any money from their members to contribute directly or indirectly to political candidates. Talk about putting the fox in charge of the hen house, letting public employee unions control who gets elected, as they do in many state and local elections, is one root cause of our unsolved public debt crisis.
One final comment: Our whole governmental structure, from the local township to the federal government is broke. The feds borrow 40 cents of every dollar they spend, print money with wild abandon and let tomorrow worry about the consequences. Inflation, anyone? And it's getting much, much worse. The politicians love to spend our money, but it's also true that we Americans want more government that we are willing to pay for.  None of these reforms will make any difference at all unless the American people, ordinary citizens, realize that we are the "shareholders of this enterprise called America, and we are responsible to clean up the mess we have allowed those idiots in Congress to make. 

At least, that's how it looks from where I sit.

Greg Dahl. 

What Nancy Could Tell President Obama

President Obama and the "Occupy Wall Street" folks have it just exactly backwards:  Jobs are only created when an economy grows.  Growing demand causes a business to add capacity--more equipment in the factory, more computers in the office, more people working on the shop floor.  The key point is this:  growing demand for a product--the goods or services that the business sells--is the only reason for a business to add more employees and "create" more jobs.

Now, why does a person start a business?  He or she has an idea--an idea for a product or service that someone else will buy.  And the prospective business owner hopes that he or she will be able to produce the good or service for less money than the customer will be willing to pay for the good or service.  Competition in a reasonably free marketplace for goods and services keeps prices down.  The difference between the revenue from sales and the costs of production is profit, and without a reasonable profit no business will survive for long.

So our business person, let's call her Nancy, decides to take the risk and go for it.  She has an idea for a new product--a tasty but low-fat and healthy chocolate chip cookie.  She opens her new business, Nancy's Cookies, starting small.  At first Nancy does most of the work herself.  She buys the flour, the butter and the chocolate chips.  She makes the cookie dough and bakes the cookies.  She sells her product and sweeps up the floor at the end of each day.
People really like Nancy's cookies.  Orders come rolling in.  Soon Nancy can't keep up with the demand by herself and she realizes that to keep Nancy's Cookies going, she needs some help.  She hires Sally to answer the phone and take customer orders.  She hires Ted to run the big new mixer and bake the cookies in her new industrial oven.  Eventually, as her business grows, Nancy leases a larger building and buys a delivery truck.  By now there are about a dozen people working for Nancy's Cookies, and Nancy pays them a decent salary each week.

Nancy has "created" a dozen jobs, but from Nancy's point of view her employees are a necessary expense--she needs each of these people to produce the volume of cookies that her company sells every week.

Along comes Mr. Government.  "Nancy," Mr. Government says, "you seem to be doing just fine, selling these delicious and healthful cookies, so I want you to pay me some taxes.  I want taxes from each employee, too.  I want a percentage of your profits, not too much, only about thirty-five percent.  Oh, and by the way, we have a book of regulations here--safety in the bakery, sanitation rules, parking regulations and license fees for your truck, exhaust regulations and green energy requirements for your ovens, lots and lots of regulations.  It's a pretty big book, and we keep changing the regulations all the time.  We add new regulations, too, like this new section about mandatory health care benefits for your employees.   You may need a lawyer and an accountant to help you figure all these regulations and taxes out.  But you better get it right, because if we inspect your bakery and find anything wrong, we'll impose a substantial fine.  If you ignore us, or don't pay, we'll shut you down."

"Now wait a minute," Nancy says, "I don't mind paying my fair share, but with all these taxes and the cost of obeying your regulations, there may not be any profit left over for me.  I took all the risks to start this business and I've worked hard.  Shouldn't I be able to keep the return on my investment?"

"Oh, sure," Mr. Government smiled.  "You can keep whatever is left after you have paid all our taxes and fees.  But I should warn you about one other thing; I've been so busy and have so many things to do that I've spent all the tax money that I've been collecting over the years and I've had to borrow even more money to keep all of my government activities going.  So your taxes will be going up."

"How much more do you want from me?" Nancy screamed.  "How can I grow my business when I don't know from week to week how much you will take from me?"

"Sorry, Nancy," Mr. Government said, "but that's your problem.  I'm Mr. Government, and I'm here to take your money so I can give it to somebody else.  I'm not here to help you or your business succeed."

What Nancy knows, that Obama apparently hasn't figured out yet, is that the way to grow a business or an economy is to reduce the costs imposed on the business so that the business has a better chance of making a profit.  If Government wants Nancy's Cookies to expand and add more jobs, then either sales revenue must increase or Nancy's costs must go down.  Since Government is not in the business of selling cookies, the only thing government can do to help Nancy hire more people is cut the costs imposed on Nancy's business by Government.  Cut Nancy's taxes.  Reduce the cost of regulations.  After all, many of government's regulations are pointless.  Nancy has a very real incentive--maintaining her company's profits--to produce a healthful attractive product in a clean, safe facility.  She really doesn't need a flock of government inspectors and regulators crawling around on her bakery floor looking for dust.

Federal corporate taxes in the US are thirty-five percent.  State and local taxes add even more.  Many of our European competitors tax their corporations around fifteen percent.  American business is at a disadvantage.  Capital gains taxes are especially difficult for business, because these taxes are often imposed on assets that were purchased with money that has already been taxed.

So, Mr. President, if you want to revive the U.S. economy and put millions of people back to work, here is how to do it:

• Cut the corporate income tax rate to under fifteen percent.
• Eliminate the capital gains tax.
• Reduce, eliminate or suspend unnecessary and burdensome regulations.

Investment will flourish and American businesses will grow.  Americans will be hired to fill millions of new jobs--real jobs.  Oh, and if history can be trusted to repeat itself,  by cutting corporate and personal tax rates the actual revenue to government will increase.  The pie gets bigger.  A rising tide does lift all boats.  You can pay down the deficit.  If you don't believe me, ask Nancy.  And if you don't believe Nancy, ask Bill Clinton. 

Gregory Dahl