In line with this morning’s early post (Four out of Five Americans See Financial Reforms as Ineffectual), I discovered, quite by accident, a horrifying little article in the July 12 Time magazine (seen at my hair cutter’s and local barber shops everywhere).

The online version is pretty skimpy, which is probably why I didn’t see it until now. But the details are quite horrific.

The article’s subhed tells you all you need to know: “Why Lobbying Is Washington’s Best Bargain; Lobbyists say for just a few million, they can make clients billions:”

“Lobbyists [are] the best bargain in Washington. Capitol Tax Partners, for example, is one of 1,900 firms that house more than 11,000 lobbyists registered to operate in Washington. Last year, according to the Center for Responsive Politics (CRP), firms like Capitol Tax were paid a total of $3.49 billion for unraveling the mysteries of the tax code for a variety of businesses. According to Capitol Tax co-founder Lindsay Hooper, his firm provided “input and technical advice on various tax matters” to such clients as Morgan Stanley, 3M, Goldman Sachs, Chanel, Ford and the Private Equity Council, which is a trade group trying to head off a plan to increase taxes on what’s called carried interest, a form of income enjoyed by the heavy hitters who run venture-capital and other types of private-equity funds.”

The print edition specifically cites Derivative trading banks and Auto Dealers as examples of ROI. Derivatives trading banks spent $28 million, and got to avoid allocating $5 billion to $7 billion to back their trades. The gain in annual profits is about $3 billion — with the risk remaining on the taxpayers.  A pretty nifty return on lobbying investment (minus the lobbyists soul burning in Hell for eternity — but that’s a small price to pay.

Auto Dealers made out even better: They dropped less than $10 million dollars ($6.3 million on lobbying, and an additional $3.4 million in campaign contributions). For their troubles, the dealers get to keep $20 billion each year in undisclosed added interest and fee kickbacks to over-priced loans.

The consumer? Well, apparently, Congress is sending each voter a matching velcro glove and sock set . . .


Government for Sale: How Lobbyists Shaped the Financial Reform Bill
By Steven Brill
Time, Jul. 01, 2010,8599,2000880,00.html

Category: Bailouts, Politics, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

39 Responses to “Government for Sale: 2009 Lobbying $3.49 Billion”

  1. ashpelham2 says:

    I’m not going to go too far bashing lobbyists, because I actually wanted to be one. Didn’t complete the law degree though. Plus, I doubt my connections were good enough to get one of the really plum lobbying jobs in DC.

    Oh, and the other fact that I don’t have a Satanic bloodline.

  2. Tarkus says:

    Can it be that politicians are there to sell-out and line their own pockets?? Nah….

  3. Drewbie says:

    And nothing will change until you divorce money from politics.

    Public funded campaign financing is the way to go.

    Gets rid of career politicians too – the ones who didn’t get in the business to represent their constituents.

  4. b_thunder says:

    It’s amazing how little is take to grab/steal/expropriate/divert trillions of dollars!
    Highest ROI in living memory.

  5. Thor says:

    On a positive note – This suggests that Time Magazine isn’t completely irrelevant . . . . yet

  6. Patrick Neid says:

    And let’s see…who do they lobby?

    Oh that’s right the same people that write all the rules and regs, finance bills, health care et al. Better still as one part decries the lobbying the other says why the government should manage all our important affairs.


  7. call me ahab says:

    a lobbyist was all forlorn and upset that he had the worst clients and was unable to twist the arm of congress to get his clients what they wanted-

    he said- “I would do anything to be a successful lobbyist”

    poof- the devil appears and says- “I wil make you the best and most successful lobbyist- I will get you the best clients and everyone in congress will do everything you ask- all I ask for in return is the souls of your wife and children who will burn in hell forever”

    the lobbysit rests his chin on his hands and ponders and then after a moment asks- “I don’t get it- what’s the catch”

    drum roll please(-:!!!!

  8. DL says:

    Labor unions have also provided a huge amount in bribes…. I mean “campaign contributions”. I’ve heard the number $200M thrown around (for the 2008 election). Certainly the UAW did quite well. Also, Obama’s $770B “pork” bill last year provided a lot of money to unions at the state level.

    The trial lawyers are large “contributers” also.

  9. lebowski007 says:

    who is looking out for the job benefits extension for everyday workers…..democrats?

  10. DeDude says:

    Amazing how little it cost to purchase a multi-trillion dollar government. Yet people get all wired up if you start talking about using tax-payer funding for our political system – talk about penny wise and pound foolish.

  11. Porsche87 says:

    It’s not just at the Federal level. A recent article in San Jose Mercury News stated that half of all legislation passed in California was “sponsored” (written by lobbyists). That’s passed into law, not just considered. Only 20% of non-sponsored legislation passed.

  12. Porsche87 says:

    Correction, half of all sponsored legislation was passed in CA, as compared to 20% of non-sponsored. Sixty percent of all legislation that was passed was sponsored. No matter which way you slice it, the lobbyists are writing our laws at every level.

  13. Thor says:

    Porsche87 – In addition, it is legal in the state of California for a corporation to write it’s own initiative.

    Careful what we wish for with regard to term limits. We have them in CA and so far it hasn’t made much of a difference – I think it must be something to do with the kinds of people who go into politics in the first place. . .

  14. stonedwino says:

    Drewbie is soooo on the money…..

    “And nothing will change until you divorce money from politics.

    Public funded campaign financing is the way to go.”

    Until we get 100% public financing of elections and set term limits for all, our government will continue to be like a casino for the wealthy and corporate interests…

  15. cdosquared5 says:

    eliminate the corporate income tax. problem solved.

  16. Cooter says:

    Not to mention government is really just a stepping stone to a corporate career. How many ex politicians are now on corporate boards?

  17. stonedwino says:

    Eliminating the corporate income tax is not enough…Money must be taken entirely out of politics. Only once it is illlegal to influence politicians and make any from of contributions to election campaigns, will the government be off, for and by the people…

  18. By The Sanity Inspector (USA) – See all my reviews
    (TOP 1000 REVIEWER)

    This review is from: Parliament of Whores: A Lone Humorist Attempts to Explain the Entire U.S. Government (Paperback)
    For those of us who came up through the universities in the
    Eighties, P. J. O’Rourke (in his conservative incarnation) was a
    hurricane of fresh air. After years of finger-wagging about how evil
    America is, how the middle-class straight white male taxpayer is the
    root of all evil, his satires horse-laughed all that liberal
    self-righteousness right out of our systems.

    All his books follow
    the same convention–he collects his previously published essays of
    observational humor, and writes linking material to create a unified
    theme. Here, it’s the federal government. Example: What are the
    three branches of government? Money, television, and b.s. It’s hit
    or miss, as most humor is, but the hits really score

    Whenever I read O’Rourke’s stuff aloud to friends, there
    isn’t a dry seat in the house. I had the great pleasure of telling him
    so in person at a book signing once. Parliament of Whores shows
    P.J. to be more than a humorist–he is, if nothing else, the present
    era’s greatest political aphorist. Example: “When buying and
    selling are legislated, the first thing to be bought and sold are
    legislators.” A keeper.”

    how P.J. O’Rourke cannot be mentioned, in such a Thread, remains a Mystery.. (:

  19. Thor says:

    “will the government be off, for and by the people”

    Didn’t the Supreme Court just rule that corporations are also now “We The People”?

    We’re screwed.

  20. cdosquared5 says:

    No, Thor, the Court did not rule that in Citizens United. Read the opinion.

  21. Ilya says:

    Congress persons aren’t paid enough to be incorruptable. Raise their pay to $2,000,000 a year. You will get a bunch of whack jobs running for offfice but you will also attract some very smart patriotic people who might be willing to put their careers on hold for a term or two. I’ll bet we could even encourage BR to step up.

    To ‘serve’ the people, one must be already wealthy or expect to collect bribes ex post facto. I don’t personally know many intellegent upwardly mobile career people that would consider supporting a family on $175,000 a year. The total direct salary cost for our 535 solid citizens is less ( $94 million) than a bankster’s bonus.

  22. ACS says:

    Public financed campaigns or term limits will not solve the problem. If you want to get money out of politics then get politics out of money. Any time government enacts legislation that creates big monetary winners and losers then those interested parties will use every method available to influence the process. They would be crazy not to. Any so-called reform is mere window dressing to appease the masses while the corruption continues.

  23. ACS,

    @ 19:57 , No Kidding.

    some things should be re-read: “Public financed campaigns or term limits will not solve the problem. If you want to get money out of politics then get politics out of money. Any time government enacts legislation that creates big monetary winners and losers then those interested parties will use every method available to influence the process. They would be crazy not to. Any so-called reform is mere window dressing to appease the masses while the corruption continues.”

  24. beaufou says:

    “What’s this!! Do you think I don’t know the law?! Wasn’t it me who wrote it?! And I say that this man has broken the law! Right or wrong, we had a deal… and the law says, bust a deal, face the wheel.”

    WElcome to Barter Town.

  25. JoWriter says:

    Right on, MEH and ACS!

    Big Government = Big Money
    Government-guaranteed corporate monopolies = Big Money
    Government-protected union monopolies = = Big Money

    Need we say more? Yes, “Public financed campaigns or term limits will not solve the problem.”

    There IS a solution – limit, roll back, shrink the size of government at all levels. That means refusing to accept grants, loans, subsidies, contracts, etc., etc. Voters must learn how to hold the elected officials’ feet to the fire and not feel embarrassed or intimidated when the inevitable ridicule rains down on their heads from MSM, and others.

  26. Maseratij says:

    The funeral of Senator Byrd may not seem related to the topic, but for me it exposed a hypocrisy. The civil servant gets the flags and motorcades because of his sacrifices for the common good. ( Now this is what I thought, in my own head…) Conserved, and made do with less for himself and his family. Dedicated to protecting the citizenry he was charged to protect. Never giving in to the temptation of greed and corruption, and more importantly not letting such inequities abide. For this a man would be given the greatest honors of a nation. Byrd was a millionaire many times over, and his children, and friends, and relatives and the lobbyists who gave him or them money benefited monetarily and socially. The politician squeezes the juice of liberty from every and any opportunity his talons can grasp.

    Alas …. he has no fear of me…. the citizen

  27. Jim67545 says:

    Aside from the gang rape that often goes on when someone someone finances a car at the dealership, I have some sympathy for the car dealers. The issue is market knowledge – is the dealer offering you competitive rates or, unbeknownst to you, are they jacking up the rate on you and pocketing “dealer reserve” and, if so, how much. Yet the dealer reserve is reflected in the rate the lender requires. The more paid by the lender to the dealer the higher the rate. So by observing the rate one can see the impact of the dealer reserve. Unlike mortgages there is only one moving part – the rate (fees being rather small and uniform.)

    Incidentally, based on the annual financials I have seen for car dealerships, it is not unusual for the F&I (finance and insurance) income to make the difference between a dealership being profitable or not. So, the dealer will get you if you let them. (Just one of the many ways that ill-educated, often lower income and poorer credit folks get disadvantaged. The growing disparity between the haves and have nots which has been discussed in this blog recently has more aspects to it than just how much net worth or income they have.)

    If the average buyer knew that given their credit score they should get a rate of 6%, then they could demand that of the dealer and probably get it (because the last thing the dealer wants to do is lose the sale.)

    Education would cure the situation. Elegant disclosures will not. Some of the more aggregious terms, such as stiff prepayment penalties, are disclosed but universally ignored.

    People have begun to learn that getting a mortgage is not the safest of things to do. They are learning this about credit cards too and courtesy overdraft products. Once they learn the same lesson for other types of credit such as car loans, problem solved.

  28. Simon says:

    For goodness sake! When are Russia, Iran, North Korea, etc going to learn that they don’t need spend nearly as much money on Arms. All they need to do is hire the right lobbyists in Washington and Uncle Sam will give them every-thing they want. My guess is some…like the Saudies… have had this figured out for a while now.

    Washington…wash rinse repeat. lol

  29. [...] Government for Sale: 2009 Lobbying $3.49 Billion Barry Ritholtz [...]

  30. [...] Government for Sale: 2009 Lobbying $3.49 Billion Barry Ritholtz [...]

  31. quints says:

    How do they no what my glove and sock size are? Where do I go to request specific colors?

  32. jpitt42 says:

    The money is simply following the power; power that nobody should have. Public financing of elections won’t solve this problem, just divert it. If the elections are financed publicly, then who do you think controls the elections and entrance criteria for candidates? Answer: The incumbents.

    Besides, good luck shutting off all of the avenues for somebody to pay a politician off. As a parallel, that seems to be working out really well in the world of collegiate sports, where it actually is illegal to give money to the athletes, and it’s still rampant. You can’t get rid of it without getting rid of any semblance of financial privacy and a somewhat free economy along with it.

  33. Lobbying IS a huge problem.

    There’s more potential in networked citizen lobbying than may be readily apparent at first.

    The Power of Small Money, Large Numbers and Immediate Feedback!

    The Individually-controlled / Commons-dedicated Account*

    *A Commons-owned neutral platform for both political and charitable monetary contribution… which for very fundamental scaling reasons must allow a viable micro-transaction (think x-box points for action in the Commons). The resultant network catalyzes additional functionality for co-ordination of other ‘social energy’ utilization. (P.S. Its the most neutral and ultimately politically viable method for the public finance of elections.)

    Personal Democracy: Disruption as an Enlightenment Essential

    Decision Technologies: Currencies and the Social Contract

    Inertia brings extinction.
    We’ve reached that critical point now where…
    Evolution requires tools…
    Carefully thought out tools.


  34. ravenchris says:

    Protect yourself and the future, do not reelect incumbents.

  35. JT23456 says:

    Keep the socks – we need KY jelly.

  36. Marc P says:

    I agree that we need to get the money out of politics, but public finance of campaigns would solve only one small part of the problem. At its essence corruption is about conflicts of interest.

    There are myriad ways to get money to public officials. A popular one over the past 20 years has been to get a spouse a really good paying job. Women’s liberation has oddly created a huge opportunity for corruption. You can’t pay a housewife $250,000/yr, but if she has an MBA then it’s just fine to pay her $250k as a special director for corporate affairs.

    I love how Bill Clinton is getting $200,000 per speech to the Saudis. As if his golden oratory is worth that much. Hmmm, what other foreign policy connection does he have? Or I’ll be bipartisan and mention how the Saudis are also major investors in the Carlyle Group, George Bush senior’s hedge fund. The Carlyle Group made a killing in defense stocks over the past decade. Gee, I wonder if there was any advance knowledge of maybe, you know, an increased demand for military hardware?

    Another method is the deferred payoff, giving a compliant gov’t official a great job. Or advance payoff. Rahm Emmanuel, with a BA in liberal arts and a MA in communications, and no financial services experience, was hired as an investment banker and paid $16.5 million for doing just eight deals over 2.5 years. Sweeeet.

    Or the revolving door. Goldman is being investigated by the SEC for shady MBS sales. The brand new head of the SEC”s enforcement division is a 29 year old with no experience in regulatory enforcement or law. He came directly from Goldman. We are to believe that he gave up a Goldman salary and bonus to make how much at the SEC?

    One of the best comments above is about the opportunity for foreign governments to influence foreign policy by payoffs. Years ago everyone was up in arms about the Clintons selling a night in the Lincoln bedroom to the Chinese for $200,000. My reaction was not so much to the blatant corruption as to the realization that a sitting U.S. President can be bought for national-budget equivalent of a ham sandwich.

  37. [...] question. One of the things we have to do is total campaign financing. It sounds expensive, but our present system costs us far, far more with all the special favors that indebted Congress critters have to do for their fat-cat [...]

  38. [...] we previously discussed, the bang these firms get for their bucks is [...]

  39. [...] of course bonuses. Regulation reduced profits. Impacting the debate to achieve a desired outcome is worth billions, even if the consequences to society costs [...]