Network News

X My Profile
View More Activity

Money in politics versus money out of political decisions

According to the Center for Responsive Politics, the health-care industry spent a whopping $648 million lobbying in 2009 -- and they probably spent even more than that, as some of the year's receipts are still outstanding. “It’s the most money ever spent by a business sector for federal lobbying,” said Dave Levinthal, a spokesman for the group.

But I actually want to make the opposite point: That's an absurdly low number given the sums involved. In 2018, for instance, the health-care bill is projected to spend about $175 billion. Here's how that compares to the money spent shaping the bill in 2009.

money_in_politics_vs_money_out_of_politics.png

It's about one-third of 1 percent of the bill's projected spending in 2018. And the bill will spend even more than $175 billion in 2019. The year after that, it will spend even more. The year after that? Even more. And so on into the future.

There are a couple of ways to interpret these numbers. One is that Washington is very cheap to purchase. The average winning congressional candidate only spent $1,372,000 in the 2008 election. With a denominator that low, industry can be decisive without investing too much money.

Another is to suggest there's a natural limit on how much of Congress you can buy. Spending $900 million rather than $700 million doesn't buy you very much more in terms of access or outcomes. Industry might have more money to spend, but if it's not going to do any good, why bother?

Another is that social norms -- or maybe fear of backlash -- stay the hand of various industries. Warren Buffett has a lot of money and a lot of political opinions, but he doesn't seem interested in buying elections or spending billions to change the way people think about, say, foreign aid. Maybe he thinks it's the wrong thing to do. Maybe he fears public outrage. And maybe the same goes for industry.

A fourth possibility is that industry uses the possibility of extra spending as a threat. The Obama administration has done a lot to purchase industry neutrality by cutting deals with pharmaceutical companies, insurers and so on. If those deals hadn't been cut, these groups might have been willing to spend billions to defeat the bill. In this scenario, industry didn't even have to spend the money in order to enjoy its full benefits.

Anything I'm missing?

By Ezra Klein  |  February 1, 2010; 12:47 PM ET
Categories:  Health Reform , Money in politics  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Lunch break
Next: Tax cuts for jobs

Comments

Ezra,

I love that you're not a shill for the left and are one of the few honest bloggers out there.

I know for a fact that "fear of backlash" is absoutely a factor. Every single piece of literature out from insurers and conference calls I've been on going over reforms have been over the top not to be anti-reform and in fact they've pushed the idea of needed cost controls above everything else. In the abscense of their ability to do needed cost controls they'd LOVE the government to handle the dirty work for them with providers. To that extent I don't think they're at "full benefits" as you put it. Insurers realize the status quo is unsustainable and would have rather had reform with cost controls than no reform at all.

Posted by: visionbrkr | February 1, 2010 1:09 PM | Report abuse

"Anything I'm missing"

Lack of information.

People don't realize how big the return would be on buying an election. Because, you know, they're in the widget-selling business, not the buying-elections-to-sell-widgets business.

Since the potential return is not widely known, the cost would be a major increase of traditional lobby spending and the outcome is extremely uncertain, the fact is that nobody with deep pockets has ever really tried to outright buy an election.

So, everyone diddles around the margins spending what everybody else spends, because it makes the most sense to just follow herd behavior.

Posted by: theorajones1 | February 1, 2010 1:09 PM | Report abuse

A third option: It's not "either/or," but "both/and".

e.g. it is both cheap to purchase legislation on big spending projects AND interest groups only spend what they feel is necessary to move public opinion and Congressional votes in their direction.

Net neutrality might be an issue where the tab could go up based on the competing private interests involved -- although smaller dollars are at stake in the final outcome -- e.g. perhaps low tens of billions rather than trillions -- so maybe not.

At a certain spending threshold, political giving provides a much better ROI than any private investment vehicle.

Another side of this story too is the nature of income inequality and wealth concentration in this country. A few hundred million seems like a lot to most, but once you're at a level where you can even consider spending those sums of money, it probably isn't that big a deal. The players who have the resources to spend that kind money are few.

In terms of public backlash, I don't see this as much of an issue. The big news orgs that tend to frame these issues in the public consciousness have no incentive to really challenge the framing, because they're usually getting a cut of the action (e.g. talking primarily about non-print media who get a nice chunk of their ad revenue stream from FIRE interest groups anyways).

Posted by: JPRS | February 1, 2010 1:31 PM | Report abuse

The government has a lot of money and so comparing money spent by a private industry and money spent by the government is always going to be lopsided?

Seriously, the health care industry has a lot of money, but you have an issue of scale here. I don't think you're point is very strong. Three quarters of a billion dollars is a LOT of money to anyone who can't tax or borrow an effective infinite amount of money.

Posted by: roquelaure_79 | February 1, 2010 1:34 PM | Report abuse

roquelaure_79,

The issue is that someone spends a few million and they get billions in the form of new tax treatment, subsidies, or changes in the law (e.g. patent protections being a recent example).

There is a direct correlation between private dollars spent and billions of public dollars spent in return as a Thank You gift.

If private money hadn't entered the equation, then odds are the legislators wouldn't have even accepted the calls, or put the issue on the legislative agenda, or cut the deal along the lines that they did (e.g. Medicare Part D as a prime example -- the underlying idea had merit, but the final dollar tally was clearly a by-product of purchased legislation).

A little bit of carefully directed private spending can have profound consequences for the way that public dollars are allocated. I suspect that's probably what Ezra is driving at.

Posted by: JPRS | February 1, 2010 1:56 PM | Report abuse

One more issue with political lobbying is the tragedy of the commons. While exceptions certainly do exist, to a certain extent corporate-friendly legislation creates a common public good that corporations share. Obviously this isn't the whole problem, and of course it doesn't prevent some "cooperation" by corporations against good laws.

Posted by: rickheineman | February 1, 2010 2:05 PM | Report abuse

There is something you're missing, which is the financial misdeeds of those in congress, perfectly on their own, without instigation by lobbyists. Top on the list is the disgusting bill run up by Pelosi to fly her children and grandchildren around at taxpayer expense on air force planes. While she has paid regular civilian air fares for these, the cost of the flights is in the millions. Many were taken without a single congress person aboard. She is allowing her family to live like royalty at taxpayer expense. Think of how much good that money could do in, say, Haiti?

Posted by: truck1 | February 1, 2010 2:33 PM | Report abuse

truck1,

1. The point that you raise has been debunked by Snoopes.

2. Even if the Speaker had this multi-million dollar perk it would be a drop in the ocean (btw, it was a post-9/11 Bush maneuver that allowed the Speaker and family to fly on a government plane for official business -- this rule also applied to Hastert who used the perk. The reasoning being that the third in the line of succession needed special treatment during a period of insecurity).

3. Flying on a government jet has no consequences for oversight of billion dollar industries. On the other hand, when legislators were allowed to fly on corporate jets at a substantially discounted rate -- these kind of issues do have consequences for the types of legislation that legislators enacted.

Posted by: JPRS | February 1, 2010 2:56 PM | Report abuse

I've seen pieces elsewhere analyzing the "return on investment" of various legislation (I remember seeing one where the amount the industry benefitted, compared to lobbying dollars invested, was a 2200% return). With figures like that, it's a wonder there aren't more lobbyists.

As for buying elections or buying Congress, that's not so easily analyzed. Researchers have been tracking the effect of money in politics for quite awhile, and thankfully, the one who spends the most does not always win. (Some of the studies focus only on self-financed, wealthy candidates, and others focus on competitive races).

I do think there's a point at which you run the risk of a public backlash, especially if you're using money to run negative ads. We had a candidate for governor in the last decade where that was at least part of what happened: an extreme attack ad was run repeatedly in the last month. It lost credibility, in the eyes of many, with each repeat.

But most elections are complex (e.g., Brown-Coakley), and that may be why no one has been able to develop a comprehensive theory on the role of money in political races that works every time.

Posted by: reach4astar2 | February 1, 2010 3:32 PM | Report abuse

I believe you mean the website "snopes" -- not "snoopes." Snopes has not dealt with this issue, which keeps coming up, recently. It did not "debunk" it -- just contradicted it. A few days ago beltway pundit renewed the charge. Pelosi has not denied flying her family, and only family, in these military jets that cost millions to operate. She has said in response that they never flew without her on board. Okay. It's still an immoral use of taxpayer money. And far far worse than taking corporate money.

Posted by: truck1 | February 1, 2010 3:40 PM | Report abuse

Warren Buffet is giving his money to Bill Gates and Bill Gates IS spending millions to lobby for foreign aid. The Gates foundation has given tens of millions to the ONE campaign and Bill Gates has (they say) said it's the best money he ever spent.

The question though is why he doesn't spend hundreds of millions. I think he should, but the reason he doesn't is probably a combination of diminishing marginal returns and uncertainty, not so much a vague feeling that it would be wrong. (And ethical intuition is probably not a big issue with corporations.)

Posted by: steve10c | February 1, 2010 3:49 PM | Report abuse

Truck1,

Here's a link to the relevant article:

http://www.snopes.com/politics/pelosi/jet.asp

Once again, I'm not really clear how this issue is relevant to the above topic.

I'm not clear that this is even really a "moral" issue. The reason that the Bush administration instituted the policy is because they believed there were national security and compelling state interests at stake -- this is the reason that the extended public aircraft for the use of Speaker Hastert.

Do you object to the use of government aircraft for high level Executive department officials conducting official state business too?

If we're talking about "perks" that influence policy, I'm a lot more concerned about loose lobbying rules involving spouses and family members; or the revolving door between public office and the private sector for government officials and their staff -- especially when they are involved in tailoring legislation that directly impacts those industries.

The jet issue is a non-sequitor.

Posted by: JPRS | February 1, 2010 4:00 PM | Report abuse

Another aspect of the problem that makes the kind of analysis you're trying to do very difficult is the fact that many contributions come from sources where the recipient is already predisposed to view that industry or issue in a certain way, and so the money certainly buys access, but does it really influence the vote? This is one of the reasons why legislators will tell you that their vote can't be influenced by a gift or campaign contribution, because they tend to take them from sources they agree with anyway. I haven't seen any thorough analyses of this issue with respect to actual candidates, however (and how easy would it be to measure, anyway?).
What IS important in those situations, however, is the second point that Professor Lessig made in the video you posted last week: there is actual corruption, but there is also appearance/perception of corruption. A legislator may honestly say that a contribution didn't influence a particular vote, but if the public perceives that the legislator's vote has been purchased, then public trust in government falls. This concern used to be enough in most campaign finance cases to justify limited government regulation of the cash flow, though the Citizens United case rejected it at least for independent expenditures (saying only quid pro quo corruption could justify regulation by the government, which the Court said wasn't a danger with independent expenditures). But, do special interests, especially corporations, run the risk of public backlash if too much is spent on a candidate or issue by a single business, because the public perceives a type of corruption of the democratic process? I'm sure there are consultants who routinely advise businesses on this very point. But I haven't seen any studies on the issue -- yet.

Posted by: reach4astar2 | February 1, 2010 4:26 PM | Report abuse

The purpose of a corporation is to maximize the profits of its shareholders. As Wendell Potter has said time and time again, health insurance companies employ very smart people whose sole purpose is to spend money in the political process that results in maximum gain for the shareholder. This money is spent directly influencing the legislative process. It's also spent influencing public opinion, since we do live in a democracy and public opinion matters. The money the insurance companies have spent is a drop in the bucket compared to what they would have lost with legislation containing, say, a public option.
This is why insurance company profits matter. These profits are a miniscule part of overall health care spending. But maximizing these profits has a massive influence on the structure of our health care system.

Posted by: jeff01 | February 1, 2010 5:14 PM | Report abuse

Documents recently obtained under the freedom of information act show that speaker Pelosi spent around 2 mill. of taxpayer money in military jets for herself AND her extended family. There is a list of the liquor consumed on one of those flights that is just staggering. They must have exited absolutely plastered! good times. What does this have to do with money corrupting our system? Some are born corrupt, others achieve corruption, and others have corruption forced upon them (by lobbyists). She's still corrupt -- which one can be without the help of lobbyists.

Posted by: truck1 | February 1, 2010 9:35 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company