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The problem of human lobbying

I put this in the lead to Wonkbook today, but I want to make a few further points:

The report cites 243 government insiders turned lobbyists working for the industry. Of those, 202 used to work in Congress, and the rest served in the White House, Treasury Department or government agencies. The list includes 33 former chiefs of staff, 54 former staffers to the House Financial Services Committee or Senate Banking Committee and 28 former legislative directors.

The report also estimates that six banks – Goldman Sachs, Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley and Wells Fargo – and their trade organizations have spent about $600 million since the first major federal bailout of Bear Sterns in March 2008. Between 2008 and 2009, the six big banks spent about $69 million on campaign contributions and lobbying, according to the report.

The American Bankers Association, the Securities Industry and Financial Markets Association, the Financial Services Roundtable, the Financial Services Forum, the Futures Industry Association, the International Swaps and Derivatives Association and the Consumers Bankers Association spent $263 million on lobbying, policy work, salaries and conferences in 2008. The report assumes the same spending in 2009.

I've often thought that lobbying is, in part, a con, and this just confirms the impression. These shops are extracting a tremendous amount of money from the major banks. And for what? I'm skeptical that outcomes would be different if the six megabanks had spent $400 million rather than $600 million since the bailout.

Of course, the lobbying shops are simply positioning themselves at the center of one of Washington’s most frustrating realities: Washington controls a lot more money than it uses. These expenditures mean nothing to the banks making them. But this is a torrent of cash by Washington standards. Very few investments offer the possibility of multi-thousand fold returns. Washington is one of them.

Finally, I worry much more about the people than the money. Let the banks spend money. But when you've got 54 former staffers from the relevant committees and 33 former chiefs of staff and more than 200 former congressmen, you're talking about something much more effective than spending: You're talking about social relationships. People return e-mails and take calls and listen closely to the people they know. This is, essentially, what journalism is about: Leveraging social relationships to get people to tell you things they probably shouldn't be telling you, and that they certainly wouldn't tell someone they didn't know and have human feelings for.

If the banks spent $600 million but had to hire people who'd never met a congressional staffer in their life, I wouldn't worry about them for two seconds. The fact that they can hire pretty much everyone who ever worked for a previous Congress makes this a much more serious problem.

By Ezra Klein  |  May 11, 2010; 12:38 PM ET
 
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Comments

"This is, essentially, what journalism is about: Leveraging social relationships to get people to tell you things they probably shouldn't be telling you, and that they certainly wouldn't tell someone they didn't know and have human feelings for."

So you are basicly playing on the human feelings of your sources in order to betray their trust. Sounds like a textbook definition of a liberal reporter and the operating model of WaPo for the past 50 years.

Posted by: WoodbridgeVa1 | May 11, 2010 12:49 PM | Report abuse

Best government money can buy.

The problem isn't that congress can be bought, the problem is that congress is so cheap!

The banking and energy industries can buy congress for what is essentially pocket change for them. BP alone makes 17.5 million in profits PER DAY!. That buys you a lot of congresscritters ready to do your bidding.

If your company is gigantic
And your failure is titanic,
Down in congress there's a safety net for you...--Tom Paxton

Posted by: srw3 | May 11, 2010 1:02 PM | Report abuse

"This is, essentially, what journalism is about: Leveraging social relationships to get people to tell you things they probably shouldn't be telling you, and that they certainly wouldn't tell someone they didn't know and have human feelings for."

So you are basicly playing on the human feelings of your sources in order to betray their trust. Sounds like a textbook definition of a liberal reporter and the operating model of WaPo for the past 50 years.

Posted by: WoodbridgeVa1

//////////////////////////////////

Of course sources use their journalists too.

That's one of the risk with a certain kind of Beltway style of reporting.

e.g. one reason that people on the White House beat were the last people to get their heads around the US Attorney's firing scandal -- one reason it's hard to think of a member of the White House press pool breaking a major story in years.

As far as "liberal" reporters go, it's worth noting reporters don't tend to burn their sources. So I think the odds are more likely that they are being used than using their sources. This was true even in the case where Matthew Cooper and Judith Miller went to prison to protect their sources in a Republican White House.

The end game is, or at least SHOULD BE, about the pursuit of truth and following the evidence wherever it leads.

One thing that has kept a certain kind of activist conservative non-professional journalism from really getting off the ground is the tendency to initiate an investigation on the basis of a pre-determined conclusion with the evidence simply shaped to fit that pre-determined conclusion (the ACORN tapes are a case in point in this. After the initial sizzle form the story, the reality of heavily doctored tapes and a heavily slanted presentation came to the fore).

Posted by: JPRS | May 11, 2010 1:22 PM | Report abuse

Ezra,

An interesting comparison would be the average Congressional or White House staffer salary contrasted against the average lobbyist salary. I imagine the 243 'insiders' are the small portion of staffers who were 1. really in it to cash out in the end through lobbying anyway or 2. finally got fed up with feeling like a chump working for low relative wages.

When you see the switch-backs and horse trading that go on in any legislative body, even the most idealistic staffers feel jaded over time.

I'd also love to see how long the integrity of these "best government money can buy" folks lasts if they were faced with someone waving a wad of cash in their faces. Most likely, as conservatives, they could be bought for pennies on the dollar.

Posted by: Jaycal | May 11, 2010 1:43 PM | Report abuse

The return on investments in lobbying are better than shorting subprime mortgages. A million here and a million there and soon you get a multibillion tax credit, regulatory relief, no bid cost plus contract, and/or appointments to the agencies that are supposed to by overseeing your government contracts. See Bush's MMS, HUD, HHS, etc.

ROI for political corruption, I mean lobbying, is the best profit driver in the market...

Posted by: srw3 | May 11, 2010 2:12 PM | Report abuse

And you want Washington to get bigger and have more control?

Posted by: Holla26 | May 11, 2010 3:56 PM | Report abuse

While I agree it is troubling, there is an upside ~ congress is able to afford extremely competent staffers at well below market pay. Why? Because staffers know they can cash in as lobbyists later on. Its the same reason the DOJ and SEC can pay well below market wages for top talent lawyers, because govt lawyers can get high paying firm jobs representing the companies they used to be in charge of regulating. Would we be better off without the rolling door? Probably, but it would have at least some significant consequences.

Posted by: Levijohn | May 11, 2010 5:14 PM | Report abuse

@ Holla26 :

If I have to choose I would rather have federal oversight vs state oversight. Look at what AZ did on immigration for an example of states trying to address national issues.

If regulation devolves to the states it will be even easier for corporations and oligarchs to buy influence because it costs even less to purchase, I mean lobby, state legislatures and regulators.

I want washington to be more responsive to voters and not to corporations and oligarchs with vast sums of money to throw around. This means some kind of public financing (I think requiring some free airtime to candidates that meet a certain level of popularity would be a good first step) and much more high profile and easy to access information on which lobbyists are contributing to what pacs and candidates or their favored organizations, charities, etc.

Posted by: srw3 | May 11, 2010 5:58 PM | Report abuse

"If the banks spent $600 million but had to hire people who'd never met a congressional staffer in their life, I wouldn't worry about them for two seconds." But why would they do that? A revolving door needs to be greased. To get people to flip from public service to lobbying takes money. Profitable industries have money. The banks wouldn't be spending $600 million if it wasn't buying them well-connected insiders--ones who can effectively pushed their agenda.

Posted by: TomPhilpott | May 11, 2010 9:36 PM | Report abuse

@srw3 -

You say it is easier for lobbyists to pressure state officials and then you say the correction should be to make Washington more responsive to voters.

Local politics solves both. Lobbyists cannot pressure local politicians b/c the voters can push back just as hard (b/c there are generally less factions). I believe my local county rep. is less likely to succomb to pressure from BofA than my congressman.

AZ law is awesome b/c it protects its people. It has nothing to do with skin color or race. If you are busted doing something illegal they can check to see of you are an illegal alien. What is the problem with that? If you get arrested anywhere else, dont they check to see if you are a felon? Should that be stopped?

Posted by: Holla26 | May 12, 2010 9:26 AM | Report abuse

Ezra,

It makes perfect sense that this is the problem. The first thing they taught us in my corporate finance class this semester was the importance of maximizing both personal and shareholder wealth. With throwing money at the government such a great investment for those companies, it's no wonder why it is done. [capt. obvious] It seems like the most effective way to make our government more in tune with the people would be to lessen the impact these companies have [/capt. obvious]. So the question remains: what do we do about it? What specifically would you recommend? The free world awaits your response.

Posted by: archamprog | May 12, 2010 1:47 PM | Report abuse

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