Category Archives: Lobbying

To reform tax code, we must end ‘crony capitalism’

Behind every great tax loophole is a great special interest. And that sentiment is readily apparent in this piece by Congressman Scott Garrett.

We are all too familiar with the often repeated mantra “broaden the base and lower the rates” as a solution to our behemoth tax code. Weighing in at roughly 4 million words and incorporating more than 200 separate tax expenditures, commonly referred to as “tax loopholes,” it is not hard to understand why reform is needed. Unfortunately, the reality is that each one of the 200 separate expenditures is tied to a special-interest group.

Chicago-based utilities company faces questions from shareholder about crony relationship to administration

Andrew Evans from The Washington Free Beacon has recently reported about the close relationship between a Chicago-based power company and the current administration. Exelon Corp., has been receiving money from the federal government and has been leveraging regulations in order to protect themselves from competition.

A representative for the National Center for Public Policy Research (NCPPR), a Washington-based think tank that holds stock in utilities company Exelon Corp., attended Exelon’s shareholder meeting and asked CEO Chris Crane about the company’s relationship to the Obama administration and the wisdom in taking government money.

Exelon officials used their connections to the White House to shape environmental policies in order to hurt their competitors, according to a New York Times article. […] Exelon also secured favorable loans from the government for an already-financed project.

Taxing Internet Purchases

The following article written by Randall Holcombe for The Independent Institute comments on the increasing possibilities of the internet sales tax. Businesses that are not based on internet sales are adding pressure to get this bill pass and damage their internet competitors.

The pressure for the Senate bill comes from “brick and mortar” stores who argue that out-of-state internet sellers have an unfair competitive advantage because they don’t charge sales tax on their sales.

The Senate bill, and the whole Streamlined Sales Tax initiative, is driven by political interests, not common sense. But then, so are all public policy decisions. Even for those who want to tax internet sales, the Senate bill is not the right way to do it.

Obama to Pick Wheeler for FCC, Watt for FHFA

The President is expected to nominate a former industry lobbyist, Tom Wheeler, for the role of FCC Chairman. If true, this could turn into a case of regulatory capture. It will also be representative of the revolving door between regulators and the regulated.

He has the rare support of both industry groups and a number of consumer advocates.

Wheeler has served as an informal adviser to Obama in recent years and has been a big fundraiser for his political campaigns. He went into the venture investing business after years at the helm of the National Cable Television Association and then the wireless industry group CTIA.

Foreign aid more about helping friends at home

Jared Pincin and Brian Brenberg write a column in USA Today about cronyism in the US foreign aid program:

Cronies never miss an opportunity to feast on taxpayer dollars — even if it means taking from those who are most vulnerable.

The United States is the largest donor of international humanitarian aid, contributing roughly $8 billion in emergency food aid over the past five years. But a significant portion of that food aid is “tied,” which means the food must be sourced from U.S. suppliers and transported on U.S. ships, even if cheaper alternatives exist. The benefits of tying go to politically-connected companies in the U.S. at the expense of aid recipients. It’s a prime example of cronyism at work.

Can McDonald’s and Denny’s kill the ethanol mandate?

Timothy P. Carney at the Washington Examiner writes about the lobbying agenda of big chain restaurants, highlighting the fact that lobbying itself isn’t bad depending on the issue:

Most subsidies have concentrated benefits and diffuse costs. You and I each pay more for food, maybe for gas, thanks to the ethanol mandate. But saving the ethanol mandate is far more valuable to the ethanol lobby than killing it is to you and me.

But that’s where McDonald’s comes in. Mickey D’s pays tens of millions a year in higher food prices thanks to the ethanol mandate. Get all those chain restaurants together and they pay a ton every year — $3.2 billion, NCCF claims. Bam. You’ve got a concentrated loser of the mandate who can counterbalance the concentrated winner.

The Case Against Cronies: Libertarians Must Stand Up to Corporate Greed

Timothy P. Carney has recently written the following article at the Atlantic, pushing libertarians to stand up to the corporate welfare we see today. Carney makes a call to libertarians and conservatives alike to start stressing the issue of cronyism on the ground of “free-market corporate social responsibility.” This means business are responsible and ethical in the way they make profits. Companies that receive subsidies, bailouts or use legislation to impede competition are generating unethical profit, damaging society and the free-market.

[…] in the age of crony capitalism, libertarians must declare that some means of pursuing profit are immoral and call on executives to reject them. This would create a positive case for capitalism — arguing that the pursuit of profit, in the context of fair and open competition, helps the whole society. The new corporate social responsibility, redefined for libertarians, must stand athwart crony corporatism yelling “stop.”

Who Profits From Alcohol Taxes?

Angela Longomasini from OpenMarket.org has written the following article asking questions about those who benefit from alcohol taxes. The issue according to the article is that the main advocacy groups that seek tax increases on alcohol are not really concerned about the public health impacts of these taxes, but rather they are concerned with inserting earmarks in the tax code to favor their organizations.

 While there appears to be no acceptable level of alcohol consumption to participants at the Alcohol Policy 16Conference, which met last week in Arlington, Virginia, they certainly don’t mind profiting from people who do drink. During a discussion on alcohol tax policy, these “public health advocates” discussed ways to hike the rates as much as possible and earmark the funds to their own organizations.

Rebecca Ramirez of the Bloomberg School of Public Health at Johns Hopkins University presented her qualitative research on the framing of pro-tax messaging for use in lobbying campaigns. […]. One disability advocacy group, she noted, told her flat out that they simply didn’t care about the public health impacts of taxes. They were in the game solely to get some of the tax revenue earmarked to their organization.

Where Bank Regulators Go to Get Rich

William D. Cohan from Bloomberg.com has recently written an article highlighting the latest case of the revolving door affecting the federal government. Mary Schapiro, former chairman of the Securities and Exchange Commission SEC, will be joining the Promontory Financial Group LLC as a managing director in its Washington office, in charge of its governance and markets practice.

 […] four months after leaving the SEC, Schapiro is joining a firm stuffed to the gills with former government financial-services regulators peddling their knowledge of Washington’s regulatory thicket to the banks and financial-services companies they once oversaw. (Schapiro, remember, also had a swell incoming trip through the revolving door: She previously ran the Financial Industry Regulatory Authority, Wall Street’s self-appointed watchdog, which paid her a bonus of almost $9 million after she left to go to the SEC in 2009.)

About 100 of the 400 Promontory employees are former Washington regulators; some 5 percent, like Ludwig, come from the Office of the Comptroller of the Currency, which regulates all banks with federal bank charters, including Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. Last year, the firm hired Julie Williams, the former chief counsel of the OCC. To keep things in the family, the agency hired as Williams’s replacement Amy Friend, a Promontory managing director.