The Essense of Corruption

Most people have a vague idea that Congress is corrupt, but they don't know enough about the inner workings to understand how the money and favors change hands.   The manila envelope stuffed with cash is so 1960s.  It's so gauche, so risky and in today's environment so unnecessary.

The original drafters of the federal (and most state) Constitutions understood how corruption works and knew how to prevent it.  The founders understood that for corruption to exist, there had to be a giver and a receiver, so most Constitutions contain provisions that prevent graft from being received as well as given. 

For example, most Constitutions have some sort of prohibition against special legislation, gifts and "bills of attainder."  That means that the Arizona Legislature can't appropriate money to, say,  minority leader's cousin.  It also can't appropriate money to Pima County,  the city of Kingman or Intel by name. Those Constitutional provisions take away the Legislature's power to give gifts.  Although legislators have tried to work around the restrictions, those devices alone fix half of the problem. 

The solution to the second half of the corruption equation was part of the unique genius of the American system.  No one legislator--no matter how powerful--can pass a bill.  The founders created two Houses and it takes a majority of both of them plus the signature of the President or Governor to pass a bill.   

That means that no single legislator can give a gift and no single company or individual can receive one.

Then came earmarks.  We've heard a lot about earmarking, and most of us have a general feeling that they are a bad thing, but the public and the media don't seem to understand why they are bad.

Most people focus on the Bridge to Nowhere and point out that earmarks can be wasteful.  Some politicians then make the case that not all earmarks are bad.  Here's Governor Napolitano's take on it.

Napolitano said a study earlier this year that ranked Arizona last in per-person federal earmarks illustrates that the state doesn't get a fair share back for the tax dollars it sends to Washington. She said not everything commonly referred to as an earmark represents pork-barrel spending.

But the governor's apologia misses the point.  Earmarks don't corrupt Washington because the projects themselves are bad.  And earmarks don't corrupt Washington because they are a large percentage of the budget.

Earmarks corrupt Washington because they enable Congressmen to bypass both of the checks that the founders put on the appropriations process.  Earmarks are given to individual companies and they are inserted by individual Congressmen. 

Earmarks are much more sophisticated than a shoe box full of twenties.  Earmarking allows a single congressman to insert a provision in a bill that gives millions of dollars to individual recipients without the benefit of a hearing or a recorded vote.  It doesn't matter if the project is important, or if the amount is small.  The process is corrupting.

The Seattle Times is on to the trick and has created a simple but effective database that shows the extent of the problem.  The Times simply took every member of Congress and listed how much money he doled out in individual earmarks and then listed every contribution that he received from recipients of earmarks. 

There are so many earmarks that the Times had to limit its database to the 2007 Defense bill.  The results are startling. 

For example, it turns out that Congressman Harry Mitchell isn't just the Capraesque former Government teacher who goes to Washington to defend folks back home.  The real story is that Mitchell inserted $4 million worth of earmarks into the defense bill alone and received a handsome $50,000 from earmark recipients.

Of course, Harry Mitchell is a piker compared to District 8 Congresswoman Gabby Giffords.  She managed to earmark exactly double what Mitchell did and managed to collect nearly double in contributions.  It's funny how nicely those number work out.  But I guess that shouldn't be a surprise.  There's one thing about corruption, it has to be, you know...fair.  

 

Comments

[ron]

How many jobs did that 12 million create?

[Jim Torgeson]

2... Michell & Giffords.

[Patrick]

"Don't point out the speck of sawdust in your brother's eye when you have a plank of wood sticking out of your own." Once again Greg tries to blame the current Congress for a culture that was far worse when Tom DeLay ran the show. Does Congress have a long way to go to clean up the way they do things? You bet. But they are nowhere near the Jack Abramoff territory they were in before and to make a "throw the bums out" plea to go back to the K-Street Project era is quite ridiculous. Congress needs more Harry Mitchells not less.

[Morp]

Let's not forget the others. From the same database:

Lawmaker
Franks, Trent (R, AZ, House)

Franks, Trent
(House, R-AZ)
Totals
2008 Defense earmarks: $5,900,000
2003-08 Campaign contributions from earmark recipients: $132,584

Lawmaker
Renzi, Richard G. (R, AZ, House)

Renzi, Richard G.
(House, R-AZ)
Totals
2008 Defense earmarks: $12,000,000
2003-08 Campaign contributions from earmark recipients: $118,100

Lawmaker
Grijalva, Raul M.
(House, D-AZ)
Totals
2008 Defense earmarks: $7,200,000
2003-08 Campaign contributions from earmark recipients: $40,000

Lawmaker
Pastor, Edward L. (D, AZ, House)

Pastor, Edward L.
(House, D-AZ)
Totals
2008 Defense earmarks: $12,400,000
2003-08 Campaign contributions from earmark recipients: $144,150

Shadegg and Flake had zero defense earmarks.

[Mr. T]

The other thing worth noting is that the amount of money listed as "contributions from earmark recipients" is not limited only to contributions from those companies that received money from that particular lawmaker's earmark.

For instance, both Shadegg and Flake had zero earmarks in the bill, but they have contribution amounts listed from earmark recipients.

Also, those contributions for all of the lawmakers were made between 2003 and 2008.

[John]

Not surprised to see Franks on that list as a recipient when he sits on the Armed Services Committee. Do any of the rest of them?

[P. Myers]

Great post Greg...

This is proof of the "soft curruption" that Schweikert has been talking about. Sure, Harry may have on his website every earmark that he has requested but he fails to disclaim that he gets a sweet return in campaing money for them. I don't care what anyone says, this is proof that Mitchell is currupt.

[DGN]

The last refuge of a scoundrel in politics is to blame the predecessor. It's particularly galling when the predecessors are long gone and a "new sheriff" is in town. The Ds have the majority - they run the joint - and part of their promise was to get rid of earmarks. They have not done so. And for anyone to say they do it less than the GOP is disingenuous. That's irrelevant since many of the GOP bums were thrown out. You can't be a little bit pregnant and you can't tolerate just a little bit of corruption.

[Patrick]

DGN: Are you serious? It's only been 20 months the Democrats have controlled the House. Before that, the Republicans controlled it for 12 years.

Speaking of the distant past (8 years ago), aren't you part of the crowd that still blames Bill Clinton for everything? Didn't I see the republicans recently blaming Clinton and Jimmy Carter (President 29 years ago!) for the financial crisis?

[doesn't matter]

Greg,

Should Schweikert win, you should promise to list his earmarks next year, or better yet, in two years. Best man or not.

If I had a very popular blog and a friend running for Congress, I'd use it to promote him too. Except, I may say something like, "Hey, my awesome buddy running for Congress is a great human specimen. Here's why: ..." But you're calling Mitchell out for something that 95% of 435 do... I'm just having trouble seeing how this story is relevant.

Jack Harper, Ron Gould (who I respect very much as a stand up politician), and Schweikert's campaign staff are the only people who really appreciate this story. Wait, I forgot about Congressman Flake.

I read EP every day. I love it. I tell my friends who are barely into politics about it. But this story just doesn't do anything for me.

DM

[DGN]

Patrick:

I'm as serious as a heart attack.

The VERY FIRST thing a new congress does is vote on their RULES. The RULES govern how they will vote on bills, what amendments are allowed, etc. In the House the Rules Committee is king. Why? Because if you want a bill to be voted on, you need to have a "rule" under which it is voted. If the Rules Committee wants to, it can (and often will) kill a bill or an amendment before it has a chance to even get to the floor for consideration.

I realize this is inside baseball, but it's how the process works. The majority in the House (keep in mind Senate rules are vastly different) has total control over the Rules process.

So... Your contention that it's only been 20 months and the Dems haven't had a chance to get things done is wrong, wrong, wrong. They've had 20 months TO DO THINGS THEIR WAY! And all they really needed was about 20 minutes in January of 2007.

The majority can change the rules on a dime. The majority can enforce discipline on its own members (and since they have more members, legislation should go their way). The majority runs all of the committees. I think you get the picture. The House majority is almost all-powerful and the minority sucks wind.

So, yeah, the Dems absolutely, positively, should take responsibility for reforming the earmark process. They did virtually nothing, and YOUR taxpayer dollars are being frittered away.

Oh, and the next time you want to argue, feel free to leave out the straw man. Y' know... the one you said about my complaining about Bill Clinton and Jimmy Carter. YOU'RE the one who brought them up, not me.

[Reagan Republican]

Bottom line: the only way we will ever stop this legalized bribery is to vote out ANY congressmen who request earmarks, regardless of party affiliation. It will never change institutionally because the same Congress that benefits from the earmarks would have to make the changes (yes, each chamber can change the rules, but the leadership has no incentive to do that unless the people start speaking up).

The only Congressmen that are worth your vote are the ones who do not request earmarks. Kick all of the others out, regardless of how they vote on ANY other issue.

[todd]

Just a thought - maybe what really corrupts Washington is spending this year $651 in "defense" which is largely done with very little question, accountability or oversight, not this penny-anty earmark spending.

[Ann]

Let's get realistic about what an earmark really is; there is pure pork and then there is a legitimate request for federal funds as allowed in law. The big difference is the why and who.

Saying ALL earmarks are bad is just as wrong as saying ALL earmarks are good. When earmarks are used after identifying a need and to bring surety to the funding so that allocations are properly dispersed and not hijacked by other, less essential, projects or requests; that is a good thing. When they are hidden and denied transparency for personal interests, no matter how round ‘about it might be, that is abuse and fraud.

One trip to West Virginia and it is very clear. Every town, no matter how small, has a Robert Byrd High School, the roads are like glass, and the folks who do not work for the government have no idea where or how to get a job.

Hey Patrick...had Carter not demanded the changes to Fannie & Freddie the process would not have been set in motion and the rules changed. Clinton did enable it further. That doesn’t remove all other ownership but it can’t be denied either.

[ron]

Here's what the Tribune said about those Mitchell earmarks:

July 30, 2007 - 3:24AM
Mitchell earmarks aid Mesa coffers
Dennis Welch, Tribune

Rep. Harry Mitchell, D-Ariz., wanted more than $9 million in federal money to pay for special projects in Mesa. But the freshman Democrat lawmaker and the city will have to settle for a lot less.

As of Friday, Mitchell had secured $1.6 million for projects Mesa can’t afford, such as police training equipment, money for nursing programs and cash to expand runways at Williams Gateway Airport. He has another $800,000 in requests pending. The rest have been rejected.

“Overall, the congressman is very happy with the funding requests he was able to secure,” said Seth Scott, a spokesman for Mitchell. “We know we’re not going to bat a thousand.”

Historically, Mesa has operated on a tight budget. Last year, the city was forced to cut millions of dollars out of its operating budget, lay off dozens of employees and pull back on city services.

So, in some cases, city leaders look to Washington to make up for financial shortfalls or to offset costs in order to free up money that can be used in other areas. Mitchell said the city’s largest request this year involved Williams Gateway Airport, viewed as a potential economic powerhouse for the region.

Mitchell, acting on Mesa’s behalf, asked for $5.7 million to expand the airport’s taxiway system used to move planes between hangars and runways. The airport will add an additional 500,000 square feet of hangar space during the next 18 to 24 months. But Congress approved only $1.3 million on Mitchell’s request, an amount that has some Mesa leaders concerned."

Interestingly, those earmarks for the airport.

Remember last week's news story about the state government raid on local airports' grants to support the state budget? Maybe someone should check to see if Mitchell's request is being used to shore up the state bank account.

[John Jakubczyk]

And then there is the whole process dealing with politicians "writing" books and selling books, and getting huge advances only to have the books fall flat.

It has been known to make some politicians millionaires.

[todd]

Ann - Fannie and Freddie Mac are not at the root of this problem. This is a total side issue.

[ron]

John,

Never bought one of those narcissistic books by any candidates for office.

[Patrick]

Ann: The real problem was the securitization of high-risk mortgages and the risk loss policies that banks like Lehman and Bear Stearns marketed to take all the high risk out. It was designed by mathematicians and was sold as being risk-proof. It meant that these high-risk mortgages were sold many, many times over and the risk-loss policies were akin to insurance but not regulated as insurance (in either the required capitalization or coming under federal law). This was fundamentally a problem of no regulation and these instruments were created in an atmosphere where all regulation was seen as bad. None of this was Carter or Clinton's fault. Watch the 60 Minutes piece on this from two weeks ago. It is the best, most understandable explanation of what has happened and it has nothing to do with Fannie and Freddie, at least not anywhere near in magnitude.

[Name:]

Patrick, that 60 Minutes piece could not have been that understandable or truthful if what you are repeating from it you also claim to be true. If an item changes hands a lot of times, you have a better judge of its value than if it changes hand infrequently. Like the value of your Coke stock versus the value of your house.

Second, high risk mortgages have value because the interest rates are so high, but it's a value relative to the value of other investments. They can be very profitable. If the economy slows, probably unemployment rises, and those huge profits can become negative. Then the only security is in the value of the house at the point of the next transaction.

And if Bear and Lehman were so busy taking the risk out of high-risk and high-profit investments, what do you call what Congress and Bush did retroactively over the past few weeks?

Gee, Congress takes the risk out of high-profit mortgage investments and people wonder why the value of their lower-risk investments tanks.

[todd]

Patrick - you are absolutely correct except Clinton does have blame for de-regulation of the financial industry.

I can't believe how conservatives have latched onto this idea that this is fundamentally about Fannie Mae and Freddy Mac when they are only a small share of the overall problem. I guess it is a convenient narrative to hang onto since it keeps them looking at the more basic problem - this crisis is largely a result of the belief in a free-market fundamentalism that has no basis in reality.

[Patrick]

I said that the risk-loss policies were designed to take the risk out of the high risk mortgage securities -- I didn't say they worked. Obviously they didn't. And as to something changing hands over and over so that we have a better idea of its value...obviously that isn't true either. Ultimately, these had to be backed by value and when housing prices dropped and defaults occurred the house of cards came down. Does Clinton have some blame for deregulation? Sure. I'm not saying Democrats are blameless here. But I would say most of the blame is the "free-market fundamentalism" that Todd talked about and that was found in abundance in only one party and it ain't the Democrats.

[rp]

Todd is WAY off base.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

[Donna]

"Earmarks corrupt Washington because they enable Congressmen to bypass both of the checks that the founders put on the appropriations process."

No-bid, cost-plus contracts to Halliburton and their ilk do the same thing for the executive branch. I honestly wish that conscientious conservatives like you would expend a fraction of the energy on them that you do on earmarks. "National security" uber alles, I guess.

[todd]

rp - I am fully against the bailout package, so don't hang that on me.

BTW, the entire entry is an article from Ron Paul, it would have been nice if that was noted, unless rp is in fact Ron Paul.

[Mesa Repulican George]

Todd,

Regardless of who wrote rp's entry, you did not address the point of rp's entry - that the crash is the result of too much intervention, not too little. I'm no economist but what he says makes a lot of sense. I'd like to hear your response (or the response of someone else who disagrees with "freemarket fundamentalism" as you call it.

[Steve F.]

"No-bid, cost-plus contracts to Halliburton and their ilk do the same thing for the executive branch."

Oh please. No other companies out there were big enough to do what they did. Lets not forget that Halliburton really didn't make that much money off of these contracts.

Well, there was apparently one French company, but that would've sent the entirely wrong message.

On the other hand, it would've been French trucks getting hit with IED's, and French employees getting butchered by insurgents...

[todd]

Mesa Repulican George,
Ron Paul's article is an argument against the Federal Reserve System and Central Banking. I disagree with them as well, but from another perspective. I am not really sure this articles makes a case about intervention in the economy outside of what the Federal Reserve normally does.