Understanding Legislative Corruption

Ezra has a smart post up on the mechanisms of influence that the health insurance industry is using to affect the legislative process. "It's Not the Money. It's the Relationships," he says and includes a chart showing the various former Senate finance staffers who've gone to work for the insurance borg.

This is a really crucial point. We have a tendency to understand the economy of influence in DC has almost entirely a product of campaign finance, and the exchange of money. But in my two years here, I've been amazed at how much more powerful establishment social networks are. For another (depressing example) of this phenomenon, check out this item from Sam Pizzigatti's newsletter Too Much:

The Managed Funds Association, the industry trade group, has just hired a well-connected D.C. lobbying firm. How well-connected? Th e firm's newest star lobbyist, Carmencita Whonder, used to serve as the top financial policy adviser for Senator Chuck Schumer, the powerful New York Democrat. Hedge fund managers are hoping Whonder can save the loophole that lets them claim fee income as a capital gain. Ending this bit of tax sophistry, as the White House proposes, would over double the tax due on hedge fund windfalls. In 2008, the top 25 hedge fund managers averaged $464 million each.

Charlie Cray and I wrote about the scandal of the carried interest loop hole last year. If you want to know why it persists, this is more or less why.

Comments (11)

1. They should let them use fee income as a capital gain. And then tax them a hell of a lot higher than actual work :-)

   Posted by zmann at 07/06/2009 @ 3:43pm

2. Maybe it's time to shut it down and start from scratch putting together a government with parliamentary style design.

   Posted by vicnikolai at 07/06/2009 @ 6:36pm

3. FREEZE,it's an embezzelment, nobody moves or the cash register gets it,@greymail.com/$$_,ha_joking_really,kinda. Remember before the computer was just another piece of office equipment,word processors,faxes,telephones,toaster ovens instead of a way or means to conceal financial devices instrumated"(new-word)and or calibrated for records kept or more likely embelleshed with shiny trinkets and beads,then destroyed,wow,point being the digatal "age seems to be of a benafit mostly of for to & by an east coast talent agency with just about no talent at all,what to do,(?)-the state of the ART at treasury might have a hard tyme dis-agreeing with this (ya know thair gonna try)Thats' real nice id radio frequency tracking & sewing the gold right into the confetti thats blowing around in the vaults of the horde, in a suspended state(recess)held and producing well besides an accidential coincidence that and the product, fear war disease death disaster,the glue that holds that oblitierration together is a social thing that really oughta declare independence cause whOO really needs it or better yet,stuck even believing it anymore,UNCLE SAM says U REALLY NEED THIS

   Posted by Ublockhead at 07/06/2009 @ 7:37pm

4. Posted by Ublockhead at 07/06/2009 @ 7:37pm

   Translate that and you win a Master's in cryptography and/or clinical psychology.

   Posted by Mask at 07/06/2009 @ 7:59pm

5. Washington D.C. smells like a whorehouse at low tide.

   Lobbying is all that D.C. is about. The rule of law has gone to the waste basket for favors and pay backs.

   It's becoming apparent that we voters get to choose between one set of lobby friendly politicians to another set of lobby friendly politicians. Either way we vote, we lose and the lobbyists and their corporate masters win.

   Posted by Wolfgang1 at 07/07/2009 @ 09:48am

6. Posted by Ublockhead at 07/06/2009 @ 7:37pm

   Is this Reese on not enough antipsychotics?

   Posted by winyahn at 07/07/2009 @ 8:40pm

7. Its time that the American public decide if our democracy is an illusion or dream that dies when we awake daily to special interests or if we can do something about it like returning the power to the people.

   I suggest that we include such an amendment of the Constitution that with the signature of 0.5% of the constituents any member of Congress can be voted to be recalled in his/her jurisdiction the very next month of November. If the machinery of either party keeps proposing for reelection candidates that the people don't care about, it is always a decision between bad and worse. Let's recover the power to the people and get respect!

   Posted by Frank42 at 07/07/2009 @ 10:28pm

8. Bribery is now institutionalized in our congress. Legislation is bought and paid for by smart businessmen that have realized that for a few million they can steal billions.

   One of the most blatant examples in history was John Breaux of Louisiana. He makes sure drug prices are non-negotiable (from the government side), retires, gets a million buck a year job with a drug manufacturer.

   Wonder when the last time he showed up for work was?

   Tar and feathers, anyone?

   Posted by UnEasyOne at 07/08/2009 @ 12:28pm

9. It's all our fault. We the sheep keep sending the same people back to Congress, and yet we think somehow they will represent us, the sheep. Why should they? Besides our lousy vote every two or six years, we have nothing our "reps" want.

   As Mencken or someone else from back in the day when the country had smart people in the media said, "We get the government we deserve."

   Posted by Citizen54 at 07/08/2009 @ 6:48pm

10. Merka's pretty cool. Gorgeous rivers, lakes, cities, coasts. Decent private schools at least. Police and fire / rescue are excellent. Post Office is amazing. Roads are pretty well paved and kept up. Most folks obey the lights and speed limit, public intoxication rules, etc., no mayhem recently. One can go about most of the city most of the time without getting mugged or forced to give up their private holdings and join some kibbutz. Our troops are generally amazing - disciplined, courageous, well trained (not commenting here on their leadership).

    Posted by winyahn at 07/08/2009 @ 8:56pm

11. You mean there's GAMBLING going on in this casino?

    And there are WHORES in that cathouse?

    And there are DRUGS in that opium den?

    Jeez, what next.

    Posted by sloper at 07/09/2009 @ 08:15am