1/3/08 -- David Cay Johnston is interviewed by Terry Gross on NPR's "Fresh Air"
Intro: Why are the rich getting richer while the middle class falls behind? That’s the question that Pulitzer Prize-winning journalist, David Cay Johnston, sets out to answer in his book, “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill).” He says that since the Reagan administration, it’s become the unstated policy to create federal laws and regulations that favor the already wealthy and the politically-connected. Johnston writes, “Money for the basics that make society work – from raking leaves in the park to highway bridge maintenance – is dwindling because so much has been diverted to the already rich through give-aways, tax breaks, and a host of subsidies that range from the explicit to the deeply hidden. It’s those give-aways, tax breaks and subsidies that Johnston examines in his book. Johnston is an investigative reporter for the New York Times and has written extensively about taxes.
Terry Gross: … Before we look at some of the case studies in your book, make the larger point for us that you’re trying to make about how, as you put it, free markets aren’t really free, they’re kind of rigged to benefit a select few.
David Cay Johnston: Well, you know, a generation ago, Ronald Reagan asked the question, “Are you better off than you were four years ago?” And Americans said, “No!” And they put him in the White House and set in motion a vast new experiment in whether reducing the size of government, reducing government regulation, and relying on market solutions would make us wealthier – would make us happier, would make us healthier, would make for a better country. A generation of time has now passed and I’m asking a new question: “Are you better off than you were a generation ago?” On the surface, we are. We’re twice as wealthy as we were then as a country. But when you look deeper, you find out that no, most of us are worse off. Incomes for most Americans have stagnated while at the top they’ve gone through the roof. Growing numbers of people don’t have health insurance. Fewer and fewer people have pension plans. More and more people are filing for bankruptcy and are in debt. They are worse off. So the question I addressed is “how did this happen?” What fundamentally has been taking place in our society? What I’ve done is examine a number of cases to show that government has rewritten the rules to favor the already rich, the politically connected, and the powerful at the expense of everyone else. In effect it’s set up mechanisms that the government itself reaches into your pocket and gives money to rich people; the government allows businesses to reach into your pocket in ways it never did; the government has all sorts of subtle and hidden policies now that funnel from the poor and middle class and upper middle class into the hands of the super-rich. And that is at the core of what’s happening in our society.
TG: Let’s start with big box stores. You devote a chapter to them. They move into a community and they often drive out local businesses – the local businesses can’t compete. Now, we assume that that’s because the big box stores buy in bulk and sell in bulk and therefore the prices are cheaper. But you say it goes further than than. They also get special advantages. What are some of the special breaks those big box stores often get?
DCJ: Well, in many of the big new box stores, when you walk to the cash register to pay for your purchase, you’re required to pay sales tax. But the government never gets that money. Instead, those sales taxes are used to pay for the cost of the store. Now, on one level this means that your community’s police department, fire department and schools and libraries aren’t getting those sales taxes. But imagine for a moment that you own the retail store down the street that’s been there for years. You’re competing against this enormous subsidy that’s going to drive you out of business. In a small town in the Poconos in Pennsylvania, a fellow named Jim Weaknecht ran a little fin, feather, and fur outfitting club. He sold hunting bows and fishing tackle and things like that. One day a big company named Cabela’s came to town. This little town – 4,100 people – agreed to give Cabela’s $36 million to build the world’s largest outdoor goods store. That’s over $8,000 for every man, woman and child in Hamburg, more than the entire city budget for everything -- police patrols, road repair – for more than a decade. Jim Weaknecht charged lower prices. He was run out of business. While he thinks he might have been run out of business anyway, he also says that this isn’t fair. This is not business. This is the government helping the politically connected. I think most people walking into a WalMart, Cabela’s, … a lot of other stores have absolutely no idea that the sales tax money is going to the owners of the store.
TG: What’s the rationale behind that?
DCJ: The theory is that this is bringing new business. In the case of the Cabela’s store, they argued that people would come from all around. They would drive a day or two from New York and Washington and maybe even North Carolina just so they could come to this Cabela’s store. As Jim Weaknecht points out, why, when you can just order out of the catalog? The argument is called “tax increment financing.” From the point of view of the people who get it, here’s the pitch they make. They say, “Dear City Councilmen: We want to make this big investment in your town. We’re going to build this store. If we don’t build the store in your town, why, we’ll just go down the highway to the next little town and they’ll get all the benefits of having our store in your town! And the price for this is, you’re going to let us keep the taxes from sales and you’re going to not charge us property taxes in return for our investing in your community.” They make it sound like a free lunch.
TG: So the city or the town is hoping that this big store is going to attract business from other places, the big new store is going to create new jobs, and that it will benefit the town. Is there proof that that usually is or is not true?
DCJ: It can’t be true. In very select circumstances, it may be true temporarily. WalMart does this. For about a third of WalMart stores, it says, it seeks these kinds of deals. When WalMart opens a store, it’s selling the same diapers and lightbulbs that every other merchant in town is selling. All they’re doing is bringing business to a concentrated location. That’s what these subsidies do. They provide the big retailers who get them with the opportunity to lower the cost of building their store and, therefore, to run out of business the local competition. They’re not adding to the economy. You want to invest in building the economy, you do that through research and development and you do that through manufacturing. You don’t do it at the end of the chain which is retail.
TG: So you’re saying that in some ways business competition means “how much of a deal are you willing to give us if we move there?” So businesses are competing for better deals from the city as opposed to competing for customers in a more straightforward way.
DCJ: That’s right. And one of the companies I write about – Cabela’s – I show that in the first three years that they were a publicly traded company they reported profits of about $220 million. But they made deals for $294 million of subsidies. They’re really not in the business of selling goods. They’re in the business of soaking the public. And this is going on at an enormous rate all around the country. It’s in the news reports, but not in the way people understand it. Would you know, Terry, what it means if you pick up your local paper and it says they’re going to build this wonderful new store and it’s going to involved “tax increment financing”?
TG: I have no idea what that means.
DCJ: Right. What it means is that the owners of the store get to keep the sales taxes. They’re not increasing the pie, they’re simply concentrating the pie in their hands. They’re not competing in the market. They’re getting the government to make them rich. And they’re doing it to the detriment of the people who don’t get those deals. There’s one company in America – Gander Mountain, another outdoor outfitter – that employs a lobbying firm to fight these subsidies. They won’t take these subsidies. They’ve actually given money back in, I think, two communities. Recently, in Indiana, where they have a store – in Greenwood, Indiana – one of their competitors wanted to build a store right across the highway. And they wanted $18 million in subsidies. The Gander Mountain lobbyist, David Ewald, goes down and says to the city fathers, “Excuse me! We’ve already invested our money to build our store here. Why would you give $18 million t this competitor to build a store right across the street from us?” And the local burghers all said, “Well, because if we don’t, they the next town down the street will do it and we’ll lose out!” This is not competition. This is not the market. This is government thwarting Adam Smith’s invisible hand – handcuffing the invisible hand.
TG: Now that big box stores are playing this game, it’s hard to be the city that says, “We’re not going to play.” You kind of have to play at this point.
DCJ: You do. There’s a real conundrum if you’re a local official. However, the constitutions of almost every state have a provision prohibiting gifts. This grew out of the scandals involving the railroads, particularly in New York State which was handing out money left and right. This will stop when taxpayers say to themselves, “Wait a minute! I’m paying taxes so that the Walton family, the richest family in America, can be richer? I’m paying taxes so the Cabelas out in Nebraska or Johnny Morris who owns Bass Pro can get richer? That’s what my taxes are going for? That I am forced to pay?” People don’t know about it. That’s the only reason this goes on everywhere.
TG: …Let’s look at a chapter you devote to President Bush and the Texas Rangers. You say he doesn’t owe his fortune to the oil business – at which he failed – but to a tax increase that was funneled into his pocket through his work with the Texas Rangers. What is the tax increase that you’re talking about?
DCJ: Well, George Bush is a very ironic case! The president most famous for cutting taxes owes his fortune to a tax increase. What happened is he and partners arranged to buy the Texas Rangers baseball team. It was a money-losing team. What they needed was a stadium that could seat enough people to make them a lot of money. His investors had more than enough money to build this stadium with their own money. But they didn’t do it. Instead, they had a special election, held in January which is not the usual time for elections, to increase the sales tax by ½ cent in Arlington, Texas. And they then funneled that money into building the stadium. They made a deal to buy the stadium for a tiny fraction of what it’s worth. And they wanted a lot more land than they needed just for the stadium. So they got the local government to use its power of eminent domain to condemn land and to take it from people. Eminent domain always means you get less than the market would pay you. One wealthy family didn’t want to sell. They fought back in court. They ended up getting about six times what the city had offered. It’s from this subsidy that George Bush, based on his tax returns and his financial disclosures, owes two thirds or more of his entire fortune.
TG: There’s another financial break that you write about that pertains to the Texas Rangers and that’s the rent-to-own deal that was negotiated. Describe the break in that deal.
DCJ: Rent-to-own is used by poor people who pay exorbitant interest rates to buy appliances when they have bad or no credit. In this case, there was a rent-to-own deal by President Bush and his partners to rent-to-own a baseball stadium. The president and his investors were wealthy enough to build the stadium themselves. Instead they had a tax increase they used to finance the stadium. That money paid for the building of the stadium which they then had a right to buy for a fraction of what it close to build. Having this beautiful new stadium made the team very valuable. They were then able to sell at a big gain. President Bush made a gain of $17 million off of this deal.
TG: What do you find inappropriate about the amount of money that he made? You say that a lot of that money is taxpayer money. Which part is the taxpayer money?
DCJ: You’re a little child buying crayons or you’re a grown-up buying a car. You paid higher taxes – half a cent more per dollar. That higher tax money was funneled into the pockets of George Bush and his investors through this mechanism. The total came to $202 and a half million of extra tax money that people paid. President Bush has characterized this as a “win/win” – everybody was a winner. But the vast majority of people in Arlington, Texas don’t go to baseball games. They, however, still buy things. They buy crayons and automobiles and other stuff that they have to pay sales tax on. So money was funneled out of their pockets and into his pocket. When I asked the White House about this, their position is, “Well, the voters approved it, so what’s the issue?”
TG: So what did you answer?
DCJ: Seems to me that for a president who is constantly extolling the market, it’s certain ironic that he didn’t make his money in the market. He made his money off the tax increase. The difference in value of the baseball team from when it was bought to when it was sold is less than the amount of the subsidy. So one of two things happened. Either the president didn’t capture the entire subsidy and therefore it was inefficient, or they so mismanaged the baseball team that they reduced its value. And the tax payers made it up. That’s not capitalism, that’s not the market. That’s corporate socialism. That’s the tax payer being forced to pay sales taxes to benefit this narrow group of individuals and make them rich – or richer.
TG: But what about the point the White House made that the citizens of Arlington voted in favor of the tax benefits to build the stadium?
DCJ: Well, first of all, it was a special election that drew a small number of voters. So it was a distinct minority in favor of this. Legally, there’s no question that we can do this. And it’s going on all across America. So it leads to a bigger question, it seems to me. The great economic mystery of our time is how can we have had almost thirty years of wonderful economic growth – more than half the wealth in America has been created since Ronald Reagan was elected president of the US. The Wall Street Journal’s editorial page often reminds us of that! And yet the statistics show – the official government data show – that the vast majority of Americans are either not better off, barely better off, or worse off. What’s happening is we have put in place all these policies, including tax increases in a variety of communities, that take money out of the pockets of the many and funnel it into the pockets of the few. I don’t think most Americans, if they understood that, would be in support of that idea. This is not market capitalism. This is handcuffing the market and having government make your money for you.
TG: Isn’t it typical nowadays that cities give some kind of incentive to get a new stadium built on the premise that the new stadium is going to attract a lot of business and give prestige to the city?
DCJ: Indeed, that’s exactly the argument that’s made. But on a financial basis it doesn’t hold up and it has awful consequences. First, let’s deal with what should be called the “fiscal impact.” When you build a new stadium, you are not expanding the pie of money that people spend on recreation. Instead, you’re just concentrating it in one place. And we actually had a real-world experiment with this. There was a baseball strike back in the ‘90’s. Economists discovered that, lo and behold in towns with major league baseball, business did fabulously well that summer. Nightclubs and restaurants and video arcades. None of which gets these kinds of subsidies! Movie theaters did better. They don’t get these subsidies. So all these subsidies do is concentrate money in the hands of the few. Now, there are side effects to this that are very important. Because governments are spending money on baseball stadiums and football stadiums and other arenas, they don’t have money for youth programs and for parks. And I show in the book that this subsidy plus a second subsidy that goes to TYCO and GE and Honeywell and some others are intimately connected with the rise of youth gangs in America. Because we’ve starved our parks for money and recreation, we have eliminated all sorts of programs.
TG: Let’s get back to President Bush for a moment and the profits that he made when he sold his share of the Texas Rangers. You say part of the profits he made is the way he declared it on his taxes.
DCJ: Yes. President Bush put up a very small amount of money to invest in the baseball team. He owned 2% of the deal. That was $600,000 which he borrowed. When the team was sold, he would have been entitled to about $2 million. But because he was one of the general partners, the partners gave him 10% of the enterprise for his work putting together the partnership and promoting it. That’s called “compensation.” It’s wages. When President Bush filed his tax return he declared his entire $17 million profit as capital gains – which is taxes at a lower rate than wages. The IRS actually has a revenue ruling on this. It is the same issue, by the way, that’s being raised about hedge fund and private equity managers and something called “carried interest.” These managers, some of whom make over a billion dollars a year, year after year, for their labor, are not being taxed at wage rates – which would be 35% -- but at capital gains rates which are currently 25% even though it’s not their money at risk. It’s the investors’ money that’s at risk and they are being compensated. As a result, President Bush paid about $3.4 million less in federal income taxes than he should have paid. This is a common device used by rich people. Under our tax rules, if you are not audited and you are not challenged, then you’re entitled to whatever you put down on your tax returns. The year that President Bush’s return would have been selected for audit was just about the nadir of tax returns, and his odds of being selected for an audit were in the neighborhood of 1 in 360. There are, by the way, special rules about handling the tax returns of presidents. But at the time he filed this return he was not the president, he was the governor of Texas.
TG: …One of your chapters is about the alarm industry. You say the alarm industry has shifted a lot of its costs onto the taxpayers. How?
DCJ: This is one of the most brilliant, hidden subsidies in America! If you looked at the books of the local government and you looked at the books of TYCO, General Electric, Honeywell, and Brinks, you would never see a dollar change hands. And yet local taxpayers pay over $2 billion a year providing those companies with free labor. That free labor provides 100% of the profits of that industry. Here’s how it works. You buy a burglar alarm. You’ve seen the ads on TV that encourage you to buy a burglar alarm? Suddenly there’s a picture on TV of this housewife and her little children gathered around her. Some guy at the door – one ad actually has a guy with a Bowie knife in his teeth! – and it’s a dark and stormy night and the announcer says that your wife and children are in danger. Suddenly the alarm goes off. You see the burglar flee. The announcer says, “Your family are safe! The police are on their way.” That’s the subsidy! The police are on their way. The police spend about $50 every time they check out the burglar alarm. All the burglar alarm company does is install an electronic device that calls them if the burglar alarm is tripped. 99% of burglar alarms are false. So, first of all, it’s an enormous waste of time. Secondly, the average police response time is around half an hour. The average burglary takes five minutes. The police on the false burglar alarm squad – that’s what I call it – almost never make an arrest. In some cities, arrests are made at one tenth the rate of other patrol officers. Now, this subsidy might seem to make sense at first blush. Isn’t there a public interest in having the police come if an alarm goes off? Here are the problems with it. Number one, only one house in five has a burglar alarm. So 80% of the taxpayers are being taxed for a benefit for the other 20%. Secondly, the police, when the spend time on this – and in many big cities, one out of every eight calls for service is a false burglar alarm – that means they’re not looking for criminals, catching criminals. They’re not investigating other crimes. Next, it turns out that having a dog – a federal study shows – is just as effective in deterring burglars as a burglar alarm. Finally, the likelihood that you will be burglarized today is one half what it was in 1980. And yet the number of installed burglar alarms is up many fold – I think it’s about six fold – over the last 25 years.
TG: Maybe that’s why you’re less likely to get burglarized – because of all these alarms!
DCJ: Not if only one in five houses has one. That’s not the connection. What you have here is an industry that has figured out how to prey on people’s fears and local TV – the way it covers news, and there are lots of studies showing this – enhances people’s fear of crime. A select segment of the population – it’s not just well-to-do people, by the way, who have burglar alarms, you’ll find them in working class neighborhoods too -- has a burglar alarm. If they want to have one, that’s fine! But you ought to pay for the real costs of the service. You shouldn’t make four of your neighbors pay for the service that you’re getting.
TG: How are the burglar alarm companies benefiting from this? Maybe they’re just charging for the service that they provide, which is the technology they’re installing in your house, answering your phone call and answering the alarm system and contacting the police about it.
DCJ: Well, the burglar alarm industry’s own statistics – what the industry says are their statistics – show that this is an unbelievably profitable business. The margin on monitoring is 77 %! Anyone who’s been in business knows that that’s just an off-the-chart number. Overall, business in America counts its profit at about a dime out of each dollar. Seventy-seven cents! So yes, if we went to a system that said you can have a burglar alarm but you have to pay for the response, they would have to raise their rates in order to cover that. But in the meantime, these companies are getting the benefit of this subsidy. It is draining police resources from other areas, and therefore making us less safe. And it’s not accomplishing any specific goal. We are not catching burglars. Burglary is down for lots of other reasons including, as I point out in the book, changes in building construction laws, because of work the government paid for in the ‘60’s and ‘70’s where they studied how we could make it harder to break into homes without spending a lot of money. So building codes were changed. “Lock laws” – which is a virtuous effect of government.
TG: How did you get onto this story about burglar alarms?
DCJ: I actually wrote about it first in the LA Times about 25 years ago. I was analyzing how effective and efficient (or ineffective and inefficient) the Los Angeles Police Department was. I came to realize that for every dollar the city of LA was spending investigating homicides, they were spending $1.25 responding to false burglar alarms. Over a ten-year period, the number of murders had doubled because of drug-trafficking. The city had maintained an even commitment to homicide. Basically the same number of homicide teams were at the Police Department at the beginning of the period as at the end. So they cut in half their commitment to solving each murder and lo and behold, the solution rate fell. But they maintained a 100% commitment to false burglar alarms! So as the number of false burglar alarms tripled, the number of officer hours spent responding to them tripled. By the way, most police departments sent two squad cars to check out false burglar alarms because in the rare case where they actually do find somebody, they want to have two cops there.
TG: So you went back and updated this story.
DCJ: That’s correct – with the new data we found. This is a subsidy that has drained enormous amounts of money. One of the effects of it is that in LA you have these parks that gangs have taken over where little children… I interviewed back later in the ‘80’s… all over the city of LA children between 7 and 11 years old who could tell you what streets were safe to cross and which weren’t. Gangs would show up with guns in the parks, and there were park directors who told about locking all the children inside and sometimes the police didn’t come for hours after this happened. Why? Because so many police were diverted to the false burglar alarm squad!
TG: …You’ve told us about several case studies that illustrate your larger point that free markets are increasingly favoring a certain few who get the benefits of tax breaks from the local or federal government. You say that this relates to the widening gap between the middle class and the wealthy. You have all kinds of statistics illustrating that widening gap. Throw a couple at us!
DCJ: Well, the average income of the bottom 90% of Americans, as reported on tax returns, adjusted for inflation, peaked in 1973. In 2005 – the most recent year we have data for – the average income of the bottom 90% was about $74 a week less than back in 1973. On the other hand, at the top incomes have grown exponentially. They’re more volatile because they rig the stock market but here’s one little revealing number. From 2003 to 2005, just the increase in income for the top 1% was greater than the total income of the bottom 20%. In fact, it was $1.37 of increase for each dollar of income that went to the poor. We have created a society now in which the gains from this tremendous economic growth that has gone on for years and years are all being funneled to the top. This is not the result of the market. This is a result of unknown, hidden, and subtle government policies that are funneling money up to people at the top by taking a little here and a little there, and taxing you here so that someone can get rich and creating ways that require you to spend money in some way that makes a narrow group of people rich. So what we have is a de facto policy of government not to build up and sustain a middle class – which is what we had in the years after World War II by bi-partisan consensus – but an unstated but actual government policy to make the rich richer, and to do so in ways that take from the middle class – not because of the market.
TG: What do you mean when you say it’s an “unstated government policy.”
DCJ: Well, the government’s stated policy is that “we’re promoting less government, more efficient markets and market solutions to the problems we have in our society.” There are all these hidden subsidies and rules that cause money to flow. There is this cultural myth that there are free markets and that there is deregulation. There is no such thing as a free market. All markets have rules. There is no such thing as deregulation. There is only new regulation. And to give you an idea of how thoroughly things are regulated in the world, baseball has rules all the way down to how many stitches are on a baseball – 104!
TG: You say government policy has changed, that government policy used to favor the middle class. There used to be policies to build the middle class. This was particularly true, you say, during the New Deal and post WWII. Give us a couple of examples of that kind of policy that you have in mind.
DCJ: Well, let me take electricity. For years electricity was run as a regulated monopoly by locally owned companies that generated and distributed their own power. And they made a few sales to neighboring companies. We set out on a campaign, promoted largely by Enron, to have a free market in electricity – to make electricity a competitively priced commodity. The result in the half of the states that have adopted this has been rising electricity prices, prices that are rising faster than in the rest of the country. Just recently, we had the big auto companies, the chemical companies, big retailers – a whole panoply of large businesses go to the federal energy regulatory commission and say, “Uh, excuse me. These electricity markets aren’t really markets, they’re not producing market prices, they’re producing inflated prices and outsized profits. You have an absolute obligation under the law to stop unjust enrichment.” This deal brought together, by the way, the auto makers and their historic nemesis, Ralph Nader, in this complaint! And the reason for the rise in prices is that the utility that sells you the power at your house must buy whatever amount of power people want. The people, however, who manufacture the power – the generating companies – can withhold power if they want. They’re not required to sell into the market. Well, it turns out that the way the system was set up, big utility companies were allowed to sell their power plants to a sister company, they sold them at fire sale prices. In one case, some power plants that were sold for less than a billion dollars were resold 18 months later for a profitable 5 billion dollars! These companies, because they own many power plants, are able to manipulate the bidding process so that the power they would sell for a dollar a megawatt they might even give away free at certain hours of the day. They have on occasion gotten $999 for it.
TG: At the same time they say policies have been rigged to benefit the wealthy few, have policies that used to help the middle class disappeared? Have those rules disappeared?
DCJ: Oh yes! We have radically cut back on all sorts of consumer protections and enforcements. If you’re one of the workers who was locked in at a WalMart store to clean, or one of the workers at the fast food chain restaurants who were ordered to work off the books, and you want to find somebody to go file a complaint with, it’s really hard. We’ve radically cut back the number of inspectors, the number of auditors. We have changed the rules on banking. There used to be usury laws that were designed to protect people from lending practices of the kind loan shark engage in. Now we have ads on national TV promoting loans that have an interest rate of 99.25%. That’s the kind of money loan sharks used to be sent to prison for charging people, but now it’s legal. So all the way through the system, this idea that markets are the solution to the problems of our lives has been extended to the detriment of consumers. I’m not against markets. Markets do great things. Markets will tell us efficiently the prices of things. But everything isn’t a market, Terry! Is there a market that sets the price for everything? No! Markets tell you the price of something at the moment. But they are not the solution to everything we have.
TG: Your whole book is a critique of these kinds of special tax breaks that certain businesses and wealthy people get. Do you have any recommendations for what could be done to level the playing field?
DCJ: I think the fundamental problem we have is the political donor classes’ outsized influence on our government. Members of Congress and the Senate respond first and foremost to their donors – this very narrow group of wealthy individuals and corporations. The Supreme Court has made it clear that campaign finance reform is something it doesn’t like, it’s very hostile to it. It has essentially equated campaign contribution dollars with free speech. So my solution is that we switch to “politician finance reform.” That we take the franking privilege in the Congress – we let every member of Congress send as much mail as they want, unlimited privilege, and we apply it to the expenses of Congress. Instead of trying to get a free lunch out of Congress by having corporations provide free jet rides and dinners and golf outings, we pay every expense that members of Congress have. We require complete disclosure of this and post it on the internet in a way that we can all analyze and see it. And a record of every expenditure for every meeting. Now, you don’t have to tell me just exactly what the congressman was told by the people who met with him, but you have to tell us what they met about and what the expenditure was. I call this “politician finance reform.” I propose that we do this with zero tolerance. Let’s insulate our politicians from all of these influences where people are buying their time and money by getting them dinner and golf outings and rides in the company jet by paying the real costs of Congress. That’ll be expensive! It’ll cost a lot of money! But it’s going to be a lot cheaper than continuing to allow the political donor class to treat the government as their own personal cookie jar, draining money out of it through policies many of which are so technical it’s hard to explain them!
TG: But couldn’t politicians just get personal favors still that they would give breaks for in return?
DCJ: Sure! The world isn’t perfect. But we’ve got to do something better than what we have now. What we have now is a system in which this very narrow group of political donors – they’re the ones whose concerns are being listened to and they’re the ones for whom policies are being written. Look at the Medicare Drug Benefit! It wasn’t designed to provide drug benefits to seniors. It was designed to maximize the profits to the drug industry. One of the key Congressmen in this deal, he leaves and he becomes the million-dollar plus chief lobbyist for the pharmaceutical industry with a budget of over $100,000,000 a year just to influence legislation. Somehow we’ve got to break that cycle if we want to have a democratic society in which our elected representatives represent the interests of the people, not just the people with money.