A poll conducted for Harvard law professor Lawrence Lessig’s book, Republic Lost: How Money Corrupts Congress–and a Plan to Stop It, found that 71% of Republicans and 81% of Democrats believed that “money buys results in Congress.” According to a ABC News/Washington Post poll, Congress has just a 13% approval rating. When a government that is largely a two party system is that unpopular with the vast majority of those voters, that’s indicative of not a problem with a candidate or a party, but a problem with the system itself. How could a government “of the people, by the people, for the people” have such a low approval rating?
It’s no secret that elections cost money. It’s also no secret that most people don’t donate to campaigns either. According to data published by the Federal Election Commission, only 818,764 Americans donated $200+ in the 2010 election cycle. 146,715 of those donated $2,400 or more, making up just 0.05% of the population.
In a nation of more than 300 million, the effects that these small numbers have is huge. Money spent lobbying Congress and federal agencies has more than doubled from $1.44 Billion in 1998 to $3.30 Billion in 2011. What does this buy?
Despite the official corporate tax rate being 35%, many pay zero taxes – or in some cases, even receive funds from the federal government despite reporting record profits. According to a report published by Citizens for Tax Justice, 30 of the 280 corporations investigated either paid zero taxes or “negative taxes” between 2008 and 2010. Pepco Holdings, despite reporting $882M in profit, had a tax rate of -57.6%. In other words, instead of paying taxes, Pepco Holdings received $508M in taxpayer dollars from the federal government. General Electric, which produces everything from jet engines to nuclear power plants, reported $10B in profit and received $4.7B from the federal government – a tax rate of -45.3%. This trend includes corporate powerhouses like DuPont, Verizon, Boeing and Wells Fargo. Despite rhetoric about the corporate tax rate being too high in America, the most powerful corporations often end up paying less than 0% in federal taxes.
The three major credit rating companies – Moody’s, Fitch Ratings, and Standard & Poor’s, have together spent more than $16 million lobbying financial-related legislation over the past decade. For example, the firms are looking to undo a portion of the Dodd-Frank law which removed lawsuit protection from the ratings agencies for negligence. When deciding to downgrade the credit rating of the United States, Standard & Poor’s made a $2 trillion mathematical mistake.
Since the 1990 election cycle, the Oil & Gas industry spent more than $238 million lobbying to weaken or remove regulations. The biggest spenders include ConocoPhillips, Chevron, Exxon Mobil, Shell, Koch Industries and BP. Opening up previously restricted areas for drilling and curtailing safety regulations also rank high on the priorities list for oil companies. BP, the owner of the Deepwater Horizon drilling rig that exploded in the Gulf of Mexico, lobbied extensively to oppose stricter safety and environmental standards.
The Food and Drug Administration (FDA) has also been targeted by lobbyists. Tasked with ensuring that the food and medical products are safe, lobbyists aim to either block competitors from entering the market or to push their product to consumers regardless of safety protocol. Sanofi, the pharmaceutical company that created the blood-thinner Lovenox, lobbied the FDA to block generics of the drug from entering the marketplace. ReGen Biologics and the FDA came under fire in 2009 regarding the approval of a knee implant device. The decision to approve the Menaflex, according to the FDA, was made despite protests from FDA scientists that the device provides any benefit to patients. After the FDA revoked their approval of the device, ReGen Biologics went bankrupt.
Instead of hiring lobbyists themselves, some opt to instead join an already established lobbying organization. The American Legislative Exchange Council (ALEC) is a 501(c)(3) policy organization that is comprised of state legislators and members from the private sector. ALEC can be described as a “pay to play” system for government policy, where companies pay between $5,000 and $25,000 per year for a corporate membership. Once a member, ALEC will draft legislation on their members’ behalf and submit it to state legislatures. For example, Coors Brewing Company was fined for their smog-inducing air pollution in 1992. ALEC responded with their “Environmental Audit Privilege” measure, which relieves companies of legal responsibility for their own pollution as long as they report their environmental violations. In addition to Coors, other members of ALEC include Amazon.com, American Express, and AT&T – and that’s only the A’s. There are over 400 corporations associated with ALEC, in addition to the 3,000 past and present lawmakers.