E Pluribus Corporatum

I have my nomination for the highest return investment of the past three years — the hundreds of millions the financial industry spent on lobbyists who take their percentage and then pass lots of it along in heavily string-attached political contributions.

The fascinating part of this whole game is how the game itself derails any attempt to reform it.  By the way, the corruption-maintenance by the system only partially includes the nightly fund-raising cocktail parties in Washington where the standard lobbyist contribution is $5,000. 

I recently ran across an interpretation of how the system itself corrupts, a view suggesting cash-stuffed envelopes or enormous political contributions aren’t the biggest influence.  Those tawdry and obvious forms of payoff may not be nearly as effective as the lifestyle change that our whole system of 2-year election cycles gives to a lawmaker.

In short, the fact is that the expensive meals, first-class (or chartered jet) transportation, meetings (with family invited) in exotic vacation spots, etc. are the environment in which a Congressional or important state office holder does their begging for money.  It’s all paid for, and allowed, funded by lobbyists or major contributors so those politicians can meet with and ask for support from those well-heeled contributors.  Living that upscale life may be the real corrupter in this picture.

We certainly can’t expect billionaires to agree to a lunch at Applebee’s to meet the candidate, can we?

But the candidate gets multiple invitations every week, effectively living the lifestyle of the rich and famous simply by being part of the system.  If they refuse to play the game by only taking small contributions, or if they disappoint the big money crowd too often, that candidate (and their family) loses out on a number of free vacations each year and too many dinners with $200 bottles of wine to count.  In short, they take a massive hit to their quality of life if they don’t get invited to the big league money-raising events.

Maybe now we can understand how US Representatives can cry poverty at their $174K per year salary level.  After all, they couldn’t possibly pay for all the great things they and their families now enjoy thanks to the lobbyist/contributor fundraising merry-go-round.

If that isn’t enough to make you want to give up on democracy, we can throw in the reality of how laws get written — by experts on the topic.  No one can expect 20-somethings that intern and staff Congressional offices to know the details of policy down to the level needed to address things like offshore drilling safety standards and tests, medical procedures that need to be called “experimental” or require a second opinion, the details of derivative securities off-balance-sheet swap contract settlement, and the thousand other issues each Member of Congress needs to vote on.  Instead, the laws themselves are written by mid-six figure experts at the lobbying firms with 20+ years detailed industry experience.

It should come as no surprise, then, when an apparently insignificant afterthought two-paragraph bit of the Troubled Asset Relief Program turned the entire program into a below-market-rate taxpayer purchase of preferred stock, doing exactly nothing for the borrowers trapped in those subprime or negatively amortizing loans.  In fact, the program never even bought any of the troubled bonds.  It just handed the banks more working capital paying less than half the market rate when they couldn’t get it anywhere else, and invited them to ride the carry trade (0% short rates, 4% or higher long rates) until they earned enough to offset the credit losses.

Whichever bank or Wall Street firm paid millions to the lobbyist who suggested that “alternative” for the TARP money to be spent earned their fee and then some.

Just look at the difference between the 10% interest rate and boatload of warrants Warren Buffet got for his investment in preferred stock in Goldman months before the crisis really hit.  After Lehman failed and the Commercial Paper and interbank lending markets collapsed, the terms for that kind of investment would have been at least 15% to 20% interest rates and ownership that started at 10% of the companies and went up from there.  Ask any private equity investor what they would have demanded to invest at the end of September of 2008.

Instead, the taxpayers got single-digit interest rates on their investments and equity “kickers” that would have been less than the arrangers’ upfront fees.  A joke, in other words.  Just 5% lower interest amounts to $50,000,000 (Fifty Million!!) per billion invested, per year. And our banking system got hundreds of billions on those terms.

Sure they paid it back.  Did it keep the housing market from sinking so far that tens of millions of responsible homeowners who did all the right things were also in trouble?  No.  Did it do anything to arrest the decline in the construction industry or prevent millions of us from losing our major storehouse of family wealth?  No.  It did rescue the banks, and even gave them the wherewithal to merge themselves into even bigger TBTF potential problems in the future.

And it gets worse.

Dodd-Frank was a toothless tiger even before it got voted on.  And even that toothless tiger is being defunded and left without a leader thanks to ideologues who use perversions of parliamentary procedure to prevent the nation from having its laws enforced.  They don’t even have to repeal a law they don’t like if they can keep it from being enforced.  I’d guess that every one of those Congressmen and Senators has all the high-end fundraising event invitations they can handle. It can’t have hurt the fund-raising prospect when the next Chairman of the Congressional committee that oversees banks said that the proper role of government is to serve banks.

Since the bizarre new law written by a 5-4 majority of the Supreme Court in its Citizens United decision, the business of creating specialized concentrated government benefits has boomed.  It stands to reason that even if two thirds, three quarters, or even 99% of us suffer from a new law, new or repealed regulation, new spending or new tax break, that minority who benefits can afford to spend a piece of the future profits on getting the legislators lined up to to do their bidding.

It’s no coincidence that the infamous Arizona illegal immigrant state law was drafted by the company that has the Arizona contract to warehouse those picked up in any local police action while waiting for an understaffed immigration hearing system to deal with each case.  And most of those contributions were before the caps came off, but they were made to state legislators who definitely listen when they get a couple thousand dollars (the old limits), so that money did the job of providing a truly amazing return on investment to Corrections Corp of America.

Now that corporations can anonymously spend millions on influencing elections, how could we expect anything different than an orgy of political spending that maximizes potential profit for them doing the spending? For those who set up the corporate spending vehicles, like Karl Rove, the power of having at least $250 million to spend on one election with no controls whatsoever says he may have even more influence from his private office in Texas than he had in his old office in the West Wing.

From the many, all we have goes to the corporation.  E Pluribus Corporatum.  It might even aesthetically improve The Great Seal of the United States of America, because that oversized typefont of the Unum part of the motto always bothered me.

hh

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15 Responses to E Pluribus Corporatum

  1. r3fman says:

    But luckily the Obamacare Legislation (the law that Nancy Pelosi famously said “you’ll have to pass it to learn what it’s all about”) must have bypassed all that nasty lobbyist influence since only the hardhearted could think it’s bad law, right?

    And of course, people like Rahm Emmanuel had no money to spend on the last election and the President of the United States has no power to get things passed so of course mean old Karl Rove is already able to outmaneuver any Democrat any place all the time.

    Or just maybe your argument proves too much.

    • hhill51 says:

      Gee, Roger….
      .
      I guess I have to admit that the health insurance syndicate did extremely well on its lobbying investment, too. But they did have to give up some of their margins (the new minima in “medical loss ratios”) when they got the keys to the taxpayer kingdom and another 35 million customers, half of whom will be subsidized.
      .
      Naturally, they never had to worry about true competition from a more efficient payment system as I and others wanted. I even wrote about it a few times, here, and here, and here, and here.

  2. Paolo says:

    Funny, just tonight I was telling a foreign friend that America has changed from a constitutional republic to a corporate plutocracy. The taxpayer is being cut to shreds by governmental scissors, one blade the military industrial complex, and the other the financial/insurance industry complex. I think I also spot a few pieces of the Constitution on the floor.

    • Robert Pinkerton says:

      You, too, have read The Mind and Society? Pareto takes it as axiomatic that the democratic republic is the {condensed paraphrase} as-if “metamorphic precursor” of the plutocratic oligarchy. So the cocoon bursts and the ugly bug is now taking its first steps. It is hungry.

      • Paolo says:

        Yeah, V. Pareto and the concept of cyclical power flows between “foxes and lions” while the sheep get sheared by both. A recent more mathematical treatment of the subject: Turchin P. and Nefedov S. 2009. Secular Cycles.

        I have thought for a while that there is a parallel between ecological eutrophication and the business cycle such as it exists now – with the nutrient being credit, as it ebbs and flows.

      • hhill51 says:

        I’m disappointed but not surprised that the media have decided to look at the OWS protests in their shopworn left/right framework rather than recognizing the axis is up/down. And that’s after the media spent nearly two years trying to convince us that the exact same people who were the core activists in the religious right weren’t partisan when they changed their name to “Tea Party.”

      • hhill51 says:

        Need to get a copy. Knew I couldn’t be the only one seeing it this way.

  3. Gary Anderson says:

    I tend to agree with the premise that you offer about how politics is purchased and paid for in America. It is a two party joy ride.
    .
    I’d like to respond to Roger (r3fman) that just because a poorly constructed law got written and passed, doesn’t mean that the problem it was supposed to address wasn’t real, or that the need for a fix is not great. It simply shows, once again, that Washington cannot construct a fix, of value, for the American people.

  4. Katie says:

    The rampant use of euphemisms in government is part of the problem. Those of us old enough to remember “deforestation” during the Vietnam War know this well.
    .
    Neither the word “Obamacare” nor, sadly, the phrase “health care,” reflect the truth. We pay for medical services, we don’t receive health care. (Although free medical clinics are experiencing year-over-year growth that would please any investor.) Obama didn’t construct the bill. He compromised once again and got blamed for the solution. If he heard the truism that a camel is a horse designed by a committee, he clearly didn’t get the joke.
    .
    Corporations aren’t citizens. They may be entities but they’re not people. I’m sorry, they’re just not.
    .
    Obama said he would get rid of lobbyists in Washington. So they deregistered themselves. Now they’re no longer lobbyists. Another language-based lie.
    .
    We need to tell it like it is. But in a world where “spin” is the norm and everyone is either a celebrity or a voyeur or reporting on one or the other, it seems unlikely. Do you remember the song, “Tell it Like it Is?” recorded by Aaron Neville and its good advice? “…let your conscience be your guide….”

  5. r3fman says:

    I have to agree with both Howard’s and Gary’s comment that a good health bill was needed. Unfortunately, it still is.

  6. Tullamore says:

    Howard, a couple of niggling points here…
    .
    One of the core founders of the Tea Party is pretty far from being “religious right”. He is no longer involved, having very publicly broken with the TP rev.2 (i.e. the co-opted version) over their preoccupation with “God, guns and gays” and their retreat from shrinking .gov and taxes. That shift of focus turned me off too.
    .
    Regarding the media’s shoe-horning things into “left-right” vs. “up-down”: they simply toe their paymasters’ line. It’s not even “all the news that fits, we print!” any more; they’re quite willing it to mangle facts in Procrustean style to fit them to their masters’ wishes.
    .
    Finally, at the risk of sounding like a pedant… I understand what you mean with your Latin slogan, but grammatically it should be “E pluribus corporationi”. Admittedly, my lexicon is at home, so I’m *assuming* that “corporatio” would be the proper Latin word; whatever the word, it should have the proper ending to show the dative case, used for indirect objects (“to the corporation”).
    .
    Tullamore.
    (by way of urbansurvival.com)

    • hhill51 says:

      Thanks so much, especially for the Latin lesson. I think I will keep it in the mangled form just because it fits so well on the Great Seal.
      .
      As to Tea Party, I was suspicious when Rick Santelli did his famous rant (about borrower bailouts that never happened). I did a “whois” on the web site chicagoteaparty.com that day, and I found it was owned by Dick Armey’s corporate lobbying firm, and that it had been set up in July of 2008, eight months before Santelli did his “spontaneous” call to arms, no doubt prompted by political hack Armey. The giveaway that Santelli was working from a script was his use of the phrase “chicagoteaparty.com” in that rant. He could have claimed innocence without that, but there is no plausible deniability with that level of detail. There were a number of others with that same etymology, including bostonteaparty.com and americanteaparty.com that I checked that day.
      .
      The real capper was the recent large-scale study by a pair of academics who follow political activism. They went back to the same people (thousands of them) that they had interviewed back in 2005. They found a hugely overlapping “Venn diagram” that showed, other than being Republican activists five years earlier, the strongest predictor (around 80% if I remember correctly) for 2010 identification as Tea Party was that they had answered the interview question regarding religion in government by saying the government needed more influence of religion. The same people, in other words, who brought us the hundreds of proposed Constitutional amendments put up in Congress these past two decades to use the power of the Federal government to impose their religious views on all Americans. Naturally, I have a real problem with people who claim to revere the Constitution while trying to change it to eliminate personal freedom.
      .
      In short, the Tea Party was a put-up job by partisan operatives before it even started, controlled from the beginning with the idea of getting political storm troopers to lead the charge against any and every attempt to reform the screwed up system they themselves had jammed onto us these past 15 years or so.

      • Tullamore says:

        I believe the guy I know of was involved in a smaller urban area *prior* to Santelli’s big splash. He’s been pushing for government prosecution of fraudsters in banking (he’s pointed out, rather acridly, how a top manager at Citibank stated publicly — to Congress, IIRC — that only 80% or more of the mortgages which went into their mortgage-backed securities did not meet the qualifications which Citi’s MBS prospectuses & such claimed to enforce). The absence of interest in prosecuting fraud contributed to his public departure from his local group (along with the interest in ‘wedge issues’ such as ‘God, guns and gays’).

        I had gotten the idea that a bunch of professionals had run out in front of the TP in order to then claim to be leading it, and successfully hijacked it. Your info points to the pros actually creating it. I can believe that such was the case in some areas, but there seem to also be some local groups which don’t owe anything to the professionals excepting, possibly, hearing early talk about shrinking .gov and taking that seriously enough to get the people around them involved. Unless those people are lying through their teeth… but most of them are either libertarians, or registered Libertarians.

        Unhappily, by now it’s pretty much of historical interest only, The professionally-led version of the TP does now have much more than a whiff of the “religious right”, which I find distasteful (despite? because of? being a practicing Christian myself). The early libertarian ideas have been pretty well replaced by one flavor of Republican Party dogma.

        It will be interesting to see how much of the groundwork for the OWS groups was laid by the Democrats, and whether that group turns out to be planted and watered by that party, or a home-grown group which the party tries to hijack.

        I hadn’t heard about this poll you mentioned, regarding increasing religion in .gov. Doing that would make me uneasy for several reasons. I *do* think .gov, both the politicians and the bureaucrats, could use some refresher courses in basic ethics and morals (e.g. identifying graft, and rejecting it) — but that’s not particular to any religion.

        Thanks for the insight ‘behind the curtain’. Could make for some interesting discussions if I encounter a recruiter for the TP.

        Tullamore.

  7. CAC says:

    In my opinion, we need to export more than we import, do away with income tax, property tax, and school taxes. Keep state sales tax if your state has it, and have a 10% use tax on everything anyone buys. Deport anyone that is in our prisons and not a citizen of the USA. Scrap the healthcare bill and have a plan that works replace it. Bring 80% of the troops home to protect our borders, airports, and coasts. Give super support to the 20% of our troops in the sandbox, or the globe while they slowly turn over the countries to the people there, or do their job. Cut the 35% corperate tax, get rid of some of the EPA rules and regs that prohibit factories from being even considered in the USA. Prosecute some of the politicians/lobby gofers and bankers who sold us down the river in too many ways to name them all. Prosecute all inside traders, manipulaters, and con artists that make trades today so crazy. The sooner people wake up to the fact that Banks, and Corperations run more of our country than politicians do the better. Politicians need to be for the people, but it has become twisted and they line their pockets and represent the rot we see in America now. Cut all their pay in half, benifits in half, and see who stays in Washington..

    Also have more checks and balances for the systems we have in place. Welfare, Medicaid, and Medicare, Unemployment benifits, and any handouts paid for by taxes. The system is abused all the way around. Make what we have work, and the 10% use tax will cover it easily.

    Then and only then will we start to fix what is broke. Because policies in place now are a joke. Follow the money to find the rot, cut it out, and sterilize it.

  8. ChewyBees says:

    Every single comment on this article follows the exact same formula that the author is outlining as the unfix-able and disastrous cause of the state of affairs we find ourselves in.
    The constitution was rightfully designed as a constitutional republic. Republic means that the states have individual and diverse domestic power, as long as all of their actions fall within the boundaries set forth in the constitution. All of these national dealings we have going on, where a bunch of worthless lawyers, bankers and statesman decide the policy for 350 million people has been a failure, is currently a failure and will be a catastrophic failure in the near future. Name one thing the Federal government touches that doesn’t get sucked dry and put away disintegrated. You cannot because there isn’t one and hasn’t been for a long time, if ever. Yet still, all I hear, on this board at least, is people still clamoring for an answer at the single point failure known as the Federal government. Give me a break. It is just one slightly different example of a top down pyramid system. Here’s some other top down pyramid systems: Monarchy, Oligarchy, communism, Naziism, empire, and the list goes on. This is the newer form of the same old BS, where a group of filthy rich soulless disconnects rape the people at large for all they are worth in a kingdom that is unreachable and untouchable.
    Every single bit of support for Federal is the feeding of a cancer that has infected the host known as the constitutional republic. This cancer is a lethal, viral parasite on the system we are told exists but has been usurped and poisoned in so many different ways that I’m astounded at the delusion of the people that still pontificate about it.
    If the constitution is the contract with we the people, and that contract is infringed in the least, then the contract is invalid. It doesn’t take a law firm to make that determination. Do you engage in contracts and then stand by as the terms are violated with fraud, extortion, intimidation and threat, praising the other partners in the contract as virtuous, and holding the contract aloft as the championship of all truth and justice? You do with this contract if you support these Federal Banking System frauds in the least. That includes voting in fixed elections and paying off their bankers interest scam via Federal income taxes. It includes their social security retirement account, a wonderful little tax scheme that also numbers the citizens and ties them into the system completely. It includes 100% of all Federal statutes and codes, all of which are in direct violation of the constitution in one form or another. It includes any law written in legalese, and any law that requires a BAR lawyer for interpretation. It includes any support of the use of the armed forces as a corporate hostile takeover extortion system. It includes the support of any 503c religious organization, which though makes them ‘tax exempt’, ties them directly into state law and violates any semblance of the separation of church and state.
    I could go on but I’m sick and tired of repeating it all. I’m sure the praise the donkey, elephant and lord programmed simpletons are going to come out of the woodwork, or crawl our from under the rock, or appear from whatever cave you live in with your TV as your own single point of contact with the suited D and R gods. Go ahead and put me in my place, taking the side of strangers that would watch you and your family languish and die with a smile on their cigar smoking face as long as it profited them. They are your moment-to-moment teleprompted salvation. Without them, without their system, without their laws and fear surely you would perish.
    Thomas Jefferson weeps from the grave.

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