Lobbying’s Return on Investment
When we substitute influence peddling for the Rule of Law, the value of Washington lobbyists becomes evident. As today’s Wall Street Journal notes, the return on investment is huge:
General Motors Corp. spent $3.3 million on lobbying in the fourth quarter of 2008, a period that coincides with the government committing $13.4 billion to the ailing auto maker under the Treasury’s Troubled Asset Relief Program. In all of 2008, GM spent $13.1 million on lobbying, down from $14.3 million in 2007. GM’s reported lobbying expenses for 2008 were only slightly less than combined spending by Ford Motor Co. and Chrysler LLC.
“Lobbying is the transparent and effective way that GM has its voice heard on critical policy issues…that companies should not be required to forfeit if they receive federal funding,” said GM spokesman Greg A. Martin, who added that no funds lent from the Treasury would be used for lobbying.
The last sentence is especially insightful. Clearly, they must keep their lobbying cash in a separate bucket from the truckloads of funds delivered from the federal government. How else would they keep score, and learn that their return on lobbying investment was 1,000-to-1 in 2008? The article also reports the combined Bank of America/Merrill Lynch lobbying return was over 5,000-to-1: $45 billion received, versus $8.8 million spent.
Of course, it’s unfair to claim that such astonishing returns are available on an annual basis. Last year’s climactic payouts resulted from years of lobbying investment — considering the balance of funds received over the past several decades, annualized return is likely much less. However, in a year when traditional investments available to most Americans (including their shareholders) were severely damaged, lobbying as an investment strategy demonstrates excellent uncorrelated performance from the overall market.
Perhaps institutions who have diligently positioned themselves as “too big to fail” could open up new hedge funds that would let sophisticated Americans invest in lobbying efforts for a direct claim on the funds received? Forget about even using those funds to run a business, let’s just set up alternative investments to see who can turn their lobbying prowess into cash as adroitly as possible. Come to think of it, perhaps that’s a better way to describe bondholders in these storied institutions.
In my opinion, however, lobbyists are not the problem. They’re simply following the money, and serving their clients. Our problems are Congress and the unaccountable bureaucracy of the Executive branch. Congress’ job is not to serve lobbyists. Congress must follow the Constitution, and hold the Executive branch in check by controlling spending.
The Constitution is our best attempt to codify a government that upholds the ideals of our Declaration of Independence — thus specifying a government that protects the unalienable rights of individual Americans, as opposed to corporate interests.
Do you know anyone in Congress who serves corporate interests? Perhaps you could send them a copy of Colonel Davy Crockett’s poignant memoir, Not Yours to Give, where Rep. Crockett was confronted by a constituent back home after appropriating public funds for the victims of a Georgetown fire:
If you had the right to give to one, you have the right to give to all and as the Constitution neither defines charity nor stipulates the amount, you are at liberty to give to any and everything which you may believe, or profess to believe, is a charity, and to any amount you may think proper. You will very easily perceive what a wide door this would open for fraud and corruption and favoritism on the one hand, and for robbing the people on the other. No, Colonel, Congress has no right to give charity.
Individual members may give as much of their own money as they please, but they have no right to touch a dollar of the public money for that purpose. If twice as many houses had been burned in this country as in Georgetown, neither you nor any other member of Congress would have thought to appropriating a dollar for our relief. There are about two hundred and forty members of Congress. If they had shown their sympathy for the sufferers by contributing each one week’s pay, it would have made over $13,000. There are plenty of men in and around Washington who could have given $20,000 without depriving themselves of even a luxury of life.
The Congressmen chose to keep their own money, which, if reports to be true, some of them spend not very credibly; and the people about Washington, no doubt, applauded you for relieving them from the necessity of giving by giving what was not yours to give. The people have delegated to Congress, by the Constitution, the power to do certain things. To do these, it is authorized to collect and pay moneys, and for nothing else. Everything beyond this is usurpation and a violation of the Constitution.
So you see, Colonel, you have violated the Constitution in what I consider a vital point. It is a precedent fraught with danger for the country, for when Congress once begins to stretch its power beyond the limits of the Constitution, there is no limit to it and no security for the people. I have no doubt you acted honestly, but that does not make it any better, except as far as you are personally concerned and you see that I cannot vote for you.’
Colonel Crockett learned his lesson. Perhaps it’s time our representatives were reminded, as well.