Lobbyists and Special Interests

Full Disclosure: Although lobbying is such a small part of my job I actually don't even need to register as a lobbyist, I have done so in compliance with my employer's policy of adhering to a "gold standard" of political transparency. Therefore, I am technically one of "them."

Both candidates have made a show of how they'll control Washington's "special interests" and the lobbyists who represent them. But, we know that many of McCain's top advisors are lobbyists, and we recall that Obama's VP hunt was initially led by Washington fixer and pre-eminent insider (and former Fannie Mae CEO), James Johnson. Others on Obama's team were lobbyists before coming on board, and presumably may return to that vocation.

Lobbyists are a part of how Washington works. That's a good thing, because what lobbyists mostly represent is information. With Washington regulating the smallest details of our lives (Congress recently outlawed the traditional lightbulb, but the prohibition won't kick in for a few years), it needs to understand how what it is doing will affect US businesses, the jobs they provide and individual consumers. Although Members of Congress have staff, and some supporting agencies such as the Library of Congress and the Government Accountability Office, they don't have nearly enough information to do the job without a lot of bad, unintended consequences.

That's where lobbyists come in. We provide information, and occasionally advocate for a client, much like a lawyer does in court. Rather than represent clients before the judiciary, lobbyists represent them before the executive and legislative branches. As a profession, it is very highly regulated at the national, state and local levels, and became even more so a couple of years ago after enactment of new ethics laws that were supposed to address recent abuses, but in fact, had little or nothing to do with them.

Like any job, lobbying can be done well and ethically, or poor and unethically. Our government benefits from the former as much as it suffers from the latter. Rather than talking about lobbying as something that needs control, then, we should ask candidates for office to specify what lobbying activities concern them and how what solutions they propose will solve them.

A Government Ill Executed - Clarity of Command

(Note: this is part of an ongoing discussion of Paul Light's book A Government Ill Executed. Other posts on this book can be accessed by clicking the tag below)

In his second chapter of A Government Ill Executed, Paul Light looks at the current composition of the federal work force, the trends, and what they imply for the ability of the federal government to operate proficiently.

Noting that his 2nd characteristic of of an energetic federal service is clarity of command, Light thinks this is one area where Hamilton nods to Jefferson. Hamilton, as Secretary of the the Treasury, was noted for the details of his orders, down to the armaments that would be on each Coast Guard cutter. "Nothing was too trivial for his attention," says Light. In addition, the federal government work force is undergoing with Light calls "thickening," which refers to the addition of more and more layers between those who run the agencies and those on the front line who execute policy and gain the insight as to what's really happening on the ground.

Additional layers are the result of two things, says Light. The first is additional missions that bring with them their own bureaucracy. The second is the misperception that more leaders equals better leadership. Instead of just a Secretary and a couple of Assistant Secretaries overseeing the civil service, we now have so many layers, especially of political appointees, that we now have people with titles that can barely fit on a business card: "Associate Principal Deputy Assistant Secretary." Modern developments along these lines include a proliferation of "Chief of Staff"s and C-level (e.g., Chief Financial Officer, Chief Acquisition Officer, etc.) to further confuse the thicken the executive branch hierarchy.

As a result, communication of what is expected from the top to the bottom becomes obscured and makes it all the more difficult for the President to get his agenda enacted. Also, key information from the "front lines" never gets to the decision makers at the top. Accordingly, we get faulty government responses to crisis like Hurricane Katrina, doubts about weapons of mass destruction never get aired at the level where decisions are made, and safety concerns about the space shuttle getting lost.

We also have a problem when we consider this with the broken confirmation system we'll discuss later. Because so many offices remain vacant for long periods of time, important information and decisions sit on empty desks. The more layers, the more opportunities for this to occur.

The key is to reverse this trend, says Light, "thin the system."

In this respect, Light looks to Jefferson rather than Hamilton for inspiration. Hamilton believed in highly prescriptive edicts that would filter down through a broad chain of civil servants. Jefferson believed in delegation, following broad principles rather than detailed orders and the use of informal communication over normal bureaucratic modes. Light noted that Jefferson understood that with new missions come new bureaucracy, which obscures clarity of command. Although the often start out flat, they have a tendency to thicken over time he observed.

While Light does a masterful job of describing the problem and the reasons for its evolution, he is much less enlightening on how to thin the federal government. He notes that most Presidents since Carter have understood the problem and endeavored to correct it, but little has been accomplished on this front other than cosmetically.

A few thoughts. First, a "thick" federal bureaucracy seems to be another price we pay for too many missions in addition to not having enough resources as we discussed earlier. Second, it's important to realize than "thinning" the government in this regard doesn't mean cutting workers but rather flattening so that information from the front lines goes through fewer hands on its way to the Oval Office.

Reforming the civil service in this way is clearly important, but it will require a big overhaul that will meet with fierce opposition from government employees and the unions that represent them. Perhaps one helpful step would be for the next President not to appoint someone to every box on the org chart. That would mean abstaining from awarding a "plum" however (and the political juice it creates for him). It's unclear whether that's asking too much.

A New Twist on the Nigerian Bank Scam

Although it's about a very serious subject, this joke spam is hilarious:





Subject: SUBJECT: REQUEST FOR URGENT BUSINESS RELATIONSHIP




DEAR AMERICAN:

I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.

I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.

I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTION IS 100% SAFE.

THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.

PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.

YOURS FAITHFULLY MINISTER OF TREASURY PAULSON

Tonight's Debate

We're still unclear as to whether we're on for a debate tonight.

(Update: 3:01 PM - we're ready to rumble)

The debate, hosted at the University of Mississippi, will focus on foreign policy. It's slated to begin at 9 EST. The four broadcast networks, NPR and C-SPAN are all planning to carry it.

While we can expect the candidates to segueway to discuss domestic politics, particularly the financial crisis, there are still some really important issues to discuss regarding foreign policy. They include:

(1) The war on terrorism - first and foremost. Terrorism is still the biggest foreign threat to the US despite everything else that has happened.

(2) Iran - the mullahs are pushing forward on nuclear power. Iran is a terrorism supporting state according to the US State Department (a designation that both Republican and Democratic administrations have made). A nuclear Iran is definitely a major concern from the standpoint of non-proliferation.

(3) Non-proliferation - it used to be that nation state cooperation was necessary to develop weapons of mass destruction. Today, that's not the case. The next administration needs a new approach for a new problem.

(4) Russia - Russia recently invaded and trashed the independent Republic of Georgia over an ostensible border dispute. The real purpose was to send the message to the US that Russia is still a world power to be reckoned with.

Hopefully, those doing the questioning will hold the candidates' feet to the fire on these issues.

Happy Friday

A cartoon from The Hill provides some insight into the initial skepticism to the Treasury's bailout, er, rescue proposal.

Obama - a good moment and a bad one

Senator Obama has generally been speaking in favor of the financial bailout concept. Agree or disagree with him, he's shown some leadership.

Senator McCain has not given any indication of his views on this, which is very troubling. His intervening in the process, then, is pointless showboating at best.

So far, Obama has shown a steadier hand in dealing with our nation's most pressing domestic issue.

On the other hand, Senator Obama has not shown an understanding of the nation's financial health that previously I credited him with having. When asked whether the bailout would alter his ambitious health care plan, he said "no":

Barack Obama told CNBC's Chief Washington Correspondent John Harwood that his plan to reform the nation's health care policy won't fall victim to the government's $700B bailout plan.

HARWOOD: So no change in your health care plan?

OBAMA: Well, the--but keep in mind, my health care plan is paid for. And I continue to believe that rolling back the Bush tax cuts on the wealthiest Americans makes sense. They are still going to be wealthy after those are rolled back. I still believe that it is important for us to make college more affordable. And I think it's important that all those things are paid for in light of this huge additional potential expense.

Huh?

It may have been paid for, but the bailout isn't.

That's like saying that you had planned to buy a new car and had saved for it. Now that you find you need a new roof, and don't have any money saved. Are you still buying the car?

Not if you're responsible, or as Paul Krugman likes to call it, a "grown up."

"The Adults in the Room"

Today's Wall Street Journal headlines the largest banking failure in US history:

In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co.

The collapse of the Seattle thrift, which was triggered by a wave of deposit withdrawals, marks a new low point in the country's financial crisis.

Here's the most important paragraph, though:

the fact that no bank was willing to buy WaMu until it failed shows how badly confidence has eroded in a banking system awash with record profits just a few years ago. Faced with deepening losses on mortgages, credit cards and other loans, big and small banks across the country are struggling with what many bank executives say is a crisis far deeper than the savings-and-loan debacle.

Although he veers a little into the lunacy that has gained him some readers he shouldn't covet and lost him some he should, Paul Krugman asks the right question - Where are the grownups?

His answer, though, that they're to be found in Congress, is fairly laughable (see yesterday's post for one example).  Further, some of his criticisms are part of the "bad Paul" (the NY Times political columnist) rather than the "good Paul" (the Princeton economics professor).

Meanwhile, House Republicans are pushing an alternative approach.  Rather than having the government purchase the bad investments from banks, they would prefer an alternative where the banks would buy insurance from the government for the debt.  

I'm not entirely clear on the details of this proposal and it doesn't sound like it would address the problem of banks having too little equity to debt to continue to lend.  However, the Journal reports only 30-40 House Republicans will support the proposal on the table between the Administration and Senate Democrats.

House Republicans, however, are in the minority.  Democrats control both chambers of Congress.  They are afraid, however, that the public will blame them for their costs of the bailout and are unwilling to proceed without strong Republican support, even though it's not need for passage.

In short, Krugman's "adults in the room" are playing CYA, big time.

Will WaMu's failure change the dynamic and get what looks to be a good compromise between Senate Democrats and the Treasury back on track?

Stay tuned.