How the little guy gets crunched
When powerful interests shower Washington with millions in
campaign contributions, they often get what they want. But it's
ordinary citizens and firms that pay the price--and most of them
never see it coming
By Donald L. Barlett and James B. Steele
January 31, 2000
Web posted at: 3:29 p.m. EST (2029 GMT)
It was just your typical piece of congressional dirty work. As
1999 wound down, the House and Senate passed the District of
Columbia Appropriations Act. You might think that would be a
boring piece of legislation. You would be wrong. For buried in
the endless clauses authorizing such spending items as $867
million for education and $5 million to promote the adoption of
foster children was Section 6001: Superfund Recycling Equity. It
had nothing to do with the District of Columbia, nor
appropriations, nor "equity" as it is commonly defined.
Instead Section 6001 was inserted in the appropriations bill by
Senator Trent Lott of Mississippi, the Senate majority leader, to
take the nation's scrap-metal dealers off the hook for millions
of dollars in potential Superfund liabilities at toxic-waste
sites. In doing so, Lott had the support of colleagues in both
This early Christmas present to the scrap-metal dealers--who
contributed more than $300,000 to political candidates and
committees during the 1990s--made them very happy. Others in the
recycling chain were not so happy. All of a sudden, they were
potentially responsible for millions of dollars in damages the
junkmen might otherwise have had to pay.
While clever in its obscurity, Section 6001 is not an especially
big giveaway by Capitol Hill standards. Rather, it is typical
among the growing litany of examples of how Washington extends
favorable treatment to one set of citizens at the expense of
another. It's a process that frequently causes serious, sometimes
fatal economic harm to unwary individuals and businesses that are
in the way.
How do you get that favorable treatment? If you know the right
people in Congress and in the White House, you can often get
anything you want. And there are two surefire ways to get close
to those people:
--Contribute to their political campaigns.
--Spend generously on lobbying.
If you do both of these things, success will maul you like
groupies at a rock concert. If you do neither--and this is the
case with about 200 million individuals of voting age and several
million corporations--those people in Washington will treat you
accordingly. In essence, campaign spending in America has divided
all of us into two groups: first- and second-class citizens. This
is what happens if you are in the latter group:
You pick up a disproportionate share of America's tax bill.
You pay higher prices for a broad range of products, from peanuts
to prescription drugs.
You pay taxes that others in a similar situation have been
excused from paying.
You are compelled to abide by laws while others are granted
immunity from them.
You must pay debts that you incur while others do not.
You are barred from writing off on your tax return some of the
money spent on necessities while others deduct the cost of their
You must run your business by one set of rules while the
government creates another set for your competitors.
In contrast, first-class citizens--the fortunate few who
contribute to the right politicians and hire the right
lobbyists--enjoy all the benefits of their special status. Among
If they make a bad business decision, the government bails them
If they want to hire workers at below-market wage rates, the
government provides the means to do so.
If they want more time to pay their debts, the government gives
them an extension.
If they want immunity from certain laws, the government gives it.
If they want to ignore rules their competitors must comply with,
the government gives its approval.
If they want to kill legislation that is intended for the public
good, it gets killed.
Call it government for the few at the expense of the many. Looked
at another way, almost any time a citizen or a business gets what
it wants through campaign contributions and lobbying, someone
else pays the price for it. Sometimes it's a few people,
sometimes millions. Sometimes it's one business, sometimes many.
In short, through a process often obscured from public view,
Washington anoints winners and creates losers. Among the recent
winners and the wannabes, who collectively have contributed
millions of dollars to candidates and their parties and spent
generously on lobbying:
TAX-FREE PROFITS Last December, President Clinton signed into
law the Ticket to Work and Work Incentives Improvement Act,
hailing the legislation as providing "the most significant
advancement for people with disabilities since the Americans
with Disabilities Act almost a decade ago." He called it "a
genuinely American bill."
Indeed so. For it also provided something quite unrelated to
disabilities: a lucrative tax break for banks, insurers and
financial-service companies. A provision woven into the
legislation allowed the foreign subsidiaries of these businesses
to extend the income-tax-free status of foreign earnings from the
sale of securities, annuities and other financial holdings. Among
the big winners: American International Group Inc., an insurance
giant, as well as the recently formed Citigroup. Overall, the tax
break will cost the U.S. Treasury $1.5 billion in the next two
years, just as it did in the past two years. The amount is
equivalent to all the income taxes paid over four years by
300,000 individuals and families that earn between $25,000 and
$30,000 a year.
THE GREAT S&L GIVEBACK Owners of savings and loan associations,
many of whom are suing the Federal Government for clamping down
on them during the S&L crisis in the 1980s, will benefit from a
one-paragraph clause that was slipped into legislation that will
hold the U.S. government liable for billions of dollars in damage
claims because federal regulators nixed certain accounting
practices. As is typical with special-interest measures, there
were no hearings or estimates of the cost before the clause
mysteriously showed up in the Omnibus Consolidated and Emergency
Supplemental Appropriations Act of 1998. Among the potential
beneficiaries: billionaires Ron Perelman and the Pritzker and
Bass families. The losers: all other taxpayers, who will have to
pick up the tab.
The future promises much more of the same. In this presidential
election year, companies and industries that hope for special
treatment in the new decade are busy making their political
contributions and their connections. Examples:
A LONGER LIFE FOR GOLDEN DRUGS Major pharmaceutical companies
will seek legislation to extend the patent life on their most
valuable drugs. In the past, such giveaways were often inserted
into unrelated legislation and covered a single drug or two. But
this year, watch for heavy lobbying for the granddaddy of all
patent extenders. It would protect pharmaceutical company sales
of $3 billion annually and add years to the profitable life of at
least seven expensive drugs, such as Schering-Plough's Claritin
for allergies and Eulexin for prostate cancer, SmithKline
Beecham's Relafen for arthritis and G.D. Searle's Daypro for
arthritis. The big losers: patients, especially senior citizens
on fixed incomes, who must buy expensive prescription drugs
instead of cheaper generic versions. Estimates of the added cost
run from $1 billion to $11 billion over the next decade.
CARS WITH A CHECKERED PAST The National Automobile Dealers
Association is pushing for a federal law regulating the sale of
rebuilt wrecked cars. Like a lot of special-interest
legislation, the National Salvage Motor Vehicle Consumer
Protection Act, as it's called, sounds good. No one is likely to
argue with its call for federal standards to govern the sale of
"nonrepairable and rebuilt vehicles." But look closely. The fine
print actually provides minimal standards, gives states the
option of ignoring these, applies to only half the cars on the
road and keeps secret the history of near totaled vehicles.
Sponsored by majority leader Lott, the bill has cleared the
Senate Commerce Committee, whose chairman, presidential
candidate John McCain, is a co-sponsor. Losers: consumers who
unknowingly buy rebuilt wrecks at inflated prices.
Both the recipients of campaign contributions and the givers
insist that no public official is for sale, that no favors are
granted in exchange for cash. Few people believe that; U.S.
Supreme Court Justice David Souter summed up the prevailing
public attitude during arguments in a case that led the Justices
last week to uphold the current $1,000 limit on individual
campaign contributions. (Donations to parties are still
unlimited.) Said Souter:
"I think most people assume--I do, certainly--that someone making
an extraordinarily large contribution is going to get some kind
of an extraordinary return for it. I think that is a pervasive
assumption. And...there is certainly an appearance of, call it an
attenuated corruption, if you will, that large contributors are
simply going to get better service, whatever that service may be,
from a politician than the average contributor, let alone no
Campaign-finance reform has emerged as an issue during the
budding presidential race. Three of the four leading candidates
are for it; one is against. McCain has made limiting campaign
contributions his defining issue, although the Arizona Republican
has accepted contributions from corporations seeking favors from
his Commerce committee. Bill Bradley has also spoken out for
reform, calling for public financing of elections. Vice President
Gore, although involved in the Clinton Administration's 1996
fund-raising scandals, also advocates publicly funded campaigns.
Only Texas Governor George W. Bush favors the status quo.
Just how obsessed with raking in cash are the 535 members of
A veteran Washington lawyer who once served an apprenticeship
with a prominent U.S. Senator relates a telling experience. The
lawyer, who represents an agency of a state government, visited
the home office of a Congressman in that state to discuss a
national issue affecting the agency and, indirectly, the
Congressman's constituents. After an effusive greeting, the
Congressman's next words were brief and to the point:
"How much money can you contribute?"
The stunned lawyer explained that he represented a state agency
and that state governments do not contribute to political
candidates. As if in response to hearing some programmed words
that altered his brain circuitry, the Congressman changed his
tone and demeanor instantly. Suddenly, he had more pressing
obligations. He would be unable to meet with the lawyer. Rather,
he said, an aide would listen to whatever it was the lawyer had
Of course, those who give money to political candidates or their
parties don't necessarily get everything they seek. Often the
reason is that their opponents are just as well connected. But
they do get access--to the Representative or Senator, the White
House aide or Executive Branch official--to make their case.
Try it yourself. You won't get it.
Bits and pieces of the story of those who give the money and what
they get in return have been told, here and elsewhere. But who
gets hurt--the citizens and businesses that do not play the
game--remains an untold story.
Over the next nine months, continuing until the presidential
election in November, TIME will publish periodic reports
examining the anonymous victims of big money and politics.