Follow the Money

There is a common colloquialism which says that money talks.  This statement is as true in politics as it is in business.

So the best way to determine what a particular party or a particular politician is going to do is take a closer look at who is giving them money.  I’m not suggesting, by the way, that these legislators are taking bribes.  That would be illegal and most of these folks are lawyers and recognize the consequences of taking a bribe.  But what is going on is not too far removed from that. 

Let’s say that I’m the head of a big agribusiness.  I make my money selling corn.  If the price of corn goes up, I make more money.  If the price of corn goes down I make less money.  So I’m a big fan of ethanol because it makes my investments in corn more valuable.  I’m going to seek out those powerful legislators who have an opportunity to influence our energy policy and find out which ones either support or can be convinced to support legislation subsidizing or mandating the use of ethanol.  Those are the ones who are going to get my financial support for re-election.

Let’s say that I’m an ambitious politician in a corn growing state.  I’m going to try to educate myself on all government policies that can improve the economics of my state.  I’m also going to support policies like ethanol that increase the cost of corn even though this also raises the world-wide cost of food and may result in some people starving to death in poor countries.

Lobbyists complete the picture.  They are the matchmakers who introduce those with money to those who have the power to influence government policy.

So by looking at the how the flow of money changed in the last election cycle, we can start to get a picture of what the newly empowered Republicans are going to do during their time in power.  That should give us a clearer picture of what sort of policies they are going to actually support.  We can then compare those policies to the promises they made to the public when they were running for office.

So let’s step through the list

Healthcare

Republican leaders got $5M over the past two years from major health-care firms and employees.  Boehner and Cantor themselves received over $2M of that.  Why? Is it because these companies think the current health-care reform bill is socialist, job-killing, or budget-busting?  No.  It’s because attempts to reduce health-care spending will affect their bottom line.  They want things to stay as they are even though that status quo would ultimately bankrupt the country.

Banking and Finance

Cantor also raked in another $2.4M from finance, insurance, and real estate industries.  That represents a 40% increase over 2008 and puts Cantor well ahead of the rest of his Republican peers.  Why?  Is it because these companies think that the deficit is too high and government has to reduce spending? Is it because these companies are eager to hire more workers, but the government won’t let them?  No.  It’s because they want to return to the less regulated days of the Bush administration and Cantor has gone on record as supporting that as way to create jobs.

Spencer Bachus is the new Financial Services Chairman.  He received more than $1.2M from banks which was the majority of the money he raised.   Guess what he has said he is going to do? Yup, reverse the Wall Street regulatory changes put in place over the last two years to prevent a repeat of the recent financial meltdown.

Energy

Fred Upton is the new chairman of the Energy and Commerce commission.  His take was up 50% from 2008 as a result of contributions from DTE, CMS, and Edison Institute.  They are all looking for regulatory relief which will allow them to continue operating big coal burning power plants.  Upton has already indicated that this is something he supports.

Farmers gave their chairman $600K. 

Defense contractors gave their chairman half of his total contributions. 

Even Paul Ryan who is supposed to be the spending cop got $1.4M in contributions from banks, hedge funds, investment houses, and other financial services companies.  Gee, I wonder what they are interested in?

So based on this data what do the next two years look like?

Well my guess is that they will look surprising like the past eight years of the Bush administration.  Regulations will be relaxed.  During the Bush administration it was under the mantra that the free market can regulate itself.  This time the excuse will be that regulations kill jobs.  You would think that the whole Republican Party has amnesia, but it isn’t really amnesia, just business as usual.

They will do their best to unravel health care reform without any sincere effort to replace it even though the status quo is unsustainable.  They will roll back the financial regulations that were put in place to prevent another financial meltdown even though the bodies are not yet cold from the last financial meltdown.  They will put pressure on the administration to expand deep water oil drilling as if the BP Oil spill never happened.  They will expose us to new ecological disasters through the same cozy relationships between regulators and the industries that they regulate.  They will slow our transition away from fossil fuels because the industries that make money off those technologies have a vested interest in their continuation. 

They will do all this while telling voters that these laws increase jobs and decrease the deficit, but their actions won’t result in any significant job growth or any dramatic deficit reduction.

Want to know how they manage to do that? 

We’ll cover that in the next post.

6 Responses to “Follow the Money”

  1. keith says:

    Jeff,
    According to your logic the following is true.

    Wall Street gave more monry to Obama then McCain, therefore Obama will make policy more favorible to Wall Street……

  2. Jeff Beamsley says:

    Keith,

    As always look at the facts and often the conclusions become more obvious.

    So let’s look first and the percentage of total revenue given to each candidate for the 2008 campaign.

    This all comes from a great website about campaign financing called Opensecrets.org.

    Barak Obama got roughly $40M from the finance sector which represented 5% of the $750M he raised.

    John McCain got roughly $29M from the finance sector which represented 8% of the $370M he raised.

    So while it is true the Obama raised more money from the finance sector, if we are just going on the influence factor, they had more influence on the McCain campaign. The bottom line, though, is that the financial sector wasn’t a significant enough component of either candidate’s fund raising to suggest that they would have any more influence than any other industrial sector.

    The difference in the house is that the contributors I mentioned constitute significant portions of the total amount of money these candidates are raising AND the money is flowing to these Republican leaders in amounts that are disproportionate to their support of other Republicans or Democrats.

    I also found another article that provided some more interesting data about election support.

    Basically they said that those with net worth between $1M and $10M supported McCain nearly three to one because they were primarily concerned about lower taxes. Those with net worth above $30M supported Obama two to one because they were more concerned about social issues.

  3. keith says:

    http://www.washingtontimes.com/news/2011/jan/31/judge-uses-obamas-words-against-him/

    This will be very interesting. Obama said all throughout the campain there should be no mandate…the judge is correct.

  4. Jeff Beamsley says:

    The score is now 2 to 2. Two judges have completely upheld the law. Two rejected parts of it. In the most recent decision, the Florida judge said that the government did have the right to expand Medicare coverage even though states would have to pay part of it.

    So I’m curious on what basis you suggest that this judge is correct and the two judges who found it constitutional were not.

    All of these judges know that this is going to be decided in the Supreme Court, so these decisions are more generally an expression of where these judges happen to fall in the political spectrum.

    BTW, this judge also refused to issue an injunction holding up the law’s implementation. So that has to tell you something too.

    I’ll probably cover this in another blog as this issue heats up, but this is another example of shallow research and rejection of expert opinion. The overwhelming majority of constitutional scholars say this is a no brainer.

    Here’s a quote from an NPR story to back that claim up.

    Wake Forest University constitutional expert Mark Hall says almost every legal scholar he knows considers an individual mandate for health insurance consistent with Congress’ power to regulate.

    “An individual who goes out and tries to purchase health insurance cannot buy a policy that covers pre-existing conditions or that asks no medical questions. Such a product is simply not sold in most states, and it can’t really be sold economically unless we require most people to have insurance,” he said. “So the requirement is really part and parcel of the regulation of the structure and conditions of the marketplace that would allow a very desirable kind of product to be sold.”

    Randy Barnett from Georgetown is the only prominent exception, and he has turned his opposition to the healthcare bill into his own little home-based industry.

    In fact there is even historical precident. In the 1790’s, Congress required members of the merchant marine to pay into a pool that paid for their healthcare because they were considered a vital element of the young nations commerce and defense.

    Clearly the Supreme Court could suprise the legal scholars. It has certainly done that in the past, but in this particular case, it is unlikely.

  5. keith says:

    Hey Jeff,

    You asked;

    “So I’m curious on what basis you suggest that this judge is correct and the two judges who found it constitutional were not.”

    The Judge is correct in pointing out that all through the campain Obama said “there should be no mandate.” The judge correctly sited Obama’s words. Thats what I was referring to.

  6. Jeff Beamsley says:

    Fair enough.

    Obama’s campaign plan included a public option too. That would be the leverage to keep the insurance companies honest and competitive. It would also eliminate the need for any mandate because the government could offer insurance at a rate that would be attractive for virtually every consumer.

    When the public option came off the table, the mandate had to take its place.

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