Last week, the EPA granted a hardship waiver to CVR Energy, a profitable refinery company owned by billionaire Carl Icahn, which will allow it to avoid purchasing roughly $23 million in renewable fuel credits. Icahn was a special regulatory advisor to the Trump administration who immediately lobbied for changes to the renewable fuel program that would have benefited CVR. He didn’t get the regulatory changes, but he did get the waiver—which we only know about through media reports, because the EPA keeps the recipients secret.
Also last week, George Mason University’s president called for an investigation into new evidence that the Charles Koch Foundation had been given unusual input into the hiring and firing of professors. A Freedom of Information Act request filed by a George Mason student found agreements between the Koch Foundation and the Mercatus Center, an in-house university think tank, giving “donors some participation in faculty selection and evaluation.” The Koch Brothers gave George Mason $48 million between 2011 and 2014, and academic research from the university routinely favors the Kochs’ libertarian worldview. In a statement, the Koch Brothers said that receiving input from donors on hiring “is still something that many universities do today.”
On Thursday, the watchdog group Campaign for Accountability asked two congressional ethics committees to investigate 14 members of Congress for taking official actions in support of the payday-lending industry while at the same time accepting campaign contributions from that industry. Their actions included voting for legislation to weaken the Consumer Financial Protection Bureau, payday lending’s chief federal regulator, writing op-eds in support of payday lenders, and sending letters defending the industry to the CFPB and Justice Department. A report from progressive organization Allied Progress details the $137,450 received in contributions before and after those actions.
There are different stories, but they’re all fundamentally the same. They’re about corruption, and the ways in which big money influences policymakers: through direct means, like campaign contributions, and indirect ones, like funding “independent” academic research into policy matters and lobbying federal agencies to take desired actions. Corruption is at the heart of much of the political and economic strife we see today. Concentrated economic power begets concentrated political power, with big business rigging the game in its favor. And self-dealing and corruption have become a new normal, both for personal gain and as favors to some corporate interest, which may turn out to be a federal employee’s next employer. This saps trust in government institutions and paves the way for demagogues.
These insights have been assembled into an excellent report from the Roosevelt Institute called “Unstacking the Deck.” Authors Julie Morgan and Rohit Chopra write that post-Watergate reforms designed to rein in public corruption have utterly failed, particularly in the area of “soft corruption,” which is best understood as a common cultural framework: it’s the symmetry of public officials and the corporate executives they regulate as members of the same class, chasing the same jobs, and saddled with the same belief systems. It may be perfectly legal for a government official to give a corporation whose views they hear the most and recognize as reasonable a break, or for a think tank to not give an opinion on something out of fear of upsetting donors. But it serves to undermine confidence and has a dramatic effect on who wins and who loses in our economy. “When government actions are not in the public interest, the net result is a wealth transfer from the entire citizenry to the purchasers of political influence,” Morgan and Chopra write.
The context of the report is just as remarkable as its findings: Rohit Chopra isn’t just a researcher on government corruption. He’s about to go into the government. Chopra was sworn in as a Democratic member of the Federal Trade Commission this week. He now sits on the very kind of federal-agency board that’s at the heart of the problems he identifies with corruption and corporate capture.
“A lot of the research was in some ways a reflection of my previous agency experience,” said Chopra in an interview. He served in the CFPB as a student-loan ombudsman, and then in the Education Department, where he saw how big companies can snap up federal contracts and write the rules to their benefit. “Small players and new market entrants don’t have the lobbying firepower that helps them get in all the right rooms,” Chopra said.
The report is studiously nonpartisan, finding fault with actions taken on the left and right sides of the aisle. Chopra cites Republican Meredith Atwell Baker, who took a job with Comcast after approving its merger while on the Federal Communications Commission, and Democrat Marilyn Tavenner, who ran Healthcare.gov and now is the chief lobbyist for the health insurance industry. “Just because someone goes from industry to government or government to industry, any individual case might be perfectly OK,” Chopra said. “But it collectively provides a perception to [the] marketplace that if I don’t play in that game I’m disadvantaged.”
This produces a kind of arms race of political influence, which leaves those without the resources to compete less well. As the report shows, political corruption increases market concentration, as those with power have better opportunities to win favorable terms. Money that has been poured into influencing government to build fortresses around established businesses then doesn’t go toward the real economy, areas like hiring and investment in equipment. It actually reduces the economic growth we need to move forward, bogging it down in lobbying sleaze that benefits only a small sliver of society at everyone else’s expense. Walk through the more posh parts of Washington and its suburbs and you’ll see this in action.
Morgan and Chopra smartly focus on money in government rather than money in politics. “Some experts I talked to said the influencing of industry used to be focused on Congress, but as Congress reduced its level of activity, that has shifted much of the energy to executive and regulatory agencies,” Chopra said. These agencies now have outsize power to grant contracts and licenses, and issue rules affecting virtually every participant in the economy. And that creates a situation that’s ripe for corruption, based on who gets those key positions, who has the ear of those policymakers, what “independent” research they see that’s actually funded by industry, and whether they just share the same cultural worldview as the people they’re supposed to regulate.
This is going to take a long time to fix. But Morgan and Chopra take a big swing, proposing a Public Integrity Protection Agency to consolidate all the disparate anti-corruption forces in government (the Office of Government Ethics, agency inspectors-general, and ethics officials) and be empowered to investigate and penalize government officials and those seeking influence, while being able to write rules to further crack down on corruption. Chopra doesn’t see it as a total analogue to the CFPB, his former agency, because agencies currently have ethics as a top priority. But they don’t have enough authority or enforcement powers to do much about it, and a new agency might.
In addition, the authors want to give the public tools to identify conflicts of interest, allowing them to file complaints and make their views more easily heard by government agencies. They propose banning stock trading by legislative- or executive-branch officials, who can profit from inside knowledge. They favor restricting lobbyists and federal contractors from entering certain government positions, and barring members of Congress from becoming lobbyists, slowing down the revolving door. And they have a number of proposals on transparency, making more information from government, like recusals and waivers and completed Freedom of Information Act requests, presumptively public.
Government corruption only becomes a priority after major scandals, and as a result we have an ad hoc, disconnected set of rules to fight it. Change usually doesn’t come in a time of perfunctory, low-level, almost accepted corruption. But conditions may be ripe for something different, Chopra says. “Given the huge decline in confidence that Americans have in government, this feels like the admission fee to restore trust.”
Chopra has a role to play in that restoration right now. The Federal Trade Commission polices marketing and advertising, which every consumer-facing company engages in. It controls merger policy for huge sectors of the economy, like health care. It enforces the nation’s privacy laws, which we know have become a major economic engine. And it has jurisdiction over the tech industry, which has become an overwhelming feature of American life. All of the big companies with interests before the FTC will be attempting to influence results. What can federal officials do, in the absence of a regulatory overhaul, to insulate themselves from soft corruption and restore trust?
“One of the things that agency officials can do now is take small steps that demonstrate that they are actually serving the public interest,” Chopra said. He cited meeting more in public and taking input on its actions from a wide variety of sources, not just industry or people in Washington. He noted that when he conducted a CFPB hearing on credit-card offers on college campuses, he took testimony via YouTube from students across the country. “That’s a small step, but it does a lot,” he said. “It shows that agencies are not just listening to one point of view.”
