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Profits in the New America: lobbyists drill for public money

13 March 2013

Summary:  One common element between the old and new America is the fantastic return to lobbying. Nothing pays like buying a congressman. Drilling for profits into the US Treasury! The difference is scale: in the New America the opportunities for great profit are less than before — while the size of the government has grown.  Here we follow the trail of money.

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Contents

Others will will run America if we find it too much work. And of course they run it for their profit. America need not be like this.

  1. A reason US health care expenses are so high
  2. Lobbying expenditures by Industry for 15 years
  3. Looting the Treasury under the cover of national defense
  4. Update: State & Local Corporate Welfare
  5. For More Information

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(1)  One reason US health care expenses are higher than other nations’

The news media often describe amazing things — such as US health care costs 1/3 – 1/2 higher than our peers, for similar outcomes — as if they just happen. But in the real world such results usually result from active effort by the people who benefit. For example: “It pays to hire an army of lobbyists: Big Pharma Gets 77,500% Return On Lobbying Investment“, Zaid Jilani, United Republic, 3 April 2012 — Excerpt:

We here at United Republic have put together some stats about the sort of ROI Big Money expects for its lobbying dollars in Washington. … Big Pharma has a ROI of 75,500 percent for the lobbying dollars it spends to bar the government from bargaining for cheaper drug prices through Medicare:

Click to expand!

Click to expand!

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(2)  Total lobbying expenditures by Industry over 15 years (1998-2012)

See this table from the database provided by by OpenSecrets. These are investments, most of which earn handsome returns. Such as:

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  • The health care industry has captured both parties, so that all reform measures increase their profits (eg, ObamaCare).
  • The oil industry gets light regulation and heavy tax breaks.
  • The entertainment industry gets perpetual expansion of copyright protection and government enforcement of it (“Is Copyright Infringement Now Seen As Terrorism?“).
  • The banks get un-regulation (ie, get out of jail free cards for serial law-breaking), bank profits as the goal of national monetary policy, and almost unlimited guarantees and loans as needed.

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Industry Total
Pharmaceuticals/Health Products $2,552,607,289
Insurance $1,812,199,377
Electric Utilities $1,701,218,677
Business Associations $1,490,066,521
Computers/Internet $1,395,997,775
Oil & Gas $1,364,045,081
Education $1,181,707,535
Misc Manufacturing & Distributing $1,175,872,482
Hospitals/Nursing Homes $1,090,793,942
TV/Movies/Music $1,050,865,354
Civil Servants/Public Officials $1,033,793,166
Securities & Investment $1,003,405,646
Real Estate $1,000,508,809
Health Professionals $962,439,485
Air Transport $916,346,387
Misc Issues $785,176,117
Telephone Utilities $755,197,036
Automotive $746,470,912
Telecom Services & Equipment $717,705,914
Health Services/HMOs $664,681,47

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Graph of lobby expenditures by sector from Zero Hedge:

From Zero Hedge, 11 March 2013

From Zero Hedge, 11 March 2013. Click to enlarge.

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(3)  Looting the Treasury under the cover of national defense

The Epic Story of the C-130: Lockheed Martin’s Herculean Efforts to Profit From Defense Spending“, Jeremiah Goulka, TomDispatch, 10 March 2013 — Excerpt:

The C-130 Hercules is a mid-sized transport airplane designed to airlift people or cargo around a theater of operations. It dates back to the Korean War, when the Air Force decided that it needed a next generation (“NextGen”) transport plane. In 1951, it asked for designs, and Lockheed won the competition. The first C-130s were delivered 3 years after the war ended.

… After 25 years, the Pentagon decided that it was well stocked with C-130s, so President Jimmy Carter’s administration stopped asking Congress for more of them. Lockheed was in trouble. A few years earlier, the Air Force had started looking into replacing the Hercules with a new medium-sized transport plane that could handle really short runways, and Lockheed wasn’t selected as one of the finalists.

… So what did Lockheed do about the fate of the C-130? It bypassed the Pentagon and went straight to Congress. Using a procedure known as a congressional “add-on” — that is, an earmark — Lockheed was able to sell the military another fleet of C-130s that it didn’t want.

… How many did Congress add on? Two hundred and fifty-six. As Hartung commented, this must “surely [be] a record in pork-barrel politics.”

Lockheed made this happen by putting its lobbyists to work. They focused on legislators in key committee positions and in states where Lockheed, like others in the defense industry, had strategically located their operations and subcontracts. The company poured millions of dollars into lobbying and political donations.

Tracking lobbying is hard to do, but to give a sense of the scope of the numbers, Lockheed has reported $22,289,859 in political donations since 1990 and millions in lobbying expenses every year, peaking in 2008 at $16,181,506, according to the Center for Responsive Politics. And that doesn’t include what it paid its PR people or the work of defense and aerospace industry advocacy groups or the think tanks those industries fund. … For these reasons, Dina Rasor of the Project on Government Oversight, which ranks the company #1 on its Federal Contractor Misconduct Database, calls Lockheed “the ultimate pay-to-play contractor.”

… When it came to the C-130, the process worked like a dream. “By following this strategy from year to year,” writes a team of scholars of lobbying, “Lockheed has been able to turn what was to be the C-130’s doom in the 1970s into a regularly funded military spending program, all without a single request having been sent by the administration to Congress.” Lockheed was so successful on Capitol Hill that its work even garnered a name in honor of the 50 planes bought for every one requested: “C-130 math.”

John McCain complained that “we’re going to have a C-130 for every schoolyard in America before this is over.” The “add-on” legislators were unabashed. Senator Max Cleland of Georgia — where Lockheed assembles the C-130 — responded, “I’m for schoolyards being able to be moved anywhere in the world on a moment’s notice.”

… So what happened to those extra planes? The Air Force didn’t have the space for them, so they retired some older models that still had plenty of life in them and shunted most of the rest off to the Air Force Reserves and Air National Guard.

20130313-ProphetsOfWar

The story gets even better. Read it in full at TomDispatch.

(4)  Update: State & Local Corporate Welfare

Taxes for thee and me, but not for Lockheed: “Corporate Welfare in Maryland: Tax Favoritism for Lockheed Martin“, Lawrence Wittner, CounterPunch, 13 March 2013 — Opening:

At this time of severe cutbacks in government funding for food stamps, early childhood education, and meals on wheels, some Maryland legislators are hard at work looking out for the welfare of one of the world’s wealthiest corporations.  Under a bill rapidly advancing in the legislature of that state, the Lockheed Martin Corporation will have the taxes on its luxurious Montgomery County hotel and conference center reduced by approximately $450,000 a year and will also receive a $1.4 million refund for the period since 2010.

(4)  For More Information

About military spending:

About health care spending:

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