The K Street Feedback Loop


Russell Roberts has an amusing post at Cafe Hayek in which he dissects a Washington Post profile of the Coushatta Tribe in Louisiana, erstwhile clients of ex–power broker Jack Abramoff, who routinely referred to the Native Americans who hired him to lobby on his behalf "monkeys," "troglodytes" and "morons." Though the Post piece paints the tribe as victims bilked out of some $32 million in lobbying fees by Abramoff, Roberts notes that they seem to have gotten their money's worth: Abramoff succeeded in blocking another tribe's plans to build a casino that would have competed with the Coushatta Casino Resort, which pulls in some $300 million annually in revenue. So it's a reasonably safe bet that the benefit of getting to keep their status as the only game in town was worth well over the $32 million they paid.

Roberts wraps up with an important general point: "Any time the government hands out monopoly rights, it's not surprising that the beneficiaries will pay large sums of money to keep those rights intact and free from competitors." Given Majority Leader–hopeful John Boehner's view that "adding more new rules isn't the answer" to K Street corruption, it's tempting to view his focus on earmark reform that would "distinguish…between legitimate earmarks with a clear local need and those for which the merits are less well demonstrated" as a disingenuous effort to seem proactive without alienating deep-pocketed lobbyists. But there's certainly a feedback loop in effect between expansive federal powers and political corruption.

Lobbyist dollars flow in at such a high rate because a potent government with expansive powers that's heavily entangled in the nation's economic life is able to provide decent return on investment. As long as that fundamental fact remains, it will remain extraordinarily difficult to keep the moneychangers out of the civic temple. The recipients of concentrated benefits have a strong motivation to find a way around whatever restrictions are in place, and those paying the diffuse costs of enriching the well-connected have a far lower incentive to rigorously police the system. In the first election after McCain-Feingold took effect, spending on federal candidates rose. But, of course, so long as that money's flowing in, the political motivation to really shrink government is likely to remain as enervated as it appears to be in today's GOP.

If the vicious cycle's ever to be broken, I imagine it would have to be in one fairly dramatic, high-visibility reform—tinkering at the margins would quickly be captured by lobbyists, since the political returns (in terms of popular opinion) to legislators from each incremental change would be relatively low. I find myself wondering whether something like Yale political scientist Steve Ackerman's "Patriot Dollars" proposal, which would combine public funding with individual choice by allowing each citizen to allocate some fixed sum among candidates, might not be the lesser of the available evils.