MONEY IN POLITICS: Earmarks & Revolving Doors

February 4, 2009

Through two readings and class discussion, students think critically about the effect of corporate campaign donations on our political system and consider efforts to reform campaign finance.

The 111th Congress opened in January 2009 and has begun work on such serious issues as the economic crisis, healthcare, global warming, two wars, major Middle East and South Asia problems, and nuclear weapons. Exactly how Congress handles these issues depends in part on the effects of money, position, and power on our political system.

The introductory student reading and three additional readings below discuss such practices as gift-giving, earmarks, and a revolving door that swings among people in government, the military and private industry. Discussion questions and possibilities for inquiry and active citizenship follow.

Previous sets of materials in the high school section of www.teachablemoment.org explored related matters:

 


Introduction:

A systemic government issue

Although many U.S. officials are above reproach, corruption is a major problem in our government. The basic reason is simple. Lawmakers and officials in various departments allocate money for everything from building roads and fighter jets to providing prescription drugs for seniors and subsidizing cotton crops and scientific research. These funding decisions affect the financial interests of construction and defense companies, pharmaceutical and insurance companies, individual and corporate farmers, research universities - and many other companies, industries, and institutions.

A position in government means access to power and money.

Thousands of lobbyists are hired by interest groups to influence government officials to pass or oppose a bill, to regulate or not to regulate a certain activity, to approve or reject a contract. K Street lobbying firms spend billions each year to influence lawmakers.

Questionable activities ensue. Does Senator X vote against gun laws because he believes the Second Amendment forbids them? Or because he wants the National Rifle Association to contribute to his political campaigns so he can continue in power? Does Representative Y work hard to fund a new fighter plane because she wants the best defense for America or because she will soon retire from government and wants a high-salaried job with a defense contractor? Or are the motives of X and Y mixed?

Sometimes the evidence suggests that an official's actions are motivated by a desire for personal gain. Often that evidence is cloudy. But sometimes it is very clear-as when, for example, Congressman Randy "Duke" Cunningham (R, CA) pleaded guilty to accepting $2 million in bribes from defense contractors in 2005. Many other situations fall somewhere between the ambiguous and the certain. They are often related to lawmakers' acceptance of gifts, insertion of earmarks into bills, lucrative favors, and jobs. This does not mean that our politicians are crooks. It means that the systemic operations of our government create temptations—and that politicians are human.
 

For discussion

1. What questions do students have about the introduction? How might they be answered?

2. What is there about our system of government that produces temptations?

 


Student Reading 1:

Gifts and unpaid taxes

A Gift Exchange for Hillary Clinton?

In November 2004, former president Bill Clinton's foundation received a gift of $100,000. The donor was Robert Congel, a developer.

A few weeks earlier, then-Senator Hillary Clinton (Democrat-NY) had helped to secure legislation that had allowed Congel to use tax-exempt bonds to help finance his pet project, a shopping and entertainment complex in Syracuse, New York called Destiny USA.

The New York Times reported that both Congel and a spokesman for Hillary Clinton said there was "no connection between his donation and her legislative work on his project's behalf." A 2007 law requires companies and lobbyists to report donations to charities linked to legislators. But no laws require former presidents to report money they receive for their foundations.

Congel has been a major contributor and fundraiser for Republican campaigns. In 2004 he bundled $200,000 in contributions from himself and others for former President Bush's re-election effort. He has also given lesser amounts to Mrs. Clinton and other New York Democrats. (Charles Savage, New York Times , 1/4/09)

Hillary Clinton intervened at least six times in government issues directly affecting companies and others that later contributed to her husband's foundation, according to the Associated Press. Her spokesman, Philippe Reines, said, "Throughout her tenure, Senator Clinton has proven that she acts solely based on what she believes is best for the state and people she represents, without consideration to any other factor."

Rep. Rangel's Beach House Deal

Representative Charles Rangel (D-NY) bought a $1,100-per-night beach house in the Dominican Republic in 1988. Since then, he has earned $75,000 in rental income from it. Rep. Rangel said that "cultural and language barriers" had kept him from understanding the finances of his villa "and vowed to repay several thousand dollars in federal taxes he owes after failing to report [the] rental income from the villa."

Rep. Rangel put down $20,000 when he bought the villa and took out a $60,000 mortgage from the resort owner. Theodore Kheel, a New York labor lawyer, was a principal investor in the resort company. Kheel had contributed given tens of thousands of dollars to Rangel's political campaigns.

The resort paid Rangel every six months for his share of the rental income. It "stopped charging interest on his mortgage after two years. The congressman said he paid little attention to the transactions—and was unaware that the interest had been waived—because the money was never sent directly to him or his wife but was instead used to pay down his mortgage..."

Rangel admitted that he had been "irresponsible" in failing to report the income "and acknowledged that as a member of Congress and chairman of the Ways and Means Committee he should be held to a higher standard of conduct." Rep. Rangel's lawyer said that the congressman's wife, Alma, handled the family's finances. The chief responsibility of the Ways and Means Committee is to write tax legislation. (David Kocieniewski, New York Times , 9/10/08)

During the 2007-2008 election cycle Rep. Rangel raised more than $5 million dollars. Contributors included $281,543 from such financial services and real estate firms as Citigroup ($61,950) and JPMorgan Chase ($50,200) (www.opensecrets.org)

Neither Clinton nor Rangel is accused of criminal behavior. Clinton spokesman Reines defended her right, even duty, to assist a constituent in business efforts good for New York State. Rangel admits to irresponsibility but explains it by pointing to barriers of culture and language and to his wife's handling of family finances.
 

For writing and discussion

Assignment: Write the two best questions you can think of that would be fair and important to ask Clinton. Then formulate your two best questions for Rep. Rangel.

After students have completed their questions, have them break into groups of three or four. Have each group discuss all its members' questions, discuss the worth of each, then have them choose the question they regard as the best one for Clinton and for Rangel. Then choose a student to report those questions to the class.

Write the questions on the chalkboard without comment. Then invite analysis of each. Is the question clear? Is it answerable? If not, how might it be reframed? How would you expect Clinton to answer? Rangel? What further questions might these answers call for? See in the high school section of www.teachablemoment.org "Thinking Is Questioning" for suggestions on analyzing student questions.

 


Student Reading 2:

Reforms and earmarks

Cyberlux is a small lighting company in Durham, North Carolina. It struggles to compete with huge corporations like GE and advertises that its bulbs save energy and cost less than ordinary bulbs.

The company has lost more than $50 million in its eight years of existence. To avoid bankruptcy, Cyberlux executives decided recently to seek a military contract through earmarks. An earmark is an add-on to a bill that often has nothing to do with the bill. It appropriates money for a specific project that some legislator usually wants for a company, group or individual in his or her district or state.

Cyberlux sent representatives to Washington DC to demonstrate BrightEye, a "portable illumination system" and to urge North Carolina legislators to buy it for the military. Those legislators responded by adding an $8 million earmark for BrightEye in the defense spending bill.

In February 2008 Cyberlux announced that the Air Force would order $3.3 million for its portable lighting products. A few months later the company hosted fundraisers for Rep. David Price (D-NC) and Senator Elizabeth Dole (R-NC). Cyberlux also posted requests on its website for donations to the two legislators. The fundraisers brought in $10,600.

Experts in campaign finance law say it's illegal for a company to help a candidate raise campaign donations from the public. A spokesman for Senator Dole said her staff met with the company but that she did not ask for an earmark. Congressman Price is a member of the House Appropriations Committee. His staffers met with Cyberlux representatives and contacted the defense subcommittee "to see if they are favorably inclined to the technology, to putting funding in the bill," said Price's chief of staff, Jean-Louise Beard. But she said they did not consider such actions an earmark request.

Cyberlux has announced it is now seeking $25 million in defense earmarks for 2009.

A Seattle Times six-month inquiry into the 2008 defense bill uncovered $5.8 billion in earmarks, 40 percent of which were hidden. Besides the Cyberlux earmark these included $588 million for a submarine neither the military nor the Bush administration wanted.

In 2007, in response to mounting criticism of wasteful and secret earmarks, Congress passed the Honest Leadership and Open Government Act. The law requires that Congress disclose the sponsors of each piece of earmark legislation, the intended recipients and the purpose of the earmark. The Seattle Times investigation found that the House broke this new rule at least 110 times, including with the Cyberlux earmark. In at least 175 cases, one of which was the unwanted submarine earmark, Senators Joe Lieberman (I-CT), Christopher Dodd (D-CT) and Jack Reed (D-RI) did not disclose themselves as sponsors.

Why? Perhaps because they did not wish to make public their violation of the rules. Perhaps because they wished to appear fiscally responsible.

Many senators dodge the Open Government Act by naming the Defense Department as the recipient of an earmark. Most earmarks are supposedly defense-related — but the exact purpose of the earmark remains unclear. Despite their official silence, the senators who sponsored the unwanted submarine earmark returned home and announced very proudly to voters that they had won jobs for sub construction.

Earmark defenders often argue that they know what is best for their district or state and that earmarks speed the process for a needed project. Rahm Emanuel, now President Obama's chief of staff, was until recently an Illinois congressman. In that role, he once defended an earmark he'd gotten to rebuild a bridge that had been rated as deficient. The bridge, he noted, was later "identified by the Department of Homeland Security as a major evacuation route in case of a terrorist attack on Chicago." ("Don't Get Rid of Earmarks," New York Times, 8/24/07)

There are some, but not many, lawmakers who oppose earmarks. Two are from Arizona, both Republicans: Senator John McCain, who has never filed an earmark and Representative Jeff Flake, who has repeatedly and unsuccessfully objected to the gross wastefulness of many earmarks.

Seattle Times reporters spent many, many hours digging through records to document earmarks. They wrote: "When a reporter for the Congressional Quarterly pointed out how difficult it remains to pull all the information together, Rep. John Murtha (D-PA), chairman of the committee that drafts the defense bill, had a quick answer: 'Tough shit.'" (David Heath and Christine Willmsen, Seattle Times, 10/12/08, www.seattletimes.com). Murtha is an unapologetic earmark supporter who for years has inserted billions into defense bills. In the 2007-2008 election cycle, Rep. Murtha raised $3,463,233 from defense contractors like General Dynamics and Boeing. (www.opensecrets.org)

President Obama has criticized the use of earmarks and declared that "We are going to ban all earmarks" from his administration's economic stimulus package (www.msnbc.msn.com, 1/6/09).
 

For discussion

1. What questions do students have about the reading? How might they be answered?

2. What is an earmark? Despite many criticisms of earmarks over the and despite periodic reform, the practice of earmarking continues. How do supporters defend it? Why do opponents oppose it?

3. Why did Cyberlux seek an earmark for their product rather than simply request that it be included in a defense spending bill?

4. What do Senator Dole and Rep. Price have to say about the Cyberlux earmark? How do you assess their comments?

5. How would you explain the behavior of the three senators involved with funding the unwanted submarine?

 


Student Reading 3:

The revolving door

Spencer Abraham (R) was US energy secretary during the early years of the Bush administration. Among his duties was regulating such energy companies as Exxon Mobil, Chevron, and Occidental Oil.

After leaving his cabinet post, Abraham took a $60,000 a year post on the governing board of Occidental Oil. For two and a half years Occidental had not registered to lobby the Department of Energy, but resumed after Abraham joined its board. A major aim of the company was to win approval for oil shipments from Libya. The US economic boycott of that country had been lifted after 20 years.

With the help of a former Abraham deputy as its lobbyist, Occidental won approval to ship oil from Libya to the US Soon, Abraham formed the Abraham Group to advise energy companies on their relations with government agencies. He won federal approval for Cheniere Energy, Inc., based in Houston, to build a liquefied natural gas facility in Texas.

The revolving door is a profitable feature of American political life. A government official retires, then is hired by a contractor to lobby for the company before Congress. Or a congressperson whose committee has had connections with defense contractors leaves office and is hired by a defense contractor to grease the wheels at the same committee on which he or she has served. Or a defense contractor who has had business with Congress gets elected to Congress and deals with the requests of the defense contractor he or she worked for.

Another Bush administration cabinet member, Homeland Security Secretary Tom Ridge, like Abraham, left his position in early 2005. Also like Abraham, he was hired to work with firms looking for contracts with his former agency. He was invited to join the board of Savi Technology, a firm that makes radio frequency-identification equipment the Homeland Security Department had promoted when Ridge had been its secretary.

Ridge also joined the boards of Exelon, an energy utility, and Lucent, a telecom company. Both sought Department of Homeland Security business. Later, Ridge formed Ridge Global, a company that hired former department and White House officials to win business on security and crisis management.

The activities of Abraham and Ridge are documented in a 108-page report by Citizens for Responsibility and Ethics in Washington (CREW) that examines what 24 former Bush cabinet members did after they left office. The report, titled Revolving Door, found that "many of these top officials joined the ranks of the companies they once regulated where there are highly compensated. In many instances, they have helped their new employers obtain lucrative government grants and contracts."

CREW found that "a number of the former officers had spurned direct lobbying themselves, avoiding unseemly appearances and complying with one-year prohibitions on lobbying their former agencies by serving as strategic corporate advisors."

The report details the activities of "15 former cabinet officials who hold positions with 40 companies that lobby those officials' former agencies" as well as "9 former cabinet members who hold positions with 15 companies that began or resumed lobbying the former officials' agencies after those officials joined the companies."

CREW's investigation took six months. Melanie Sloan, Crew's Executive Director, stated that "Crew's investigation has shown that most of these former Bush administration officials have cannily leveraged their time spent in the public sector. By using their government positions as springboards to new lucrative opportunities, they have successfully made a mint on the backs of American taxpayers. It may be legal, but it is certainly not honorable." (www.citizensforethics.org, 1/12/09) (See also www.miamiherald.com, 1/12/09)

On President Obama's first day in office he signed an executive order that requires all government appointees who leave their job to wait for two years before joining a lobbying firm. The order also requires lobbyists to wait for two years before serving in a government agency they lobbied. Obama has already waived the latter requirement for William J. Lynn III, whom he hopes will become his deputy defense secretary. (www.thehill.com, 1/23/09)
 

For discussion

1. What questions do students have about the reading? How might they be answered?

2. What is the revolving door? How does it work? Why?

3. Describe the revolving door activity of Spencer Abraham and of Tom Ridge.

4. How would you explain why the revolving door process is so prevalent in Congress as well as the various departments of the executive branch? If you don't know, how might you find out?


For inquiry

What do students know about the activities of their own two senators and representative? Have any of their votes suggested the influence of special interests? How do you know? What earmarks for your state or district have your legislators been responsible for? Why? Have legislators from your state or district made use of the revolving door? What evidence do you have for your answer?

Such questions can inform inquiries by individuals and groups of students.
 

For citizenship

Following a particular inquiry, students might produce a report that could be sent to their legislators, along with a letter that includes their questions and opinions based on their investigation.
 

Sources

The following websites are very useful:

Center for Responsive Politics (www.opensecrets.org)
Center for Public Integrity (www.publicintegrity.org)
Public Citizen (www.citizen.org)
Common Cause (www.commoncause.org)
Citizens for Responsibility and Ethics in Washington (www.citizensforethics.org)

 

This lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email them to: lmcclure@morningsidecenter.org