Crony Capitalism Infects Washington

Crony Capitalism Infects Washington

By Jack Kelly - July 6, 2014

They were “dead broke” when Bill left the White House, Hillary Clinton told Diane Sawyer of ABC News. That raised some eyebrows, because she’d just gotten an $8 million book advance and the couple owned mansions worth $12 million (though Bill had racked up a lot of legal bills).

The Clintons are “dead broke” no longer. Hillary has raked in about $5 million in speaking fees since she left government. Bill’s been paid more than $100 million for his speeches. They’ve got what they have “through dint of hard work,” she told a British newspaper, while suggesting that they “aren’t truly well off.”

A speech isn’t what first comes to mind when most Americans think of “hard work.” Including Q&A, it rarely takes more than two hours to deliver one.

The $225,000 Mrs. Clinton will be paid for speaking at the University of Nevada-Las Vegas is eight times what median-income Americans will earn all year. Perhaps it would have been worth that much to hear Demosthenes or Daniel Webster. Nobody puts Hillary in their league. But it isn’t for her oratory that Goldman Sachs et al pay her big bucks.

“Large financial institutions have benefited greatly from regulations which guaranteed their survival while allowing for increased concentration of financial assets,” said Joel Kotkin. “Wall Street grandees, many of whom should have spent the past years studying the inside of jail cells … are only bothered by how to spend their ill-gotten earnings.”

It pays to buy friends in Washington, where so many are for sale.

At the start of his political career, Senate Majority Leader Harry Reid, D-Nev., was a man of modest means. After a lifetime in “public service,” he has a net worth of up to $12 million.

Sen. Reid often sponsors legislation that benefits firms represented by lobbyist sons Rory and Key, according to Peter Schweizer, president of the Government Accountability Institute.

Between 1998 and 2002, firms connected to the Reid family earned more than $2 million “from special interests that were represented by the kids and helped by the senator in Washington,” the Los Angeles Times reported.

Corruption in Washington is driven more by extortion than bribery, Mr. Schweizer says. Bills have been introduced, “crises” manufactured primarily to extort contributions.

They should spend at least four hours a day dialing for dollars, the Democratic Congressional Campaign Committee advised new members last year.

“We need to somehow break the back of the ability of politicians to leverage their position to extract donations,” Mr. Schweizer told CNN.

Both parties depend heavily on the wealthiest 0.1 percent. And if you judged by how Barack Obama spends his time, you’d think a president’s primary duties are to hobnob with the rich at $32,800-a-plate fund-raisers, and play golf.

During his presidency, “we have seen a rapid concentration of wealth and depressed conditions for the middle class,” said Mr. Kotkin, who teaches at Chapman College. “The stimulus, with its emphasis on public sector jobs, did little for Main Street. And under the banner of environmentalism, green cronyism has helped fatten the bank accounts of investment bankers and tech moguls at great public expense.”

Obamacare has forced millions to pay more for health insurance and cost taxpayers billions. But it’s been a bonanza for Obama “bundlers,” Mr. Schweizer said.

“Renewable” energy firms, which produce little energy at exorbitant cost, profit immensely from federal subsidies.

When you have friends in Washington who’ll write you a check from the taxpayers or sandbag your competitors, it’s easier to make money.

But when businessmen focus more on greasing the palms of politicians than on pleasing consumers, innovation is stifled, prices rise, employment falls, the economy stops growing.

Only the free enterprise system has ever produced wealth for ordinary people. All government need do to restore prosperity is provide a level playing field, with taxes and regulations that are simple, clear, fair and stable.

But it’s when things are complex and chaotic that politicians get rich.

Opposition to crony capitalism has come mostly from the Tea Party, joined by a few lonely voices on the left. For most Republicans and nearly all Democrats, it’s business as usual.

Twice before, when the economy served the vast majority so poorly, “a political prairie fire” was ignited, Mr. Kotkin said. It could happen again, soon, “if the corrupt bargain between the oligarchs and the political class goes unbroken.”

Jack Kelly is a columnist for the Pittsburgh Post-Gazette and The Blade of Toledo, Ohio.

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