Congress and Corruption: Compensation and the Revolving Door

Lawrence Lessig has produced a fascinating book that provides valuable insights into the ways in which our government functions: Republic Lost: How Money Corrupts Congress—and a Plan to Stop It. Lessig indicates the need for legislators to be continually seeking funds for their reelection campaigns as the core of that corruption. That concept was previously discussed in Congress and Corruption: Campaign Funds. The impact of that perpetual need for money on legislators’ activities and priorities was discussed in Congress and Corruption: Regulations and Taxes. Here we will discuss Lessig’s description of how a more personal form of corruption has grown within Congress.

We have decided to assemble a group of highly educated, talented, and very ambitious individuals and put them in positions of great power while deciding to pay them very little in a relative sense. One can find here the compensation structure for senators and congresspersons. It is less impressive than one might think. All legislators received a base salary of $174,000 for the year 2011-2012. Congressional leaders received slightly more. Retirement benefits are consistent with other federal employees.

"Members of Congress receive retirement and health benefits under the same plans available to other federal employees. They become vested after five years of full participation."

"As it is for all other federal employees, congressional retirement is funded through taxes and the participants' contributions. Members of Congress under FERS [Federal Employees’ Retirement System] contribute 1.3 percent of their salary into the FERS retirement plan and pay 6.2 percent of their salary in Social Security taxes."

Lessig tells us that 44% of the members of Congress are millionaires, many have wealthy spouses who can supplement their income, and some come from districts where $174,000 is considered a lot of money. The rest are put in the position of being surrounded by people living a lavish lifestyle that they are unable to emulate. This is not a stable configuration.

"What we know from economics, and from experience with governments across the world, is that if you underpay government officials relative to their talents or to their peers, they will find ways to supplement their income."

Some of these ways are merely venal and do not necessarily corrupt the legislative process, others introduce extreme risk to the integrity of our system.

Many have used the requirement to raise campaign funds as a means to siphon off a fraction of that money to augment their lifestyles. Consider the popularity of Political Action Committees (PACs).

"Many members of Congress (at least 397, according to the Center for Responsive Politics) have leadership PACs. A leadership PAC....raises money from individuals and other PACS, and then spends it to support candidates for office."

A leadership PAC is then a vehicle by which a legislator can raise money in order to have money to spend in the act of raising money. It is common for members to use PAC funds to provide expensive meals and trips to extravagant locations and label those activities as "fund raising." Often such activities are just what they seem, but the opportunity for abuse is large. One only has to receive a single campaign contribution from the exercise to justify the expenditure.

Here is a bipartisan list of suspicious activities.

"[Thirty] Democrats and 17 Republicans....collected $1.07 million collectively without spending a dime on other candidates."

"Two-thirds of expenditures of then-House minority leader John Boehner [R]....have gone toward fund-raising costs, which included ‘fine meals and trips to luxurious resorts,’....’including $70,403 at the Ritz-Carlton in Naples Florida, and more than $30,000 at Disney’ resorts."

"House majority leader Steny Hoyer [D] spent more than $50,000 on ‘travel with donors to resorts’ in the 2010 election cycle, including $9,800 on entertainment tickets and limousines."

Perhaps the unseemliness is best exemplified by this.

"Members of our Congress stand in the well of the House handing one another checks for up to $5,000. Such checks are the glue that keeps the system together."

Another approach has grown more common: the revolving door between industry and government. This one is aimed at ultimately enhancing one’s wealth as well as one’s life style. It is much more troubling.

Legislators, regulators, and congressional staffers are all in the position of affecting the activities of those who are no more capable than them, but who make enormously more than them. Lessig claims that some legislators, regulators, and staff members view their positions as opportunities to audition for higher paying jobs in the private sector after they leave office. Others see a high paying job after years of public service at low pay as their just reward.

If one is overseeing activities in the pharmaceutical industry, one becomes knowledgeable of the industry and could be valuable as a lobbyist or as a "consultant." How likely is such a legislator to butt heads with industry executives in quest of the common good if he/she anticipates working for the industry one day?

Consider the case of former congressman Billy Tauzin. From Wikipedia:

"[Tauzin] is an American lobbyist and politician. He was President and CEO of PhRMA, a pharmaceutical company lobby group. He was also a member of the United States House of Representatives from 1980 to 2005, representing Louisiana's 3rd congressional district."

"Two months before resigning as chair of the committee which oversees the drug industry, Tauzin had played a key role in shepherding through Congress the Medicare Prescription Drug Bill, a bill which had been criticized by opponents for being too generous to the pharmaceutical industry. The switch from regulator to lobbyist was widely noted."

"This link was explored at great length in an April 1, 2007 interview by Steve Kroft of 60 Minutes. The report, Under the Influence, pitted Rep. Walter B. Jones (R-N.C.) and Rep. Dan Burton (R-Ind.) against Tauzin and accused him of using unethical tactics to push a bill that "the pharmaceutical lobbyists wrote". Along with Tauzin, many of the other individuals who worked on the bill are now lobbyists for the pharmaceutical industry."

While it is conceivable that Tauzin’s actions were honorable, how many people would believe that to be the case?

Lessig provides these data:

"In the 1970s, 3 percent of retiring members became lobbyists. Thirty years later, that number has increased by an order of magnitude. Between 1998 and 2004, more than 50 percent of senators and 42 percent of House members made that career transition. As of June 2010, 172 former members of Congress were registered lobbyists. In 2009 the financial sector alone had 70 former members of Congress lobbying on its behalf."

These forms of corruption have two disturbing effects. First, they lead people to mistrust the intentions and honesty of our legislators and diminish respect for our government. Second, they become institutionalized and their very success generates resistance to any attempt at reform.