Good and Bad Lobby Groups

by Michael S. Rozeff
by Michael S. Rozeff

Lobbyists, according to various definitions, contact, inform, communicate, try to influence, persuade, and influence government officials to pass legislation that favors them or their backers. They also mobilize voters to use petitions to exert public pressure for political actions.

Lobbyists use a broad range of verbal and political techniques to influence legislation. One widely-used tool is the junket, a trip for legislators paid for by the lobby. The junket is corrupt. It amounts to bribery-lite, because a basic fact of human psychology is that when person A gives something to person B, then person B feels an obligation to person A. Specific examples include all-expenses-paid conferences at luxurious resorts, fully paid trips to India, and wining and dining. Although these goodies are duly reported on Congressional financial disclosure forms, they are then typically ignored because the Democrats and Republicans have an understanding that they will look the other way. Tom Delay’s trip to Korea shown on Schedule VII of his 2001 form got him into trouble because the lobbyist had registered as a foreign agent. More typically, Mr. Delay spent 10 legal days in Kona, Hawaii in 2002, and the American Association of Airport Executives reimbursed him for $5,967.28.

Some of Washington’s foundations and think tanks may be registered as lobbyists, some may not. Functionally, this doesn’t matter. They are pretty much birds of a feather. They often generate information, get involved in petitions or grassroots citizen efforts, and otherwise act to influence policy. The Heritage Foundation supported Mr. and Mrs. Delay’s trip to Singapore in 2001 to the tune of $8,428, and the National Center for Public Policy Research paid for his and his wife’s visit to Scotland that same year. Somehow this 10-day trip came to $28,106, the travel cost being $20,266. They took some side trips.

One site estimates that $14.3 million was spent on Congressional junkets between 2000 and the present. Mr. Delay came in 29^th out of the top 100 recipients. Given about 538 members of Congress and a 5-year period, this works out to $5,316 per Congress member per year. The total amount spent by lobby groups to influence legislation is many orders of magnitude greater. The Pharmaceutical Research and Manufacturers of America had $150 million budgeted for 2004. Lobbyists in the State of California alone are reputed to have spent $267 million. Lobbyists for the EU spend $70–100 million a year.

Law is for sale. It is not law on the market because Congress has the legal power to make law and no competition. Ameliorating factors are that the lobbies compete and the individual members of Congress compete. The conscience of the voter and the jealousies of members of Congress also place limits on the corruption.

Some lobbies are very powerful and exert strong pressure by being able to mobilize enough votes to unseat a member of Congress if he or she votes against what the lobby group wants. Strong lobbies include the National Rifle Association (NRA), AARP (formerly the American Association of Retired Persons), the National Federation of Independent Business (NFIB), and the American-Israeli Public Affairs Committee (AIPAC).

Another form of corruption is the revolving door between government and the influencing organizations – the lobby groups, foundations, trade associations, corporations, universities, and think tanks. "Lobby Shops Salivate as Big Names Hit K Street" one headline reads. Powell Moore, a senior lobbyist at McKenna, Long and Aldridge, has had "stints in the Nixon and Reagan administrations and at the Lockheed Martin Corp.," and has been "Donald Rumsfeld’s chief liaison with Congress for nearly four years." Newly-minted lobbyists who are old Congressional hands include Sen. Don Nickles, Rep. Billy Tauzin, and Rep. Jack Quinn. "A seemingly endless list of staffers has moved as well."

This corrupt activity is wrong, pure and simple. It is very difficult for government officials to act objectively if they have the expectation of being rewarded by cushy jobs by the very groups that they are legislating for while still in office! If a Congressman votes against a measure that benefits Boeing, is Boeing more or less likely to hire him when he retires? Or will Boeing hire its "friends"?

The Heritage Foundation’s 2002 Annual Report proudly informs us: "So years ago we assumed the role of matchmaker – identifying and recruiting qualified conservatives for key positions in the administration, in statehouses, on Capitol Hill and university campuses and in the ‘lobby shops,’ policy organizations, and business and trade associations that shape public policy in America. In 2002, the Heritage Job Bank filled more than 100 vacancies. As one Senate Policy Director remarked: ‘When we need to fill a position on the Senator’s staff, one of the first people I call is Lynn Gibson, Coordinator of Heritage’s Job Bank. She always seems to have a ready supply of smart, solidly conservative candidates, many with ties to our home state...’" Granted the Senator favors Heritage out of personal conviction, but won’t the Senator’s warm spot for Heritage be strengthened and cemented by favors being exchanged? Won’t these staff members end up telling the Senator what to think and write?

All of this lobbying, influencing, pressuring, hiring, and to-and-fro movement of personnel is entirely legal. It’s also entirely sensible given the way the government operates, but it is corrupt. Corruption naturally accompanies the State. The State is plunder, there for the taking. It’s Treasure Island. One only needs the treasure map and a properly outfitted ship. The Jim Hawkins of today is a bright young law school graduate. They come a-flocking. Columbia and Barnard students even have a Lobby Day in Washington. We institutionalize our corruption so that we no longer have to face what it really is.

The State pays out a set of valuable prizes in the form of laws, subsidies, taxes, regulations, tariffs, agreements, contracts and policies, jobs, positions, power, access, credential building, and career enhancement. Competition is keen. The American get-up-and-go spirit is far from dead. Given the rules of any game and given an opportunity to play, Americans will be there aiming to win.

The web definitions of lobbying point to goals such as a specific cause, or laws that further one’s own interest or inhibit those of opponents, or establishing an individual’s or organization’s point of view. This means that lobbyists usually, but not always, are working for the private interests of their sponsors or themselves. They are generally not working for the "General Welfare" but their own welfare. Since the door to such activity has been constitutionally opened by the Supreme Court, the lobbyists and their backers naturally have walked in. That all of this works to the detriment of society has long since stopped being noticed.

One of the basic things wrong with our country is that many people no longer know the difference between right and wrong. Another is that many people do not believe that there is a right and wrong. They believe that we as a group can make up any rules we want and live by them. Only bitter experience can rectify such deep and willful ignorance.

A process that passes laws for private purposes is unhealthy for any society since it means that some gain at the expense of others. Injustice cannot remain indefinitely at the core of a society’s ethic without undermining economic and social relationships. A society following such a rule in its public affairs will eventually apply it to its external relations in foreign affairs and to its private affairs internally. Since the State has some importance in people’s lives, its undermining of just rules of conduct will tend to sap the morale of the people, producing cynicism, skepticism, and nihilism. If many people then turn away from the State, that is good. That is a corrective action.

A process in which government is basically for sale means that those in and around the lawmaking power extract gain for themselves without worrying about the losses imposed on others. If those losses are spread widely or if the causes of them are hard to pinpoint, then the forces of reaction such as counter-lobby groups may be slow in arising. Bad laws can take the society far away from where it otherwise might go. The military-industrial complex descried by President Eisenhower can foster war after war. A sugar lobby can foster domestic prices that are two or three times the world price. A labor lobby can put minority workers out of the general economy altogether by Jim Crow laws or by minimum wage laws. A construction lobby can devastate neighborhoods. From this viewpoint, the process we have now is rotten.

Counter-lobbies can arise to fight bad laws, a good thing indeed. Nevertheless, the cost of making the system work in this fashion is substantial.

Many reformers observe that the ethics of the Congress and of those exploiting the law-making power are not very pretty. A good deal of thought is going into this subject. However, trying to reform this system by focusing on changing Congressional ethics is about like getting a lion to meow. Even if the lion is tamed down, its appetite and roar won’t be.

In my opinion, it is truly low of an elected official to accept any such thing as a paid trip from a lobbyist or think tank or foundation. Widespread publicity can help voters decide how important these things are. In my quaint and old-fashioned view, elected officials should be one-dollar-a-year men of honesty, probity, integrity and judgment. They should voluntarily not accept gifts. If an elected official made a public statement that after leaving office, he would not accept a closely-related position as a lobbyist, that to me would provide a favorable signal of integrity. If they even said that they would only vote in the public’s interest, that would be favorable in today’s atmosphere. If they would provide the least bit of innovation, such as stating that an independent auditor would at the end of each year compare their performance to their stated principles, that would be an improvement. A person with integrity will have no problem coming up with signals and signs that they mean what they say.

Lobbying, junkets, resume building, job-jumping, are all ingredients in the law-making sausage. I can imagine much more that is unsavory goes on. This is the province of exposés, novelists, and screenwriters. More importantly, who turns the handle of the meat grinder? Who makes up the recipes that Congress cooks? The lobbyists and their backers, the interest groups, are key players.

For the time being, we are living with this system, so what can we say at the margin about it? It seems to me that we can still identify the relatively good guys and the bad guys, the relatively good lobbies and the bad lobbies. The good lobbies are those that are seeking things that libertarians can applaud, which include lowering aggression, repealing intrusive laws and regulations, lowering taxes, cutting programs, enhancing freedoms, etc., while the bad lobbies are those that are seeking more aggression, more coercive laws and regulations, higher taxes, more programs, and fewer freedoms.

Let’s evaluate the four strong lobbies mentioned earlier: NRA, AARP, NFIB and AIPAC. I’ll argue that the NRA and the NFIB are good lobbies, and the AARP and AIPAC are bad lobbies.

The NRA is basically what I called a "counter-lobby," a lobby whose focus is fighting bad laws, in this case the panoply of gun laws that fly in the face of the Second Amendment. Even if there were no Second Amendment, the right to keep and bear arms would still exist. Bearing arms is about as basic a natural right as there is, since one’s life isn’t much good unless it’s protected. It is a near certainty that the NRA’s political stances do not accord 100% with what libertarians may support, and that there are libertarians who are anti-NRA. For example, the NRA supported Bush over Kerry. The history of the NRA may show occasions when it erred on legislation or compromised. These shadings do not alter the basic thrust of the NRA, which is upholding a right expressed in the Constitution. This is one reason why it is easy to conclude that it is a good lobby. The second, as I stated, is that self-defense is a natural right. A third reason is the path-breaking research-based practical case that has been made in numerous articles by John R. Lott, Jr.

In many respects, the AARP is a benign voluntary organization that provides useful services to its members as a review of its history and operations will show. Its many services, from insurance to discounts on many products, are distinct from its lobbying activities with which I am here concerned.

Its positions are available for download. There are a great many of them, and I doubt strongly that all the AARP members are aware of these. It is also highly likely that significant numbers of members would disagree with one or more positions if they knew them.

The AARP’s lobbying is directed against budget caps, against entitlement caps, against cuts in Medicare, Medicaid, and veterans’ benefits. It is for the prescription drug entitlement. It is against any privatization of Social Security, including voluntary or mandatory personal retirement accounts. It supports the progressive income tax. The AARP looks upon tax measures in terms of their impact on government budgets (that is, tax cuts have a "cost"). It favors the income tax at the federal level. It favors reducing "tax expenditures," that is, revenue losses to the government that arise from deductions, exclusions, and credits, etc. In other words, it favors tax increases from this source. The AARP takes "the need to fund national spending priorities" as a given, for which Congress "must ensure an adequate revenue base." (AARP manages to use the words "need" and "must" in the same sentence.) AARP favors taxing capital gains at the same rate as ordinary income.

The AARP has positions on many more general areas such as housing, transportation, education, social services and utilities. As in the cases of entitlements and taxes, its positions are monotonously of one stripe – the government should do this and do that and do the other thing. It should regulate and control. Such an animal as a market solution that is unassisted or undirected by a government directive does not seem to exist in its view. In short, the AARP’s lobbying is thoroughly and one-sidedly in favor of big and bigger government.

The AARP lobby is unabashedly socialist, for it advocates controlling the income produced by the productive efforts of others. If one controls, one owns. The amazing thing about its calls for more and more and more directed to the "elderly" is that there is seemingly no upper bound. Economists tell us that wants are insatiable. They usually analyze cases where freedom to choose is present. We learn from the AARP that coercive satisfaction of wants also is insatiable. No matter how much misery is caused to those paying the bills, the master seeks to extract more from the slave. This seems irrational, so maybe there is an upper bound. The AARP hasn’t hit it yet.

As with the NRA it is easy to reach a conclusion, this time in the opposite direction. The AARP lobby is a bad lobby.

The NFIB represents small businesses. It is lobbying for permanent repeal of the estate tax, small business health plans (as unions and large firms already have), ability to bid on federal projects (unbundling them), private sector bidding for services now handled by government, an end to the ban on interest on business checking accounts, and an end to the expansion of tax-exempt rural electric cooperatives. It favors individually controlled personal retirement accounts, no payroll tax increases to fund Social Security, and no increase in Social Security paperwork burdens. It favors a host of tax measures that involve lower taxes and simpler taxes. For example, it favors eliminating the Federal Unemployment Tax and returning the issue to the states and it favors repealing the alternative minimum tax.

Small businesses have been hard hit by numerous laws that place them at a disadvantage relative to larger companies. The NFIB is either directly against many such laws or else notes their bad effect on small businesses. Those mentioned in this vein include the Americans with Disabilities Act, the Davis-Bacon Act, mandatory ergonomics requirements, the Family Medical Leave Act and the minimum wage. The NFIB does not call for repeal of all these, but the tenor of its concern is that they are harming small businesses.

There are a number of other issues such as reforming OSHA, reducing environmental regulations, protecting business property rights, postal reform to prevent rate increases, and limitations on Superfund waste oil liabilities that further provide the flavor of the NFIB lobbying efforts.

A great many of the NFIB efforts are in line with the directions that libertarians favor. Mind you, there is not ever going to be 100% agreement. But the clear direction of the NFIB is to reduce the government presence in the lives of small businesses and open up markets for competition. Their idea is to reduce taxes, end some taxes, and reform and reduce burdensome regulations. These are laudable objectives. The NFIB is a good lobby.

Both the NRA and NFIB contrast with AARP in an interesting way. While the AARP wants more and there is no apparent upper bound, the NRA and NFIB want less. The lower bound exists, and it is the libertarian ideal of complete non-aggression.

Last I consider AIPAC, which is "America’s Pro-Israel Lobby." AIPAC differs from the other lobbies in that its orientation is foreign policy, not domestic. AIPAC supports foreign aid appropriations for Israel (about $3 billion a year typically), tighter economic sanctions against Iran in the form of permanent penalties against companies that invest in Iran’s energy sector and assistance to pro-democracy forces in Iran. It supported the Congressional resolution asking the EU to place Hizballah on its terror list. It supports the current Israeli withdrawal from Gaza and several West Bank communities. AIPAC is against Iran having any nuclear program in any form. It favors a get-tough policy on Iran involving sanctions rather than negotiation. AIPAC supports the military alliance between the U.S. and Israel that has existed since 1985. It supports increased U.S. assistance to modernize and restructure Israeli armed forces, increased joint defense programs, and enhanced sharing of intelligence. It wants the U.S. to pressure Russia and other countries to prevent Iran and other "rogue states" from advancing their missile capabilities.

AIPAC’s general aim is to maintain strong and intimate U.S.-Israeli ties so that the U.S. is thoroughly enmeshed and involved in the many problems and difficulties faced by Israel. Having a senior partner with the strength and capabilities of the U.S. is clearly advantageous to Israel.

This outline of AIPAC’s aims is enough to base an evaluation upon. What is the libertarian position regarding foreign aid and policy? Rothbard’s answer is still relevant, and Ron Paul’s more recent answer also is insightful and useful.

At present, I add the following basic ideas. Self-defense of a person or a country has a clearly delimited goal. It is a goal around which a population can and will rally. It has a well-understood moral standing in the world at large and attracts moral and sometimes other support. It has the "negative" aim of restoring or maintaining rights. It has a logical stopping point. This is analogous to the lobbying actions of the NRA and NFIB to maintain certain rights of their constituencies. By its nature, defensive actions do not have to turn into conquering or expansive actions, although humans sometimes give in to this temptation when they gain the upper hand.

By contrast, intervention in the affairs of another country has no clear boundaries. It can grow and alter. It can backfire merely because there is no clear goal. It involves control of one group by another group, and that leads invariably to complication. It leads to resistance. It creates a seeming imperative for further interventions and entanglements. Interventions are likely to go wrong because of the knowledge problem. The intervener really does not know what the foreign situation is. The State that intervenes is prone to error. A self-defending State has no such problem. It knows exactly what it is about. Interventions are infinitely expandable because there are always new aims that can be imagined, new goods to be done, new worlds to be conquered. Interventionism is analogous to the AARP’s agenda. It knows no limits and no bounds.

Many volumes of history bear out the sorry effects of interventionism. If the British, French, Spanish, Italians, Germans, and Russians have failed in recent memory, why won’t the Americans also fail? The American intervention in the Middle East is no exception. AIPAC even wants to influence how the U.S. behaves with respect to other foreign countries. That desire is natural because Israel interacts with many other countries, but it shows precisely how one U.S. intervention mushrooms into another and yet another.

AIPAC is a good case study for showing what is wrong with interventionism. It is again an easy call that AIPAC’s aims run counter to properly conceived American interests, despite all their rhetoric to the contrary. AIPAC is a bad lobby.

August 18, 2005

Michael S. Rozeff [send him mail] is the Louis M. Jacobs Professor of Finance at University at Buffalo.

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