This past term of Congress let the drug industry write much of a health care overhaul, extended of ethanol subsidies, passed the Marlboro Monopoly Act, crafted a subsidy-laden stimulus bill, gave us Cash-for-Clunkers and Cash-for-Caulkers, tried to pass a corporate-backed climate bill, and created a Wall Street “reform” that formalizes bailouts.
Call it the corporatist Congress.
H.R. 1, the first undertaking of the 111th Congress, was the $800 billion stimulus bill, a cornucopia of corporate welfare and special favors. The New York Times reported in early 2009, “the industries that stand to gain most from the proposed legislation were also working to help shape it even before Mr. Obama had won the election.”
These included the likes of Google and other tech firms, but also the coal and power industries, whose five-year joint lobbying effort finally paid off with a billion-dollar earmark for a clean-coal project in Illinois.
The stimulus also created special subsidies for electric cars, high-speed rail, and other “green” technologies, including a “Production Tax Credit” for windmills — allowing companies like General Electric to be paid, up front, for building windmills, even if they never spin. While profiting handsomely from these targeted tax breaks, GE also got $24.9 million in stimulus money for its Global Research Center.
In June, Congress passed a tobacco regulation bill known on K Street as the Marlboro Monopoly Act. Philip Morris, by far the largest tobacco company, had been backing the bill for a decade, knowing it would crush smaller competitors and lock in its market share.
Cash-for-clunkers transferred tax dollars to the automakers and car dealers who had proposed it, while driving up the price of new and used cars for everyone.
The encore was Cash-for-Caulkers, a home renovation bill backed by the Chamber of Commerce, the National Association of Manufacturers, and Dow Chemical, who all get the subsidies.
The lame-duck session tax extender bill got attention mostly for the income tax increases Democrats had wanted and Republicans blocked, but the final bill also extended ethanol subsidies — naked corporate welfare by any honest measure — and created a special tax break on “active financing” for multinational corporations and banks. This last break was the fruit of a lobbying effort by a coalition of corporate giants who hired Democratic superlobbyist Steve Elmendorf, who was chief of staff to former House Democratic leader Dick Gephardt.
The major regulatory efforts by this Congress — all of which Democrats heralded as broadsides to greedy big business — included outright corporate-welfare giveaways (cap and trade) to lukewarm measures that in the long run will protect the big guys (the Wall Street bill), and something in between (health care “reform”).
Let's start with the least corporatist of the big three — the financial regulation bill. The bank lobby lost a lot of battles in this war (and in retaliation gave almost as much to Republicans as to Democrats), and the measure certainly will crimp the biggest banks' profits in the short term. But the central promise of the bill — to prevent future bailouts — was never delivered. In fact, the bill's “resolution authority” increases big banks' advantage by guaranteeing their debt.
While Goldman Sachs CEO Lloyd Blankfein said, “We will be among the biggest beneficiaries of reform,” the big winners are probably the hedge funds, which are far closer to the Democrats, especially Banking Committee honchos Chris Dodd and Chuck Schumer.
Health care reform was more explicitly corporatist. While Obama was praising the Senate a year ago for “standing up to the special interests,” the largest single-industry lobby in the country was singing the bill's praises. The Pharmaceutical Research and Manufacturers of America, under the guidance of former Rep. Billy Tauzin, ran the table in health care reform. The bill's subsidies, mandates and lengthy government-guaranteed monopolies enriched the drug companies so much they desperately rallied to save the Democratic supermajority in the Senate by raising funds for hapless Senate candidate Martha Coakley in the Massachusetts special election.
While the insurers take a hit from the measure, the bill does, after all, require every American to buy health insurance.
And the cap-and-trade bill the House passed, with subsidies and free credits handed out like Halloween candy — well, Obama budget director Peter Orszag said that sort of policy would “represent the largest corporate welfare program that has ever been enacted in the history of the United States.”
Big business isn't alone in reaping the fruits of the 111th Congress. The lawmakers and staffers who wrote these bills are already cashing out to lobby for the affected companies. As for the Republicans, they're brimming with high-minded talk right now, but in fact they can't wait for their turn at the trough.
Timothy P.Carney, The Examiner's senior political columnist, can be contacted at email@example.com. His column appears Monday and Thursday, and his stories and blog posts appear on ExaminerPolitics.com.