Government Favors And Politicians For Sale! Election Year Specials! Act Now! Institutional Corruption

Yesterday we covered some of the election year specials on political class corruption. That post covered basic government and politicians' corruption, usually corruption where there is a basic relationship between a politician and an entity or special interest buying a favor: the special interest donates money to a politician's reelection campaign and the politician ensures that government and American taxpayer wealth is diverted to the special interest. These are basic, one-on-one value exchanges.

Today we will look at what I call institutional corruption. This is when our Federal politicians have exempted their entire institution of Congress from illegal behavior that the rest of us cannot partake in. A recent Wall Street Journal editorial called this type of behavior "entrenched corruption." These institutional, formalized forms of entrenched corruption include, but are not limited to, the following, according to the article:

1. Insider Trading – this entrenched corruption is when politicians and their staffs use government information not available to the public to predict which companies’ stocks will rise or fall. They then adjust their own personal investment portfolios accordingly to profitably take advantage of this insider information. This type of behavior is a felony everywhere but in the U.S. Congress since Congressional politicians have exempted themselves from felony prosecution.
2. IPO Gifts – this type of entrenched corruption really surprised me. It appears that it is legal for our Congressional politicians to partake in these types of lucrative financial transactions. While it is illegal for members of Congress to accept cash or other physical gifts from special interests, there is nothing illegal or wrong on them being offered and participating in initial public offerings (IPOs) of firms. These offerings can be very profitable. For example, if I understand these perverted rules, General Motors could not offer a Congressional politician a free Cadillac. However, those same politicians could participate in a General Motors IPO offering that could result in IPO profits that dwarf the value of a single, silly Cadillac.
3. Self-Serving Earmarks –historically, members of Congress have created and implemented infrastructure earmark requests for their Congressional districts that have resulted in increases to the value of their real estate holdings. This is in addition to the classic, basic use of earmarks when politicians arrange for government money to be directed to special interests' advantage in return for election campaign donations.
4. Negatively Encouraging Campaign Donations – the Wall Street Journal editorial calls this “subtly extorting campaign donations through the threat of legislation unfavorable to an industry.” In the reality of most Americans' lives, this is called blackmail and it is a criminal felony, punishable by hard jail time. This is not a felony in Congress, it is called reelection campaigning.
5. Whistle Blower Law Exemption - unlike the rest of the Federal government and the rest of the country, politicians in Congress can punish staff members who expose these politicians' abuses without fear of breaking any law, since Congressional members are not subject to Federal whistle blower laws.
6. Equal Employment/Affirmative Action Law exemption - as pointed out by Step 45 in "Love My Country, Loathe My Government," if you look at the profile of the House of Representatives and U.S. Senate you see that the overwhelming composition of both bodies is older, white guys. The proportion of minorities and women in both parts of Congress is embarrassingly lower than the proportions' of minorities and women in the general U.S. population. If Congress was a typical, large American company, the Federal government would likely be going after them for such a dysfunctional and likely illegal employee profile. However, as a result of it being Congress, the employment laws do not apply.

This type of behavior was the underlying premise for "Love My Country, Loathe My Government." We have allowed a special class of people to coagulate in this country called the political class. Common sense and fairness relative to integrity, rules, laws, punishments, and rewards do not apply to these political people, largely because they have exempted themselves from the behavior the rest of America has to live by.

Since common sense and fairness do not exist in this class of people, replaced by self interest and self enrichment, the business of America is not the top priority of the political class. This results in wasted taxpayer resources, distractions from the real problems facing Americans, and the destruction of liberty and freedom in this country.

Now I would be remiss if I did not discuss recent political class activity to curb these abuses. Since a major "corruption in Congress" story ran on the "60 Minutes" television show on November 13, 2011, the following has been happening in the halls of Congress according to a November 30, 2011 Associated Press story:

• The House Ethics committee has published memos and advisories reminding members of what is legal and illegal.
• Different House committees will be holding meetings in the next few weeks to look into the practices described in the "60 Minutes" piece and the ones we have been talking about.
• New York Congresswoman Louise Slaughter has tried to get legislation passed since 2006 that would address some of these corrupt practices. The legislation is known as the STOCK Act, "Stop Trading on Congressional Knowledge." Up until recently, the legislation never went anywhere since she could only round up a half dozen sponsors or so. In a matter of weeks, since the "60 Minutes" piece ran, all of a sudden, she now has 118 sponsors.
• Many of the principals in Congress who were named in the "60 Minutes" piece, including John Boehner, Spencer Bachus, and Nancy Pelosi, have issued press releases avowing their honesty and allegiance to ethical behavior and denying they did anything wrong.
• Pelosi's press release claimed that she had always supported the STOCK Act legislation. However, she could not have supported it that much if she never signed on as sponsor, never scheduled it for House review and voting when she was Speaker of the House, and certainly did not abide by its letter or spirit if the "60 Minutes" piece is to be believed.

They are really all pathetic and selfish. The abusers in the political class do not get excited until they are outed, allowing the abusive behavior we have described for the past two days to exist for years. It should be interesting to see what comes out of the latest excitement, whether we get true reforms or the politicians do what the normally which is pass legislation with so many loopholes that the final law is useless.

This is what they should do:

1. Pass the STOCK Act immediately with no watering down of its intentions and tenets.
2. Prohibit any Federal politician from participating in any IPO while in office and for ten years after they leave office. The vast majority of Americans never get to participate in an IPO so waiting ten years after leaving office is not an unfair, onerous requirement.
3. Require all sitting politicians that participated in an IPO while in office to turn over any profits they garnered as a result of being involved in the IPO, either to the Treasury to reduce the national debt or to an independent charity of their choice. This includes the nine or so IPOs Nancy Pelosi has participated in, as outlined in the "60 Minutes" piece, as well as other members of Congress.
4. While in office, require all politicians to place their entire fortunes and all of their investments into an independent blind trust until they leave office.
5. Change the whistle blower laws so that the laws and their penalties, including jail time, also apply to all Federal politicians.
6. Change the Affirmative Action laws so that the laws and their penalties, including jail time, also apply to all Federal politicians.
7. Change insider trading laws so that the laws and their penalties, including jail time, also apply to all federal politicians.
8. Implement Step 39 from "Love My Country, Loathe My Government," a step that would impose term limits on all Federal politicians so that they are "one and done." This would certainly reduce the amount of money and corruption that is based on the perpetual reelection campaigns of incumbent politicians.

I am sure that I missed something that would reduce corruption at the Federal level but the above eight steps would be a good start. Consider a quote from David Brin:

"It is said that power corrupts, but actually it's more true that power attracts the corruptible. The sane are usually attracted by other things than power."

We need to desperately change our political processes so that we begin to attract people to Washington that have integrity, sanity, and a focus on problem solving, and who are not corruptible and who are not selfish. Especially during an election year.





Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.



Please visit the following sites for freedom:


http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/