LOBBYISTS WRITE LEGISLATION

“ . . .  he[Lee Drutman]  remains highly concerned about the imbalance of spending and information in Washington today. He quotes Richard Hall and Alan Deardorff, authors of the 2006 paper ‘Lobbying as Legislative Subsidy’:

‘Legislators…work hard primarily on behalf of the interests that can afford the high costs, not only of organizing and making campaign contributions, but of paying professional lobbyists and financing the organizations that support them.’

“One example of how lobbyists actually write legislation involved a controversial rule to disallow banks from using depositors’ money to invest in derivatives. Financial reformers believe that such speculation shouldn’t be financed by savers’ deposits, which are insured by the Federal Deposit Insurance Corporation. In this case, Citibank rewrote almost all of two paragraphs of legislation that undermined the reform. Drutman provides too few such examples. But a number of academic studies conclude from specific cases that lobbying pays off financially. Several of the studies he cites briefly arrive at the following conclusions:

—“ ‘The stocks of the firms that spent the most on lobbying as a percentage of their assets beat market averages substantially.’

—“ ‘The more firms lobby, the lower their tax rates.’

— “ ‘Lobbying has a positive effect on a firm’s return on equity compared to the market as a whole.’

— “ ‘Companies that lobby intensively are less likely to be detected for fraud than other companies.’

— “ ‘Companies with politically connected board members have higher stock market returns than others.’”

Jeff Madrick, “How the Lobbyists Win in Washington,” April 7, 2016, in The New York Review, a review of Lee Drutman’s The Business of America Is Lobbying: How Corporations Became Politicized and Politics Became More Corporate, April 7, 2016, pp: 50-52.