Cleaning Up Corruption in the Statehouses

At the core of many voters' frustrations with government is the sense that, too often, politics is for sale. High-priced lobbyists offering "gifts" to lawmakers swarm state legislatures; companies looking for public contracts get too cozy with those handing out public money; and corporate campaign contributions grease the wheels as public policy is auctioned to the highest corporate bidder.

On May 12th, Progressive States is sponsoring a conference (PDF Flyer) with partners the Center for American Progress, MoveOn Civic Action, Democracy for New Hampshire, New Hampshire Public Research Interest Group (NH PIRG), Common Cause, New Hampshire Citizens Alliance and Americans for Campaign Finance Reform, in Concord, New Hampshire to highlight both the problem and what state governments are doing or could be doing to clean up our statehouses and restore a system where big corporate campaign contributions can't buy our political process.

This special Stateside Dispatch will detail three of the main solutions to be highlighted at the conference: lobbying reform, ending "pay to play" for government contracts, and promoting "clean money" financing of elections.

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Lobbying Reform

The Problem: The federal lobbying scandal tied to Jack Abramoff, who was recently sentenced to almost six years in prison for bribery, is unfortunately just a mirror of the flow of crooked money in our statehouses as well. The most prominent recent examples are Governor Bob Taft of Ohio pleading guilty of not disclosing gifts and golf outings paid for by lobbyists, and a Tennessee investigation leading to the May 2005 arrests of five current and former lawmakers on charges of accepting bribes, conspiracy and extortion.

Lobbying at our statehouses is a billion dollar per year business. Nearly 47,000 separate groups hire more than 38,000 lobbyists or an average of five lobbyists and $130,000 in expenditures per state legislator. Especially in states with few legislative staff, this army of lobbyists often becomes the dominant source of legislative information and power�greased with lobbyist-paid dinners and entertainment boondoggles.

To give just one example, the Center for Public Integrity recently highlighted the pharmaceutical industry's lobbying, a $44 million state operation during 2003 and 2004. And they used every dollar to shoot down a wide variety of state reform efforts to lower the cost of prescription drugs for consumers. Dozens of key lawmakers across the country were treated to lunch and dinner, flown to resorts, given tickets to sporting events, and invited to golf outings.

But these gifts paled in comparison to the "revolving door" jackpot for some legislators�a cushy lobbying job for the legislators themselves when they leave office after serving the industry's interests.

  • A third of federal lobbyists hired by the drug companies are former government officials and their state lobbying army includes dozen of former state lawmakers.
  • In Massachusetts, former Speaker Thomas Finnerman became head in 2004 of the Massachusetts Biotechnology Council, an industry trade group, after years of using his legislative position to kill drug cost-saving bills.
  • In Georgia, former Democratic Leader Pete Robinson and former Republican Leader Arthur Edge IV became pharmaceutical lobbyists.

And the drug companies are just one player in a lobbyist bazaar dangling the promise of a billion dollars worth of lobbying jobs for legislators after they leave their posts�if they vote right and follow the industry line on legislation.

Lobbying Reform Solutions: While the problem of lobbyist influence is severe, many state governments have been taking steps to improve the situation:

  • Disclosure: Even as the federal government does almost nothing to force lobbyists to disclose their activities, most states force some degree of disclosure on lobbyists with Idaho and New Hampshire toughening their disclosure laws in recent weeks. Still, twenty states don't even require lobbyists and their employees to report their compensation, and loopholes remain in many existing state laws.
  • Banning Gifts: Seven states ban gifts from lobbyists completely, while most states limit and require officials to report such gifts�but no states require lobbyists themselves to report what gifts they hand out to government officials.
  • Ending the Revolving Door: Most importantly, six states have imposed a two-year moratorium before former legislators can become lobbyists, while twenty states have imposed a one-year moratorium. If an initiative backed by its Governor qualifies for the ballot, Montana may join the states with a two-year moratorium � with tough enforcement measures often lacking in other states' laws.


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Ending "Pay to Play" on Government Contracts

The Problem: Just as corporate lobbying corrupts the legislative process, the scramble for government contracts corrupts the executive branch and its agencies. Again, Ohio has been a focal point of this corruption in the last year, as campaign contributors illicitly received legal contracts by the attorney general's office, no-bid contracts from the secretary of state's office, and control of workers comp investments in the notorious Coingate scandal. Similar scandals have enveloped New Jersey, New York, California and other states' politicians across the country.

Increasing this "pay to play" problem in recent decades has been the wave of privatizations of public services that has handed work previously done by the government itself to private businesses plying officials with political contributions�creating an environment ripe for corruption. The result has been not just inflated costs from companies bilking the taxpayer, but a degradation of services. For example, Texas turned management of its human services call centers over to the corporate consulting firm, Accenture, in a controversial $1 billion private contract, only to see repeated delays. Kentucky has run into similar charges of corruption in its bidding system for private companies to manage its Medicaid system.

One outcome of this privatization corruption, as a federal Government Accountability Office report detailed recently, is that 43 out of 50 states now offshore jobs administering at least one federal aid program. It's a cruel irony that a majority of states are sending jobs overseas to run food stamps, family assistance and unemployment insurance programs�in many cases no doubt on behalf of state residents previously employed by the state before the corporate contractors took over.

"Pay to Play" Solutions: A number of states have taken action to assure greater accountability in the public contracting system through common-sense solutions:

  • Banning Campaign Contributions by Contractors: Connecticut, West Virginia, South Carolina, and Illinois have all passed laws that bar companies bidding on contracts from making campaign contributions to government officials, although New Jersey has passed the most far-reaching "pay to play" law in the wake of local contracting scandals in recent years. The New Mexico state House and state Senate recently passed different bills barring contributions by contractors.
  • Forcing Contractors to Prove Privatization is Cost-Effective: Over a decade ago, Massachusetts passed a law prohibiting private contracting of government services unless private companies prove they can perform those functions more efficiently than government workers � an automatic check on corruption that multiple studies found saved Massachusetts from the typical bilking suffered by other states privatizing public services under the pressure of corporate lobbying. Other states put a range of restrictions on privatization of various services.
  • Tightening Contracting Standards: Where private companies do perform public functions, the tighter the standards for the bidding processes, the less likely incompetent or corrupt companies can buy them with campaign contributions. Vendor-performance requirements help protect taxpayers from being ripped off, while prevailing or living wage laws and responsible contractor laws screen out shady employers who cut corners on public services. New Jersey and Arizona have flatly prohibited companies that offshore jobs from bidding on their state contracts.

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"Clean Money" Financing of Campaigns

The Problem: Still, while reforms of the lobbying and contracting systems can diminish corruption of our political system, the domination of our elections by corporate money will undermine the best reforms over time. As the Los Angeles Times observed: "even those [states] that imposed the toughest restrictions and oversight continue to grapple with problems of corruption and how to keep it in check." Just in recent weeks, special campaign committees were created to indirectly funnel campaign money from companies barred from making campaign contributions under New Jersey's "pay to play" law to candidates.

With over $2 billion in campaign contributions for state elections in 2004, there is really no way the political process will be cleaned up without dealing with the fundamental source of corrupt politics�the funding of our elections by narrow corporate interests. As the failure of McCain-Feingold to stem the money flow to politicians at the federal level has shown, mere tinkering with contribution limits and disclosure doesn't accomplish much.

Clean Money Solution: Luckily, states like Maine and Arizona have pioneered public financing systems that have fundamentally diminished the role of special interest money � and Connecticut just voted to join them this past December.

The "Clean Money, Clean Elections" systems in those states require candidates to collect a set number of small $5 contributions to establish their broad-based support, after which they are supplied with enough public money to run a viable campaign � as long as they agree not to accept any other outside money for their campaign. The result was that in 2004 more than 80% of legislative candidates in Maine and 56% of candidates in Arizona rejected all private money for their elections, freeing them from the grasp of big spending interests.

Clean money reforms not only undermine the power of big money contributors, they free candidates to spend less time fundraising � meaning they spend less time hanging out with lobbyists and more time with regular voters hearing about their concerns.

With tightened lobbying rules and reform of government contracting, enacting clean money systems could largely drive corruption out of our statehouses.

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