On the money

In a state with a high unemployment rate and a crater of a deficit, does it surprise anyone that we are spending upwards of $65 million on lobbying. The tighter the money, apparently, the more groups need to spend to convince the state that they need the money.

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Lobbyists have a difficult road ahead? Pardon me for not caring

A wave of nausea came over me this afternoon as I read this story on the proposed bank rules. The reason: It is clear from the story that Washington and the mainstream press see the lobbyists on the bank payrolls as just one more player in the big game of legislation.

The set-up on the story is simple, describing a series of fundraising events hosted by the financial industry — “just another day in the nonstop fund-raising cycle for members of the House Financial Services Committee, which has become a magnet for money from Wall Street and other deep-pocketed contributors, especially as Congress moves to finalize the most sweeping new financial regulations in seven decades.”

Executives and political action committees from Wall Street banks, hedge funds, insurance companies and related financial sectors have showered Congressional candidates with more than $1.7 billion in the last decade, with much of it going to the financial committees that oversee the industry’s operations.

In return, the financial sector has enjoyed virtually front-door access and what critics say is often favorable treatment from many lawmakers. But that relationship, advantageous to both sides for many years, is now being tested in ways rarely seen, as the nation’s major financial firms seek to call in their political chits to stem regulatory changes they believe will hurt their business.

But, according to the story, the environment has changed. As both houses of Congress have moved ahead with financial reform, something that the industry has sought to quash.

The biggest flash point for many Wall Street firms is the tough restrictions on the trading of derivatives imposed in the Senate bill approved Thursday night. Derivatives are securities whose value is based on the price of other assets like corn, soybeans or company stock.

The financial industry was confident that a provision that would force banks to spin off their derivatives businesses would be stripped out, but in the final rush to pass the bill, that did not happen.

Good news, right? But only when you consider the context (a government awash in lobbyist cash) and if you ignore that the legislation — which is far weaker than it should be — comes nearly two years after the financial meltdown.

So, pardon me for not being impressed that Congress is making the lobbyists work. I’m just not that impressed.

Government-to-government graft

Several years ago, South Brunswick paid consultants to lobby the state and federal governments in an effort to win grants for its SMART bus and to get the widening of Route 1 moving.

The township in 2005 hired Cavarocchi, Ruscio and Dennis of Washington to take advantage of the firm’s influential ties to the power-holders, looking to cut through year’s of indifference by higher-level officials and get the township’s goals accomplished.

The cost was $120,000. The result, money for the bus line and some federal money for Route 1 and state interest in the widening. Money well-spent? Maybe, but only if you consider the issue from the narrowist of perspectives.

Considered more broadly — within the context of a story in today’s Star-Ledger — the money is part of a questionable trend that drains public coffers by privatizing the interaction between government agencies.

The story focuses on a report from the state comptroller that found that 74 government entities spent $3.87 million to lobby state government — a figure that the report acknowledges may understate the amount spent because it only includes self-reported spending and also does not include money paid in dues to organizations like the state League of Municipalities. It also does not take into account money spent to lobby the feds, which cost $1.9 million.

The government agencies included ran the gamut from municipal and county governments to school boards to independent authorities, with some spending as much as $536,000 over the two-year peeriod. And the lobbying issues included both general and specific issues —

The Mercer County Improvement Authority hired a lobbyist (for $136,000) to monitor legislation and work with NJ Transit, while Montgomery paid a lobbyist $17,000 to aid in the purchase of the North Princeton Developmental Center.

The report raises two questions — whether public agencies should be allowed to hire lobbyists and what kind of disclosures are necessary to ensure that citizens know what is going on in their names.

Five states ban the hiring of lobbyists — legislaton on which the comptroller neglects to take a position. Better disclosure, however, is absolutely necessary, he says.

“It makes no sense to permit public entities not to disclose information that private companies are required to provide about the hiring of lobbying firms,” State Comptroller Matthew Boxer said. “Given that we’re talking about a use of taxpayer dollars that some would deem controversial, public entities should in fact be held to a higher standard of transparency than private companies.”

He adds that

the public is certainly entitled to information from government entities hiring lobbying firms as to why such expenditures are necessary, whether steps have been taken to reduce costs and, in the end, what public benefits were derived.”

That’s the least we can expect.