American Oligarchy

The Permanent Political Class

Ron Formisano

• Publisher: University of Illinois Press
• Year: 2017
• ISBN:
  9780252099878
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

A permanent political class has emerged on a scale unprecedented in our nation 's history. Its self-dealing, nepotism, and corruption contribute to rising inequality. Its reach extends from the governing elite throughout nongovernmental institutions. Aside from constituting an oligarchy of prestige and power, it enables the creation of an aristocracy of massive inherited wealth that is accumulating immense political power. In a muckraking tour de force reminiscent of Lincoln Steffens, Upton Sinclair, and C. Wright Mills, American Oligarchy demonstrates the way the corrupt culture of the permanent political class extends down to the state and local level. Ron Formisano breaks down the ways this class creates economic inequality and how its own endemic corruption infects our entire society. Formisano delves into the work of not just politicians but lobbyists, consultants, appointed bureaucrats, pollsters, celebrity journalists, behind-the-scenes billionaires, and others. Their shameless pursuit of wealth and self-aggrandizement, often at taxpayer expense, rewards channeling the flow of income and wealth to elites. That inequality in turn has choked off social mobility and made a joke of meritocracy. As Formisano shows, these forces respond to the oligarchy 's power and compete to bask in the presence of the.01 percent. They also exacerbate the dangerous instability of an American democracy divided between extreme wealth and extreme poverty.

Chapter 1

Meet the Political Class

Although the political class embraces networks, families, and individuals working and living across the country, its hub is Washington, D.C. The nation's capital, workplace of ostensible servants of the American people, is awash, if not inundated, by the political class. Its populace is, as Mark Leibovich described it in This Town, “trained to view human interaction through the prism of ‘How can this person be helpful to me?’¹ At the head of the class are members of Congress, current, former, and would-be.

How to Know Them

Congress provided a typical example of political class behavior during early 2013 when the draconian federal funding cuts known as the “sequester” kicked in. The sequester was supposed to be an incentive for President Barack Obama and House Republicans to agree on budget issues or have spending reductions automatically begin. In a standoff House Republicans refused to stop the cuts, which soon began to damage the economy and delay recovery. The meat-axe cuts to the federal budget hurt millions of low-income people with reduced money for education, housing, health, and nutrition.

But when Federal Aviation Administration shortfalls forced the agency to furlough air traffic controllers, and for two weeks air traffic backed up with long delays, Congress acted, just before members themselves would depart for their home districts, and found money to bring the controllers back to the towers to avoid delays for them. By unanimous consent the legislators switched funds from airport improvements to provide funds for the controllers to return full-time to their jobs.²

On those trips home members of Congress enjoy an experience unlike the vast majority of ordinary air travelers. Parking? No problem: at Washington's Reagan National Airport they can zip into their own reserved spaces, adjacent to the terminal and free. (The Metropolitan Washington Airport Authority absorbs the loss of $738,760 in revenue it would take in if the people's servants paid their own way.) The airlines allow lawmakers the privilege—unheard of to the rest of us mere mortals—to book themselves on multiple flights, so if they miss an earlier flight they can take a later one.

On the drive to the airport members can ride in style since their passage of the “Cromnibus” budget in December 2014. That legislation already smelled with a rollback of part of Dodd-Frank regulating Wall Street and a campaign finance gift to rich donors letting them increase giving to political parties by ten times the current limit. It also contained a secret provision with a new congressional perk. Hidden on page 982 of the 1,603-page bill members gave themselves $1,000 a month for a luxury car allowance.³ With reserved airport parking, those who upgraded need not be concerned about their Lexus getting scratched.

Many members who go home frequently (some do not, see below) fly first-class, at taxpayer expense. In typical political class behavior, campaign arms of both Democrats and Republicans have hypocritically played politics with the issue and attacked individual legislators for voting against a ban on first-class travel. Not only is the vote cited misrepresented and not really against such a ban; Congress has not seriously considered depriving itself of any conveniences it has given itself. One exception: the 2016 federal budget banned the perk of members having their portraits painted at taxpayer expense, with the average cost about $25,000.⁴

Representatives also enjoy exercise in their free, on-site gyms with a swimming pool, basketball and paddleball courts, and sauna and steam rooms. During the 2013 government shutdown that lasted sixteen days, the Senate and House deemed their gyms and pools “essential” and kept them open.⁵ Senators and House members (and guests) also have access to dining facilities in the Capitol with excellent menu choices at much lower cost than most Washington restaurants. (Many of their servers, however, who bus tables, deliver carryouts, and run cash registers earn less than eleven dollars an hour; cooks who have worked for several years make not much more.)⁶

Although Congress may often disappoint the American people, it excels at taking care of itself. Later in 2013, as millions of Americans encountered hours of delays and frustration in trying to enroll for health insurance under the Affordable Care Act, legislators and their staffs enjoyed smooth sailing. The District of Columbia set up “a special web portal with an expanded menu of health plans, a dedicated toll-free assistance line, and on-site support.” DC Health Link provided “special first-class services to help them [members and their staffs] every step of the way.”

In 2009 President Obama said that everyone should be able to buy insurance “the same way that federal employees do, same way that members of Congress do.” But legislators and their staffs could use a special phone number, compare insurance plans on websites devoted to them, and select from 112 choices offered in the “gold tier” of the DC exchange. Though lawmakers and aides are not eligible for tax credit subsidies, the government pays up to 75 percent of their premiums. By early 2014 more than twelve thousand congressional aides had enrolled in health plans through the exchange. While the ACA required members and aides, like all Americans who enrolled in a new plan, to give up their former insurance coverage, one long-standing perk for Congress was not changed by the new law: they may receive care from a congressional physician, located in the Capitol, for an annual nominal fee.⁷

In addition to their entrenched opposition to the Affordable Care Act, Republican members of Congress have resisted proposals to require employers to provide paid parental leave. In early January 2015 President Obama by executive action granted employees of federal agencies up to six weeks of paid parental leave and urged Congress to extend paid leave to private sector employees. With both houses controlled by Republicans, that was not likely to happen. The existing Family and Medical Leave Act provides up to twelve weeks of unpaid leave while protecting the individual's job and existing health benefits.

New York Times reporter Jennifer Senior decided to write to all 100 U.S. Senators asking them how they handled parental leave for their staff. Just 26 replied (15 Democrats, 2 Independents, and 9 Republicans), and virtually all provided paid leave of some kind. It was no surprise that Independent Bernie Sanders from the “Socialist Republic of Vermont” provided generous paid leave, but so too did conservative Republicans Marco Rubio of Florida and Mike Enzi of Wyoming. Mississippi Republican Thad Cochran offers eight paid weeks of leave for both mothers and fathers. Lamar Alexander of Tennessee, chair of the Health, Education, Labor and Pensions Committee, gives twelve paid weeks of maternity leave. These Republican senators may be “philosophically” opposed to requesting private sector employers to treat their employees similarly, but in harmony with political class behavior, “when confronted with the life challenges of their own personnel, these elected officials all believe paid compensation is in order.”⁸

Upon retirement from Congress, members who have served at least twenty years receive an average of $59,000 annually in pension benefits. All federal workers including representatives have access to the Thrift Savings Plan, a 401(k) type investment with fees of 0.03 percent, far lower than the fees paid to the average 401(k).

In Washington and environs, life is good for legislators and their staffs. In the Capitol they are likely to breakfast and schmooze with their peers, or wealthy contributors, influential and powerful business executives, celebrities, professional athletes, TV personalities, and Hollywood stars. They dine in the best restaurants and drink in posh cocktail lounges, the bills paid for usually by their personal Political Action Committees (more on this below). They socialize frequently with lobbyists, many of whom are raking in millions in a very short time without much heavy lifting. In 2012 members of Congress enjoyed 239 days off.⁹

Occasionally, Washington becomes a legislator's home, and such members actually lack a residence in their home states. Many live in the Capitol area and reduce their visits “back home” to several a year. What could be more emblematic of political class behavior than a member of Congress not owning a home and not living in the state he or she represents? Sometimes this creates a political backlash and threatens what legislators most cherish: reelection.

In 2014 Senator Pat Roberts's (R-KS) residence became an issue; he arrived in Washington in 1969 and in time made it his home. The seventy-eight-year-old Roberts was virtually born into his state's political class: his great-grandfather had founded Kansas's second oldest newspaper, and his father had served briefly as Republican National Chairman during the Eisenhower years. After service in the Marine Corps and five years as a reporter, he first went to Washington as a congressional staffer. He won election to the House in 1980 and then the Senate in 1996.

Always elected by large majorities, Roberts was expected to easily win reelection in 2014 when it was revealed that he did not live in his own home in Dodge City. Rather, the rent-free house next to a golf course and listed as his voting address belonged to a friend and longtime wealthy donor, C. Duane Ross. Roberts started paying a nominal rent of $300 a month after a Tea Party primary challenger hammered away at Roberts's housing arrangements. In reality, the Roberts owned a home and were longtime residents of Alexandria, Virginia, a suburb of Washington, where his wife Franki worked as a real estate broker, boasting of her “extensive knowledge” of the area. In one interview, Roberts inadvertently said it all: “Every time I get an opponent I go home—I mean every time I get a chance—I'm home.”¹⁰ A gaffe, as journalist Michael Kinsey quipped, is when a politician slips and tells the truth.

In the general election Roberts faced stiff opposition from Greg Orman, an independent candidate and wealthy businessman. Orman initially enjoyed a large lead after the Democratic candidate withdrew, but the Republican National Committee and outside PACs rode to Roberts's rescue, outspending Orman by about two to one and raising his unfavorable rating with a barrage of negative advertising. On November 4, 2014, Kansas voters returned the thirty-four-year occupant of Congress to office with 52 percent of the vote, well below his usual winning margin. Where they really “live” aside, other members of Congress also spend little time in their home states and make few trips in the span of a year. Geography and age play a role, of course, but so does the seductive allure of the capital and the perks members of Congress enjoy there.

In an October debate Roberts and Orman disagreed about most issues. At its conclusion the moderator asked both candidates to say something nice about their opponent. Orman praised Roberts for his service in the marines and his sense of humor. The senator's version of something nice differed: “I would say you are a very well-dressed opponent. I admire your accumulation of wealth. I have a little question of how you got there from here, but I think that's the American dream I would hope we could make that possible for everybody up and down every small Kansas community.”¹¹ The irony of Roberts using Orman's wealth against him heightens when viewed in light of the ever-increasing wealth of representatives and senators or their affluent lifestyle experienced by few of their constituents.

Profiles of PC Exemplars

Although many public figures could be selected to typify the political class, I selected a moderate liberal Democrat who has promoted such worthy and progressive causes as a single-payer health care system: Tom Daschle, who served both as U.S. Senate minority and majority leader, and who saw his party's “political challenge” during the Bush administration “to truly help the people who we felt were being left out, and left behind.”¹² Daschle, like so many former members of Congress, after being defeated for reelection to the Senate in 2004, went on to make big money as a lobbyist, except that he did not register as a “lobbyist” until 2015. Rather, Daschle and his employers seeking government largesse classified him as a ”consultant,” or “strategic advisor.” As such he quickly made millions of dollars and bought a large mansion in a posh Washington neighborhood.

Why select a liberal Democrat for this honor? Many other Democrats or Republicans who moved from political office to lobbying or other lucrative pursuits in Washington or Wall Street could have been chosen. Liberal Democrats, however, are more appealing because some are such shameless hypocrites. Anointing Daschle for this distinction was not easy, since he faced strong competition from other liberal Democratic former U.S. Senators, notably Richard Gephardt and Evan Bayh. Glenn Greenwald would not be surprised by the choice of Daschle; he observed in 2009, “Even for the most cynical observer of Washington sleaze, Tom and Linda Daschle's exploits are quite striking.”¹³

Daschle's career and connections also bring into view other exemplars and glittering facets of the political class. Daschle first entered politics in 1972 to work in the presidential campaign of George McGovern—the World War II bomber pilot, reform senator, and public servant wholly unlike the politicians depicted here. Daschle, the eldest of four brothers in a South Dakota family of Roman Catholics, went to college and then served in the air force, after which he, in an apprenticeship like that of so many members of Congress, landed a job as an aide to a senator, South Dakota's James Abouresk, the first Greek Orthodox Christian of Arab descent to serve in the Senate.

Elected to the House in 1978, Daschle served four terms, then three in the Senate. No important legislation bears Daschle's name, but he relished process and excelled as a party insider. In both chambers the pragmatic Daschle rose quickly to leadership positions; indeed, when he became the Senate's minority leader in 1994, only that noted “political animal” Lyndon B. Johnson had served fewer years before becoming a party leader. In 2001 Daschle became Senate majority leader, but after the Democrats lost the Senate in 2002 he was again minority leader. With an eye to taking his seat, Republicans continually accused him of obstructing the agenda of the Bush administration. Targeted by Republican PACs, he lost reelection in South Dakota by a narrow margin and then entered the private sector working for corporations and law firms to which he brought highly valuable knowledge about how to influence congressional policy.¹⁴

Though not a lawyer, Daschle moved smoothly into positions outside of government with powerful firms as a “senior policy advisor,” while denying that he was a lobbyist and not registering as one. In 2005 he went to work for a private equity firm, InterMedia, headed by Leo Hinderey, a friend and political supporter. As a “policy advisor” also to a large Washington law firm engaged in lobbying, Daschle increased his personal fortune while advising sectors of the health industry, including insurers. He also consulted for the global law firm DLA Piper, which employs over 4,200 lawyers in some thirty countries around the world.

After Daschle's first marriage ended in divorce, in 1984 he married Linda Hall, Miss Kansas of 1976, who had worked in marketing for airlines before marrying Daschle. She then held positions in aviation associations and, after a stint as President Clinton's deputy director of the Federal Aviation Administration, joined a prestigious law firm as a full-time lobbyist.

Characteristic of Washington's revolving door, Linda Hall Daschle's clients came mostly from the airline industry, notably American Airlines, on whose behalf she stoutly opposed stricter safety regulations. After 9/11, when Tom rose to Senate majority leader and considered a run for president, Linda's connection to American loomed as a political liability. The airline had six fatal crashes since 1994, and it was American's planes that terrorists flew into the World Trade Center. Some critics uncharitably suggested that Hall Daschle had lobbied to resist stricter security regulations that might have deterred the 9/11 plot.

Still, one day after the attacks, airline lobbyists, including Hall Daschle, sprang into action to persuade Congress to grant them a massive bailout since the federal government had grounded air traffic for three days, and airline travel was about to plummet. In two weeks Congress forked over a $15 billion bailout with American Airlines getting $583 million in cash grants and absolution of legal liability for the hijackings. Congress and the corporate-friendly Bush administration overlooked the fact that the airlines were already in an economic downturn, laying off thousands of employees before 9/11 and continuing to do so afterward, with none of the $15 billion going to those laid-off workers.¹⁵

Meanwhile, after 2005, as a “senior policy advisor” Tom Daschle provided “analysis” (his word) to clients seeking federal contracts from businesses involved in health care, ethanol production, Native American gambling casinos, and telecommunications. Daschle succeeded so well in this realm that a New York Times reporter concluded that his activities offered “a new window into how Washington works…[and] shows how in just four years an influential former senator was able to make $5 million and live a lavish lifestyle by dint of his name, connections and knowledge of the town's inner workings.”

Several hundred thousand dollars of Daschle's income came from speeches before interest groups to whom he was also giving advice, including health insurers, medical equipment distributors, and pharmacy boards. One Daschle client, United Health, a huge insurance company, earned about a third of its $81 billion in revenue from federally regulated sales of Medicare Advantage and Medicare supplement and prescription drug plans. Since the company often had been at odds with the Department of Health and Human Se...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Preface
• Introduction - Beyond Plutocracy: Becoming an Aristocracy
• Chapter 1 - Meet the Political Class
• Chapter 2 - Our One Percent Government, Congress, and Its Adjuncts: The Way to Wealth
• Chapter 3 - Is the Political Class Corrupt?
• Chapter 4 - The Permanent Campaign and the Permanent Political Class
• Chapter 5 - Political Class Adaptation and Expansion
• Chapter 6 - The Political Class in a Poor State
• Chapter 7 - The Profitable World of Nonprofits
• Conclusion
• Afterword
• Notes
• Index
• About the Author