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Tuesday, March 28, 2023 — Houston, TX

Special interests hurt legislation

By Neeraj Salhotra     10/19/11 7:00pm

At a recent Baker Institute event, former Senator Alan Simpson said: "If the U.S. government is beholden to AARP and Grover Norquist, then we don't have a prayer, don't have a prayer, of getting anything done." His analysis, though dismal, is completely accurate — U.S. policy is paralyzed by moneyed special interests, and it is eating away at our democracy and hindering any chance at progress.

Currently, the U.S. economy teeters on the brink of disaster — with 9.1 percent unemployment, 24 million Americans either unemployed or underemployed, vast income inequality where the top one percent controls over 35 percent of the nation's wealth, and a debt-to-GDP ratio of 70 percent. Nevertheless, policies to promote job growth, raise revenues, cut spending and reform entitlement programs are being hamstrung by intransigent special interests — whether it is AARP on the left, or Americans for Tax Reform on the right.

Similarly, U.S. education policy is crumbling — the U.S. spends more per-pupil than any other nation. Yet U.S. reading and math scores lag behind those of China, South Korea and other countries. Domestically, the achievement gap between affluent children and low-income minorities is growing exponentially. Although every U.S. legislator realizes this problem and understands that part of the solution will be ending teacher tenure and instituting some form of merit pay, politicians are stymied by the powerful teachers unions that have bankrolled over $65 million since 1989 in political campaigns.

This same miserable pattern emerges when considering U.S. energy policy. The U.S. generates much of its electricity from coal, which, although quite cheap, is rather harmful for the environment. This externality is not internalized by the market, and, as such, economists ranging from Paul Krugman to Douglas Holtz-Eakin agree that the government should levy a tax on carbon emissions to correct the market failure. Yet, the powerful fossil-fuel lobby, with its sizable campaign donations, has rendered Congress powerless; in other words, a sustainable energy policy is restrained by special interests.

Even when legislation is passed, it is often watered down because of powerful special interests. When President Barack Obama proposed reforming health care in America, he had a huge opportunity to control health care costs by using the government's bargaining power to negotiate with pharmaceutical companies and reduce drug prices, which are double those of other countries. However, just as President George W. Bush before him, Obama gave the pharmaceutical lobby a seat at the negotiation table and caved in to their interests. Why? Because those same drug companies had donated hundreds of thousands of dollars to political campaigns.

Finally, after the 2008 financial crisis, Bush and Obama, as well as Congress, had an opportunity to pass sweeping legislation to regulate the financial sector and prevent a similar crisis. The American people were angry at Wall Street; they were furious that financial executives had cheated them and the country, and they were irate that CEO pay was 400 times that of an average worker. They were ready to support far-reaching, substantial financial reform. Yet, Obama and Congress, in the end, passed the toothless Dodd-Frank bill that did not address the underlying problem of "too-big-to-fail" and significantly diminished the power of the consumer financial protection bureau. The powerful Wall Street lobby threatened sizable donations, and politicians were forced to accede to all its demands.

This problem was only accentuated by the 2010 Citizens United ruling; in a 5-4 majority along ideological lines, the Supreme Court ruled that corporations are individuals and therefore have the same First Amendment rights as citizens. This ruling allows corporations to spend unlimited sums of money funding campaigns. In his dissent, now-retired Justice John Paul Stevens wrote: "While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics."

Given that special interests, lobbyists and money in politics are current realities, politicians have two options — they can either pass ineffective legislation that does not address the country's problems, or enact meaningful legislation that reforms campaign finance laws and limits the power of special interests and lobbies. For the U.S. to maintain its exceptionalism, we should all hope and pray that our elected officials choose the latter.

Neeraj Salhotra is a Sid Richardson College junior.

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