Saturday, June 10, 2017

Reversing some of the political corruption of our governance

Well this is good news. From Settlements for Company Sins Can No Longer Aid Other Projects, Sessions Says by Tatiana Schlossberg and Hiroko Tabuchi.

In the past eight years, the government has, with increasing frequency, functioned as a shakedown crew in a fashion bad for law, bad for governance, and bad for economic decision-making.

The model is that 1) Corporation A commits or is accused of committing a crime. 2) The Department of Justice brings a case against them which, either because they are guilty, or because the cost of defense is prohibitive, or because the reputational cost is too high, they decide to settle. 3) The DOJ and the company reach a settlement (or the case goes to a trial and an award is made). 4) The settlement includes, as you would expect, compensation for the victims and penalties paid to the government. In recent years, though, the government has increasingly imposed payments to third parties; payments not associated with victim compensation or penalties to be paid to the government. Payments to political allies or payments for things that could not pass muster in the normal budget making fashion.

In the article, most the examples are heartwarming - payments to environmental groups or housing groups. As often as not, though, these payments are essentially political shakedowns with monies going to political allies of the party in power. This article provides examples of tens of millions of dollars being directed by the Obama administration's DOJ to political allies such as ACORN and National Council of La Raza.

Like civil forfeiture, this has long struck me as a form of banana republic gangster government.

Not only are these strategies (civil forfeiture and third party payoffs) corrupt and morally unconscionable practices, they undermine our culture and government.

If you are an administration with an unpopular array of policies and want to circumvent the people's will as expressed through Congress, you have the pen and the phone and can try and get away without legislating anything but merely relying on executive orders. This strategy has its limits, principally because Congress is the branch of government controlling the budget.

Third party payoffs via court settlements is another way of circumventing Congress by directing corporations to pay political allies of the Administration as well as partners to deliver policies that could not otherwise make their way through Congress.

It is a profoundly undemocratic strategy. It undermines the principles of democracy by circumventing the will of the people as expressed through Congress. It undermines the rule of law in two ways: 1) Perpetrators are paying less in fines and restitution than they might because part of the settlement is going for political bribes; and 2) It corrupts the settlement process by inducing the perpetrator to bribe the DOJ on political grounds.

It is economically inefficient. We all want nice beaches and soil restoration. But those are public goods that should be paid for through public funding. Congress is the mechanism by which national public interests are reconciled against budget limits. By circumventing the Congressional budgeting role, you also circumvent the prioritization process. $100 million spent on beach erosion is nice, but perhaps it was more critical that we spend $100 million to upgrade our national radar system for air safety. The only prioritization through third party payoffs is dependent on the political whims of the administration.

While this strategy was significantly expanded by Obama, it should not be a left/right issue. This is corruption and bad governance. Both ends of the spectrum ought to be willing and supportive of restoring our constitutional roles and processes and demonstrating to American citizens that principles supersede political expedience.

I am glad to see the back of this and am surprised that it has come so early in the administration.

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