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  • Why Lobbyists Love Liberals

    There are few better illustrations of the fundamental difference between liberals and conservatives than their markedly different approaches on how to curb special interest power in Washington. Liberals try to control the economy through ever more invasive regulations and when the regulated industries push back, liberals pass ever more stringent ethics and campaign finance laws. Conservatives on the other hand simply try and limit Washington’s intervention in the market and it’s ability to dole out special favors. As Heritage Foundation Government Relations VP Mike Franc writes on NRO:

    The less a government does, the fewer reasons there are for individuals, businesses, universities, and state and local governments to petition their government for special favors. When government is small, congressional barons don’t hold the fate of entire industries in their well-greased palms. Federal bureaucrats don’t wield unbridled regulatory power to break CEOs. Big decisions are made by private actors in private settings, and obey the will of the marketplace.

    Big and intrusive governments set an entirely different set of forces in motion. The endless array of subsidies it dispenses and the regulatory schemes it fosters give birth to rent seeking. Rent seekers form associations to protect their interests. They create political action committees and hire lobbyists. They write checks to the powerful committee chairmen. They become the very Washington insiders the presidential candidates ritualistically denounce.

    Franc details the difference between these approaches by looking at the presidential candidates health care plans. First Franc notes that in 2007 the pharmaceutical industry spent $165.7 million on lobbying, hospitals and nursing homes spent $69.8 million, health professionals spent $47.2 million, and HMOs spent $39.2 million. But since Medicare is the largest single source of income for hospitals, physicians, and medical equipment suppliers, $50 million here and there is a drop in the bucket compared to the $460 billion Congress spends on Medicare alone.

    Sens. Hillary Clinton’s and Barack Obama’s only further wed Medicare policy to the political process. Obama’s plan requires employers to offer “meaningful” coverage or face penalties. Individuals would then be allowed to participate in a program that would only sell “approved” plans (“approved” meaning consistent with a rigid set of Congressional mandates). Clinton’s plan similarly slaps on heavy mandates and premium limits and then mandates coverage for all individuals. If you don’t comply you can expect the IRS to garnish your wages.

    Under either of these plans private sector actors that actually deliver care will have strong incentives to increase their influence in Washington since every element of both these plans would be subject to the whims of lawmakers and bureaucrats. As Franc points out, “The wages of every health provider and the revenues accruing to every hospital or other health facility in America will depend on how well they work the Washington system. That means more lobbyists – lots of them.”

    By contrast, Sen. John McCain’s (R-AZ) plan would end the World War II era focus on employer provided health insurance and give individuals a refundable health care tax benefit. Americans would also be able to choose what ever plan they liked from all 50 states, by passing many of the costly and cumbersome mandates they do not need. Franc writes: “The inevitable competition among states for your business would constrain the tendency of lawmakers to succumb to special-interest pleading.”

    For more on rent seeking and economic ways of thinking of politics, check out the Concise Encyclopedia of Economics.

    Posted in First Principles [slideshow_deploy]

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