Anticipatory Bribery

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This is the third lawsuit NRDC has filed against the Trump administration for its attacks on regulation.

Washington has been rocked by the scandal of J. Dennis Hastert, the longest-serving Republican speaker in the history of the U.S. House, indicted on charges of violating banking laws by paying $1.7 million (as part of a $3.5 million agreement) to conceal prior misconduct, which turns out to have been child molestation.

That scandal contains another one that’s received less attention: Hastert, who never made much money as a teacher or a congressman, could manage such payments because after retiring from Congress he became a high-paid lobbyist.

This second scandal is perfectly legal but it’s a growing menace.

In the 1970s, only 3 percent of retiring members of Congress went on to become Washington lobbyists. Now, half of all retiring senators and 42 percent of retiring representatives become lobbyists.

This isn’t because more recent retirees have had fewer qualms. It’s because the financial rewards from lobbying have mushroomed, as big corporations and giant Wall Street banks have sunk fortunes into rigging the game to their advantage.

In every election cycle since 2008, more money has gone into lobbying at the federal level than into political campaigns. And an increasing portion of that lobbying money has gone into the pockets of former members of Congress.

In viewing campaign contributions as the major source of corruption we overlook the more insidious flow of direct, personal payments – much of which might be called “anticipatory bribery” because they enable office holders to cash in big after they’ve left office.

For years, former Republican House majority leader Eric Cantor was one of Wall Street’s strongest advocates – fighting for the bailout of the Street, to retain the Street’s tax advantages and subsidies, and to water down the Dodd-Frank financial reform legislation.

Just two weeks after resigning from the House, Cantor joinedthe Wall Street investment bank of Moelis & Co., as vice chairman and managing director, starting with a $400,000 base salary, $400,000 initial cash bonus, and $1 million in stock.

As Cantor explained, “I have known Ken [the bank’s CEO] for some time and … followed the growth and success of his firm.”

Exactly. They had been doing business together so long that Cantor must have anticipated the bribe.

Anticipatory bribery undermines trust in government almost as much as direct bribery. At a minimum, it can create the appearance of corruption, and raise questions in the public’s mind about the motives of public officials.

Was the Obama White House so easy on big Wall Street banks – never putting tough conditions on them for getting bailout money or prosecuting a single top Wall Street executive – because Tim Geithner, Barack Obama’s treasury secretary, and Peter Orszag, his director of the Office of Management and Budget, anticipated lucrative jobs on the Street? (Geithner became president of the private-equity firm Warburg Pincus when he left the administration; Orszag became Citigroup’s vice chairman of corporate and investment banking.)

Another form of anticipatory bribery occurs when the payment comes in anticipation of a person holding office, and then delivering the favors.

According to the New York Times, as Marco Rubio ascended the ranks of Republican politics, billionaire Norman Braman not only bankrolled his campaigns but subsidized Rubio’s personal finances.

A case of anticipatory bribery? Certainly looks like it. In the Florida legislature, Rubio steered taxpayer funds to Braman’s favored causes, including an $80 million state grant to finance a genomics center at a private university and $5 million for cancer research at a Miami institute. “When Norman Braman brings [a proposal] to you,” Rubio said, “you take it seriously.”

Hillary and Bill Clinton have made more than $25 million for 104 speeches since the start of last year, according to disclosure forms filed with the Federal Election Commission in mid May – of which she delivered 51, earning more than $11 million of the total.

Now that she’s running for president, she’s stopped giving paid speeches. But her husband says he intends to continue. “I gotta pay our bills,” he told NBC News.

Anticipatory bribery? Asked about his paid speeches, some of which pay $500,000 or more, Bill Clinton said, “People like to hear me speak.”

That may be the reason for the hefty fees, but is it possible that some portion comes in anticipation his having the intimate ear of the next president?

We need some rules here.

First, former government officials, including members of Congress, shouldn’t be able to lobby or take jobs in industries over which they had some oversight, for at least three years after leaving office.

Second, anyone who runs for office should bear the burden of showing that whatever personal payments they received up to three years before were based on their economic worth, not anticipated political clout.

Finally, once they declare, perhaps even their spouses should desist.

See this story on Robert Reich’s blog.

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Robert Reich
Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fourteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "Saving Capitalism." He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, co-founder of the nonprofit Inequality Media and co-creator of the award-winning documentary, Inequality for All.

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