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Home Publications Blogs Beat the Press Tell the Post: Lobbyists and Politicians Don't Always Say What They Believe

Tell the Post: Lobbyists and Politicians Don't Always Say What They Believe

Thursday, 17 June 2010 04:30

Most of us know that lobbyists sometimes argue positions for their clients that they don't really believe. They do this because they are paid lots of money by their clients. The same applies to the politicians who often repeat the lines given them by lobbyists, whether or not they believe them.

The fact that lobbyists and politicians are not always truthful apparently would be news to the Post. It began an article on lobbyists' efforts to block the elimination of a tax break for hedge funds and other special partnerships by telling readers:

"Their [the lobbyists'] worry: That Congress had vastly underestimated the impact that the measure would have on partnerships, one of the primary ways U.S. investors raise capital to invest in businesses and real estate."

While it may actually be the case the lobbyists are concerned that closing this tax break will impair capital formation in the United States, it is also possible that the lobbyists could not care less about capital formation and this was just the best line that they could find to try to prevent the elimination of a tax break that could cost their clients billions of dollars in the next decade.

If the lobbyists argued that their wealthy clients should not have to pay the same tax rate as ordinary workers (as would be the case if the tax break is eliminated), they would probably find little sympathy from the general public. Therefore, they must find some argument about how eliminating this tax break will hurt the economy, no matter how fallacious it might be. Reporters should be aware of this fact.

The article commits the same error near the end when it told readers:

"Some moderate Democrats have worried that the partnership-sale and carried-interest tax increases would hurt the venture capital industry."

The reporter of course does not know what has actually "worried" moderate Democrats. The reporter can only know what the moderate Democrats claim has worried them. The moderate Democrats would be unlikely to say that they get large campaign contributions from venture capitalists and therefore are working to keep their taxes from rising. They would likely claim to be concerned about the health of an important industry even if they were just doing favors for campaign contributors.

Comments (3)Add Comment
But Dean does know the motives of Republicans in Congress
written by AndrewDover, June 17, 2010 6:59
The subject was:
"The Republican Motion to Recommit H.R. 5072, the FHA Reform Act, would amend the bill to prohibit individuals who strategically default on their mortgage from accessing the FHA program and protect taxpayers from financing a bailout of FHA programs."

And Dean wrote:

"But Republicans in Congress aren't interested in leaving things to the market. They were concerned that too many homeowners were acting in their own best interest and thereby hurting the banks. So they decided to have Big Government step in and create an additional sanction for homeowners who strategically default."

That position can be attacked with the exact same logic that Dean used to attack the Post:

-- If Dean argued that there should be no consequences for people walking away from their debts, he would probably find little sympathy from the general public. Therefore, he must find some argument about how action to impose consequences is actually a plot to help banks, no matter that 50% of the mortgage accrue to the federal budget. --

More facts on what proportion of mortgage losses will accrue to the Federal Government:

"Fannie Mae, Freddie Mac, the FHA and the Veterans Administration backed nearly 97% of home mortgages in the first quarter of this year, ..."

"Fannie and Freddie ... Together they own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages."


So, the Federal Government has a real interest in minimizing its mortgage losses.

And no, "carried interest", the deal manager's tax loophole, should not be taxed at a lower rate than income, when there is no capital invested.
written by izzatzo, June 17, 2010 7:12
Reporters reported that lobbyists for the bottle and can drink industry were worried about people not having enough water who could suffer serious health problems due to regulations that restrict access to natural sources of potable water.

Lobbyists said higher prices for private water based products like bottled water not only prevent the moral hazard of overconsuming underpriced water, but induce the net production of more total potable water, not the substitution of existing amounts of natural water that supply municipal water plants for pennies a gallon, and anyone who disputes this is a zero sum socialist.

Reporters also reported that lobbyists were worried about crime as well, since the recession has caused more unemployed homeless to trespass into gated areas and use lawn sprinklers for a quick shower bath when they could just grab a quart of mineral water from a convenience store and use that.
written by Queen of Sheba, June 17, 2010 4:56
What a surprise - politicians and lobbyists both lie to the press and anyone else they think might swallow their bilgewater. Best to hold politicians accountable for what they do and ignore altogether anything lobbyists say.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.