In my original post about the Obama administration's awarding of $503 million in "stimulus" funds for alternative energy projects, I wrote that the recipient of $294 million, Iberdrola SA, had executives who had donated more than $21,000 to the Obama campaign and related funds. Another $115 million in funds for windmills went to a company called First Wind, which, I noted, had owners that included D.E. Shaw and Madison Dearborn Partners. Shaw is the firm at which President Obama's chief of the National Economic Council, Lawrence Summers, held a $5.2 million a year, one-day-a-week job, and Madison Dearborn is the firm of which Rahm Emanuel, now the White House chief of staff, said, "They've been not only supporters of mine, they're friends of mine."
Today, I decided to check the Senate lobbying database to see if the companies had hired professional lobbyists to help reap their windmill windfalls. Sure enough, the plot thickens. Iberdrola hired two lobbying firms: Capitol Tax Partners, LLP, which it paid $100,000 in the first half of 2009, and Tonio Burgos & Associates, which it paid $10,000 in the first quarter of 2009. The disclosure forms say that Capitol Tax Partners lobbied the Treasury and Energy departments on tax incentives for wind energy as part of the stimulus act. The disclosure form lists seven lobbyists at Capitol Tax Partners, LLP: Lindsay Hooper, Jonathan Talisman, Richard Grafmeyer, Joseph Mikrut, William McKenney, Lawrence Willcox, and Christopher Javens. It identifies Mr. Talisman as a former assistant Treasury secretary for tax policy, Mr. Grafmeyer as a former deputy chief of staff of the Joint Committee on Taxation, Mr. Mikrut as a former tax legislative counsel of the U.S. Treasury, Mr. McKenney as a former staff director on the House Ways and Means Committee, Mr. Willcox as a former staff director of the Senate Republican Policy Committee, and Mr. Javens as a former tax counsel to Senator Charles Grassley, who is the top Republican on the Senate Finance Committee. A photo of the Capitol Tax crew and more information about them is here.
First Wind, for its part, paid $150,000 in the first 6 months of 2009 to lobbyists at the firm Brownstein Hyatt Farber Schreck LLP. Disclosure forms indicate the firm lobbied the Energy and Treasury departments on behalf of First Wind in relation to the stimulus law. Brownstein Hyatt listed four lobbyists working on the case: a former Treasury department official, Michael Levy; a former Energy department official, C. Kyle Simpson; Michael McAdams, and Norman Brownstein. Mr. Brownstein goes back so far in Democratic politics that a New York Times article back in 1996 was already describing him as a "longtime Gore friend." This release from the Campaign Finance Institute reports that Mr. Brownstein pledged to raise $1 million for the 2008 Democratic National Convention in Denver at which Mr. Obama was nominated, over and above Mr. Brownstein's law firm partner Steven Farber's efforts as a co-chairman of the convention host committee.
First Wind also paid $75,000 in the first half of 2009 to a Boston-based lobbying firm, Rasky Baerlein Strategic Communications. Rasky Baerlein's filings indicate it lobbied Congress rather than the administration. The firm listed a total of five staff members assigned to the project: Mike Gorman, George Cronin, Jeff Terrey, David Tamasi, and Emily Gombar. Mr. Cronin, the firm's Web site says, was "a senior advisor and New England political director for US Sen. Joseph Biden's 2008 Presidential campaign." The firm's namesake, Larry Rasky, took a leave from the firm in 2007 "to join the "Biden for President" campaign as its communications director. He previously served as press secretary for U.S. Sen. Joseph Biden's 1988 presidential bid," according to the firm's Web site, which notes Mr. Rasky was also "deputy press secretary for President Jimmy Carter's re-election campaign in 1980."
Many of these lobbyists have extensive records of their own of political campaign contributions.
All of this raises some interesting questions for the Obama administration:
If this administration is about "change," why would firms seeking to influence the administration hire such old-time players as Mr. Brownstein and the firm of Mr. Rasky?
On March 20, President Obama issued a memo stating "The Recovery Act is designed to stimulate the economy through measures that, among other things, modernize the Nation's infrastructure, jump start American energy independence, expand high-quality educational opportunities, preserve and improve access to affordable health care, provide middle-class tax relief, and protect those in greatest need. It is not intended to fund projects for special interests." The memo went on: "An executive department or agency official shall not consider the view of a lobbyist registered under the Lobbying Disclosure Act of 1995, 2 U.S.C. 1601 et seq., concerning particular projects, applications, or applicants for funding under the Recovery Act unless such views are in writing."
The memo also says, "All written communications from a registered lobbyist concerning the commitment, obligation, or expenditure of funds under the Recovery Act for particular projects, applications, or applicants shall be posted publicly by the receiving agency or governmental entity on its recovery website within 3 business days after receipt of such communication."
In other words, the Obama administration's stated policy is that lobbyists can't talk to the executive branch about applications for stimulus funding unless the communications are in writing, and that in that case, the communications must be immediately posted to the agency Web site. The lobbying reports for the second quarter for both Brownstein Hyatt Farber Schreck LLP and for Capitol Tax Partners, LLP indicate that the Treasury and Energy Departments were lobbied in relation to the stimulus act. But neither the Treasury nor the Energy Web sites contain documentation of any communications from the two lobbying firms. What accounts for the discrepancy?
When President Obama announced his memo, he spoke of what he called "a fundamental commitment." He said, "Decisions about how Recovery Act dollars are spent will be based on the merits. Let me repeat that: Decisions about how Recovery money will be spent will be based on the merits. They will not be made as a way of doing favors for lobbyists. Any lobbyist who wants to talk with a member of my administration about a particular Recovery Act project will have to submit their thoughts in writing, and we will post it on the Internet for all to see. If any member of my administration does meet with a lobbyist about a Recovery Act project, every American will be able to go online and see what that meeting was about. These are unprecedented restrictions that will help ensure that lobbyists don't stand in the way of our recovery."
If these funds are being awarded "on the merits" and not "as a way of doing favors for lobbyists," why are presumably rational business owners paying lobbyists hundreds of thousands of dollars in fees to lobby for them?
FutureOfCapitalism.com will be seeking answers to these questions from some of the relevant players in the coming days.
It's worth noting, too, that Mr. Obama's stated goal of transparency in the spending of the stimulus money has fallen far by the wayside. The joint Treasury and Energy Department release announcing the $503 million in alternative energy funds includes neither the words "First Wind" or "Iberdrola." It does include the mysterious entities "Canadaigua Power Partners, LLC" and "Canadaigua Power Partners II, LLC." Google them, and you find documents indicating they are subsidiaries of UPC Wind, which changed its name in May to First Wind. Search on the Obama administration's "Recovery.gov" Web site for First Wind or Iberdrola, and nothing comes up. Remember, this isn't some $30,000 pothole repair; it's hundreds of millions of dollars.
But to make this a story only about the Obama administration's failure to live up to the admirably high standards it set for itself would be missing the larger point. When government gets involved in redistributing money, or in picking winners and losers in the economy, whether it is in the energy sector or anywhere else, one of the consequences inevitably is the empowerment of lobbyists, either former campaign officials or former government officials and campaign fundraisers and donors, in a way that breeds cynicism that is incredibly destructive to democracy. It is the sort of thing that causes wise people to describe our economic system as not capitalism but protektzia, or to think of government, whether it is in Albany or in Washington, as a kind of vending machine into which interest groups pour campaign contributions and lobbying fees and get back taxpayer money in exchange.
What's remarkable, too, is how little attention this particular episode has gotten. Much of the press corps is in thrall to Mr. Obama and the rest is occupied with matters such as the death of Michael Jackson. The Republican politicians don't control a congressional committee that might hold an oversight hearing. The Republicans themselves are plenty complicit; the lobbyists at Capitol Tax Partners include a number of Republicans, and Mr. Brownstein's team at Brownstein Hyatt includes a former chairman of the Republican National Committee. Of course, there is nothing wrong with a firm spending money to lobby for its interests in Washington. It's as American as apple pie, and it's expressly protected in the First Amendment rights to speech and petition. But when the owners of First Wind — D.E. Shaw and Madison Dearborn — spend $225,000 in six months to lobby Washington and get back $115 million in money, that $115 million is wrested from lots of little taxpayers who don't each have $225,000 at their disposal to hire lobbyists to protect their interests in Washington. Those taxpayers were the people Mr. Obama was addressing when he said "Decisions about how Recovery money will be spent will be based on the merits. They will not be made as a way of doing favors for lobbyists." It's hard to imagine all those little taxpayers aren't going to be disappointed when they learn what happened to their hard-earned money.
