"The system is rigged against regular people": Big money has completely warped American democracy

Few are as qualified to tackle the massive topic of money in politics as Wendell Potter and Nick Penniman. Their new book, Nation on the Take: How Big Money Corrupts Our Democracy (read an excerpt), is a comprehensive and important examination of the many ways our lives are affected by the stranglehold corporations have on our government and society. And it’s a look at how we can fight back.

Wendell Potter is senior analyst at the Center for Public Integrity, an ex-newspaperman and a former executive with the health insurance industry who dared to come in from the cold and become one of our most knowledgeable and forthright champions of health care reform. Regulars here at BillMoyers.com will remember his 2009 appearance on Bill Moyers Journal, when he first told his remarkable story.

Nick Penniman, a former journalist, was co-founder and director of the Huffington Post Investigative Fund, publisher of Washington Monthly and founder of the American News Project. He is executive director of Issue One, a bipartisan group working to reduce the influence of money in politics and to put everyday citizens back in control of our country.

Our conversation began with Wendell and Nick talking about how their book Nation on the Take came to be. Listen using the streaming audio above, or read the transcript, slightly edited for clarity, below.

TRANSCRIPT

Wendell Potter: I guess I’m known most for leaving my job in the insurance industry and becoming an advocate for health care reform. And it became pretty clear to me toward the end of that health care reform debate that nothing would really get done that really benefits consumers in the way that it should until we do something about money in politics.

My first book, Deadly Spin, began to explain why we didn’t get the health care reform that we needed and so this book that Nick and I have written goes a bit beyond that and also looks at other industries and it attempts to connect the dots to show how big money in politics affects us on a daily basis.

Nick Penniman: I came to this because I had spent more than a decade in Washington doing long form reporting and investigative reporting as a publisher and magazine editor. And most of the good stories that we did ultimately led back to some policy dysfunction, which ultimately led back to money in politics. It was a combination of that and watching the sausage making around Obamacare and around the attempt at financial reform that made me realize that we’ve reached a point in this country in which the money power is so significant that it’s hard to truly fix anything. So Wendell and I, after many soulful discussions about this, decided to team up and do this book.

Michael Winship: It’s a stunning indictment of the corrosive influence of money in politics. In the introduction, you have a sentence, “We the people are losing our faith in the dream of democracy as our collective power is increasingly eclipsed by a rigged system of politics and governance dominated by a handful of billionaires and a phalanx of well-financed special interests.” Which is quite a statement.

Potter: It is quite a statement. In fact, for a while, our working title for the book was Rigged. The system is rigged against regular people, and as we write in the book the system largely has been taken over by a few very, very wealthy individuals and families, and how public policy is so influenced by rich and entrenched special interests that in a sense we’ve lost our ability to self-govern.

Penniman: We also make the point that this is not something that is just newly upon our democracy. This problem has been metastasizing for more than 30 years quietly in Washington. You know, the number of lobbyists has gone through the roof, the amount of dark money in the system has gone through the roof, the number of billionaires who are writing bigger checks has gone through the roof. The amount of time members of Congress spend fundraising, same thing. Every single index that you could look at that defines the problem of money in politics has grown exponentially in the last thirty years. But it’s occurred kind of quietly. Some reporters cover it, but they don’t really cover the big picture writ large. It’s no longer just that irksome thing that all Americans hate, right? It’s really reached the point of stage IV cancer, where it’s shutting down the body politic, it’s shutting down our ability to self-govern.

One of the things you talk about is the impact of Citizens United and some of the other Court decisions that have crippled campaign finance reform. You describe it as “crop spraying gasoline onto a wildfire.”

Penniman: Yes, it was a terrible and misguided decision in many ways, and what it’s done is it’s created a real permissiveness within primarily the billionaire community to play much bigger and harder in politics than ever before. So it’s almost more of the mentality and psychology that the decision created than the legal reality that it created. And what I mean by that is that it’s not as if wealthy individuals weren’t already pumping a lot of money into politics before 2010, before Citizens United. But they feel as if they have every right to do it and have no limits to it in the wake of Citizens United.

You have a great line in the book where you say that “even if the donor has no expectation of bending legislation, pressuring a government official for a favor, the process of raising it marinates the minds of politicians and the concerns of the wealthiest among us.”

Potter: Yes, exactly. And we’re not talking necessarily about the quid pro quo transactions. That really doesn’t take place very much at all. It is the knowledge that an elected official has of who is writing the check, who’s going to be there if and when this person decides to run for reelection, that they can expect another campaign check if they have demonstrated that they are voting the way the donor wants. So it is something that has really begun to influence the system in ways that it didn’t when Nick and I were reporters covering politics many years ago. And as Nick said, it has happened largely without very much media scrutiny. The reporters who are covering government, covering politics in Washington pretty much ignore what’s going on as they’re writing stories about what politician said this or that or which politician is saying this or that on the campaign trail.

Penniman: I would add that anyone who really loves fishing will tell you that the key to good fishing is to think like the fish. And that’s what our politicians are required to do every day and the fish that they’re trying to get to are — there are really two of them — wealthy individuals who can max out at $2,700 to their campaigns and lobbyists who can do the same. So what ends up happening is they end up thinking like those fish and they’re not thinking like the folks back home in district who are working multiple jobs and who have a lot of needs.

Potter: The people that they see day in and day out are the lobbyists, not regular folks back home and Capitol Hill is just overrun with lobbyists now compared to what it was just a few years ago.

You make mention of the townhouses on Capitol Hill, which are either run by lobbyists now or are call centers for party fundraising.

Potter: That’s right, both the Democratic and Republican congressional committees have offices a few doors away or a few feet away from the Capitol. Members of Congress leave their offices and go to these buildings, go to the cubicles and dial for dollars there. And the townhouses that we wrote about, they look at just first glance like someone actually lives there, but many of the townhouses around the Capitol and other buildings have been bought and are operated by special interests, whether it’s a big corporation or a labor union or a lobbying firm. They just ring the Capitol.

You also make an excellent point that all the time spent fundraising is also time that could be spent crafting or better understanding legislation. Not to mention time spent with colleagues on the business of governance, and even just getting to know each other, which is no small thing.

Penniman: What’s amazing is that in this era of extraordinary political polarization, there is so little talk about whether or not our politicians even have the time to get together to sit down and talk and to go through legislation and to build common ground. When you’re spending four to five hours a day just dialing for dollars or trying to recruit money from the lobbyists that you’re supposed to be regulating, it’s hard to find the time. And that’s what Senator Tom Harkin from Iowa said when he left the Senate. He said there just isn’t enough time for us as senators to work together anymore because we’re all out there trying to raise the money.

You write in the book about how AT&T, for example, has 88 percent Hill coverage, meaning that 88 percent of all the members of Congress have gotten campaign contributions from AT&T. Same with Honeywell International, 87 percent from UPS, 80 percent from Lockheed Martin and on and on. What does that tell you?

Potter: It tells you that they’re very generous with the check writing. The big corporations and entities are able to do that and they’re very bipartisan in their check writing. They in many cases write just as many checks to Democrats as they do to Republicans and they certainly pay a great deal of attention to who is a committee chair or ranking member of a committee or is in some other leadership capacity. They’re very strategic. One of the things I used to do in my job in the insurance industry was administer the political action committee and there’s a lot of thought that goes into who you write checks to, and you want to make sure that you’re writing checks to people who can be persuaded to see things from your perspective and vote for the things that you want them to or vote against things you are not supporting when the time comes.

Penniman: How many regular Americans have that kind of Hill coverage? You know, Bob Dole once quipped that there is no poor people’s political action committee in Washington. So when you’re underrepresented with the financial resources of politics, as most Americans are, then you’re underrepresented with the lawmaking too.

You use the metaphor of a newborn baby named Eve, and all that child is going to be put up against as a result of lobbying and campaign contributions.

Potter: We use that to just drive home the point of how we and those we love, our children and everyone that we know, including ourselves, are affected by this from cradle to grave. In the middle part of the book, we look at five different industries and show how these industries in one way or another are able to impact so much of Eve’s life and her parents’ life, whether it’s their mortgage or the air that we breathe or the college debts that Eve’s parents might have, everything is affected in one way or another because of public policy and public policy is so heavily influenced now by special interests.

Penniman: We also are using that to take on the argument about government, the size of government. Our point is that in a country with 330 million people, a pretty significantly sized government will exist in a country as big as ours and as powerful as ours. And therefore, it is either going to be working for the best interest of the common good or it’s not. So let’s get over this kind of abstract argument about the size of government and realize that it exists and it’s either going to be controlled by the special interests on behalf of the narrow interests of a few or it’s going to be controlled by all of us on behalf of our common interests.

Potter: And we use the term “the system.” Big money has created its own system and we note that Eve can’t escape the system, her parents can’t, you can’t, we can’t collectively escape the system that has been created and that so many people see as being rigged against them.

When you talk about that size of government and the necessity of that national government, you also talk about how all this influence has also trickled down to state and local governments.

Potter: We do. We’ve looked a lot at state and local governments and in the chapter in particular on fossil fuel. We looked at my state of Pennsylvania. I live in Pennsylvania and the lawmakers in Harrisburg and the previous governor were very, very close to the fossil fuel industry, the fracking companies, to the point that we’ve seen a lot of communities just really affected adversely by the way that those companies were able to operate and influence lawmakers in Harrisburg, including the previous governor and even Governor Ed Rendell, Democratic governor, after he left office. So we look at not just what’s going on in Washington but also how this is pervasive as well almost at any state capital and many municipalities as well.

You just used the energy industry as an example. Another is the banks and the too big to fail bailout of 2008. Since 1998, nearly $4 billion in contributions to federal candidates and super PACs have been made by the banks and the real estate interests and financial interests.

Potter: Their contributions have been extensive and continue to be so and certainly the legislation that was finally approved by Congress, the Dodd-Frank Act, and other pieces of legislation that have been proposed to regulate the financial industry were written to a large extent by the lobbyists for financial institutions. And we point out in the book how the interest of the banks and mortgage companies were served first, and the challenges and the difficulties that a lot of average homeowners are having even yet today to keep their homes out of foreclosure.

Penniman: The House Finance Committee in Washington, the nickname for it is the Cash Committee, not because they deal with finance but because it’s such a lucrative perch to collect campaign contributions from. It’s like winning the lottery ticket. Of the 435 members of the House, 60 of them are members of the finance committee because you just can rake in money from bank executives and bank lobbyists when you’re on the committee. I remember watching Bill Moyers’ show a number of years ago when he had Gretchen Morgenson on, the chief financial reporter for The New York Times, and when she was asked whether or not Dodd-Frank had tackled the big stuff, she said, “No, absolutely not. It hasn’t and we could likely have another financial crisis as a result.” And when asked why, she said, “Because the banks have hundreds of lobbyists in Washington and the American people have none.”

The two of you go back even further from before the meltdown and talk about the repeal of Glass-Steagall during the Bill Clinton years.

Potter: Yes, we need to remember that this is not an affliction that leans more toward the Republican Party than the Democratic Party. Both parties are very afflicted by this and when Bill Clinton and other Democrats in the 1980s saw the potential decline of union money and unionization, they realized that that would create a decline in income for the Democratic Party, so they went out and started actively recruiting money that they hadn’t sought previously, corporate money. And a lot of that money came directly from Wall Street. They also went to the pharmaceutical companies and the health care companies and they went harder at Hollywood. But an active marriage occurred between Wall Street and the Democratic Party in the ‘80s and ‘90s and it culminated in 1999 in the repeal of Glass-Steagall with the ‎Gramm-Leach-Bliley legislation. Bill Clinton signed it and a lot of the people who worked in the White House and worked for him helped manufacture it.

Another one of your chapters is specifically about the pharmaceutical industry. I was wondering if you could tell us a little bit about the saga of Billy Tauzin.

Potter: Billy Tauzin was a congressman from Louisiana. He rose to leadership initially in the Democratic party but during the Republican revolution, the Gingrich years, he came to the conclusion that he needed to change parties. So he became a Republican, was reelected and soon became a leader in the Republican party as well. And the leadership roles included a very influential role on a committee that wrote the legislation that pertains to health care and in particular the pharmaceutical industry. He became a favorite of the pharmaceutical industry and was there for them on a couple of very important occasions, in particular during the debate on the Medicare Part D prescription drug benefit in 2003.

He was very instrumental in making sure the pharmaceutical industry’s interests were protected and the legislation was written largely by lobbyists for the industry who worked with him and a few other congressional leaders to shape the legislation in ways that led to huge profitability in the pharmaceutical industry. The pharmaceutical industry and the manufacturing companies have among the highest profit margins in the world of any companies and people in the US pay far more for medications, including people who are Medicare beneficiaries, than anywhere else in the world.

Penniman: Right after Medicare Part D got passed, Tauzin quit his job as a member of Congress early, left his office early and took a job as the head of PhRMA, which is the lobbying wing of the pharmaceutical industry, making $2 million a year. It’s just despicable.

Potter: And soon after taking that job, he went back to Capitol Hill and was there representing the industry during the debate on health care reform and once again was wearing a different hat but he was still inordinately influential in helping to draft the legislation that became Obamacare. Despite the promises that Barack Obama had made when he was running for president that at the very least Medicare should have the ability to negotiate with drug companies to lower prices for Medicare beneficiaries — and he also campaigned on making it lawful for Americans to reimport medications from Canada where drugs are a lot cheaper — despite those campaign promises, President Obama gave both of those up under intense pressure from the pharmaceutical industry to be able to get something passed.

It was clear from the many meetings that Tauzin had in the White House and on Capitol Hill that if the administration and Congress didn’t go along with what the pharmaceutical industry needed, then of course they would pull out all the stops and whatever it took to kill the legislation, to keep it from ever getting passed. So it was almost essentially blackmail. And once again, Tauzin was right there leading the effort for the pharmaceutical industry.

There’s a section in that chapter on the pharmaceutical industry that’s titled “Public Research, Private Profits.” 

Potter: Yes, few people realize that even though the pharmaceutical industry talks a great deal about how much they spend on research and development, the companies spend far more on sales and marketing than research. In fact, most of the research is done at taxpayers’ expense by governmental or quasigovernmental entities like the National Institutes of Health and universities that get funding from the government. So much of the research is done at the taxpayers’ expense, and rightfully so. But the companies themselves spend relatively little on research. They take the research typically and invest in the development of medications but most of the prescription medications are developed at publicly funded institutions. And in a sense we pay twice as a consequence. We pay for the research as taxpayers and of course we pay dearly whenever we need the medication.

There’s another chapter in the book about Big Food. And I was fascinated by your account of the fight against certain nutritional changes in the school lunch menu and the lobbying of “the lunch ladies.”

Potter: Yes, the lunch ladies, that was a nickname for cafeteria managers around the country. We write about how they essentially were coopted by Big Food to affect any regulations that pertained to school lunch programs. This chapter in particular is one that shows that the influence certainly is ever-present on Capitol Hill but also in the regulatory system, the executive branch, the agencies that supposedly regulate the companies like big food and beverage makers. But in many cases we have what’s referred to as regulatory capture, in which the regulatory agencies are very influenced by the very companies that they’re supposedly regulating.

Penniman: We want our kids to eat healthy, period. That should just be a no-brainer, a fait accompli in a good society. But instead, because of the power of money in politics, it becomes hyperpoliticized, a massive battle with all kinds of very powerful people who make a lot of money trying to manipulate the food items that show up on our kids’ plates at their school cafeteria.

You might want to talk a little bit about school pizza, Schwan’s Food company and Minnesota’s two Democratic senators.

Potter: The regulations that would have made school lunches much more nutritious were challenged by the food manufacturers. One in particular, based in Minnesota, was very upset because there was this concern that pizza would not be as prevalent on the school lunch menus as it had been in the past. They were able to get the senators from Minnesota to intervene and so consequently, for all practical purposes, pizza is now considered a vegetable for school lunches.

I’m stunned that the whole sugar subsidy continues to be an issue and that the industry continues to hold such a grip on Congress.

Penniman: This is one of the many places in the book where we were able to connect the problem to cronyism and to a dysfunctional economy. A lot of people when they think about the issue of money in politics think that it’s just people trying to regulate more. Well, in fact, there are a lot of people who understand that the fight for reform is also an attempt to create true competition in the marketplace and sugar is the exact opposite of that. It’s an industry that has been propped up by taxpayer subsidies. It’s inherently an unhealthy industry and if not for those subsidies, a) either we would all save money when we go out and buy stuff that has sugar in it or b) the industry would be forced to be more competitive and reduce its prices. But neither of those have happened.

Potter: The new mayor of Philadelphia just this past week has announced that he’s going to be trying to impose I think a 3¢ per ounce tax on sugary beverages and already the industry is developing its strategy and we’re seeing stories are beginning to appear in the media. They have been so successful in their strategies that whenever a city has proposed this in any form or fashion it has been beaten back. The one exception being Berkeley, California, where last year the voters were able to successfully vote in a tax on sugary beverages. Just right across the bay in San Francisco it was defeated. So these companies are very, very active at the local level to beat back these kinds of initiatives and are extremely successful, not just in the work through their campaign contributions but through the money that they spend on forming front groups and forming coalitions, believe it or not, with some labor unions and organizations like even the NAACP to defeat these initiatives.

What’s the Formaldehyde Panel?

Potter: The Formaldehyde Panel is an industry group that was formed to keep regulations from being written and enforced that would reduce the amount of formaldehyde in products that we use every day. We’re talking about the chemical industry here and components of the chemical industry that make or use formaldehyde, which can obviously be very toxic at high levels and they’ve been exceedingly successful.

We tell the story of a couple in Michigan who suddenly were getting very sick and they couldn’t figure out why. They were getting severe headaches and nothing had changed except that they had just recently installed new flooring. They happened to be watching a 60 Minutes segment in which the manufacturer of the very flooring that they had bought was being sued because of excessive levels of formaldehyde that they had used in the flooring that actually had been manufactured in China. So even though it was manufactured in China, the regulation in the US was so lax that these high levels of formaldehyde were able to be used in their flooring and in many, many other products that we’re probably not even aware of.

It’s astounding the number of chemicals in our lives that remain untested for safety.

Potter: The vast majority are untested. In fact, 80,000 chemicals are in use in various products and only a fraction of them are ever tested, much less regulated.

The last two chapters of your book are the most hopeful. The first of those is titled “It’s Fixable.” How?

Penman: In terms of policy, it’s fixable in four ways and I’ll go through them real fast.

1) We need to create new ways of financing politics in America, ways that shift the system over to small donors away from the big donors. Because as long as the big donors are the ones, are the fish that all the politicians are trying to catch, then the system and policy making and the mindset of politics is going to lean towards them. If the people who are financing politics are all of us with small donations then the fealty of the politicians and the mindset of politics will lean towards us. It’s really very simple; he who pays the piper calls the tune. And if we all are paying the piper, then we’re going to have a much better chance of calling the tune. So that’s number one, new ways of financing politics that are oriented towards small donors.

2) Ethics and lobbying reform. Wendell’s and my favorite proposal is one that they have already accomplished in South Carolina which bans lobbyists’ contributions to political campaigns. And the conservative State Supreme Court in South Carolina has upheld that law for more than two decades.

3) Transparency and disclosure. There is no reason why any of the money in and around elections should be dark money. And right now dark money is exploding. And in the age of the Internet, we should be able to know where the money is being spent and who’s giving it and we should know it within 24 or 48 hours online.

4) You’ve got to put a stronger cop on the beat. And right now the Federal Election Commission is busted. It’s mired in partisanship and its $65 million dollar a year budget may as well be incinerated daily by all those taxpayers. So you’ve got to fix the FEC.

What’s encouraging is that there is legislation to accomplish all of the things we just mentioned. All of those are constitutional. None of them could get shot down by the Supreme Court and especially if we have a different court in the future, likely those laws would just be upheld anyway. The task before us is developing the political power and pressure to get those laws passed.

How do we generate that political willpower? What do we do?

Penniman: We see it in two steps. Step one is we’ve got to bring more people into the army for reform. For way too long the army has consisted of a pretty limited group of liberals and that’s just not a big enough army to win this fight. Number two, there’s no reason why this should be seen as a liberals-only cause.

We see this as the cause of 1776, of the revolution, of the promise and dream of a truly representative republic. It’s a fight that we all should be involved in. And the polling shows you, in fact, that there is an incredibly broad consensus, 80 percent plus in the public that believe this is a serious problem and they want it seriously fixed. So we’ve got to broaden the army out beyond the left. We’ve got to bring in centrists and independents and grassroots Republicans who see and feel like the party is shutting them out at the top by the big check writers and the Washington establishment.

And then once we’ve got that bigger army, we’ve got to bring the pressure to bear on members of Congress. We’ve got to create sustained political pressure and power and we’ve got to pin them to the wall and ask them what they’re going to do to clean up the system, put the legislation that we believe in before them and if they don’t say that they’re going to vote for it and work for it, then they need to be defeated.

Potter: And the people are there. This movement can encompass Republicans as well as Democrats because polls show consistently that just about as many Republicans as Democrats talk about the corrosive effect of money in politics and note that it needs to change, that their interests are not being taken into consideration, that they always play second fiddle to the big moneyed interests.

One of the things that you mention a couple of times in the book is this whole notion of President Obama signing an executive order that all federal contractors disclose their political activity. What do you think is keeping him from doing that?

Penniman: Well, the official line is that there are a lot of executive orders that he’s considering and that he gets real beat up whenever he does any one of them and that as a result this is something he’s looking at but that he hasn’t prioritized it yet. Someone who’s a little more skeptical could also look at the Trans Pacific Partnership, the TPP deal that he’s trying to get through. He doesn’t have enough support for it in the Democratic Party alone, so he’s got to be able to recruit enough Republicans, which means he needs the Chamber of Commerce and he doesn’t want to upset the Chamber of Commerce by signing an executive order around corporate political disclosure. So you can kind of pick whichever story you think fits best.

“Jam the revolving door” is another suggestion you make, which I think is a good one.

Penniman: Yes, Jack Abramoff, who was a little bit of an advisor on this book, and as many of your readers and listeners know was thrown in jail for his stepping over the line as a lobbyist in Washington, helped guide us on this one. His point is that as long as members on Capitol Hill and their staff are always looking around the corner for a lucrative lobbying job, then inevitably they’re going to feel inclined to do favors for the lobbyists, who are showing up at their offices. So we just need to do a significant jamming of the revolving door, at least five years as a cooling-off period between when you can serve on Capitol Hill and go into the lobbying industry.

Who and what are some of the other people and groups that you see are making a difference in this fight?

Penniman: There’s a lot of energy out there. I want to emphasize Take Back Our Republic, because they are a genuinely grassroots conservative organization and they are worried about the cronyism and the control of government by the few. So it’s great to see them on the scene. There’s a group called Represent.Us, which has a lot of grassroots energy and is going to be launching some ballot initiatives in a couple of states this year to accomplish campaign finance reform. Every Voice is another fantastic group out there and they also are going to be working at the state level in addition to the federal level, but they’re really focusing a lot of their energy on the state level to pass ballot initiatives. And then there are some good transparency groups that I’m sure your readers and listeners are really well aware of like the Center for Responsive Politics and the Sunlight Foundation that do a good job of tracking the money.

But what we need at this point is not just a handful of relatively small groups working on this, we really need everyone to understand that everyone has skin in the game. So whether you’re working on fighting obesity or fighting to get chemicals out of our food or fighting for saner regulation of finance or whatever it is, we kind of need everyone to realize that this is the blockade that we all face, this is the common blockade. And that we’ve all got to put our shoulder to this wheel and get it out of the way.

Potter: And I guess to go back full circle, we talk about connecting the dots with people. People can be very passionate about health care or the environment or whatever issue that they feel strongly about and get very frustrated that very little is able to get accomplished. The problem that we try to demonstrate is [that] big money in politics thwarts this progress. The special interests and even the billionaires that are involved in funding the super PACs and other ways of influencing elections and public policy typically like the status quo; gridlock doesn’t bother them all that much because the status quo is typically pretty profitable for the entrenched special interests.

But it can be defeated?

Penniman: Meaning can we win?

Yes.

Penniman: Absolutely. I think that, you know, this country has accomplished so much more than this in its past. We overcame slavery for God’s sake, which was driving the entire economy at that point. We overcame millennia of sexism with the suffrage movement. And then we readdressed the race problem again with civil rights. We defeated fascism and the Nazis in World War II. The enormous things that this country has accomplished from the revolution up through the twentieth century have been extraordinary. This is really a technical fix, ultimately. I mean, yes, it addresses power in our society, but it’s a technical fix about the way money flows in and around the political system. This should almost be like an easy layup for us Americans.