I don’t mean to keep writing the same article about lobbying and special interests over and over. But the federal government keeps creating more and more opportunities for special interests to hire lobbyists. This week The Economist writes,
with up to $800bn in clean‐energy handouts now up for grabs over the coming decade, …
The energy industry as a whole spent nearly $300m last year on lobbying, the most since 2013 (see chart 1). Big oil and electric utilities, which had been reducing their spending on influence‐seeking before 2020, have ramped it up again; spending is growing in line with that of the biggest lobbyists, big pharma. Renewables firms went from spending an annual average of around $24m between 2013 and 2020, to $38m in 2021 and $47m in 2022. “We’ve now got an interesting new ecosystem of swamp creatures here,” says the government‐relations man at a giant renewable‐energy company.
And what caused this new ecosystem?
The reason is the passage last year of the Inflation Reduction Act (IRA). The law funnels at least $369bn in direct subsidies and tax credits to decarbonisation‐related sectors (see chart 2). It came on the heels of the Bipartisan Infrastructure Law, which also shovels billions in subsidies towards clean infrastructure. Some of the provisions offer generous tax credits, with no caps on the amount of spending eligible for the incentives. A mad investment rush, should it materialise, could lead to public expenditure of $800bn over the next decade. An official at a big utility says her firm has projects in the works across America that, if successful, will secure a staggering $2bn in funding from the two laws. “We stopped counting…we just have a big smile on our faces all the time these days,” confesses the renewables firm’s government‐relations man. “There is a lot there for a lot of people,” sums up a business‐chamber grandee. And, he adds, “A lot of lobbyists are interested in the spending.”
And as my colleague Scott Lincicome told Politico about another multi‐billion‐dollar pot of gold, the CHIPS and Science Act, “It would almost be corporate malpractice to not go after that cash.”
This is of course the standard story whenever Congress appropriates, or considers appropriating, a new pot of taxpayers’ money. The civics books explain that the people bring a problem to Congress, committees hold hearings and hear from expert witnesses, the issue is debated, Congress then maybe appropriates the money, and selfless experts in the bureaucracy spend it in the national interest. The reality is more like a feeding frenzy to get a piece of every new funding opportunity. It’s no surprise that that lobbying expenditures are reaching new highs in the spendthrift Biden administration.
Lobbying is protected by the First Amendment: “Congress shall make no law … prohibiting … the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” But those who worry that corporate interests and the wealthy have too much influence in Washington should recognize the “supply‐side economics” of the problem: When government supplies billions — tens of billions — hundreds of billions of dollars to be handed out by appointed officials and the bureaucracy, you can bet that interested parties will leave no stone unturned in their effort to get a piece of that cash.
As Craig Holman of the Ralph Nader‐founded Public Citizen told Marketplace Radio during the 2009 financial crisis, “the amount spent on lobbying … is related entirely to how much the federal government intervenes in the private economy.”
Marketplace’s Ronni Radbill elaborated: “In other words, the more active the government, the more the private sector will spend to have its say…. With the White House injecting billions of dollars into the economy [in early 2009], lobbyists say interest groups are paying a lot more attention to Washington than they have in a very long time.”
Big government means big lobbying. When you lay out a picnic, you get ants. And today’s federal budget is the biggest picnic in history.
The Nobel laureate F. A. Hayek explained the process 80 years ago in his prophetic book The Road to Serfdom: “As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.”
That’s the worst aspect of the growth of lobbying: it indicates that decisions in the marketplace are being crowded out by decisions made by lobbyists and politicians, which means a more powerful government, less freedom, and less economic growth.