On April 12, 2017, former Boeing CEO Jim McNerney sat down in the West Wing with President Trump. Trump had, on the campaign trail, advocated abolishing the Export-Import Bank, a federal agency that typically subsidizes $10 billion a year in Boeing exports.
On April 13, Trump announced he would fill out Ex-Im's board of directors, thus reviving the agency's ability to subsidize Boeing's overseas customers.
This was a replay from eight years earlier.
Candidate Barack Obama had called Ex-Im "little more than a slush fund for corporate welfare." Obama soon picked McNerney and General Electric CEO Jeff Immelt as his manufacturing czar and jobs czar, respectively. GE is arguably Ex-Im's No. 2 beneficiary. Obama quickly came around on the agency, and became Ex-Im's most important ally in Washington.
Access to the White House is extremely valuable for corporations, regardless of who the president is. Everyone in Washington knows this, and now two scholars have confirmed and quantified the profitability to companies of access to the White House.
In President Obama's most impressive act of transparency, he published, regularly throughout his tenure, his White House visitor logs. Jeffrey Brown and Jiekun Huang of the University of Illinois studied those logs from Obama's first month through the end of 2015, and found 2,286 White House meetings between Obama officials and executives of the companies included in the S&P 1,500.
The researchers found two notable things about the companies that made up these 2,286 meetings: That money helped the executives get in the door, and getting in the door helped them make money.
The first finding could be put this way: Access could be bought through campaign contributions and lobbying expenditures.
"We find that firms that contributed more to Obama's presidential election campaigns are more likely to have access to the White House. We also find that firms that spend more on lobbying, firms that receive more government contracts, larger firms, and firms with a greater market share are more likely to have access to influential federal officials."
Second, they found that access was profitable.
"Corporate executives' meetings with White House officials are followed by significant positive cumulative abnormal returns." That term, "cumulative abnormal returns," in this case basically means how much the stock in question outperformed the S&P 1500 index over the 10 days before and the 30 days after the meeting. "We also find that the result is driven mainly by meetings with the President and his top aides. We find insignificant CARs for canceled visits, suggesting that the actual incidence of the meetings matters for firm value."
Why would a meeting drive up the stock of a company? The authors posit three mechanisms: A meeting could secure a government contract, it could help line up regulatory relief, or it could simply provide inside information that is valuable to a company.
I would add many more ways access to government is profitable. For instance, Boeing's access to the Obama and Trump White Houses seem to have secured support for a subsidy program that has nothing to do with government contracts.
Also, regulatory relief isn't always what companies seek. Google had amazing access to the Obama White House. Google "Internet Evangelist" (definitely not a lobbyist) Vint Cerf served on an Obama board. Google's former top lobbyist Andrew McLaughlin was a top White House official on tech policy, and he traded emails with current Google lobbyists who were supporting the White House's push to further regulate the Internet in the name of net neutrality. Here, corporate access to Obama's White House advanced more regulation which would protect Google's current business model.
The researchers had another intriguing finding: "firms with access to the Obama administration experience significantly lower stock returns following the release of the election result than otherwise similar firms."
In other words, their investment in Democrats became a money loser when Trump took over.
For a cynic in Washington, or even just a close observer, there's no surprise in these conclusions. Of course money buys access, and of course access to politicians is valuable. But there's plenty to learn from this study.
First, some people actually believed that Obama had changed Washington and stopped the cash-for-influence game. This study doesn't compare Obama to other presidents, but it shows that the game was alive and well under Obama.
Second, it makes Obama's transparency — in this one regard — even more laudable. The visitor logs made this study possible and so it showed the country how Washington works. For this reason, especially since Trump has said he won't follow Obama's lead here, Congress should mandate regular and thorough reporting of White House Visitor Logs.
A final lesson: Since big business clearly has more access to government, then bigger government equals a bigger advantage for big business. If government played a smaller role in industry, access wouldn't be so valuable, and the playing field would be more level.
Donald Trump and Bernie Sanders were both correct that the game is rigged in favor of the big guys. This new study helps us see how big government is the rigger.
Timothy P. Carney, the Washington Examiner's senior political columnist, can be contacted at email@example.com. His column appears Tuesday and Thursday nights on washingtonexaminer.com.