Did you hear about the politician who threatened to harm an ailing company unless it agreed to the politician’s campaign donors? Illinois Gov. Rod Blagojevich? Sure. But I could also be talking about dozens of congressmen, senators, or governors, most of whom are not currently under arrest.
In fact, such shakedowns of corporations are standard operating procedure in Washington and in many state governments, and the bailout bonanza on Capitol Hill makes such borderline corruption an everyday occurrence.
Take Rep. Steve Kagen, D-WI, who lashed out last week at Cerberus, the private equity firm that owns a controlling stake in Chrysler, one of the Detroit automakers begging at the federal trough for tax dollars. Cerberus, you see, also owns the Ohio-based paper company NewPage, which just bought a paper mill in Kimberly, Wisconsin, and then shut it down.
The mill and the 475 unemployed workers are in Kagen’s district, so he’s been applying political pressure to Cerberus and NewPage to either sell or reopen the plant. You can read a perfectly legitimate storyline into these facts: A congressman is fighting for the workers in his town, and trying to make sure their tax dollars aren’t “paying the hangman,” as Kagen puts it.
With some more facts, and a different perspective, however, Kagen looks like a government bully. First, consider that the top contributor to Kagen over his two elections to Congress has been the United Steelworkers—the union representing the paper mill’s workers.
Sure, Kagen might see that he’s getting appreciation from the workers for whom he is sticking up, but it also looks like he’s trying to use bailout money to pressure Cerberus to refill the union treasuries that will fund Kagen’s 2010 race.
It’s also worthwhile to ask which business might benefit from Kagen’s efforts to force NewPage to sell the plant. The political action committee (PAC) of Plum Creek Timber contributed $3,000 to Kagen’s competitive reelection this fall, including $1,000 less than two weeks after Kagen petitioned the Federal Trade Commission to force NewPage to sell the plant. Is Plum Creek Timber a potential buyer?
Kagen voted nay on the bailout Wednesday night, but he’s asked to separate the GM bailout from the Chrysler bailout, so that he can help Chrysler’s competitor while refusing to help Chrysler.
We don’t have wiretap transcripts of Kagen’s conversations about the Kimberly plant, and so we can only infer motives. In contrast, Blagojevich, if federal charging documents are correct, was explicit in using his government power to benefit his donors and harm his enemies.
And while Kagen likely isn’t corrupt and is probably proud of his actions against NewPage, do we really expect that none of the 435 House members and 100 senators is going to use the bailouts to squeeze personal or political gain from ailing companies on Wall Street or in Detroit?
There are other parallels between the current Cook County mess and the one in Washington, D.C.
Blagojevich offered a bailout to the Tribune Company, which owns both the Chicago Cubs and the Chicago Tribune. Allegedly, he made it clear that the company would only get the bailout cash if it would fire deputy editorial page editor John McCormick, a leading Blagojevich critic.
Only in Chicago? Don’t speak too soon. General Electric, the company that spends more than any other lobbying, is getting special access to credit insurance from the Federal Deposit Insurance Corporation, which used to be available only to banks. The insurance is $139 billion in GE debt.
GE also owns NBC, MSNBC, and CNBC (which aggressively supported the Wall Street bailout). So, the U.S. government is in the business of bailing out a major media corporation.
Will the Obama administration bail out other networks, or only the cable network that provided it the most fawningly positive coverage from Iowa through Election Day?
This is all to say that we ought to worry. Government power is an opportunity for corruption. We see it very clearly in Illinois these days, thanks to the federal investigation. If you look closely, you see the outward signs of it in Washington every day.
As the bailouts heighten and government gets an even stronger hand in industry, we’ll see it more and more. Now Obama is promising increased control over the energy industry and the financial industry, and billions in spending on infrastructure projects. Eager lawmakers are shaking down more businesses every day.
Does the FBI have enough wiretaps to go around?
Examiner columnist Timothy P. Carney is editor of the Evans-Novak Political Report. His Examiner column appears on Fridays.
