When word got out that President Trump’s lawyer, Michael Cohen, had taken millions of dollars in fees from big businesses shortly after Trump’s election, it set off my alarms. It looked like Cohen had set up a slush fund whereby companies seeking favors from the White House could funnel money to Trump and his lawyer.
A few hours later, though, we learned some interesting details. Novartis, one of Cohen’s patrons, issued a statement:
NBC News: In a new statement (their third) Novartis says they paid $1.2 million to Michael Cohen, had one meeting with him and determined he would be “unable to provide the services that Novartis had anticipated related to US healthcare policy matters.” https://t.co/110QeSSycX pic.twitter.com/QGuYT0M93I
— Tom Winter (@Tom_Winter) May 9, 2018
In short, Novartis had hired Cohen to help the drugmaker navigate the Trump era, whether through access and lobbying or just through insight into Trump, but Novartis executives soon realized Cohen had nothing of value to offer. But the drug giant had already signed the contract, and so they ended up paying over a million dollars for nothing.
So suddenly this story is a whole different species of Beltway shadiness. Cohen’s racket, it seems to me, isn’t selling policy to the highest bidder, it’s ripping off gullible companies who thought he could be a MAGA rainmaker.
The details in this case are pretty striking — $100,000 a month is a very high fee for K Street — but the general form of this is standard. Cohen’s racket, if it is what it looks like right now, demonstrates an underappreciated fact about K Street and D.C.’s consulting class: This isn’t always a lever by which big business moves government; it is often the proboscis through which the political class extracts wealth from business.
Cohen was basically taking part (though in a more brazen way) in the same racket you saw if you watched the Facebook hearings. This was much of the way Clinton Inc. functioned. This was how Microsoft got roped into politics. I told a story a few years back about House Minority Leader Nancy Pelosi, D-Calif., extracting much wealth and favors from one San Francisco businessmen.
Sometimes these businesses are seeking special favors. Sometimes they’re trying to avoid special mistreatment. Novartis, surely, wanted to ward off Trump’s promises to drive down drug prices.
So the lessons of Cohen’s not-exactly-lobbying episode — from what we know now — are two:
- The Washington consulting class is just as likely to be ripping off business as to be influencing government.
- The more a politician threatens to flex government muscle on an industry, the more his friends can extract protection payment from that industry.
