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When businesses and big government politicians go into “business” with one another, taxpayers lose—big time. It's called cronyism.
A "crony" is an individual or organization that colludes with politicians to gain unfair treatment, taxpyer-funded benefits, or regulations that the rest of us don't enjoy. Cronyism occurs because politicians rely on wealthy interests to fund their campaigns, and those donors then seek government goodies or favors in return.
It’s a match made in heaven for cronies and hell for taxpayers. Just as bad, such cronyism erodes economic freedom by destroying the real competition that fuels free market capitalism.
In 2012, the cronies had a banner year, poaching billions of taxpayer dollars to pump up their profits and redistribute their losses. In other instances, the cronies leveraged their insider connections to evade prosecutions and skirt the laws that apply to the rest of us. Consider just a few of the cronies that got away in 2012.
1. Jon Corzine, former MF Global Chief, New Jersey Governor, and Top Obama Bundler.
The collapse of the now defunct MF Global vaporized $1.6 billion in investor’s money, according to James W. Giddens,trustee for the SIPA Liquidation of MF Global Inc. Even Democrats said “people should go to jail.” But disgraced former MF Global Chief Jon Corzine shrugged off charges of wrongdoing and appears to have gotten off with nary a consequence. How? Cronyism, pure and simple.
Corzine was a top Obama bundler who helped haul in $500,000 in campaign donations for the 2012 presidential election. And, as the Government Accountability Institute uncovered, MF Global was a client of Attorney General Eric Holder and Assistant Attorney General Lanny Breuer’s law firm, Covington & Burling. That’s right—Corzine’s company hired the very law firm Eric Holder and Lanny Breuer hail from.
The attorney representing MF Global Treasurer Edith O’Brien is Reid Weingarten. Who is he? Eric Holder’s “best friend” and own personal attorney. Reid Weingarten and Eric Holder also co-founded a non-profit together.
The result: Corzine’s insider connections and big money political fundraising for Obama helped him skate away unscathed, even as his MF Global customers saw $1.6 billion of their money go up in flames.
2. Sen. Harry Reid (D-Nev.)
For Senator Harry Reid (D-Nev.), politics is a family business. And when it comes to doling out the federal goodies to favored friends, few can compete with the Nevada senator. Sen. Reid has sponsored at least $47 million in earmarks that directly benefitted organizations that one of his sons, Key Reid, [RW1] either lobbies for or is affiliated with.
Recently, another of Sen. Reid’s sons, Rory Reid, helped Chinese energy giant ENN Energy Group make headway on its plan to build a $5 billion solar panel plant on a 9,000 acre plot in Nevada. And according to Reuters, this year Sen. Reid attempted to “pressure Nevada’s largest power company, NV Energy, to sign up as ENN’s first customer.”
Not surprisingly, both father and son deny that they are working in tandem to further the family interests. “I have never discussed the project with my father or his staff,” says Rory Reid. Likewise, Sen. Reid’s spokesperson says he never talks to his son about the $5 billion deal he’s working on for his Chinese client.
Last year the U.S. Congress overwhelmingly passed the Stop Trading On Congressional Knowledge (STOCK) Act to ban members of Congress from using non-public information when making their personal investments. The law also requires senior-level employees in executive and legislative offices to post their financial disclosures to ensure greater transparency, boost public trust, and make sure that politicos live by the same kinds of insider trading laws as the rest of us.
Common sense, right?
Wrong, says Congress. Since the bill became law, the U.S. Congress has delayed the financial disclosure requirement for federal workers not once, not twice, but thrice.
Why all the delays on implementing a common sense ethics law? Congress is worried that making such information public may place federal workers at risk for identity theft and endanger their personal safety. Scary stuff.
There’s just one problem with that argument: financial disclosures are already public records; the new requirement would simply make them more easily accessible to the public. Still, Congress continues to drag its feet on implementing an ethics law designed to make sure cronies aren’t abusing their positions of power for personal financial gain.
The rationale for the new delay was to wait until a study by the National Academy of Public Administration is released in March. That’s just another dilatory tactic. Indeed, after the first delay, Rep. Jim Moran (D-Va.) said he hoped the study would kill the law’s public disclosure provision for federal workers. “I am confident that the National Academy study will show that this policy is unnecessary and potentially very harmful,” said Rep. Moran.
Cronyism is a bipartisan problem. When politicians and special interests collude to disrupt free markets, hook up family and friends with special deals, and leverage political connections, taxpayers lose. Yes, 2012 was a banner year for the cronies. Here’s hoping 2013 will be different.