Book Review

Hired Guns: Buying Power in Washington

by Louis Nemeth


The Lobbyists: How Influence Peddlers Get Their Way in Washington
By Jeffrey H. Birnbaum
New York: Times Books, 1992
334 pp.

PEAKING WITH THE 1990 BUDGET ACCORD that finally shattered President Bush's infamous "read my lips" pledge - and his chances for reelection - Jeffrey Birnbaum's The Lobbyists presents what too few U.S. citizens see: the day-to-day workings of the influence peddlers who promote their clients' agendas, often at the expense of the public.

Birnbaum, who covers the White House for the Wall Street Journal, follows a handful of the most powerful members of Washington's "Fifth Estate" through the years of the 101st Congress, 1989 and 1990. Some, like Stuart Eizenstat, former aide to Jimmy Carter, and Charls Walker, former deputy treasury secretary under Richard Nixon, are well known fixtures on the political scene. Others, such as Thomas Donohue, president of the American Trucking Association, or Robert Juliano, who has ties to labor (Hotel and Restaurant Workers) and business (American Express), are famous only in their own circles.

 Each of them, however, has a common interest: representing corporate America in the never-ending budget struggles that constituted much of the work of the 101st Congress.

 It is, as Birnbaum notes, a battle that frequently occurs "on the fringes," where obscure provisions in a tax law can save or cost a client millions of dollars. He writes, "[It] is there, in relatively small changes to larger pieces of legislation, that big money is made and lost. Careful investment in a Washington lobbyist can yield enormous returns in the form of taxes avoided or regulations curbed - an odd, negative sort of calculation, but one that forms the basis of the economics of lobbying."

The two years Birnbaum profiles are full of opportunity, treachery and disappointment for the lobbyists he follows. Walker, Mark Bloomfield of the American Council for Capital Formation and others mount an ultimately unsuccessful campaign for a reduction in the capital gains tax. Eizenstat fights, more successfully, to retain a tax break for research and development. Donohue labors mightily, and with mixed results, against an increase in the motor vehicle fuels tax, and Robert Juliano masterfully protects one of the few benefits both his business and labor clients enjoy: the tax deduction for the "three- martini lunch."

 During the period portrayed in Birnbaum's book, much of the debate in Washington centered on the skyrocketing federal deficit and attempts to reduce it. In that environment, Birnbaum points out, tax breaks for the largest U.S. corporations and wealthiest individuals were an easy target for members of Congress desperate for revenue. The lobbyists he follows make their names and their fortunes protecting such corporate bonanzas.

To do so, they have grown increasingly sophisticated in their methods. Birnbaum effectively traces the evolution of lobbying from its roots in what was essentially bribery to the modern techniques of direct mail and telephone outreach, mass circulation advertising and affiliations with academic and scholarly institutions designed to provide intellectual camouflage for profit-driven motives. Birnbaum is at his best describing methods by which lobbyists operate: blending social, political and personal relationships into a seamless whole that rarely affects legislation directly, but distorts the lens through which legislators view issues and make decisions. "If you spend a lot of time with millionaires," declares one Hill staffer, "you begin to think like them."

 Birnbaum notes that one result of lobbyists' penetration of Washington culture is that "corporate America, once a perennial sacrificial lamb when it came to government crackdowns, has become something of a sacred cow. Not only are lawmakers and policymakers reluctant to make changes that would hurt businesses, they even have a tendency to try to help them." One example he points to: "In 1990, Congress passed ... the biggest deficit-reduction bill ever. But of its approximately $140 billion in tax increases over five years, only 11 percent came from corporations. The rest came from individual, taxpaying families."

 Where Birnbaum fails is in analyzing - or even acknowledging - any link between the accounts his book portrays and the growing public cynicism toward all political institutions. Although he discusses the downfalls of former House Speaker Jim Wright and California Representative Tony Coelho, he only superficially points out that it was their relationship with lobbyists that led to their disgrace.

Nor does he provide any indication that the budget accord or the ethics travails of Wright, Coelho and much of the Department of Housing and Urban Development - all of which occurred in the period covered - had any lasting effect on U.S. political life or society. Even the most casual observer would conclude that these events in large part shaped the 1992 election and, as a result, the history of the United States for at least the near future. Yet, even in his epilogue, written just prior to the November election, Birnbaum only casually suggests that there may be something more to all of this than his book outlines.

 Given the opportunity and the ammunition for a widespread indictment of the modern political process, Birnbaum settles for the more timid "behind the scenes" profile common for the reporter he is. "Just the facts" seems to be the motto. Birnbaum should have gone all the way, reaching the conclusion for which his book cries out.

Despite this shortcoming, and an unnerving insistence on writing almost exclusively in past tense (referring to individuals, organizations and Congress itself as if none of them exists any longer), Birnbaum's The Lobbyists remains a compelling profile of a system ripe with problems. Perhaps his next literary undertaking will outline a solution.

Investing in Peace

Converting the Cold War Economy: Investing in Industries, Workers and Communities
By Ann Markusen and Catherine Hill
Washington, D.C.: Economic Policy Institute, 1993
85 pp.

THE PROPOSAL TO CUT U.S. MILITARY SPENDING in half, long advised by peace advocates and others who have spent the last 12 years puzzling the ironies of U.S. budget priorities, is now being seriously considered even by some policymakers and elected officials well outside "the nuclear freeze crowd." The end of the cold war challenges the U.S. government to free up $140 billion per year by halving military expenditures over the next decade - or to deny that the "peace dividend" resulting from such a policy is desperately needed to bolster education, revitalize manufacturing, reduce budget deficits, provide jobs, income security and housing, invest in health care and restore the environment.

In Converting the Cold War Economy: Investing in Industries, Workers and Communities, a report released in February by the Economic Policy Institute, Rutgers University economist Ann Markusen and research associate Catherine Hill argue that the federal government's creation of guaranteed markets and its provision of research and development (R& D) funds ensured the bloated success of a small group of U.S. industries: aerospace, communications and electronics. These three industries provided a large portion of U.S. manufacturing growth and export earnings in the last 30 years. Converting the Cold War Economy contends that science and engineering fields became swollen and defense-dependent, drawing talent away from civilian sectors. Moreover, the authors say, military production was highly concentrated in particular regions and communities, heightening their vulnerability to cuts.

 The authors, operating under the sound assumption that a 50 percent military spending cut is imperative to economic health in the United States, focus their report on the means of successfully converting the cold war economy. They recommend that the federal government pursue a coherent R& D policy, emphasizing research on products that meet genuine social needs and ensuring that the benefits of federal R& D spending are spread out more geographically evenly than Department of Defense (DOD) spending has been.

The economists note that military cutbacks have already begun to erode the relative prosperity of "the gunbelt," where they contend that worker adjustment is hampered in part by the regional concentration of defense-oriented plants. The study shows that physical isolation of defense plants from civilian industrial districts makes it harder for workers to find new jobs.

Markusen and Hill argue that it would be unwise to expect the DOD to oversee conversion: in addition to a fundamental conflict of interest, the Defense Department has no expertise in civilian production or commercial competition. To achieve conversion efficiently, the authors propose establishing a temporary Office of Economic Conversion outside of any cabinet agency and responsible directly to the president. The Office of Economic Conversion would craft policy, review government programs and provide state and local governments with badly needed data on forthcoming cuts and their probable impact. Otherwise, they warn, U.S. citizens can fear the worst for their defense-addicted economy. "Deliberate, concerted action is required to shake the dependence of our economy on Pentagon dollars without the worst ęcold turkey' symptoms afflicting our industries, workers and communities," write Markusen and Hill.