Government Ethics and the Revolving Door: Tax It = Revolving Door Tax (RDT)

When Obama ran for president in 2008, he promised to “close the revolving door” and clean up both ends of Pennsylvania Avenue, but that hasn’t happened. Which isn’t to say that it shouldn’t happen now. But I don’t think the usual ethics-rules approach is enough.

The problem with ethics rules for this sort of thing is that they tend to be ignored, or distorted. So I say, let’s involve the most effective behavior-control machinery in America: the Internal Revenue Code.

In short, I propose putting a 50 percent surtax — or maybe it should be 75 percent, I’m open to discussion — on the after-government earnings of former government officials. So if you work at a Cabinet- level job and make $196,700 a year, and you leave for a job that pays a million a year, you’ll pay 50 percent of the difference — just over $400,000 — to the Treasury Department right off the top. So as not to be greedy, we’ll limit it to your first five years of after-government earnings; after that, you’ll just pay whatever standard income tax applies.

This seems fair. After all, when it comes to your value as an ex-government official, it really is a case of “you didn’t build that.” Your value to a future employer comes from having held a taxpayer-funded position and from having wielded taxpayer-conferred power. Why shouldn’t the taxpayers get a cut?

Taxes could halt ‘revolving door’ in politics, industry

I am sick and tired of politicians impugning the ethics of private individuals engaged in commerce. There are certainly a small minority of fraudsters in the world of business, but there is a supermajority of unethical people in Congress, arguably approaching 100%.

My latest evidence for such is this article in the Washington Post about the ethical bankruptcy of the Federal budgeting process. It is impossible to excerpt, but here is a representative example:

At the Census Bureau, officials got credit for a whopping $6 billion cut, simply for obeying the calendar. They promised not to hold the expensive 2010 census again in 2011.

By law, the next census is not until 2020. There was never, ever going to be a census in 2011. But Congress claimed $6 billion in savings for not having one none-the-less. Here is more:
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You can impugn business ethics all you want, and I can add a few stories to yours, but I have worked at fairly senior positions in two Fortune 50 companies and as a worker bee in a third, and in all three it would be a firing offense to engage in this kind of Charlatanism.

Congressional Ethics

Office of Congressional Ethics

House Committee on Ethics

We like the suggestion to tax government employees and elected and appointed officials on higher compensation after they leave office. Say a revolving door tax (RDT) of between 50% and 75% of the amount above their last salary in government employ. It just seems fair, as they are exploiting a resource developed at taxpayer expense.

In general, federal law bars senior administration officials from lobbying their former agencies for one year, and on taking office in 2009, Obama issued an even broader post-employment ban.

The pledge, as it is known, extends the existing ban to two years, and for former officials who become registered lobbyists, it prohibits them from lobbying any covered executive branch official for the entirety of the Obama administration.

The ex-Obama aides are free to lobby Congress. That ability to breeze around Capitol Hill, coupled with their knowledge of the inner workings of the executive branch, even if they can’t lobby it, can make them attractive hires.

Administration Staffers Head Out the Revolving Door

Note that the revolving door is a D and R problem.

Take what happened late last month [January, 2013] as Washington geared up for more fights about the taxing, spending and the deficit. The Senate majority leader, Harry Reid, Democrat of Nevada, decided to bolster his staff’s expertise on taxes.

So on Jan. 25, [2013] Mr. Reid’s office announced that he had appointed Cathy Koch as chief adviser to the majority leader for tax and economic policy. The news release lists Ms. Koch’s admirable and formidable experience in the public sector. “Prior to joining Senator Reid’s office,” the release says, “Koch served as tax chief at the Senate Finance Committee.”

It’s funny, though. The notice left something out. Because immediately before joining Mr. Reid’s office, Ms. Koch wasn’t in government. She was working for a large corporation.

Not just any corporation, but quite possibly the most influential company in America, and one that arguably stands to lose the most if there were any serious tax reform that closed corporate loopholes. Ms. Koch arrives at the senator’s office by way of General Electric.

Yes, General Electric, the company that paid almost no taxes in 2010. Just as the tax reform debate is heating up, Mr. Reid has put in place a person who is extraordinarily positioned to torpedo any tax reform that might draw a dollar out of G.E. — and, by extension, any big corporation.

A Revolving Door in Washington With Spin, but Less Visibility

General Electric, the company that paid almost no taxes in 2010.
You just can’t make this stuff up.

To those who would argue that the notion of a perpetual motion machine is impossible, we give you the revolving door — that ever-spinning entrance and exit between public service in government and the hugely profitable private sector. It never stops.
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The conservative Boston Herald endorsed the idea, comparing an ex-legislator or official’s connections and knowledge to intangible capitol and Reynolds’ scheme to a capital gains tax.

Imagine — conservatives and libertarians making a favorable comparison to the capital gains tax! This and that Russian meteor may be signs of the apocalypse. Just gives you an idea of how deeply awful and anti-democratic the revolving door is, no matter which side you’re on. That’s why it has to be slowed down if not completely stopped — and why we’ll keep talking about it.

The Revolving Door Spins From Sea to Shining Sea

A few weeks back, I wrote here about taxing the revolving door that takes people back and forth between the federal government and the various industries that federal government agencies regulate. My proposal was to put a surtax — 50%, say, or maybe 75% — on the post-government earnings of federal officials in excess of their government salaries for the first five years: Leave a federal job paying $100,000 a year for an industry job paying $600,000 a year, and you’d pay a $250,000 surtax. After all, with folks leaving the Obama administration, as they left previous administrations, for salaries several times what they earned in the public sector, and with excessive entanglement between government and business a growing problem, why not use the power of the IRS to modify behavior?

I didn’t think my proposal would go very far, but maybe I was too pessimistic. It seems that people are noticing and approving.
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The revolving door is just one symptom of a bigger picture: Whatever claims our political class makes about the general welfare, it is really running things mostly for its own benefit.

Slowing the revolving door

Ozymandias

Mockery, truculence, and minimalist living are best, then enjoy the decline. We also need to prosecute politicians and staff who profit from insider trading.

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