The Economist focus and cover articles in its February 18 issue were on “Over-Regulated America.” The pieces talked about EPA regulation and about some of the reasons why America is in a quagmire of regulation, in the magazine’s view. The authors focused on two possible reasons, among others:
Hubris — legislators try to write the laws in such detail that they will preclude every possible counteraction, loophole and eventuality, forever. Thus they write dense, complex bills hundreds of pages long, most of whose provisions require dozens or hundreds of pages of regulation to put them into effect. The time involved in rulemakings, and the complexity of the final rules becomes a problem for the legislators, regulators and the regulated parties.
Lobbying: — Parliament is where lobbying originated, according to the lore, but the magazine is not talking about lobbying per se. Rather the issue is legislators’ micromanagment, which encourages insertion of special provisions into the voluminous and growing bill, often on the request of a special interest or a friend who sees a particular problem to be addressed. Theoretically, the House of Representative rules require all provisions to be relevant to the purpose of the bill, but the Senate has no such rule. The authors point out that Dodd-Frank provisions cover “conflict minerals,” which the magazine says, “were a disturbing issue [but were] not one of the causes of the global financial crisis.”
The February 25 issue continued discussion of Dodd-Frank as the latest example of unwieldy lawmaking. It, probably unknowingly, also exposed the fact that at least some lobbying was illegal. The story said that, “Activists rejoiced when they got a provision requiring firms to publish payments per project included in the ragbag Dodd-Frank corporate-reform act in 2010. ‘We thought we had blown up the Death Star,’ says Ian Gary of Oxfam America, a charity.” (emphasis mine)
What’s wrong with this picture? First, Dodd-Frank was not actually a corporate-reform bill; it was aimed more narrowly, at banking system reform. Second, like “conflict minerals,” the issue of “transparency” had nothing to do with the global financial crisis (but benefited by the Senate’s lack of rules on relevancy). Third, the story and the quote show that Oxfam America (a driving force behind the public campaign for energy company “project transparency”), does not live by the rules it wants to impose. Oxfam America covertly and without transparency, lobbied Senators or Senate staffers into tucking an irrelevant, non-bank reform provision into the 848 pages of the Dodd-Frank bill, and to do that without notice or debate. Since almost no legislator reads these gigantic bills, the provision was undetected through passage and enactment.
Congratulations to Oxfam America, you may say. But (fourth) US law bars charitable, non-profit organizations (501-C-3s in the legal parlance) such as Oxfam America from lobbying. So it acted illegally. And (fifth) it continues to do so by directly and indirectly soliciting members of both Houses of Congress to push the Securities and Exchange Commission to hurry and publish its final rules to meet the “transparency requirements” of Dodd-Frank. Oxfam says that transparency is now “required by law.” Golly.
Personal opinion on “conflict minerals” or “transparency” aside, Oxfam America does not act transparently, nor are they acting legally. That activity should put their tax-exempt status at risk. Most people familiar with Capitol Hill activity know that 501-C-3 employees are frequent visitors in offices or at lunch with House and Senate staffers or the Members themselves. Company employees who do that work are lobbyists. Perhaps it’s time that 501-C-3 Board Members and officials, or people who donate to them, should tell them to be more transparent and abide by the law. Just an idea.
The Washington reaction to The Economist articles was perfect. Both authors wrote and claimed that it had helped keep things from going from bad to worse, and that it was actually making things better already. Various Treasury and regulatory agency writers added their opinions. According to them, we’re better off because of them. That’s your government in action.