Milton Friedman Distinguished Fellow

Andrew C. Spiropoulos (M.A., J.D., University of Chicago) is the Robert S. Kerr, Sr. Professor of Constitutional Law at the Oklahoma City University School of Law. He also serves as the Milton Friedman Distinguished Fellow at OCPA.

Milton Friedman Distinguished Fellow

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This article was originally published in the October 2006 issue of Perspective.

After finishing my two-year-stint as policy adviser to the Speaker of the Oklahoma House of Representatives in the summer of 2006, I faced the daunting task of reviewing and culling my files. This pile goes to someone else in the office, this much bigger pile goes with me to Oklahoma City University (where I teach in the law school), and this pile—my favorite—goes to the trash.

As the trash pile mounted, I was struck by one of the biggest contributors to the mess—a giant stack of materials given to me by special-interest groups and their lobbyists over the last two years. Many of these, as you would expect, were from private entities seeking some subsidy and favor from the state. Disturbing enough, but no surprise there.

What struck me, though, was how much of the pile came from government entities seeking more cash. Reams of paper from the state Board of Regents, the Department of Human Services, the Department of Corrections, OSU and OU (I guess they don’t trust the Regents to lobby for them), the Attorney General, the Tax Commission, the Oklahoma Water Resources Board, the Oklahoma Capital Investment Board, and many more. And all of this piled on someone who actually went out of his way to avoid meetings with people asking for money. These meetings, unfortunately, are the main day-to-day business of any legislative leader.

Anatomy of a Shakedown

These meetings are all the same, and are pretty discouraging for anyone who believes in limited government. First, the lobbyists—at least one of whom is permanently on the state’s payroll and is often accompanied by private mouthpieces hired with taxpayer dollars—hand you the pile of expensive, glossy materials describing the vital work of their agency. Then they extol their agency’s virtues and explain, in the most apocalyptic terms, their desperate needs, emphasizing the terrible harm that will be caused if they don’t get the money (which, of course, is far, far more than they have ever received before).

Then, they tell you (unconvincingly) that they do understand that even in years of plenty, money is limited and that there are too many worthy recipients competing for the limited amount of money available. Sometimes they even acknowledge—grudgingly—that we might have to reduce taxes a bit—just as long as it doesn’t get out of hand and cost “us” (the state) too much of “our” money. But, they conclude, their agency is so much more important than the others and their needs are so much more urgent than everybody else’s that the common good can only be served by granting them their whole request. Granting them just part of their request simply won’t do, you understand, because too many deserving folks will be left out in the cold.

These lobbyists, of course, don’t leave without reminding you that: (1) several members of your own GOP caucus support this vital spending; and (2) several important Republican donors support this government spending as well, with the implication that these donors will be very angry if we don’t fork over the cash. (Often, the donors will subsequently make a call asking about the request.)

Let’s review, then, what has just transpired. A public entity, which by definition has been funded by the taxpayers, has just taken the very money it says is desperately needed to provide vital services and instead spent it on a full-time lobbyist (usually called the “director of communications”), some additional hired guns, and fancy marketing materials. All of this spending is designed to win even more taxpayer money, some of which can be plowed into next year’s lobbying efforts, making them even more sophisticated and effective in collecting the loot.

The key here, of course, is the full-time lobbyist. If they do their job well—and most do—they will win over key members of the caucus by making full use of the constant access to legislators and other key leaders made possible by their taxpayer-subsidized ubiquity at the Capitol. It isn’t just that they have better and more frequent opportunities to make their case and then tirelessly renew their requests. They also, for example, provide legislators timely and useful information on the agency’s activities and help to resolve problems that legislators and (more importantly) their constituents have with the agency.

In addition to these carrots, they also carry a big stick: They often can effectively apply political pressure by leaking tidbits of juicy information (to the press and to a legislator’s opponent) and spreading rumors of the legislator’s opposition to the expansion of a politically popular program. The legislator faces a choice: Make friends with the lobbyist and receive needed information and help making constituents happy, or resist their requests and be portrayed as an enemy of the people and a barrier to progress. Unsurprisingly, most choose the former.

Tax Money for Left-Wing Groups

The problem I describe goes far beyond what I have discussed. State and other public agencies are not the only entities that engage in taxpayer-funded advocacy for higher taxes and bigger government. There are many so-called “nonprofit” and “public interest” groups that receive money from the government (through the specified or a closely affiliated entity) and then use some of that money to lobby for even more. And keep in mind that the government money that funds these groups doesn’t just come from direct government grants to the organizations—although there are plenty of those. It also includes dues money drawn from the paychecks of government employees.

Among the groups that take your money and use it to ask for more of your money are the major education groups—the Oklahoma Education Association, the Oklahoma State School Boards Association, and the various representatives of school superintendents and other administrators. And of course the Oklahoma Public Employees Association wants more government spending. “Community service” agencies like Planned Parenthood and the Community Action Project of Tulsa County, funded largely by government grants, also lobby for bigger government. None of this should surprise anyone. Why wouldn’t those who live off taxpayer dollars have an incentive to expand government? He who takes the king’s shilling does the king’s bidding.

In a 2001 Cato Institute paper entitled “More Government for All: How Taxpayers Subsidize Anti-Tax Cut Advocacy,” John Samples, Christopher Yablonski, and Ivan G. Osorio make the important observation that, even though organizations that receive government money may use it to fund programs and services, the government money still amounts to a subsidy for the organization’s left-wing advocacy. “After all, money is fungible,” they write. “Government funds given for programs or services allow an organization to devote other money to advocacy efforts. The federal money also necessarily builds those organizations’ base of support and infrastructure, which enhances their advocacy efforts.”

Surely, one might think, there are contrasting voices and institutions questioning the lobbyists’ pleas for more money and more government. Sadly, the truth is that taxpayers are not as well represented in the state capitol building as those who want to fleece them.

The most serious problem is that the legislature itself does not have the staff or the resources to genuinely question and evaluate the requests and operations of the agencies and organizations.

In addition, outside groups dedicated to representing the taxpayers have neither the personnel nor the resources to provide all the information necessary to refute the claims of all the government-funded groups. Consequently, it is difficult for even those legislators sympathetic to the cause of limited government to resist increased government spending. They don’t have the intellectual ammunition, from legislative staff or from outside organizations like OCPA, to challenge every argument of every group seeking money.

Another problem is that legislators do not consistently hear from constituents who oppose increased funding and new programs. Why is that? “The answer lies in the logic of concentrated benefits and diffuse costs,” former University of Oklahoma economist Daniel Sutter explained in these pages in January 2005. “The full cost of rent seeking or pork barrel spending … exceeds the benefit to recipients. But typically a relatively small number of people benefit, while the costs are spread over the remainder of the population. Thus, the beneficiaries of pork barrel spending typically have a lot more at stake on this issue than the taxpayer. … As a result, the beneficiaries tend to be a lot more vocal than taxpayers when specific budget items are considered. Only the beneficiaries have enough at stake to write their legislator or attend a committee hearing or make campaign contributions based on this one issue. Taxpayers hardly notice the extra couple of dollars annually for this spending project.”

The Threat to Freedom and Limited Government

We must understand, then, that this taxpayer-funded advocacy, whether it’s by a state agency or an independent organization funded with government dollars, poses serious threats to the cause of limited government.

The most serious, and obvious, threat is that these taxpayer-funded lobbyists constitute a built-in and powerful constituency in favor of higher taxes and bigger government. The strength and constancy of their voice, particularly in contrast to the near silence on the other side, creates an artificial but powerful impression that public opinion supports the expansion of government (when in fact public opinion supports no such thing, as SoonerPoll data repeatedly demonstrate). In addition, their requests are so numerous and so expensive that when some of them have to be denied simply because there isn’t enough money to satisfy all of them, legislators can congratulate themselves on their fiscal conservatism. Borrowing from the late Sen. Daniel Patrick Moynihan, I call this phenomenon “defining fiscal restraint down.”

Second, in addition to fighting for and winning more government spending, these groups often oppose efforts to reform government. In 2006, for example, while some agencies like the Oklahoma Health Care Authority (OHCA) cooperated with and provided important professional assistance to House members in designing some free-market reforms of the Medicaid system, other agencies, such as the Department of Mental Health and Substance Abuse Services, initially worked hard to subvert and defeat the reforms in order to save its piece of the fiscal pie. For doing its duty, OHCA was rewarded with threats from Senate Democrats that its funding would be cut and its officials forced from their jobs.

Third, the dangers have increased because of the recent discovery by these taxpayer-funded groups that their influence over public opinion can be even greater if they band together. Both at the federal level and the state level, these tax-consuming groups—including labor unions, the education funding lobby, and industries dependent on government (such as hospitals)—have pooled their resources and political influence to oppose tax cuts and limits on government spending. More money for government in general means more money for them individually. As the conversation at the state Capitol has now turned toward reducing or phasing out the state income tax, the liberal Oklahoma Policy Institute is hiring an outreach coordinator to lead a coalition fighting against tax cuts.

Clearly, if we are to advance the cause of limited government, we must find a way to combat the influence of the tax-subsidized advocacy of public agencies and other organizations. However, before articulating possible solutions, I must sound two notes of caution. First, with regard to private organizations, we must not enact new regulations on recipients of public money that are so onerous that we interfere with reformers’ efforts to redirect tax dollars from ineffective public programs to private (particularly faith-based) organizations. (These groups, as well, have rights under the First Amendment that must be considered.) We must distinguish between those groups that seek to expand government and those that will enable it to work better and more efficiently.

Second, with regard to public agencies, we must remember that communication between agency representatives and government officials is useful—indeed, indispensable—to good government. To do their jobs well, legislators and other officials need the information and help that agency officials supply. If we cripple the agency’s ability to communicate, we also cripple its ability to function.

Suggested Reforms

With those caveats, I suggest the following ideas to deal with the problem of taxpayer-funded advocacy.

First, we should enact laws making it more difficult for taxpayer-subsidized groups to use that money to lobby for more spending. While current law does not allow the paying of lobbyists contingent on the passage of a bill or program, this provision and others do not go far enough.

Second, the legislature must give itself more and better tools to scrutinize the operations and spending requests of both government agencies and private organizations. While it may seem incongruous to call for more government spending to reduce government spending, what I am suggesting is no different from a private corporation hiring fiscal officers and accountants to watch the books. One political scientist has proposed that Congress establish a well-funded Office of Taxpayer Advocacy to establish an institutional voice for fiscal restraint. Oklahoma should consider something similar.

Last, but certainly not least, turning Oklahoma government in the direction of fiscal restraint requires a shift in the beliefs and values of its citizens. Part of the reason for the increasingly robust advocacy for more money by tax consumers is that, incredibly, they feel no shame in doing so. Indeed, representatives of agencies and groups seeking money have often assured us—sincerely, I think—that they are conservatives and agree with our principles. They just do not see how those principles interfere with their efforts to expand the welfare state.

Until we all realize that the central principle of good government is the sacrifice of our personal interests and wants—as attractive, even noble, as some of them might be—for the common good, we will never reform Oklahoma government. As the founders of our nation could tell us, no law or institution can substitute for the virtue of the people.

Milton Friedman Distinguished Fellow

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