Forget Stocks Or Bonds, Invest In A Lobbyist

[Huey P. Long]

Forget Stocks Or Bonds, Invest In A Lobbyist
02:53 am
January 6, 2012

by Alex Blumberg

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Corporations don't lobby Congress for fun. They lobby because it helps their bottom line. Getting a regulation gutted or a tax loophole created means extra cash for the corporation. But getting laws changed can be very expensive. How much money does a corporation get back from investing in a good lobbyist?

It's a messy, secretive system so it was always hard to study. But in 2004, economists found a bill so simple, so lucrative, that they could finally track the return on lobbying investment.

The American Jobs Creation Act benefited hundreds of multinational corporations with a huge, one-time tax break. Without the law, companies that brought profits earned abroad back to the U.S. had to pay a tax rate of 35 percent. With the law, that rate dropped to just over 5 percent. It saved those companies billions of dollars.

In a recent study, researchers Raquel Alexander and Susan Scholz calculated the total amount the corporations saved from the lower tax rate. They compared the taxes saved to the amount the firms spent lobbying for the law. Their research showed the return on lobbying for those multinational corporations was 22,000 percent. That means for every dollar spent on lobbying, the companies got $220 in tax benefits.


That high of a payoff surprised even Alexander:

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http://www.npr.org/blogs/money/2012/01/06/144737864/forget-stocks-or-bonds-invest-in-a-lobbyist

[comipinko]

1. I bought one , once.

Funny thing, thier shelf life is not so good. I put one in my basement, and just 3 weeks later went down to get it, and it was dead! Seems it was dead for at least 2 weeks. So, I would not advise you to buy one unless you're going to use it right away.
(and do you realize how heard it is to get rid of one when you're done with it?)

[unblock]

2. i think the methodology in this study is weak.

without even rolling up my sleeve:

- they neglect that many corporations got a free ride -- paid zero, but reaped benefit. to the extent that corporations take turns doing the lobbying and getting the benefits of other corporations' lobbying, this lowers the overall cost.
- they counted as savings the difference between the 35% rate and the 5% rate, but the 35% rate was a rate that they weren't paying at all. if they were routinely paying 35% and then instead paid 5%, that would be a savings of 30%. but given that they refused to pay the 35%, the actual savings was less. same situation as if i buy a suit for $100 that was marked down from $1000. i didn't actually "save" $900 because i was never going to buy it for $1000. if they had said it was originally $10000 would i say i saved $9900? no -- the actual price at which a transaction DIDN'T HAPPEN is irrelevant.
- they picked a lobbying success and ignored lobbying efforts that failed. paid something, reaped nothing.


that said, it's rather well understood that for certain things for corporations or collections of entities of a certain size, lobbying can easily produce stellar returns on investment. the usual ballpark given is a 100:1 return.