To raise the alarm about what’s happening in gerrymandered statehouses across the country, I wrote Laboratories of Autocracy in 2021.
In order to understand why these places have become the front line in the non-stop attack on democracy, you first have to understand how absolutely corrupt they are….how, in a world with no accountability, they’ve gone from being about public service, to using public assets and public power to serve private interests. It looks like this:
So the corruption and the attack on democracy go hand in hand. And it’s the endless attack on democracy that sustains the corruption.
But understanding the details matters. And because food is still on my mind after yesterday, I’m going to share the part of the book that analogizes what statehouses do for private players as delivering a really long and sumptuous meal…for a price. (These excerpts from Laboratories of Autocracy are available to paid subscribers).
At the Statehouse Grille, A Savory Menu To Order From
We reviewed in the last chapter the broad powers of the legislature. But when people throw money at legislators like Cliff Rosenberger, and travel with him to all points of the globe, what are they looking for? What exactly can they get from statehouses in return?
For some, of course, they’d like to see the general policies of the state comport with their interests or passions. A budget that keeps taxes down or allocates money in ways that satisfy their broader ideological views. And Ohio’s legislature has indeed kept many big players pleased with the general direction it’s taken. Ohio’s version of trickle-down economics, practiced for a generation, has been to reduce state income taxes in a way that’s paid off handsomely for those who make the most. And they’ve paid for those budget-busting tax cuts by ripping money away from local governments and schools (who then either cut spending or raise their own local tax rates) and redirecting those funds to the state. The model may be an abysmal failure, but its Ohio’s status quo, and they’re sticking to it!
But when it comes to the legislature, the ways in which lawmakers can help get much more specific than that, and fast. Think of the statehouse as a restaurant—let’s call it the Statehouse Grille—where insiders know how and what to order and are willing to pay dearly.
Here’s a basic menu of what the lawmakers serve up:
The Appetizer: Paying for “Services”
First up on the menu, a state doles out taxpayer funds to businesses and entities who do “work” for the state or on behalf of the state.
Like a business, states like Ohio and its many agencies and departments purchase goods and services in the billions of dollars—everything from accounting and legal services, to technology, to trucks, to contractors and engineering firms who fix roads and bridges. Most of these services are straightforward. Some make up a small part of a company’s overall portfolio; Xerox, for example, has a division that provides numerous services for government clients. Other companies rely exclusively on government work to survive. And to be clear, most selections for this type of work won’t involve the legislature at all. Depending on the type of service, they are guided by a formal bidding processes that bidders must win fair and square.
But sometimes, a nudge from the state legislature can maneuver companies into this lucrative torrent of state business, or keep a company in it once there. And that’s where lobbying and political giving can make a big difference. Sometimes this “nudge” is dressed up in the high-minded language of policy. For example, when you hear about the “privatization” of previously public services, it means someone is looking to make big bucks out of taxpayer dollars. And it will too often be accompanied by major political giving at multiple levels to make it happen. Private prisons are a good national example of private companies positioning themselves to grab a big chunk of public corrections budgets. Companies like Corrections Corporation of America have invested heavily in politicians to grow into the billion-dollar company they are today.
Of course, the most prominent Ohio example of a lucrative “government service” dressed up as policy takes us back to William Lager [the founder of a for-profit online school that turned out to be an enormous scam]. What he drew on those napkins was basically a scheme to have the state pay him for the service of educating Ohio’s kids at his on-line school. Helpfully, he even identified the revenue stream that would flow his way. And Ohio’s legislature did exactly as he asked, diverting money that previously went to Ohio public schools for any students Lager claimed to attract.
His example shows the enormous upside of getting a critical mass of statehouse politicians on your side; and it shows how, once they’re in, the politically connected can continue to get paid for their “service” no matter how poor their performance. In cases like Lager’s, it’s not just hitting the lottery—it’s a bigger payout, and you’re hitting it multiple times every year, year after year. Except here, it’s not luck. The legislators are spinning the wheel and stopping it on your numbers every time, so long as you give them some of the winnings so they, too, stay in power. Then they keep spinning the wheel.
Another type of state work making people a lot of money in Ohio is collecting debt for the state. In this case, the decision of who does this work isn’t made by the legislature, but by the Ohio attorney general. For a generation, Ohio AGs have been notorious for raising millions from those they dole out this debt collection work to, using no competitive process to speak of. The way the money flows is straightforward: private collectors pocket a percentage of the money they collect from debtors, then pass along a cut of their cut to the attorney general’s campaign fund on a regular basis, who thanks them by keeping them on as collectors, year after year. Practically speaking, this means that some of the largest political donors in Ohio are (unwittingly) student, medical and tax debtors, as millions of their dollars make their way to politicians or to party accounts that then give to those politicians.
Now even though this is not a legislative function, the fact that this is orchestrated by the attorney general is highly relevant to overall corruption in Ohio. Because if you watch for long, you’ll notice a pattern—it’s always the FBI that cracks down on the biggest Ohio scams. Where’s the policing from within the state? Well, if the chief law officer of Ohio (i.e., the attorney general) is engaged in one of the most blatant pay-to-play operations in Ohio—and everyone knows it—you’d imagine that official would be gun-shy about cracking down on pay-to-play elsewhere. And you’d be right.
As a result, pay-to-play is everywhere in Ohio, often to perform government “services.” And only outside entities (i.e., the FBI) truly go after it.
First Course: A Few Goodies
Next up on the Statehouse Grille menu are the variety of valuable goodies legislators can dole out. Not because the recipients are performing a “service” for compensation, but because the entities know how to ask, and because the statehouse has the power to give. These goodies come in a variety of forms: grants, incentives, tax credits and breaks. They can be small and straightforward and make sense for all sorts of policy reasons. Or they can amount to billions and make little sense at all. It all depends on the ask, and what the legislature wants.
The largest bribery scandal in the history of Ohio…was essentially an enormous goody handed to one institution….
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