Steven Slivinski: My name is Stephen Slivinski. I'm director of Budget Studies here at the CATO Institute and today the book we're celebrating a release of is titled, "The Big Ripoff: How Big Business and Big Government Steal Your Money". Now there is a big myth in American politics today. It's the supposition that whenever business organizations and trade groups get involved in politics, they're doing it because they want to get the government off their back. Well, that's only half true, they do sometimes want to get government off their back, but instead of simply leaving it at that, they also lobby to place government on the backs of their business competitors in the process. Short of that they at least want special hand outs for themselves as a means of protection against the forces of competition of the free market. Now, these sorts of handouts have been broadly grouped by observers, like myself, under the rubric of "corporate welfare". These direct subsidies to businesses cause tax payers about 90 billion dollars each year according to the latest estimate from the CATO Institute. That only shows the edges of the phenomenon. That estimate does not include tax breaks, cartel protections, tax barriers and various regulatory barriers to competition. These sorts of corporate welfare and equal countless billions more. And the cost of them are born by consumers; a form of higher prices at the store, fewer choices in the market place and higher barriers to entry for small businesses and entrepreneurs. In other words, The Big Ripoff. Tim Carney's book is a well written and much needed reputation of this big myth. The Big Ripoff is also essential as a tool to understanding the lobbying scandals that have affected Washington D.C. lately as humorist PJ O'Rourke once noted, "when buying and selling are controlled by legislation, the first things to be bought and sold, are legislators." Fueled by Tim's hard hitting investigative reporting, which includes many stories that I as a policy who studied this issue for many years, didn't even know myself, The Big Ripoff is a book that really should be read by every concerned citizen and tax payer. At $24.95 cover price, the book itself is not a rip-off. In fact, considering the information inside, it's really quite a bargain. Even more of a bargain for $14.00 here outside the lobby, I encourage you to buy a copy for yourself or for a friend and Tim would be more than pleased to sign as many copies as he can upstairs in the lunch, immediately following today's program. Also want to thank Mr. Jim Pinkerton of Newsday on FOX News for being here today to provide us with his thoughts on the book. For those of you that don't know, Jim has worked at the White House under President Ronald Reagan and George Bush leaving government in 1993, he's been a columnist for Newsday and a contributor to the FOX News channel on a regular, on its show. His writings have appeared in the New York Times, the Washington Post, Wall Street Journal, Foreign Affairs, New Republic, Slat e and the others. He also stakes claim to be one of the tallest people in Washington D.C.. I also want to note, there is going to be a short question and answer session after Jim presents his remarks; He'll be commenting on the book after Tim speaks. And so with that, let me go ahead and introduce you to Mr. Timothy Carney. He's a freelance, investigative reporter and also the Warren Brooks Journalism Fellow at the Competitive Enterprise Institute. He's been published in the Wall Street Journal, Washington Times, New York Sun, National Review on- line and the American Spectator. Also an associate editor at Human Event Magazine, a Philips Foundation fellow and he cut his teeth in the journalism world working for (unidentified) Robert Novak. In fact, Robert Novak refers to Tim in the introduction as possibly the best political reporter who has worked for him in the past 25 years. In my opinion, this book is very strong proof of that. Please help me in welcoming Mr. Tim othy Carney.
Tim Carney: Thank you Steve, uh, thanks to the CATO Institute, thank you everybody who, uh, came through the heat to comer here today. The, last summer at this time, I was working on my book at six months before I had gone up to New York and interviewed two business men, small business men, Bill Burdick and Bill Brody. One, Bill Brody, he lived in (unidentified) New York, a couple towns away from my parents, he had a hardware store down in the Bronx and then a couple towns away from that in Port Chester, New York, he had bought a couple run down buildings on a dirty little water front there and renovated them. And they had turned into a Laundromat, he bragged the best Laundromat in town, then it turned into a Hispanic foods store, a couple other small businesses there. And he was approached one day by a developer up in Port Ches who said. "we would like to buy your land." But this was Bill Brody's retirement, this was his uh, he got steady income from that. He was going to quit the hardware store in a few years and then just live off of that and then pass the buildings down to his children. So, Brody said, "we're not going to sell", and then the developer said, "well then, we are going to take them". And when Brody tried to complain to his, the local politicians in Port Chester, they said, "Oh, well here's the number you need to call." It was the number of the developer. And sure enough, last summer at this time, the Kelo decision came down, Kelo- New London, and I reveled in reading liberal blogs for the next two days where these people just went ballistic about the fact that big business was going to be taking over the houses of these poor families there in Connecticut and my favorite part was when they would acknowledge and say ,"what kills me the most, is that Antonin Scalia was right on this and Clarence Thomas was right on this and the (unidentified) judges Ginsberg, etc., the good judges were wrong on this. What went wrong? How did they end up on the side of big business? Well, I don't think that Scalia or Stevens care very much what side business is on and in this crowd there are probably people that have their complaints about Scalia from a liberal perspective, but at least relatively speaking, Scalia is going to take the side of the smaller government and Stevens is going to take the side of the bigger government in economic issues. And in this case, and a lot of liberals saw this as an exception, in this case, big business actually profited from bigger government and I liked it when I saw those lines out there, because I realize that the story I had to tell in this book hadn't been told enough and I love it when Al Gore recently said, "you know that you need global warming restrictions when even the head of Duke Energy is saying something has to be done." And even the head of Duke Energy is calling for carbon dioxide tax. Really, even the head of a company that has monopolies on all their coal fire power plants, state controlle d monopoly, state controlled prices. He's calling for a tax on the coal? That just means he raised his prices for consumers. It should, if you said, even the customers who know their rates are going to go up, want a tax on carbon, that would be even, but no, we get the, even the head of Wal-Mart has said that the minimum wage needs to be raised. Wal-Mart pays $10-$12 a, the lowest I've read is in the $8 range, per hour. The minimum wage hike they're talking about would go up to $7. So Wal-Mart CEO says well alright, our consumers can't afford enough at this point and they'll be able to afford more when they get laid off. These guys understand economics at Wal-Mart. They understand economics almost better than anyone else and they understand that mom and pop paying high school kid, hiring high school kids, are the ones who are most likely to be paying minimum wage and that they'll be hurt, and there is fewer competitors there if the minimum wage goes up and the idea is completely lost on the mainstream media for the most part. And so I tried to pepper the book with all sorts of these stories. The people here at CATO are very good at explaining the basic economics and I mostly try and stay away from that and just tell the stories that get reported once in awhile as the aberrations as in an interesting twists, Philip Morris wants more regulation of tobacco, even General Motors is calling for a stricter new rules on auto emissions, and there is no interesting twists when it happens again and again. And unfortunately, it's also not a new trend. I want to read here from the book here for a tiny bit from a part that mentions the building we're standing in. This is in my chapter called the history of Big Business is the History of Big Government. "In northwest Washington D.C., on the south side of Massachusetts avenue, between 10th and 11th streets, stands a unique building defined by a large glass atrium inhabitants called the "Winter Garden". It's the headquarters of the libertarian CATO Institute. Across the streets sits a monument to American Confederation of Labor Founder, Samuel Gompers, once a marked citizen, today revered as the founder of the American Labor movement. Given the disparate political leanings, the contrast is amusing. The men who gathered at the Department of War, however, on December 6th, 1916, struck a more startling contrast. Samuel Gompers in the flesh sat at the table with President Woodrow Wilson, Secretary Newton Baker, Secretary of the Navy, the Agriculture Secretary, the Commerce Secretary and the Labor Secretary. Joining Gompers and these democratic politicians were Daniel Willard, the president of B&O Railroad, Howard Coffin, president of Hudson Motor Company, Wall Street financier Bernard Baruch, and a handful of other politicians, businessmen, a scientist and a doctor. This extraordinary gathering was the first meeting of the council of National Defense formed by Congress and President Woodrow Wilson as a means for organizing 'the whole industrial mechanism in the most effective way'. The Council of National Defense coordinated the manufacture of ammunition and other war necessities, but it did a lot more." The business men at this 1916 meeting had dreams for the CND that went far beyond America's eminent involvement in the great war, both in breadth and duration. "It is our hope", said Howard Coffin, the head of the Hudson Motor Company," it is our hope that we may lay the foundation for that closely knit structure, industrial, civil and military, which every thinking American has come to realize is vital to the future life of this country in peace and in commerce, no less in war." And I've got a, some other quotes in here from uh, some, one business man who was there saying, "The war industry's board, successor to the Council of National Defense, the War Industry's Board extended its intent into the inner most recesses of industry. Never was there such an approach to omniscience to the business affairs of a continent, the approach of omniscience." And this happened again in World War II, where business and government get together and they decide, business; nothing is more efficient and robust than industry. And in a lot of the minds of the elites who ran the businesses and certainly in the minds of politicians, nothing is more altruistic and philanthropic and right minded, than the government. So why not having, have business do the rowing and government do the steering and this is not an upsetting idea to business at all. And I don't use the word in the book, because it makes people think of Nazis and invading Poland, and all the other atrocities, but fascism is the word that is used to describe this type of partnership between business and government. But when liberals or the mainstream media complain about conservative influence in Washington and they don't mind throwing out the word fascism, RFK Jr. gave a whole spiel on that on the radio or in one of his articles recently. They call that fascism when say Bush doesn't raise the arsenic standards on drinking water because somebody who would lose money from the drinking water standards going up, doesn't lose the money. Or a tax cut across the board that rich people get to save more money, there's no difference in some peoples mind in less government helping, big business and more government helping big business. It's actually an interesting problem. I'm going to read you a quote from the book in a second. But when I was meeting with independent book sellers, I was very excited about this and one book seller came up to me and said, "I heard about your book and it's a great idea, and I'm going to stock it because this is exactly the problem that I'm complaining about." And she was in Portland, Oregon or San Francisco or Greenwich Village, they were all from towns like that. And she said, "for example, Starbucks wants to start selling books." And I said, "Oh, wow, that's gotta be tough for you. You should definitely, uh, stock my book in your bookstore." There is no distinction in some people's mind between that, but uh, is a big myth and I have a section on that. And there is a documentary made, but it was also turned into a book and it was called the Corporation. And I start my book with, pointing out that 90% of Americans in a recent poll says big business has too much influence in Washington and then asking well, what does it do when there is too much influence? And the documentary said, "most of the time when big business is lobbying in Washington, it is lobbying for less regulations and lower taxes." And there is nothing to back that up and obviously we do see them lobbying for less regulations and lower taxes, but because journalists tend to be a little scared of business men, cause journalists are not business men and we don't wear as nice suits as businessmen, we don't make as much money, we usually ride the metro while the businessmen drive in and park in their $10 a day garages. They are a little bit scary to us and the free market is terrifying to the average reporter who really thinks free markets good, but too free, that's what caused the depression and that's the extent of their economics even if they're covering economic issues in Capitol Hill. So both of those issue s fall into the scary category for reporter, the free market and businessmen and since they're both scary then they must both go together. And that's what we're up against and it creates a real problem. It creates a problem because it makes it so much easier for some one to attack advocates of the free market, advocates of the regulation as being corporate shills. You don't have to make an argument if you can just say, well, you're opposing ethanol, because you're working for the oil industry or your opposing tax cuts because you're just doing to bidding of the big business and the rich. And it frees them from making an argument for their big government policy. And so I don't well, I, when I was working for Bob Novack, I got a call from someone who had forward emails from Enron that the government had their hands on and we helped get out that Enron had been lobbying the Bush administration through Paul O'Neill to ratify the Kyoto global wa rming treaty, strict regulations on energy use and all this stuff. And so when Novak reported that and it showed up in the Washington Post and some other conservative outlets reported this, Timothy Noah in Slate said, well just because Enron stood to profit from Kyoto and thus supported it, doesn't mean that Enron was bad. And all the sudden you're thinking, how come it does make it bad that Bush's supporters stand to profit from, when Bush wants to deregulate something? And probably in Bush's regulations, you will get the mainstream media, luckily looking into who might benefit from the big government policies that he pushes. I do have a whole section on corporate welfare here that's heavily reliant on Steve's work and the CATO Institutes' work, but for me, that stuff is only, sort of part of the tip of the iceberg, as Steve said. It's the actual looking for stricter regulations. So the simple economic argument, the easiest one is, regulation adds to overhead and access to barrier to entry, keeping out possible new competitors and disproportionately affecting smaller businesses. And so with that simple fact, it all the sudden becomes, and every radio host I talk to, once I say that, they all assume I understand most of this, but some of them are a lot more clever. Some of the regulations and the big government stuff they push for. I mentioned how you often hear, oh well, he's paid by the oil industry or this, I have a section of that on my chapter called, that last section of my book is probably my favorite; it's called "Green is the Color of Money" and chapter ten is called "Environmentalism for Profit". And its sort of just a run through of various different schemes where big businesses are lobbying for environmental policy, getting good press off of it and then, on the other side, profiting off of it in a way that they couldn't in a free market. And I quote Juliet Eilperin a writer for the Washington Post, who wrote in November, she wrote this article talking about all these people that wanted stricter regulation of global warming laws and then ends it by saying uh, by quoting Roy Spencer. Now this was her way of getting balance. She quotes AP who wants stricter regulation, she wants Roy Spencer who she calls a, someone who, "does not believe the climate will warm us rapidly as many computer models predict." He's a scientist, she describes him as, um, someone who "contributes to the free market on-line journal tech central station, which is in part funded by oil companies opposed to mandatory carbon limits. Now I've got nothing wrong with a reporter throwing that in. I think that's great because everyone might have ulterior motives, so you quote them because their argument might be good and then you mention their affiliation because their motives might not be good. But I went back through Juliet's article and I looked at what she didn't say. When she quoted Joe Bidden, she didn't say, Joe Bidden, whose primary source of funding is a DuPont Corporation who supports, a corporation that supports greenhouse gas laws, has invested more than anyone else in carbon dioxide credits. No, she didn't say that. She, when she quoted the Natural Resources Defense Council, she did not say a group funded by banking corporation that stands to profit from restrictions on greenhouse gas emissions, that is the biggest banking corporation in the world that has invested more than anyone else in windmills and other alternative fuels, energy that lots of people argue is worthless, city group might think its worthless in itself, their funding Natural Resources Defense Council, but they know that with the right government policies, it can become worth something. When GE had its "ecomagination" launch, they didn't have organically grown wine a nd windmill generated hors d'oeuvres some how and they didn't hold their, they said well, this isn't just about helping the planet, we want to help the planet, but we gotta help our share holders to so we're gonna make money by doing good. And they held the event on Pennsylvania Avenue, half way between the White House and the Capitol and then Jeffery Immelt, the CEO, then went and met with, met with people in the White House and people in Congress, meaning they are going to make money by pushing the right regulations that's going to mandate their product. And uh, the chapter on ethanol here discusses it, the chapter on Enron in here discusses it and the Enron thing points to one more cost and one more reason I think its important to write this book, the quotes that came out after Enron, this is a casualty of the free market, this is what happens when government doesn't control anybody, this is deregulation in California, I tear all of those down to try to make the point, Enron would have been a small pipeline company, whose collapse would have been unfortunate for Ken Lay and for a few thousand employees, but wouldn't have been devastating in the way it was if the government hadn't proped them up. The games they play in California would not have been possible without regulations that Enron fought tooth and nail for, so I think its an important idea to get out there. The final reason its important to get this stuff out there, about big business supporting big government, is that too often, defenders of liberty, give a free pass to big business. Next time Altria comes calling on some group or some politician here in Washington whose a conservative free market, the Altria lobbyists will probably get in the door, despite the fact that Philip Morris has been pounding away for FDA regulation of tobacco for years, not to mention the master settlement agreement which is also covered in here. We assume that big business is on our side because we know that the left and most of the media hate most big businesses and then we give them free passes. But we also don't reward them enough for being advocates of the free market. I mean Microsoft and Wal-Mart both are big companies that have tried to stick up for the free market, gotten beaten up, not gotten much love, they've gotten love from the consumers, but that starts to taper off with enough bad press, and then they come to Washington and they get pounded for not coming to Washington more frequently. And so the left is good and government people are good at providing incentives to come over to the big government side. And there is not enough incentives to come over to the free market side, because the benefits of the free market, we argue, are widely dispersed and the benefits of government can be very narrowly concentrated, and they are not concentrated on mom and pop, they are concentrated on the people that have the best lobbyists, which is GE, General Motors, Enron, Boeing, all the companies that have long listings in my index. So uh, later on I'll look forward to the questions and uh, look forward to what Jim has to say and thank you again all for coming.
