Whatever Happened to Honest Graft?

By Alex Pareene | February 16, 2018 | 9:24pm

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Last week, The Intercept’s Lee Fang and Spencer Woodman published a story about how the family of U.S. Secretary of Transportation Elaine Chao, whose husband is Senate Majority Leader Mitch McConnell, funneled millions of dollars to their family foundation from their own offshore tax shelters, which are incorporated in the Marshall Islands in order to hide their dealings and profits from the United States government. That is, the government that Chao and McConnell help to run.

The Transportation Department says, “Chao has no affiliation with the family shipping business,” though she did receive at least one officially reported gift of millions of dollars from her father. The foundation also gave $40 million to Harvard, which named a building after Chao’s mother. McConnell, who has never had a career outside of politics, and who has served in the U.S. Senate since 1985, somehow has a personal net worth of around $26.7 million. None of this is particularly unusual.

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Senator Bob Corker, R-Tenn., whose willingness to state the obvious about Donald Trump’s temperament and mental fitness has made him something of a “principled conservative” hero among moderates and some liberals, has for years been flirting with what looks a bit like financial fraud and insider trading—or perfectly legal activities bearing some curious resemblance to those things—largely through his investments in a real estate firm run by some longtime associates. His net worth, too, has skyrocketed since he was elected to Congress (though he was a wealthy man before), and he has always made a staggering number of financial transactions. As Matt Taibbi puts it, he has acted like “a full-time day-trader who did a little Senator-ing in his spare time.” Corker is notable for the volume of his trades—in one extreme example, he made 1,200 trades over a nine month period in 2007, according to Taibbi—but not for the acts of making ethically questionable investments or carrying out trades seemingly based on information known only to members of Congress. Both are common enough in Washington.

Tom Price, the Secretary of Health and Human Services for about seven months last year and before then a longtime member of Congress, nearly had his Senate confirmation derailed by news that, acting on a tip from another lawmaker, he invested in a small Australian biotech firm before pushing legislation to speed the FDA approval process. This was just one example of his habit of buying healthcare-related stocks and then pushing for policies that would increase their worth. As mentioned, Price actually got in a little trouble for this one, though not enough to stop the Senate from confirming him. Then, as The Politico later reported, four more lawmakers then bought shares in the Australian firm. This, too, was all pretty normal:

POLITICO found that 28 House members and six senators each traded more than 100 stocks in the past two years, placing them in the potential cross hairs of a conflict of interest on a regular basis. And a handful of lawmakers, some of them frequent traders and some not, disproportionately trade in companies that also have an interest in their work on Capitol Hill.

Of course, you don’t need to dig up financial disclosure records and track down trades to find evidence of self-dealing in Congress. They just passed a massive tax overhaul that will personally benefit nearly all of them. Most wealthy individuals, which includes most members of Congress, will see their personal income taxes cut this year. Lawmakers also, as International Business Times and others reported last December, inserted a provision giving a huge tax break to “pass-through” entities, like real estate LLCs, that will benefit literally dozens of members of Congress.

One senator who can expect to see his income rise considerably thanks to this measure is the aforementioned Senator Corker, who at first opposed the bill on the grounds of fiscal responsibility before suddenly changing his mind once the the final product, complete with those new pass-through rules, was unveiled. Corker then became outraged that people, I guess, noticed this, and assumed perfectly natural things about his motivations. He went so far as to ask Senator Orrin Hatch, who helped shepherd the tax bill through Congress, to explain that Corker hadn’t sought the inclusion of the provision that enriched him. It occurred to neither of them that a bribe doesn’t have to be asked for in order for it to be offered.

Dozens of Republicans voting to make themselves, and their families, personally richer, in the midst of the second Gilded Age, would seem to be a potent political message for their opponents. But you will not hear many Democrats making that argument this year. Democrats are frequently willing to attack Republicans for pushing an economic agenda consisting mostly of handouts to uber-wealthy donors, large corporations, and friendly industries. What they seldom do is attack Republicans for voting to enrich themselves. Even the attacks on Corker came mainly (though not entirely) from outside groups.

The reason, I’m guessing, for this presumably unspoken nonaggression pact on the issue, is that most elected Democrats are also rich, and a few of them engage in similar practices.

I think this blatant self-dealing, and thin-skinned outrage at the suggestion that it is what it plainly looks like, is another example of norm erosion. In a Twitter thread a while back, the writer Jedediah Purdy identified a version of this new shamelessness:

The political class first assumed a world where everyone was acting only according to “rational self-interest,” as defined by fervently pro-market economists. Then they began operating as if that world existed. The result has been, frankly, a national looting, and one that the looters have convinced themselves is made up entirely of above-board business dealings totally consistent with ethical governance.

As Purdy says: “Maybe this politics is what it looks like when the market, as an all-encompassing form of life, burns down its own house.”

Perhaps I’m oversimplifying, but the basic outline of the story looks pretty clear. Bribery, graft, and naked self-dealing used to be commonplace in our politics, especially in the big urban “machines,” as exemplified by Tammany Hall. The professionalization of our politics—its takeover by serious lawyers and respectable, credentialed men—meant, first, that those practices were reformed away. Then it meant that they returned, totally legal but slightly disguised, as normal politics.

As is the case with most of the norms that have been swallowed by the sea recently, this one’s erosion is exemplified by Donald Trump, but he is the culmination, not the cause. Serious people who imagine themselves to be virtuous, or at least no less virtuous than their neighbors, have normalized what used to be easily recognizable as graft.

American legal theory, and its tendency to describe a world that only coincidentally resembles the one we inhabit, bears some of the blame. The Supreme Court (in a unanimous decision) narrowed our official, prosecutorial definition of “corruption” to a comical degree in McDonnell v. United States. Obvious ethical norms have been replaced with the self-serving professional standards of a few elite professions, where everyone is assumed virtuous until proven guilty, something which is now impossible anyway. A few years before McDonnell, in the court’s Citizens United decision, Justice Anthony Kennedy gave us a quote for the ages: “The appearance of influence or access, furthermore, will not cause the electorate to lose faith in our democracy.” The electorate made its own feelings on the matter clear in 2016.

Tammany Hall was as corrupt as its reputation, but it also built things, like most of upper Manhattan. And skimming off the top, while awarding overpaid patronage jobs to supporters and allies, is, at least, an honest sort of graft. It certainly benefits more people than insider trading and tax evasion. Perhaps the Ruth Mulan Chu Chao Center at Harvard Business School will someday prove to be as useful to the country as, say, Harlem, but most buildings at Harvard have proved not to be. Even in their corruption, today’s elites seem to lack the sense of civic or social responsibility of our crooks of old.

Update: This piece has been corrected to reflect the fact that criticism of Bob Corker for self-dealing didn’t come exclusively from outside groups, but from some elected Democrats as well.