The More Government Loot Available, the More Looters Who Come to Washington

There are endless attempts to “clean up” politics–limiting campaign contributions, restricting lobbyists, and the like–as if the problem is a few self-interested individuals who want to ruin the otherwise pristine process of governing.  But it is government that inevitably dirties the game.  After all, the bigger, more powerful, and wealthier government becomes, the more important it is for everyone to seize control of the beast.  When government hands out hundreds of billions of dollars, it becomes worthwhile to spend millions and even billions to try to get a share of the loot.

Consider the special interest bail-out rushed through Congress in September.  It turns out the administration lied–the $700 billion was supposed to be used to buy “toxic” assets. Now, Treasury Secretary Paulson says, none of it will be used for that purpose.  Oh, well … .  But the money will still be distributed, so there’s a rush on by companies to get their hands on some of the loot.

Reports the New York Times:

When the government said it would spend $700 billion to rescue the nation’s financial industry, it seemed to be an ocean of money. But after one of the biggest lobbying free-for-alls in memory, it suddenly looks like a dwindling pool.

Many new supplicants are lining up for an infusion of capital as billions of dollars are channeled to other beneficiaries like the American International Group, and possibly soon American Express.

Of the initial $350 billion that Congress freed up, out of the $700 billion in bailout money contained in the law that passed last month, the Treasury Department has committed all but $60 billion. The shrinking pie — and the growing uncertainty over who qualifies — has thrown Washington’s legal and lobbying establishment into a mad scramble.

The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers — as well as for improbable candidates like a Hispanic business group representing plumbing and home-heating specialists. That last group wants the Treasury to hire its members as contractors to take care of houses that the government may end up owning through buying distressed mortgages.

The lobbying frenzy worries many traditional bankers — the original targets of the rescue program — who fear that it could blur, or even undermine, the government’s effort to stabilize the financial system after its worst crisis since the 1930s.

Among the most rattled are community bankers.

“By the time they get to the community banks, there may not be enough money left,” said Edward L. Yingling, the president of the American Bankers Association. “The marketplace is looking at this so rapidly that those who have the money first may have some advantage.”

It’s hard to blame business for this shameless begging for federal alms.  The money is there, one’s competitors are in the hunt, so why stand on principle?  But it shows how Washington corrupts everything it touches.  Responsible home-owners, businessmen, investors, and savers are played as fools, forced to underwrite the improvident, foolish, and irresponsible.

The answer is not a new ethics code or new campaign finance rules.  The answer is to shrink government, and the amount of taxpayer funds politicians can distribute to their campaign supporters and the otherwise well-connected. Only by radically reducing government will we ever “clean up” politics.