Playing Ball

On the evening of Wednesday, June 12^th, 2024, a few dozen federal lawmakers renewed an annual tradition: the Congressional Baseball Game. Thousands of fans—rooting for either the team of Republican congressmembers or their Democratic opponents—attended the charity event, which benefited vulnerable children and families in greater Washington.[1] Regardless of political party affiliation, fans were invited to enjoy one of the affair’s secondary attractions: free souvenirs provided by the event’s corporate sponsors, many of whom were operating booths inside Nationals Park. Those sponsors included corporate behemoths well-known for their blue-chip stocks, such as Visa, Disney, and Amazon.[2] They also included a handful of firms which each received over $1 trillion in federal government contracts in 2023, such as Boeing, Deloitte, RTX, and Leidos, which was individually paid nearly $10 trillion in 2023.[3]

Two days later, the U.S. House of Representatives passed its version of the National Defense Authorization Act (NDAA), an annual defense bill that allocates nearly $900 billion in government spending.[4] While the House bill drew media attention this year primarily due to its culture war provocations,[5] the reality is that the NDAA is, in large part, a procurement policy bill. It shapes—in some detail—how hundreds of billions of dollars will be awarded to contractors.[6] The NDAA is comprised of over 50 titles and hundreds of pages, authorizing precise dollar amounts to fund various military programs and specifying the requirements those programs must meet.[7]

A piece of legislation that, in effect, creates and controls such a large market naturally draws considerable attention from private industry. Industry spent approximately $70M lobbying Congress in order to shape the 2023 NDAA;[8] some of the top expenditures came from Congressional Baseball Game sponsors.[9]

It would be absurd to infer or imply that government contractors sponsoring Congress’s favorite fundraiser was a factor in the passage of an annual defense bill—some version of an NDAA passing is close to death and taxes on the inevitability scale. However, the coincident timing and ostensibly bilateral nature of exchange—free souvenirs at a baseball going to congressional staffers, billions of dollars awarded to private firms the next day—can be taken as a synecdoche: Government takes care of big business and big business takes care of government. Naturally, given that industry is receiving billions of dollars of taxpayer funds and government is receiving a hodgepodge of water bottles and tote bags, this dynamic has been characterized as “corporate capture.”

 

Corporate Capture

The concept of corporate capture posits that corporate power has control over government.[10] The term has been defined as “the process in which multinational corporations advance their interests… by ‘capturing the institutional capacity of states.”[11] There is a substantial amount of academic literature on the topic[12] as well as commentary from civil society and the media framing the phenomenon as a major issue in American democracy.[13]

In Congress, Representative Pramila Jayapal introduced a bill in 2021 purporting to take on the problem: the “Stop Corporate Capture Act” (SCCA).[14] This legislative solution would generally take effect by acting directly on federal agencies and the rulemaking process,[15] not by making any changes to the way Congress, itself, operates. Indeed, after the Supreme Court’s decision to overturn the Chevron doctrine this past summer,[16] some progressive members of Congress attempted to build new momentum for the SCCA by reformulating it into a codification of Chevron—standing for the propriety of agencies exercising their expertise and independent judgment in the regulatory process.[17]

However, the SCCA’s name may bite off more than its text can chew. Given it would affect the regulatory state, but doesn’t speak directly to either procurement or legislation, it is unclear if the Act would have any remedial effect on corporate capture. While there is no silver bullet to undo corporate capture, there is a more structural economic issue which would also need to be addressed.

 

“They pay five times what we do”

A long-tenured sitting House Member remarked to me that the life of a lobbyist seemed much more attractive than the life of a congressional staffer. The topic was apparently top-of-mind, given he launched into these remarks entirely unprovoked at a routine meet-and-greet. The Member told a story about a young staffer who had been working in their office for a very short amount of time, no more than a couple of months. They had a lobbyist visiting the office one day who seemed to hit it off with that staffer. The Member noticed the two talking before the lobbyist asked about the young staffer during their meeting. In his words, “the next week [that staffer] was gone.” What had happened was very simple, in the Member’s view: “they pay five times what we do.”

The average age of a House staffer is only 31,[18] whereas the median age in the American workforce overall is about 40.[19] In a high cost of living area like D.C., where the median home price hovers around $700k,[20] it should not be surprising that a customary career path for an underpaid Congressional staffer eventually leads to a lucrative lobbying firm.[21]

A similar phenomenon can be observed with Executive branch employees as well. Private firms that bid on government contracts are eager to hire ex-Agency staff who may help them “shape” a Request for Proposal (“RFP”).[22] A sales leader at a firm which receives over $1B in government contracts each year once explained to me that if you are merely responding to the RFP, rather than helping to write it, then you have already lost the opportunity to a competitor. For this reason, it was common practice at that firm to hire former Agency people for the role of Business Development Executive, in the hopes that they would be able to lend their expertise and connections to help the firm win more contracts. These opportunities can be very attractive options for Agency staff who find themselves looking for a pay raise.

A version of these dynamics may even be at play in the judicial branch. There has been much ado in recent years about Supreme Court reform.[23] While the Biden Administration’s recent proposals for term limits and an enforceable ethics code[24] may go a long way towards reinforcing judicial integrity, one may question whether there isn’t a more structural issue. Supreme Court justices are paid about $250,000 per year.[25] After completing a clerkship with one of them, a newly-minted lawyer can make about three times that amount in the private sector.[26] Considering that Supreme Court Justices make a small fraction of what a partner at a large law firm does, it seems plausible that the Justices might have a reasonable sense that they are paid less than market rate. Considered under this light, it may be unsurprising that Justices—essentially the CEOs of the legal industry, yet paid as entry-level employees—are prone to accept gifts when the economic elite throw them an extravagant bone (or several).[27]

While it’s not acceptable for public officials to compromise their ethics, it may appear at least understandable—or even predictable—when one considers just how steep the public service discount truly is. After all, is there another sector of the economy in which our most accomplished leaders are paid peanuts compared to their peers, and often less than their former understudies?

 

Paying for Public Service

How much pay inequity between the public and private sectors implicates corporate capture is not an issue to be settled by this piece. But some pundits have posited that there is a tie between relatively low pay for Congressmembers and the “revolving door” between Congress and lobbying.[28]  Indeed, there have been serious conversations the past several years surrounding giving both Congressmembers and their staffs a substantial pay raise.[29]

This solution is provocative in the sense that raising the pay of politicians and government bureaucrats is not likely to be a politically popular idea.[30] Some critics from the right would doubtlessly see dramatically increased government pay as an excess, or even a form of corruption itself. Progressives may deride the notion that a structural solution to corporate capture could include salaries for public servants that could be characterized as extravagant. But if slowing the revolving door between industry and government is part of a stronger version of American democracy, then making government work more remunerative may be a necessary step.

Aggressively increasing federal government salaries across the board would not be outlandish from an economic perspective. For reference, consider that the U.S. has the lowest government expenditure among the G7 advanced economies: about 38% of GDP.[31] The U.S. government could spend approximately $300 billion more in one year before it would overtake Italy for sixth place on that G7 list; it could spend several trillion more USD each year without catching up to France’s 57% public sector share of GDP.[32] Even with this headroom, if policymakers thought it unwise to increase overall federal spending, they could find other areas in which to reduce spending to offset the dollars needed to bridge the pay gap, such as by reducing spending on services contracts to the private sector.

Doubling the compensation of every House staffer would cost approximately $0.5B per year.[33] Of course, Congress has a much smaller workforce than the executive branch. This year, the federal government will spend approximately $800B on salaries.[34] Doubling this amount would noticeably reshape the federal budget. But consider that the federal government spends around $300B more on services contracts than it does on its own employees—about $1.1T.[35] One major reason for spending so much on services contracts with private companies is that the private sector has skills that are difficult to find in government; however, this logic becomes circular at a certain point. Government would have less need to contract high-skill work out to the private sector if it radically increased its investment in its own workforce, thus attracting and retaining its own highly skilled pool of talent. While this sort of expenditure on civil servant salaries may meet political opposition, it’s also true that many voters would be surprised to learn that government salaries are less than 10% of the $8 trillion federal budget.

Overall, increasing federal compensation across the board would leave the American economy decidedly private sector-driven, while potentially building a powerful structural incentive to keep top talent in government. Living in a capitalist democracy, we are very comfortable with the idea that people will behave in their own economic interest. If public service were to pay twice as much, we should expect that it will be about twice as attractive a job opportunity. Another way of looking at the situation is this: If we pay our public servants their true worth, then maybe we will find it just a bit easier to trust that our interests are truly being served.

 

 

[1] Congressional Baseball Game, https://www.congressionalbaseball.org/ (last accessed June 19, 2024).

[2] Congressional Baseball Game 2024 Sponsors, https://www.congressionalbaseball.org/sponsors/ (last accessed June 19, 2024).

[3] Compare id. (listing the Congressional Baseball Game’s sponsors) to 2023 Top 100, Washington Technology, https://washingtontechnology.com/rankings/top-100/2023/ (listing the top 100 largest federal government contractors by total contract value).

[4] Abigail Hauslohner, House passes defense policy bill advancing key GOP priorities, The Washington Post (June 14, 2024 11:22am), https://www.washingtonpost.com/national-security/2024/06/14/ndaa-house-republicans-defense-bill/.

[5] See id.

[6] See H.R. 2670 Tit. I (“Procurement”).

[7] See generally H.R. 2670.

[8] Mat Schumer, Defense contractors spent $70 million lobbying ahead of annual defense budget bill, OpenSecrets (Oct. 20, 2023 1:48pm), https://www.opensecrets.org/news/2023/10/defense-contractors-spent-70-million-lobbying-ahead-of-annual-defense-budget-bill-ndaa.

[9] Compare id. (showing RTX spending nearly $6M and Leidos spending over $1M on 2023 NDAA lobbying) to Congressional Baseball Game 2024 Sponsors, supra note 2.

[10] See, e.g., Corporate Capture, Center for Constitutional Rights, https://ccrjustice.org/Corporate-Capture; Robert Monks, The Corporate Capture of the United States, Harv. L. School Forum on Corp. Gov. & Fin. Reg. (Jan. 5, 2012), https://corpgov.law.harvard.edu/2012/01/05/the-corporate-capture-of-the-united-states/.

[11] Online Library: Variegated forms of corporate capture: The state, MNCs, and the dark side of strategic coupling – Teixeira – 2024 – Global Networks – Wiley Online Library

[12] E.g. Stephen Barley, Corporations, Democracy, and the Public Good, J. of Management Inquiry 201 (2007); Daniel Nyberg, Corporations, Politics, and Democracy: Corporate political activities as political corruption, 2 Organization Theory 1 (2021), https://doi.org/10.1177/2631787720982618.

[13] Alex Tippet, To Protect U.S. Economic and National Security, Biden Should Address Concentration in the Defense Sector, Council on Foreign Relations (Aug. 25, 2021 4:51pm), https://www.cfr.org/blog/protect-us-economic-and-national-security-biden-should-address-concentration-defense-sector; Matthew Kent & Amit Narang, How to end corporate capture of the regulatory process, The Hill (Feb. 9, 2022 6:00pm), https://thehill.com/blogs/congress-blog/politics/593594-how-to-end-corporate-capture-of-the-regulatory-process/

[14] https://www.congress.gov/bill/118th-congress/house-bill/1507/text/ih

[15] See Dan Bosch, Assessing the Stop Corporate Capture Act, American Action Forum (Jan. 11, 2022), https://www.americanactionforum.org/insight/assessing-the-stop-corporate-capture-act/.

[16] See generally Loper Bright Enterprises v. Raimondo, 144 S.Ct. 2244 (2024).

[17] https://www.warren.senate.gov/newsroom/press-releases/warren-leads-senate-response-to-end-of-chevron-doctrine

[18] https://www.statista.com/statistics/1454870/house-representatives-staffers-age-us/

[19] https://www.bls.gov/emp/tables/median-age-labor-force.htm

[20] https://www.redfin.com/city/12839/DC/Washington-DC/housing-market

[21] E.g., https://www.vox.com/first-person/2017/6/29/15886936/political-lobbying-lobbyist-big-money-politics

[22] See, e.g., https://www.linkedin.com/pulse/shaping-rfp-steps-successfully-sell-federal-jaime-gracia/

[23] E.g. https://www.whitehouse.gov/briefing-room/statements-releases/2024/07/29/fact-sheet-president-biden-announces-bold-plan-to-reform-the-supreme-court-and-ensure-no-president-is-above-the-law/; https://harvardlawreview.org/forum/vol-134/the-future-of-supreme-court-reform/.

[24] website: https://www.whitehouse.gov/briefing-room/statements-releases/2024/07/29/fact-sheet-president-biden-announces-bold-plan-to-reform-the-supreme-court-and-ensure-no-president-is-above-the-law/

[25] https://www.nytimes.com/2020/09/21/us/politics/supreme-court-clerk-bonuses.html

[26] https://www.nytimes.com/2020/09/21/us/politics/supreme-court-clerk-bonuses.html

[27] https://nymag.com/intelligencer/article/quick-guide-supreme-court-justice-clarence-thomas-ethics-scandals.html

[28] https://www.vox.com/the-highlight/2019/5/3/18311810/congressional-pay-salary-decline-andrew-hall.

[29] https://www.businessinsider.com/members-congress-100000-pay-raise-salaries-174000-2024-1?op=1

[30] 55% of Americans favor cutting the salaries of Congressmembers, according to one poll. https://www.businessinsider.com/americans-disagree-alexandria-ocasio-cortez-congress-pay-increase-poll-2019-3.

[31] https://www.imf.org/en/Publications/WEO/weo-database/2023/April/weo-report?c=156,132,134,136,158,112,111,&s=GGX_NGDP,&sy=2015&ey=2024&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1. The only years since 2015 in which the U.S. has not had the lowest share were 2020 and 2021, in which the U.S. elevated from its typical levels of 35–38% to a 43–45% share.

[32] Based on very simple calculations assuming a U.S. GDP of approximately $27 trillion. https://www.statista.com/topics/772/gdp/#topicOverview

[33] Again, derived from a basic calculation using average salary and total headcount in the House in 2022—a year after a major pay increase was instituted. https://www.politico.com/f/?id=00000184-572d-d6e1-a3a6-d73fd2850000.

[34] https://www.usaspending.gov/explorer/object_class

[35] Id.