American Culture

'I'll stand up to those special interests.' Really? How?

We are all going to die.

When we do, an industry with 100,000 employees will annually collect about $11 billion in revenue from our survivors, who presumably love us and wish to put us to rest with appropriate pomp and circumstance. Requiescat in pace, although survivors’ wallets might not.

Since 2002, after authorities found the remains of 339 people scattered about the grounds of a Georgia crematorium, the funeral industry has been visited by a wave of regulatory activity in many states. Not surprisingly, the funeral industry, a monopoly in many ways, wishes to influence that regulatory activity. It has also sought to influence drafting and revision of federal regulations, most notably the Federal Trade Commission’s “Funeral Rule.”

According to a richly detailed and footnoted report by Scott Jordan of the National Institute on Money in State Politics, from 1999 to 2006 the industry has coughed up $6 million in political contributions spread over political parties and state-level candidates in 46 states, positioning itself “to have a hand in shaping legislation and regulation” [emphasis added]. Millions more have gone to federal candidates.

This is what lobbyists principally do — act to influence legislation and regulation. And they’re really good at it. Therefore it’s important to take notice when presidential candidates spout rhetoric promising to “curb this industry” and “control that industry.” How will they do that?

A principal function of government is to necessarily regulate behavior of the governed. Some would argue about the definition of “necessarily,” but for people to live relatively peacefully in communities, states and nations, some agreement must be reached regarding individual and communal behaviors. But if a behavior is viewed as overly or improperly restricted, lobbying for behavioral change results. If one entity’s behavior unduly affects another, lobbying again results. Often, those doing the lobbying are referred to as “special interests.”

In America, government regulates a boatload of stuff. What we eat. The drugs we use (and abuse). How the barber and the butcher must be trained. How much of our earnings we may keep. The conditions of our workplaces. What tax we must pay to maintain the common good. The environmental quality of our air, water and land. The conduct of markets. Medical care. How some products and services are produced. Certain kinds of information. What the military may or may not do. How we collectively and individually protect ourselves and our property. How we marry. How our children are schooled and for how long. And what happens when we die.

Ah. Back to the funeral industry.

For industries, consistency of regulation, and, perhaps, minimizing it, is a desirable goal. Reports Mr. Jordan: “The interests of the funeral industry are not completely monolithic. They fight some oversight, but often support other regulations that may hinder competition.” Mr. Jordan details the uneven oversight of funeral industry regulation from state to state regarding apprenticeships and mortuary science diplomas, trust accounts for prepayment of funeral services, funeral merchandise, package sales vs. itemized billings, and monopolistic behavior. (Did you know that 10 states have “virtual casket monopolies” that allow markups of 300 to 400 percent?)

So the funeral industry set out to seek influence. Here’s the tale of its $6 million:

• State funeral director associations were the leading contributors,
accounting for $3.3 million, or more than half of the industry’s $6
million in contributions.
• The industry placed its bets wisely, with current officeholders receiving 82 percent of the $4.5 million given to candidates and incumbents not up for re-election.
• Party committees in 34 states received $1.5 million, or 25 percent of the industry’s contributions. The industry favored Republican Party.

Like any industry, the funeral industry seeks to influence regulation to further its ability to maximize profit. Its current problem is the patchwork of state regulations affecting the industry, hence its significant contributions at the state level. But gosh, wouldn’t it be easier all around if the funeral industry only had to deal with federal regulations — a single, known, consistent set of rules — rather than 50 different sets of state regs? That’s the wet dream of industries.

That’s what industries claim when faced with conflicting and contradictory regulations from state to state. It inhibits the ability to plan, industries say. It costs more to operate in one state than other. Jobs are at risk, too, they say. Give us one set of rules, please.

When the state of Maine passed a law in 2003 “requiring those who sell tobacco products directly to consumers to use only those delivery services that verify the age of the recipient,” thus superseding a federal statute, the trucking industry took Maine to the Supreme Court. It argued Maine’s law opened “the door to the very patchwork of conflicting state regulations that Congress meant to pre-empt when it deregulated motor transportation.” Industries hate “patchworks of conflicting state regulations.” That creates roadblocks to maximizing profit.

Consider what the auto industry confronts regarding emissions. The federal Clean Air Act gave California “the unique authority to set its own emissions standards and allows other states to adopt California’s rules instead of the federal rules.” So far, more than a dozen states have done so. The auto industry is not happy with that.

Methinks, though, that a principal reason industries seek a single consistent federal regulation is simple: the cost-effectiveness of lobbying. If the feds control the regulations, then the lobbyists only have to deal with Washington, D.C., legislators and regulators rather than those scattered through 50 different state capitals.

See, that’s the thing. Lobbying is most effective when it’s a person-to-person enterprise. The lobbyist takes the politician or regulator to lunch, contributes to his or her favorite charities, attends his or her fundraisers — and makes lots and lots of donations. It’s squeeze and please. One-stop shopping makes that easier.

Why spin the federal regulators? Easy. Congress passes laws in broad strokes that enable regulation. It leaves the details of actually writing the regs to “experts” in federal agencies and departments. If you cover a legislative body as a journalist long enough, as I did, you discover that much legislation is actually drafted by lobbyists. General Electric is the acknowledged master:

[I]n a two-year campaign, fueled as much by brains as political brawn, GE has shaped the legislation that would replace the old export-promotion law in ways that would allow it to save as much, if not more, in taxes, according to both GE lobbyists and congressional aides. In pursuing its financial interest, the company may also have turned the U.S. corporate tax code away from domestic manufacturing and toward expansion of operations abroad.

Industries routinely seek to write tax benefits into legislation. Remember the jobs act that created no jobs? The American Jobs Creation Act of 2004 allowed numerous multinationals a one-time chance to repatriate profits abroad at a tax rate of 5 percent instead of 35 percent. Now, that’s lobbying for you.

How can a president control the wholesale drafting of legislation by lobbyists that time and again becomes the law of the land? I don’t have an answer for that. Perhaps the press that reports on our current crop of contenders could actually ask that question.

But a president does have some control over who writes the regulations mandated by Congress. It’s called The U.S. Constitution, Article II, section 2, clause 2, which says:

The president shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States …[emphasis added]

The president appoints a few thousand people to serve in the federal government. Those hire others. Sometimes those appointments are rather iffy. As I’ve written previously, “Congress makes laws. But presidents appoint the regulators who actually write the policies that implement those laws. While Democratic presidents have had controversies with regulators being too close to the regulated, President Bush’s appointments have been particularly noteworthy as pals of industry.” (Other times, regulators act honorably. It’s a mixed bag.)

President Bush is a dwindling irritant. The next president will likely sweep out hundreds of Bush political appointees in favor of those more palatable to the new president’s philosophy (which, in turn, may be shaped by the influence of those “special interests” who contributed to his or her campaign money, influence or service.)

But whom will the next president appoint to act as writers of regulations? Again, perhaps the press that reports on the campaigns could actually ask that question. So far, only Washington Post columnist David Broder has prominently done so. In wondering why his colleagues spent so much ink and air on the Rev. Jeremiah Wright’s preaching, given that the reverend won’t be a member of an Obama administration, Mr. Broder says:

I’d like to know what kind of people Obama would bring into his White House and where he would turn for a Cabinet, because there is so much uncertainty about his actual policies at home and abroad.

The presidency is routinely referred as the most powerful position in the world. But in the context of legislation and regulation, that ain’t necessarily so. He or she cannot effectively control the former, but he or she may significantly affect the latter through his or her presidential appointments.

Instead of “he said, she said,” horse-race, trivial coverage of the presidential campaign, more light ought to be focused on the qualifications a candidate would demand of potential appointees. The press isn’t doing it.

Meanwhile, back in the $10,000 copper or bronze casket:

The National Funeral Directors Association, “the leading funeral service association, serving 19,500 individual members who represent more than 10,000 funeral homes in the United States and other countries,” continues to lobby the Federal Trade Commission to reopen its regulatory review of the “Funeral Rule” and its decision to retain the rule as it stands.

Says the association’s CEO, Christine Pepper:

After almost a decade of review, during which time NFDA continually offered written comments hoping to tighten and improve the rule to better protect both funeral service professionals and consumers, it is disheartening to see the FTC take this position. While the review process may be over, NFDA will continue to advocate through all available channels of government for a Funeral Rule that provides those meaningful protections. [emphasis added]

Ah, the language of lobbying. Mention those consumers. Discuss meaningful protections. Refer to improvements. Meanwhile, under the FTC’s Funeral Rule, “law enforcement sweeps of 174 funeral homes in nine states found significant violations of the FTC’s Funeral Rule at 26 funeral homes and minor compliance deficiencies at 66 others.” The violations included failure to provide itemized price lists and casket price lists.

In 2006, FTC regulators obtained a consent settlement when they “contended that Service Corporation International’s (SCI) proposed acquisition of Alderwoods Group Inc. would lessen competition in 47 markets for funeral or cemetery services, leaving consumers with fewer choices and the prospect of higher prices or reduced levels of service. [emphasis added]”

Since 1990, the funeral industry has made more than $7 million in campaign contributions to federal candidates or PACs, leaning toward Republicans.
According to Mr. Jordan, Service Corporation International, “which bills itself as ‘North America’s largest single provider of funeral, cremation and cemetery services,’ contributed more than $319,800 in 19 states.”

So many industries, such as the funeral industry, through their lobbyists and professional associations seek to influence legislation and regulation. Lip service is indeed given by industries to “protecting the consumer” and other politically correct niceties, but don’t be fooled: protection for industry is the holy grail sought.

If your favorite presidential candidate stands up at a rally, looks you straight in the eye, and boldly claims, “I will stand up to the special interests,” you look him or her right back and just as boldly ask: “How?

It could not be, and should not be, a sound-bite answer.

xpost: Scholars & Rogues

2 replies »

  1. Pingback:
  2. Important post. Particularly meaningful to me was this:

    The presidency is routinely referred as the most powerful position in the world. But in the context of legislation and regulation, that ain’t necessarily so. He or she cannot effectively control the former, but he or she may significantly affect the latter through his or her presidential appointments.

    Thanks, Dr. D.