The author is at his best detailing the painful realities of modern interest-group politics. The problem is not that the government is picking winners and losers. It’s actually worse than that. The winners are picking the government, and gaming the rules to keep themselves on top. New Deal farm subsidies, to cite one of Cost’s examples, systematically favored white Southern agricultural growers, while pushing African Americans off their tenant plots.
Another example is Medicare. The federal government has given Medicare providers an open checkbook. “All told,” Cost concludes, “experts estimate that as much as 20 percent of the total cost of Medicare is attributable to highly expensive care that is of questionable value” to the “beneficiary” but affords the providers a generous revenue stream.
Then there is Fannie Mae and Freddie Mac. After the Enron scandal broke in 2001, it came to light that Freddie Mac, which had used Enron’s accountant Arthur Anderson, had cast aside accounting rules. A year later, regulators discovered that Fannie Mae was up to similar shenanigans. And yet both enterprises walked away scot-free until it was too late. “We manage our political risk with the same intensity that we manage our credit and interest rate risks,” commented Fannie CEO Franklin Raines. The sugar-trust lobbyist who brokered Senator Aldrich’s sweetheart deal could not have put the point better.
A Republic No More offers straightforward cures for special interest corruption of governance. Either we must roll back the federal government’s powers substantially or we must have a serious conversation about how to reform the legislative and regulatory systems to bring the public interest back to the forefront. Cost also champions a cross-party effort to take down the most flagrant examples of systematic corruption.