by Alec Ross
“For any particular problem we have arrived at the most gerry-rigged, opaque, and complicated response,” Teles wrote of US public policy. “From the mind-numbing complexity of the health care system … our Byzantine system of funding higher education, and our bewildering federal-state system of governing everything from the welfare state to environmental regulation, America has chosen more indirect and incoherent policy mechanisms than any comparable country.”
The Internal Revenue Service, for instance, needs to constantly update its efforts to reflect the tax policies of each new administration, while also studying increasingly complex transactions across the world’s 196 countries to track the maneuverings of the world’s largest companies and wealthiest people. It’s dealing with the kludge of every nation, and it is also operating with fewer resources than it needs to administer the law.
The US government’s tax collection agency is just one of several departments that have been weakened in recent years. Between 2010 and 2020, Congress cut the IRS budget by 21 percent. Today, the IRS employs fewer auditors than it did in 1953, and in 2019 the agency audited less than half as many tax returns as it did a decade prior. Audit rates for individuals making more than $10 million—the top 0.1 percent of income earners—fell from 14.5 percent in 2017 to 6.7 percent in 2018. In 2018, people making less than $20,000 per year were about as likely to face an audit as those making more than $500,000 per year. Ten years ago, the IRS performed annual audits for every US company with more than $20 billion in assets. In 2018, less than half of those companies came under the agency’s magnifying glass. When auditing major companies, the agency also finds itself frequently outgunned by corporate lawyers. Untangling the tax schemes of big businesses and billionaires requires a substantial amount of expertise, personnel, and money. Right now at the IRS, all three are in short supply.
We have seen similar trends in other government agencies charged with keeping the private sector in check. The Environmental Protection Agency employed fewer people in 2020 than it did in 1988. After adjusting for inflation, its current budget is lower as well. The Federal Trade Commission, the US consumer protection agency, has also seen its real budget and staff reduced over the past decade. To address major public problems, government institutions will need more money and people, not less.
Political polarization and kludgy, weakened institutions have rendered the US government unable to address too many of today’s challenges. We can see the effects of this stagnation in the country’s soaring health care costs; its unequal and expensive education system; its crumbling infrastructure; its urban housing shortages; its growing economic inequality; its inaction toward climate change; its failure to lead in advanced manufacturing and other emerging technologies. We saw them in the US government’s inability to prepare for and respond to the COVID-19 pandemic, a failure that cost hundreds of thousands of Americans their lives. We saw how FEMA’s kludgeocracy led to the loss of lives in Puerto Rico.
Addressing these challenges requires big ideas and bold actions. In the past, federal, state, and local governments transformed the national landscape with infrastructure projects. The Erie Canal linked the Atlantic Ocean to the Great Lakes in 1825, the Illinois and Michigan Canal connected the Great Lakes to the Mississippi River a generation later, and the First Transcontinental Railroad connected the eastern United States to the West Coast a generation after that. For the thirteen years that I commuted from Baltimore to Washington, DC, my train traveled through a 1.4-mile-long tunnel built in the 1890s by 2,400 workers. In the 20th century, the federal government helped build the Lincoln Tunnel, the interstate highway system, a national air traffic control system, and the internet. Through programs like Social Security, Medicare, and Medicaid, it also constructed a safety net for its most vulnerable citizens. Today it is difficult to imagine the state undertaking such large projects. It is frozen by kludgeocracy, vetocracy, and a lack of imagination and will.
The government needs fresh thinkers to break its stagnation, but it is also suffering from a fourth causal factor in its decline: brain drain. The loss of talent is not the chief cause of government’s woes—we will get to that shortly—but real consequences add up when government is an unattractive choice for a nation’s graduates. Few of today’s best and brightest want to spend their careers fighting bureaucracy and resetting a derailed political system.
Throughout the Cold War, many talented, driven graduates from universities across both the Western world and the Soviet bloc were driven to work for their governments by a sense of mission and purpose. In the sciences, this could mean going to work for NASA or one of the national laboratories. For a student of business or economics, this meant going to work for the Treasury Department. The best and brightest students in the humanities often joined the Foreign Service, the CIA, or their non-US equivalents. The State Department and CIA were stacked with fresh graduates from America’s top universities. The Foreign Office and MI6 were chock-a-block with Cambridge and Oxford alumni. But the popularity of government jobs began to decline as society started deifying captains of industry. Oliver Stone’s movie Wall Street served more as an inspiration than as the harsh critique the filmmaker intended. The lifestyle of Gordon Gekko and his real-life equivalents drew more young men (and it was overwhelmingly men) to the world of business and finance. Beginning in the 1990s, it became rare for graduates of the most prestigious universities to view government service as an attractive career. More often than not, they chose an investment bank, an elite consultancy, or a technology company. Those with a real bent for public service gravitated toward Teach for America or large development NGOs.
Tom Fletcher is the principal of Hertford College, University of Oxford, which has roots dating back to 1280 and alumni that include John Donne, Thomas Hobbes, and Jonathan Swift. Before returning to lead his alma mater, Tom was the hottest of young hotshots in the UK Foreign Office. He served at Number 10 Downing Street as foreign policy adviser to three prime ministers—Tony Blair, Gordon Brown, and David Cameron—and went on to become the British ambassador to Lebanon, all before the age of forty. Today, however, fewer young people are trying to follow in his footsteps.
“The problem for government is that they’re just outgunned, and not just in that they are lacking the resources and the energy and the tech to keep up,” Tom told me. “If there’s an arms race for talent the government’s gonna lose it.… You look at the UK now, the best people are not going off to join the fast-stream civil service.”
Some countries have taken innovative approaches to recruiting and retaining the very best people to serve in government. One notable example is Singapore. When I served in government, the White House held a monthly meeting for the innovation leads from each federal agency. The only time a foreign government was ever invited to participate was when representatives from the Singaporean government presented their government’s long-term planning strategies (ours looked pathetic by comparison). The presentation was led by Aaron Maniam, a career civil servant with economics, politics, and philosophy degrees from Oxford and Yale, and a side hobby writing award-winning poetry. The impression Maniam and his colleagues made was unforgettable.
Singapore is able to recruit and retain Maniam and other dazzling talents in significant part because they are compensated like their private-sector peers. The formula includes pay for a “thirteenth month” and includes bonuses linked to the country’s economic performance. Job stability for career civil servants is known as the Iron Rice Bowl. At the minister level, a compensation formula ensures an annual salary of more than $1 million a year, much like a top executive in business. Taking away the financial incentive to leave government allows real expertise to gather and grow in the civil service. It also increases the prestige of serving in government.
Unfortunately, that dynamic does not exist in the West. There are amazing people who devote their careers to public service, and I worked alongside many of them during my four years of service at the State Department.
But today, too few remain in government. The appeal of better pay, more independence, and sometimes even more power drew many of my colleagues to the private sector while they still had decades left in their careers. They have gone on to take roles at companies like JPMorgan Chase, Visa, BlackRock, Google, Twitter, Stripe, and Qualcomm. Several started companies of their own. I frequently receive emails from the career officials who have not yet left, asking for a cup of coffee and counsel about how to navigate the transition out of government.
Thanks to brain drain, much of the expertise in how to develop and implement policy—the skills needed to actually govern—exists outside of the government. And the private sector is more than happy to scoop up these former officials. The skills they developed in government transfer well to business, and so do their relationships with their former employer. Ex–government employees are a valuable asset to companies that want access to decision makers in Washington, Brussels, London, and other capitals.
This dynamic is especially pronounced in the legislative branch, where low pay and long hours (which average between sixty and seventy hours a week) push the majority of congressional staffers to leave before their thirty-second birthday. Once in the private sector, former congressional staffers can help their new employers build relationships with policy makers and navigate the machinations of Washington. The same goes for former White House staffers, agency officials, and foreign policy hands. In a city that runs on interpersonal relationships, your Rolodex can be just as important as your résumé.
This phenomenon is not unique to the United States. When I spoke with Tom Fletcher, he alluded to a similar revolving door between the British government and the financial services industry.
“HSBC has this guy Sherard Cowper-Coles who’s a fairly notorious ex–UK ambassador,” Tom remarked. “He styles himself as HSBC’s foreign minister and will walk up to places and will expect to see the top people because he sees himself as at that level. He doesn’t quite call himself ‘His Excellency the Foreign Minister of HSBC,’ but he kind of behaves like that.”
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WE HAVE EXAMINED the role of politicians and policy makers in the government’s current dysfunction, but the most important factor to consider comes from the outside. The private sector has played a striking role in sterilizing the state. Rather than having a government of, by, and for the people, the United States and other countries around the world now have a government of, by, and for the businesses that purchase the governments they want.
Government policy affects virtually every corner of the economy, which gives all manner of companies incentives and vested interests to sway those decisions in their favor. Milton Friedman’s famous position states that a business’s purpose is to maximize its profits “so long as it stays within the rules of the game.” But over the last four decades, mirroring the time period of the rise of shareholder capitalism, private companies have been remarkably successful at reshaping the rules of the game. They have attained a level of influence in Washington unrivaled since the Gilded Age.
The term—and practice of—lobbying dates back to the 1640s, when the British public would gather in a lobby outside the House of Commons to speak with members of Parliament. In the United States, citizens have lobbied lawmakers since the birth of the republic. But the industry grew more prominent and professionalized—and despised—in the late 19th century. In this era, the monopolies of the Gilded Age were deeply invested in currying favor with lawmakers and defending economic policies that sustained their monopolies. Lobbying boomed as a result, roping in a raft of retired congressmen to make the monopolists’ case to their old colleagues. The industry came under increased scrutiny in the early 20th century, however, as Congress launched frequent investigations into corporate influence efforts and started requiring lobbyists to file quarterly activity reports with both the House and Senate. After the Great Depression and World War II, the lobbying industry hit a lull—and so did the private sector’s influence in Washington. During the mid-20th century, the private sector and Washington had a mostly distant but cordial relationship, with each preferring to stay out of the other’s day-to-day business. But as public support for stronger labor laws, consumer protections, and general business regulation grew during the tumult of the late 1960s, companies felt they needed to start playing stronger defense.
In 1971, just before that wave hit, future Supreme Court justice Lewis Powell Jr. noted that “few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. If one doubts this, let him undertake the role of ‘lobbyist’ for the business point of view before Congressional committees.” Today, there are zero elements of American society with more influence in government than corporations.
The rebirth of lobbying followed the same trajectory as the explosion of shareholder capitalism, and the two were intimately connected. In 1972, two anti-labor groups and a loose organization of corporate executives joined together to form the Business Roundtable. The group worked alongside a growing army of corporate lobbyists to reduce regulations, cut taxes, and kill labor reform. Instead of organized labor, this was organized capital. The business community’s investment in government lobbying during the 1970s had something of a snowball effect. After logging a few early victories, companies saw the huge returns that a relatively small investment in influence operations brought to their bottom line. Instead of hiring lobbyists as one-off hit men to fight a new regulation or law, companies brought them on as full-time guards. As issues arose, new firms would enter the influence game, and if their interests clashed with existing players, the old guard hired even more lobbyists. It became a loop, with lobbyists creating the need for more lobbyists.
In 1975, federal lobbyists collectively drew less than $100 million in revenue. In 2019, lobbyists brought in $3.5 billion, thirty-five times what they had made forty-five years earlier. And that is just what is publicly reported. As in the Gilded Age, former members of Congress are flocking to the profession. Approximately a quarter of the lawmakers who left Congress between 2009 and 2019 went to work for lobbying firms. Still others work as private consultants, advisers, and government relations specialists without having to file as lobbyists.
Though most people associate it with corruption, lobbying is one of the few professions protected under the US Constitution. The First Amendment guarantees citizens the right to petition the government, and lobbying is one way for them to do so. In practice, lobbyists are something like mercenaries of the democratic process. Any special interest group can hire a lobbyist to advocate on behalf of virtually any policy. An oil company might hire a lobbyist to advocate on behalf of a new pipeline, and an environmental advocacy group might hire a lobbyist to fight against it. Lobbyists also play an important role in helping overworked policy makers make sense of complex topics. But, inevitably, lobbyists tilt the democratic process in favor of the interest groups with the ability to hire the most and the best lobbyists. Good lobbyists are expensive. While the advocacy group might be able to afford a single lobbyist to fight against a proposed pipeline, the oil company can afford to hire dozens. For every dollar that public interest groups and labor unions spent on lobbying in 2019, companies and business associations spent fifteen. Lobbyists give voice to competing points of view and priorities, but wealthy companies can raise the decibel level and drown out the competition.
In many cases, their roles are alarmingly hands-on. In 2013, the House passed a bill that would roll back a portion of the Dodd-Frank Act, a financial reform bill enacted in the aftermath of the 2008 financial crisis. Reporters found that seventy of the eighty-five lines in the measure were pulled directly from a draft bill written by Citigroup lobbyists. This is a common practice now. A separate investigation found that more than 2,100 state laws enacted between 2011 and 2019 were copied nearly verbatim from lobbyist proposals.
One leading lobbyist, Bruce Mehlman, walked me throu
gh the latest developments in the industry. Mehlman has moved between business and government his whole life. He began his career on Capitol Hill, moved to Cisco Systems, returned to government as a senior Commerce Department official, and left the government again to start his own lobbying firm. Today, he helps companies including Walmart, IBM, Lyft, Procter & Gamble, and Twitter make their case to policy makers. Mehlman is lean, loquacious, and bursting with energy. While your typical workplace go-getter is content sitting or standing at a desk, Bruce outfitted his with a treadmill platform. He spends the first two hours of his workday, from 6:30 a.m. to 8:30 a.m., doing his reading for the day while walking the equivalent of five miles at his desk. With more than eighty clients, he is among the most prolific lobbyists in Washington. If you are a member of Congress who wants to understand a given piece of legislation, Mehlman can give you a level of analysis you could not get from even your most capable staffer.
Mehlman told me that the nature of the influence business has changed in the last few years. Registered lobbyists used to do much of the heavy lifting, but today the industry is becoming less overt. Instead of hiring an official lobbyist, many companies are now recruiting former government officials to serve as consultants or strategists. Unlike registered lobbyists like Mehlman, these “shadow lobbyists” do not disclose their list of clients nor the amount of money they receive. While such informal influence channels are not necessarily pernicious, they certainly have the potential to be. “I am a fan of disclosure,” Mehlman said.
