Journal Article

Lobbying, Rent-seeking, and the Constitution

Hasen, Richard L.

2012

Overview

Politicians across the political spectrum, from Barack Obama to Sarah Palin and Rand Paul, routinely castigate lobbyists for engaging in supposedly corrupt activities or having unequal access to elected officials. Since attaining office President Obama has imposed unprecedented new lobbying regulations, and he is not alone: both Congress and state and local legislative bodies have done so in recent years. At the same time, federal courts, relying upon the Supreme Court's new campaign finance decision in Citizens United v. FEC, have begun striking down lobbying regulations, including important regulations that limit campaign finance activities of lobbyists and impose a waiting period before legislators or legislative staffers may work as lobbyists. Two courts have held such laws could not be sustained on anticorruption grounds, and they are unlikely to be sustained on political equality grounds either. This Article advances an alternative rationale which could support some, though not all, of the recent wave of new lobbying regulations: the state's interest in promoting national economic welfare. Lobbyists threaten national economic welfare in two ways. First, lobbyists facilitate rent-seeking activities. Rentseeking occurs when individuals or groups devote resources to capturing government transfers, rather than putting them to a productive use, and lobbyists are often the key actors securing such benefits. Second, lobbyists tend to lobby for legislation that is itself an inefficient use of government resources. Part I of this Article provides an overview of the current state of lobbying regulation and lobbying jurisprudence. Part II proposes a new national economic welfare rationale for lobbying regulation. It begins by describing the political science literature on how lobbying works, as well as current statistics on the extent of lobbying on the federal level and the costs of lobbyist-driven rent-seeking on the national economy. Some of the new and proposed lobbying regulations, such as antibundling provisions and anti-revolving-door provisions, could decrease the total amount of interest group rent-seeking. The state's national economic welfare interest must be balanced against the First Amendment costs of lobbying regulation in infringing on the right to speak and petition the government. I defend this interest as an important (even potentially compelling) state interest that justifies at least some new lobbying regulations against constitutional challenge. Part III turns to objections and extensions of the argument. I respond to objections on both ends and means. On ends I consider the circumstances in which the promotion of national economic welfare can trump First Amendment rights. On means, I consider whether there is sufficient proof that lobbying regulations are sufficiently tailored to a reduction in rent-seeking and whether, because of the \"hydraulic\" nature of money in politics, attempts to regulate lobbying so as to decrease rent-seeking will be easy to evade. Under extensions, I consider whether the national economic welfare rationale could be used to justify the reenactment, as suggested by Justice Stevens, of the ban on spending corporate treasury funds in candidate elections, as well as the recent SEC \"pay-to-play\" rule for investment advisers.

• Publisher: Stanford University School of Law,Stanford Law School,Stanford University, Stanford Law School
• Subject: Bills / Campaign contributions / Campaign funds / Congressional investigations / Constitutional amendments / Contract negotiations / Corruption / Economic aspects / Economic crisis / Economic regulation / ECONOMICS / Elected officials / Elections / Equity funds / Federal court decisions / Federal regulation / First Amendment / First Amendment-US / Fund raising / Government / Government regulation / INVESTMENTS / Jurisprudence / Law and legislation / Laws, regulations and rules / Legislation / Legislators / LITERATURE / LOBBYING / Lobbyists / Pension plans / Political aspects / Political corruption / Political finance / Political regulation / Politics / Public officials / Public policy / Regulatory legislation / Rent seeking behavior / Rent-seeking / SEC regulations / State elections / State laws / STATISTICS / U.S. states / United States. Securities and Exchange Commission