How Political Money is Crushing the American Economy

It’s not your imagination: It’s hard to get ahead

If you think the gap between rich and poor is getting bigger, it isn’t your imagination. It’s the truth. The facts are endless. America is about as unequal, economically speaking, as China. There have been five million foreclosures since 2006, forcing five million families out of their homes. From 2007 to 2011, Americans lost $7 trillion of savings in their homes. Credit card fees are going up. Wages are stagnating. Just what is going on with your finances, with the economy, and with jobs?

The answer is obvious, if a bit ironic. Political money has corrupted our government, and it’s killing our economy. Wealthy people have the power to make the rules in our economy. They have the money, they know what it takes to make more of it, and, most importantly, they bend the rules to help them win.

Financial industry regulators gouge you, $3 at a time

A small example of a big problem. Banks charge nearly a 1000% markup on ATM transactions, and regularly block consumer protection agencies from doing anything about it.

Here’s a simple example that illustrates the dynamics at work for all major economic problems (lack of jobs, foreclosures, wage theft, credit card fees, etc.). Let’s look at ATM fees.

When you use a non-network ATM, you’re usually charged a $3 fee—just for accessing your own money. That same ATM transaction costs the bank just 37 cents. That’s price gouging, and when you add it all up, a total of $7 billion annually that goes from our pockets straight to the big banks. These fees aren’t just annoying – they’re downright corrupt.

Corruption protects itself from regulation

There are 25 lobbyists supporting the financial sector for every 1 lobbyist fighting for reform.

Before 1988, banks didn’t charge ATM fees at all, because ATMs were cheaper than human tellers. But the big banks gradually realized they could make a pretty penny on ATMs. Initially, politicians jumped to protect consumers. In 2002, Iowa passed a law mandating that banks establishing ATMs couldn’t charge fees. The banks fought back, and a federal banking regulator, under the influence of the bank lobbying juggernaut, blocked that law from taking effect.

In 2010, after the financial system collapsed because of the bad behavior of these same price-gouging banks, a bunch of senators actually proposed a bill to cap ATM fees at 50 cents. It was again blocked by bank-friendly senators, who did not even let it get a vote in the Senate. Consumer loyalty at its finest.

From $6.8 billion in influence spending to $3 ATM fees

Members of Congress need to earn $12,000 a day just to run for reelection. It’s no wonder they chase the money instead of working to protect the economy.

According to OpenSecrets, the banking sector spent $6.8 billion buying our government from 1998 to 2011. This money went not only to campaign contributions but also to lobbying, so that regulatory agencies like the one that blocked the Iowa ATM law stay firmly under the thumb of the big banks. If banks are willing to play dirty to win $3 ATM fees, just imagine how hard they’ll lobby to win when it comes to mortgages, jobs, foreclosures, credit cards, and consumer protection.

Financial services companies simply outmaneuver and outspend the consumer watchdog groups that look out for you. In 2009, financial institutions were represented by 1,537 registered lobbyists in Washington – 25 times the number registered to support consumer groups, unions, and other reformers.

How else could politicians raise $12,000 a day?

Politicians aren’t necessarily bad people. Okay, they aren’t all bad people. But they are people who do need to raise up to $12,000 from private interests every single day, Monday through Friday, just to keep their jobs. That’s how much it costs to fund a reelection campaign. This never-ending fundraising war means our representatives ultimately have to serve the agendas of those with the most money. That’s why the Senate blocked the bill to cap ATM fees – or senators would have risked losing vital campaign contributions from the financial sector…That’s called bribery. It’s business as usual in Washington, and it’s legal. But make no mistake: what’s happening with our politicians is corruption.

If you care about jobs, finances, and the widening gap between the haves and the have-nots, you should care about this corruption. It’s time to declare: Our economy is Not For Sale

Get the facts about money in politics and the economy

• There were 1,537 registered lobbyists in D.C. in October 2009 representing financial institutions — 25 times the number registered to support consumer groups, unions and other reform groups. Source: Republic Lost: How Money Corrupts Congress — And a Plan to Stop It, Lessig, Lawrence, p.164
• The financial industry spent $1.3 billion during 2009 and the first quarter of 2010 to weaken the Dodd-Frank reform bill. Source: Newsweek
• There were 850 businesses and trade groups fighting Dodd-Frank in Washington.
• There are five lobbyists per member of Congress who lobbied against Dodd-Frank.
• The financial sector spent $2.7 billion on lobbying from 1999 to 2008; individuals and related PACs donated more than $1 billion in campaign contributions. Lessig, p. 83
• 70 former members of Congress lobbied on behalf of the financial sector in 2009. Lessig,  p. 123

Take Action »

Find out how corruption affects the other issues you care about:
Education » Defense » Healthcare » Economy » Environment »