The Best Government Money Can Buy, An In-depth analysis of House Leadership voting behavior in the 112th Congress with respect to their largest donors.

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Master Thesis: North American Studies

Auguste Jan Janssen 1090275

Schoolmeesterpad 59 2316 VE Leiden +31-683537938

First reader: Dr. E.F. van de Bilt Provisional second reader: Dr. D. Fazzi

The Best Government Money Can Buy

An In-depth analysis of House Leadership voting behavior in the 112

th

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1. Introduction

Political debate about campaign finance in the United States political system took a sharp turn toward the side that advocated for more freedom to donate money to political causes after the Supreme Court made its decision on the case called Citizens United v. FEC on 21 January 2010.1 In this decision the court struck down significant parts of a law colloquially known as “McCain-Feingold” dealing with the ability of individuals and corporate entities to spend money advocating for a certain issue just before an election. 2 This not only meant a radical reversal for the Supreme Court on the issue of campaign finance, but had large implications for the already sizable marketplace of ideas that is known in Washington D.C. as K-street, the lobbying hub of the United States capital. Overnight the limitations on campaign donations for single issue PAC’s without ties to a specific candidate were removed, which not only gave the green light to the wealthiest people in America to start “investing” more in their chosen candidates, but caused a sharp and high-stakes political debate to rear its head once again.

Many political proponents of election finance regulation sharply opposed the decision with the argument that this kind of spending on election efforts could very well lead to a system based on “quid pro quo“ corruption or “Pay to Play” politics, in which the amount of money one is able to spend determines the size of one’s mouth in the political arena. Opponents of the regulations, however, defended their position with the argument that the parts of the law that were struck down were, as the Court had ruled, in conflict with the first amendment of the constitution. Moreover, that the monetary funding of organizations striving to bring a certain issue to the public’s attention had never been proven to be a corrupting force on politicians themselves, because it had never been proven to be a statistically deciding factor in the voting behavior of any representative. This last claim is clearly one that should be scrutinized to the fullest extent, not only because this was an important presumption in the defending oral arguments of the Supreme Court, but more so because it would, if disproven,

1_{Citizens United v. FEC, 558 U.S. (2010).}

2_{Bipartisan Campaign Finance Reform Act of 2001, Public. Law 107-155, U.S. Statutes at Large 116, (2002).} 81-116 https://www.gpo.gov/fdsys/pkg/STATUTE-116/pdf/STATUTE-116-Pg81.pdf

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reinforce the allegations of corruption that have been endemic in U.S. political debate in ever increasing intensity since the end of the Nixon administration.

This thesis aims to look into this claim. What is more, it will argue that the claim has merit. It will do so by studying the voting behavior of a number of American politicians in the House of Representatives of the 112th congress. This thesis will argue that the House leadership of the 112th Congress was not influenced by donations offered to it through political action committees or direct donations, because it has been known to vote against the interests of its top 5 largest donors. The reversed questioning in this thesis allows us to leave aside the issue of proving “quid pro quo” corruption for the moment and focus on the instances in which the donors of the House leadership of the 112th Congress had a clear, vested interest in the passing or failing of certain legislation and allows us to see if there is any significant correlation between the voting behavior of the representatives in the House leadership and the interests of their donors.

Before answering relevant questions like what constitutes a donation, what constitutes influence, and what precisely constitutes an interest for a donor, I will discuss the historiographical context of this project. The method with which I will approach the problem at hand will be laid out in the next part. Then I will deal with the ways donors and other special interests have found a way into the legislative process and other government institutions, through lobbying, the creation and funding of special interest groups that have come to be called “Super-PACs” after the Citizens United v. FEC decision, and the economic and political impact these groups and entities have had. The main body of this research, however, deals with the specific sectors for which legislation has been written and voted on in the course of the 112th Congress. This will be divided into two parts. Part one deals with the amendment process of the first appropriations bill passed by the 112th House during which members can change specific parts in the bills meant to appropriate funds for the next fiscal year and are

unusually free from their party’s voting discipline. This process elucidates the specific voting behavior of representatives and could lay bare a pattern in the voting behavior of the specific politicians this paper looks at. The second part is in turn divided into five parts, each dealing with a specific branch of industry the House of Representatives has put forward legislation for: Finance, Insurance, Real Estate, Securities and Investment or in short the Financial industry, the Oil and Gas, Coal and Mining

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7 industry, the Healthcare industry, the Defense industry and the Telecommunication industry. In each of these sectors a piece of relevant legislation will be discussed, as well as the voting behavior of and relevant donations to the House leadership’s of each party. The last part is dedicated to a general analysis of voting behavior of the House leaderships of each party over the entire 112th congress.

2. Historiography

Most of the literature written on the political implications of Citizens United v. FEC has been written with a clear political view and goal. This is a problem, because this hampers the ability of the non-partisan researcher to correctly and objectively assess the real political and historical impact of the Supreme Court decision. Left-leaning literature like Jane Mayer’s Dark Money3, Jacob S. Hacker and Paul Pierson’s Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class4 and many others, all—quite appropriately—approach the subject from a

historical point of view. In most political debates it is quite useful to take a step back and assess the current political situation through a historical lens, because this approach might enlighten the reader on the historical trends precipitating the political outcomes that the American public has to grapple with today. But, though operating within this historical perspective, clearly the authors mentioned above were heavily influenced by their own political convictions. They are therefore useful as the representatives of one side of the debate. Overarching academic works that can claim to represent the other, conservative side of this debate are scarce if not nonexistent. This might be because the conservative side of the debate has no interest in defending this ideological position, or it might be because most American academics is united in its opposition to the Citizens United decision. Either way it is hard to find any credible counterarguments against the grim picture painted in the previously named works in mainstream American academic literature.

The other major strand of literature dealing with the Citizens United v. FEC decision deals with the decision’s legal implications and specifically with the impact the decision had on the

3

Jane Mayer, Dark Money: The Hidden History of the Billionaires behind the Rise of the Radical Right, (New

York: Doubleday, 2016).

4_{Jacob S. Hacker, Paul Pierson, Winner-Take-All Politics: How Washington Made the Rich Richer-and Turned} Its Back on the Middle Class (Simon & Schuster, 2010).

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jurisprudence surrounding the First Amendment of the United States Constitution. A few good examples of this kind of literature are Robert C. Post’s Citizens Divided, Campaign Finance Reform and the Constitution5 and Monica Youn’s collection of essays called Money, Politics, and the Constitution: Beyond Citizens United.6 These works have a markedly more objective feel, because they approach the subject matter simply from a legal point of view and try to assess if the Supreme Court used the right methodological devices to come to its conclusions: they leave out almost completely the political undertones that can be found in the left-leaning historical scholarship. This technical approach is helpful in assessing the real influence of ideological or political interference in the court ruling that is often alleged in historical or polemic works and helps the reader further understand the real considerations of the court in the Citizens United decision. But this focus on the technical intricacies of First Amendment jurisprudence and the almost obsessive efforts to remain impartial to the political implications of the Court ruling also has a clear downside. The works might point out a few inconsistencies in the definition of certain words used in the ruling, but the conclusion of most of this literature based in the law profession argues that the ruling was mostly reasonable and fully within the bounds of the First Amendment and its jurisprudence; sweeping changes would be needed in the understanding of the goal of the First Amendment to come to significant change in a more “democratic” direction.

Several scholars, however, have tried to bridge this gap between political-science and historical scholarship on the one hand, and the legal literature dealing with the repercussions of Citizens United v. FEC on the other. The most acclaimed of these efforts consist of two works by Lawrence Lessig, named Republic Lost: How Money Corrupts Congress – And A Plan to Stop It7 and Republic Lost 2.0: The Corruption of Equality and the Steps to End It.8 One was published just after the Citizens United v. FEC decision in 2011 and one a few years later, with more data about the real consequences of the decision in the political system where money is concerned. In these works Lessig

5

Robert C. Post, Citizens Divided Campaign Finance Reform and the Constitution, Tanner Lectures on Human Values (Cambridge: Harvard University Press, 2014).

6

Monica Youn, ed., Money, Politics, and the Constitution: Beyond Citizens United (New York: The Century Foundation, 2011).

7_{Lawrence Lessig, Republic, Lost: How Money Corrupts Congress - and a Plan to Stop It, Reprint edition (New} York: Hachette Book Group, 2012).

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9 uses striking examples and clear analogies to explain the disparity between legal nomenclature used in the U.S. legal system and real world implication of the law. This to assess if a specific form of

transaction could have a corrupting influence, to assess the real-world implications the narrow definitions in campaign finance law have for the political process, but more importantly to assess the impact on the confidence the average voter has in the system. In this process Lessig not only uses historical examples, like the aforementioned political historical works, but goes head to head with statistical analyses of the political process in an effort to point out their significance and to help the reader understand the methodological problems and underrepresentation of certain factors in these studies. In this fashion Lessig promotes the argument that “Quid Pro Quo” corruption may not be provable in a direct sense, but that mutual financial dependency between representatives and large donors might have a more than insignificant influence on the legislative process. One of the most impactful and significant of these statistical studies that Lessig refers to is an article by Stephen Ansolabehere, John M. de Figueiredo and James M. Snyder, “Why Is There So Little Money In U.S. Politics”9.

This article uses the results of 40 studies into this financial dependency to come to the conclusion that, when correcting for the ideology of the candidate, the influence of party politics and the amount of consensus in the representative’s district on an issue, the influence of contributions to a candidate are negligible if not non-existent. However, the authors are very cautious when drawing their conclusion by stating for example that “To raise sufficient funds, candidates might skew policies in ways preferred by individual donors. Since campaign contributions are so closely linked to income, campaign contributions might act like weighted votes. Contributors who are disproportionally wealthy might have different policy preferences than the median voter.” So their conclusion is, as Lessig states, “We don’t see it [corruption]”, not “There is nothing to see”.10

This is a trend that can be seen in much of the work produced in the realm of political science. Statistical significance can be attained at a basic level, but is often skewed by too many factors and

9_{Stephen Ansolabehere, John M. de Figueiredo, and James M. Snyder, “Why Is There so Little Money in U.S.} Politics?,” Journal of Economic Perspectives 17, no. 1 (2003): 105–130, doi:10.1257/089533003321164976.

10

Lawrence Lessig, Republic, Lost: How Money Corrupts Congress - and a Plan to Stop It, (New York: Hachette Book Group, 2012). 121

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problems concerning the definition of the variables and the significance of their impact to come to overarching conclusions about the system as a whole. So, where do these problems manifest themselves and is there any way to correct for them as Ansolabehere, Figueiredo and Snyder attempted to?

3. Method

In an effort to answer the questions raised by the thesis posited in the introduction, I will use data gathered from aggregation efforts like OpenSecrets.org and Congress.gov to determine if

representatives in the House leadership of either party demonstrably voted against the direct interest of one of their top 5 donor sectors. Some definitions in this statement need some clarification. These will be provided in the following section.

At the start of each new Congressional session, members of the House of Representatives elect among themselves a number of people to positions that are together referred to as the “House

leadership”. These positions include the respective majority and minority leader of each party, the party whips, the respective Republican Conference and Democratic Caucus Chairs and others. For this paper I intend to use the data of five people in leadership positions of each party. The aforementioned positions in each party, accounting for a total of six representatives, the Chairs of the campaign committees of each party and one member of each party that has demonstrated to be a rising star over the past years at the time they were representing their district in the 112th Congress.

Republican Democrat

Majority Leader Eric Cantor Minority Leader Nanci Pelosi

Majority Whip Kevin McCarthy Minority Whip Steny H. Hoyer

Campaign Committee Chair

Pete Sessions Campaign Committee Chair

Steve Israel Republican Conference

Chair

Jeb Hensarling Democratic Caucus Chair

John B. Larson

Budget Chair Paul Ryan Deputy Whip Debbie

Wasserman-Schultz

Each of these representatives received an amount of money from a certain number of donors to be able to run for office. Some received more than others and the source of the donations were

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11 different for each person. As a result of this a donor profile can be created for each of these members. Considering these profiles it is possible to determine which industries were most actively vying for the favor of a certain candidate in the time before the oncoming election in 2012, which will be refered to as the 2012 election cycle. Of these industries this thesis will focus on the top 5 industries for each House member.

With these profiles in hand, the next step is analysis of all the relevant roll-call votes that were brought before the 112th House of Representatives. Relevance of a roll-call vote on a bill in this sense is defined quite broadly. Before all else, because votes on the passage of final bills have the largest impact on the actual legislative process, all roll-call votes for amendments can be deemed irrelevant, this stage of the legislative process will be discussed in a different fashion. Some bills can be

dismissed as irrelevant when they deal with the naming of a post-office or other government building, or when a vote is ordered to adjust a legislative rule. After completing this process a number of bills are left that are not or negligibly influenced by donations, because no industry would in any way benefit from influencing the process. For instance, this group contains legislation concerning decisions about foreign aid to disaster areas or legislation mandating investigations in specific government funded programs. After this process only the roll-call votes of which could reasonably be expected that a party other than the representative and his or her constituency would have a stake in are left.

This dataset is still quite sizable, though there is a way to shrink the dataset even further. By using the data provided through the Federal Election Commission (FEC) to OpenSecrets.org, a top 5 of industries can be determined who in aggregate donated the most money to Congress in the 2012 election cycle. This top 5 consists of the following industries:

The result of this is that another set of bills can be deemed irrelevant because of the fact that the industry

possibly benefitting from the legislation did not donate enough to House members to qualify for the overall top 5.

Industry or Sector

1 Finance, Insurance, Real-Estate, Securities and Investments 2 Oil, Gas, Coal and Mining

3 Healthcare and Health insurance 4 Defense

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The fact that other industries might be able, willing and inclined to influence the legislative and electoral processes still stands and it is true that by reducing the dataset by these standards, this paper might miss some industries that have a significant influence on the aforementioned processes. The reason for this choice is clear-cut. To determine if any representative voted against the interest of his or her donor, there first has to be sufficient influence by the donor over the representative. Our presumption here is that influence increases with the amount of money donated to a representative because the higher the donated amount is, the larger the implicit dependence of the representative is on future donations and the larger the inclination of the representative to vote in the manner he or she presumes the donor would want him or her to vote.

By having determined the final set of roll-call 55 votes that are of interest to this paper, we can now use the data gathered about the accepted donations per House leadership representative, combine them with their voting records on the bills that are relevant to these industries and determine to which degree they voted against the interests of their respective donors. Further, for each industry, one piece of legislation is subjected to a case study. These pieces of legislation represent instances in which a bill was demonstrably beneficial to one industry or instances in which a significant number of members voted against the interest of their donor. By using the oral argument on the floor of the House, media appearances, press releases or other source material, the reasons behind this particularly divergent vote or voting behavior on this piece of industry focused legislation can be determined.

To provide a sufficient amount of evidence to support the thesis, another dataset can be used. Whereas the amendment process to regular bills might not be deemed relevant in the research

concerning the voting behavior on regular legislation, the amendment process might in fact be more informative than these final votes. For this purpose the complete list of amendments to the first appropriations bill that passed the House of Representatives in 2011 called: “Making appropriations for the Department of Defense and the other departments and agencies of the Government for the fiscal year ending September 30, 2011, and for other purposes” or H.R.1 of the 112th Congress will be used. The amendment process is a relatively swift affair, and therefore party-line is not enforced as stringently as it is with final votes for important bills. This process therefore provides a more in-depth look at the voting behavior of the individual representative. H.R.1 proposed to appropriate money to a

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13 host of different programs across the government and to private industry for direct services in, for example, the Defense and Healthcare sectors for the remainder of fiscal year 2011.

In essence the same method that was utilized to appraise the complete set of final votes can be used to appraise the recorded amendment votes on H.R.1. First take out the irrelevant amendments that deal with rules changes or other demonstrably trivial changes to the bill. Next, the amendments are sorted by “top 5” donating sector. This yields a set of amendments that is demonstrably relevant to at least one of the sectors.

4. Money in American Politics and the effects of Citizens United v. FEC.

“Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standard of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too

often as given to a sacred trust the likeness of callous and selfish wrongdoing”11

At the height of the Great Depression in March 1933, Franklin D.

Roosevelt was set the immense task by the American voter to make life in the United States livable again for the

11_{Franklin Delano Roosevelt, First Inaugural Address of March 1933, Published in The New York Times March} 5, 1933 Ed. Jack Lane, Maurice O’Sullivan, A Twentieth-Century American Reader, Volume 1 1900-1945, (United States Information Agency: Washington 1999). 341-343

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common man. This task was allotted to him at a time when almost a quarter of the labor force was unemployed12 and trust in government in the United States was at an all-time low.13 In the decades before both the 1929 and 2008 Wall Street crashes, large financial institutions had a great amount of influence on the political system through the appointment of officials favorable to their interests.14 This was exacerbated in 2008 by the enormous numbers of campaign donations provided by the financial industry to both political parties.15 Although it must be said that the economic strife after the 2008 crash and recession was never as dire as during the early 1930s, trust in government had eroded massively by the time Supreme Court made its momentous Citizens United decision, to a measly 20% according to a Gallup poll conducted in January 2010.16

The response to these almost unprecedented amounts of distrust by the public in their government’s capacity to represent them was markedly different from the response Franklin D. Roosevelt outlined in his inaugural address. Little of the governmental practices that made this distrust so widespread were addressed in any meaningful way by the representatives able to do so. Moreover, one of the main perceived causes of this ever growing distrust was further exacerbated by the Supreme Court.

To state that money only became an important or deciding factor in American electoral politics after January 2010, would be as inaccurate as stating that money has never been a significant factor in American politics at all. Ever since the founding of the Republic, partisan organizations and the Parties themselves were in need of money to enthuse their electorate and therefore sought the financial support of moneyed interests and individuals who in return might have expected some sort of compensation or return on investment. Especially during the end of the 19th century, a period also known as the Gilded Age, the influence of business on politics was as substantial as it has ever been,

12_{U.S. Census Bureau, Statistical abstract of the United States: 1999, Civilian employed as a percent of the} civilian non-institutional population. U.S. Bureau of Labor Statistics, Bulletin 2307; and Employment and Earnings, monthly. https://www.census.gov/prod/99pubs/99statab/sec31.pdf

13_{Figure 1.: Pew Research Center U.S. Politics & Policy, Public Trust in Government: 1958-2017.} http://www.people-press.org/2017/05/03/public-trust-in-government-1958-2017/ (3 May 2017) 14

Anatole Kaletsky, Capitalism 4.0: The Birth of a New Economy, (New York: Bloomsbury Publishing, 2010). 148-152

15_{Centre for Responsive Politics: OpenSecrets.org, Finance/Insurance/Real Estate: Long-Term Contribution} Trends, (Updated: 16 May 2017). https://www.opensecrets.org/industries/totals.php?cycle=2016&ind=F Accessed: 24 July 2017

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15 mainly because the practice of donating to political causes was completely unregulated. “By the end of the nineteenth century these elites had ‘penetrated’ and taken ‘control’ of both major political

parties.”17

Since that time, political debate about campaign finance has remained contentious. The legal debate on this issue has always pivoted around two major values: Equality of representation and freedom of speech.18 Finding common ground between these two fundamental values has proven to be a daunting task that has not been completely resolved to this day. This is not to say that there hasn’t been any progress in this field. Congress has on multiple occasions made efforts to regulate election related donations or electioneering spending. The Supreme Court has, however, in almost as many instances struck down large and significant pieces of this legislation, for instance in the cases

Buckley v. Valeo19 and Citizens United v. FEC20. The last decision specifically struck down significant parts of the Bipartisan Campaign Reform Act of 2002, colloquially known as the BCRA or McCain– Feingold Act, which limited political party committees in their ability to raise money from sources that weren’t subject to the individual donation cap of $2.700 or the PAC donation cap of $5.000 and prohibited the use of “issue advocacy adds” that named a specific candidate 30 days before a primary election, or 60 days before a general election.21 The first part of this law still stands, but in Citizens United v. FEC the Supreme Court ruled against this second section which had the result of effectively lifting any restrictions on spending where advocacy for a political cause in combination with a voting advice on that issue was concerned, as long as the advocacy group was completely separately

organized from the campaign effort.22

Political parties have long worked tirelessly to provide their candidates with sufficient funds to run a more effective campaign than their opponents, most would agree that this is more or less the essence of politics. For the longest time, these donations were fairly modest or, if they were sizable the consisted of undisclosed deposits via brown paper envelope or briefcase. Yet, this changed shortly

17

Erik J. Engstrom, Party Ballots, Reform, and the Transformation of America’s Electoral System (Cambridge ; New York: Cambridge University Press, 2014). 17

18_{Post, Citizens Divided. 11-12.} 19_{Buckley v. Valeo 424 U.S. 1 (1976).} 20_{Citizens United v. FEC, 558 U.S. (2010).} 21

Bipartisan Campaign Finance Reform Act of 2001, Public. Law 107-155, U.S. Statutes at Large 116, (2002). 81-116. https://www.gpo.gov/fdsys/pkg/STATUTE-116/pdf/STATUTE-116-Pg81.pdf

22_{Compiled by the Federal Election Commission, Federal Election Campaign Laws, First Printing § 30118:} Contributions or expenditures by national banks, corporations, or labor organizations, (Washington, March 2015). 77-82. https://transition.fec.gov/law/feca/feca.pdf

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after the 1972 Watergate scandal, when illicit donations by business leaders to former President Richard Nixon came to light.23 The subsequent 1974 amendment process to the Federal Election Campaign Act (FECA) of 1971 is widely accepted as the starting point of the modern era of political debate concerning campaign finance. This amendment process sealed off many of the avenues political parties and their campaigns had traditionally utilized for fundraising, which left the parties two options: either rely on public funding for campaigns as provided for in the 1974 overhaul of the FECA, or begin raising money through the narrow channels the new legislation allowed. This trend of acquiring more and more campaign donations ramped up slowly, but in the late 1970s through to the early 1980s the GOP was the first party to seriously take up the challenge of raising money through the solicitation of a stupendous number of individual donations and the Democratic Party soon

followed suit.24 Inadvertently over the following decades, the 1974 law inadvertently caused a gigantic increase in scale where the amount of money in the American political system was concerned.

Between 1974 and 2008 the amount needed to run for reelection in the House or Representatives increased from $56.000 to $1.3 million, a 2221% increase. In 1974 all House and Senate candidates combined spent a sum total of $77 million. This amount increased to an astounding 1.8 billion in 2010, a 2238% increase.25

23

Charles R. Babcock, “When Contributors Cross The Line”, The Washington Post, (January 27, 1994). https://www.washingtonpost.com/archive/politics/1994/01/27/when-contributors-cross-the-line/a5c7aae7-e713-40de-bad4-5780e6727edb/?utm_term=.7d6ff1fdb19c

24_{Hacker, Pierson, Winner-Take-All Politics. 114-116/121-123} 25_{Lawrence Lessig, Republic, Lost. 85}

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All figures are based on contributions from PACs and individuals giving more than $200 to candidates, party committees, and from donors giving to Super PACs and other outside groups, as reported by the FEC on the 25 March 2013 and compiled by OpenSecrets.org and the Centre for Responsive Politics. Not all percentages might add up to 100% because of donations to third party candidates and/or party committees.

https://www.opensecrets.org/overview/sectors.php?cycle=2012 Figure 2. Sector in the

2011-2012 election cycle 26 Total to amount donated rounded to the nearest million Total amount to (non super)PAC’s, Parties and individual candidates % to Democrats % to Republicans

Finance related 692 million 529 million 32.1% 67.7%

Health related 269 million 205 million 44.0% 55.7%

Communications/electronics 205 million 152 million 63.3% 36.4% Energy and Natural

resources

148 million 117 million 19.4% 80.5%

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17 Simultaneously, between 1974 and 2010, the cumulative rate of inflation was 343%27, which means that every 1974 dollar was worth approximately $4.42 in 2010. This means that the growth of campaign expenditures during the thirty-six years following the Nixon presidency outpaced the inflation-rate by 652%.

The facts thus support the notion that the amount of money in the American political system has increased dramatically over the past forty years. This leaves us with two questions. How do these politicians acquire these exorbitant amounts of politically driven cash and more importantly, how is it used and what are the implications of this amount of money circulating in a political system?

This first question can be answered relatively easily, because of the close scrutiny and oversight provided by governmental institutions, the press and scholarly work. Members of Congress today spend a large amount of time reaching out to wealthy people by phone that might have interest in sponsoring their campaign efforts.28 This is the main fundraising strategy when it comes to soliciting individual donations. There are, however, two other streams of revenue for political parties and

individual representatives; these are donations by Political Action Committees or PAC’s and donations through the lobbying efforts of special interests.

PAC’s have been a hallmark of American politics since 1944 and are referred to in legislation as “separate segregated funds”.29

Originally set up to gain more oversight capacity over limited individual campaign donations, these constructs allow the pooling of individual donations by organizations that would not otherwise be allowed by law to donate money directly to a candidate or political party. The vast majority of regular PAC’s concerns themselves with advocacy for a branch of business, a single ideological issue, or another singular cause and are set-up as separate funds from the main organizations for the purpose of soliciting individual donations from their base.30 The committee then donates directly to the candidate or political party that they deem would best represent their interests. As a result of the Citizens United v. FEC decision, however, a new and much more

27_{Bureau of Labor Statistics, Consumer Price Indexes. https://www.bls.gov/data/inflation_calculator.htm} 28_{Ryan Grim, Sabrina Siddiqui, “Call Time For Congress Shows How Fundraising Dominates Bleak Work} Life,” The Huffington Post, (9 January 2013).

29_{Federal Election Commission, Federal Election Campaign Laws § 30118. 77.}

30_{Rajeev K. Goel, “PACking a punch: Political Action Committees and Corruption,” Applied Economics 46 No.} 11, (2014). 1161 http://dx.doi.org/10.1080/00036846.2013.868589

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economically powerful kind of PAC has emerged, the Super-PAC. These organizations are now legally permitted to solicit unlimited donations from any entity; that is to say business, individuals, labor unions or otherwise, as long as the organization has never had any contact with the candidate of its choice for the purpose of message coordination. Furthermore these Super-PAC’s are not privy to the extensive regulation that normal PAC’s are subject to, because they are legally separate from the candidate’s effort for election and spend their money separately, in the same way environmental NGO’s or other pressure groups do.31

The second, not purely individual stream of revenue members of Congress use to fund their election efforts are the funds they acquire through the lobbying industry. This method is, according to most literature arguing against the political influence industry, the most harmful kind of donation because of what Lawrence Lessing describes as the “Gift economy” of Congress. Although the lobbying industry only furnishes a fraction of the total amount of cash in circulation in the political system, the money distributed in this circuit is almost certainly delivered with an accompanying political message. In these deliberations a system of direct reciprocity is strictly outlawed, but it is the place where a question about changes to or support for a specific piece of legislation could be followed almost directly by an offer to organize a fundraiser.32 This stream of political revenue is closely monitored and heavily regulated. Politicians are legally required to file monthly reports of their receipts. The true implications of this mode of exerting influence on the system are believed to be far greater than those of individual or PAC donations because of the possibility of direct deliberation with the

representative.33

This brings us to the second set of questions; what happens to all this money, for what purposes is it used and what are the implications of a political system that is dependent to such an extent on donations from business, labor, or ideologically motivated interests?

For the first part of this question, a relatively simple answer can suffice; it is used by each political party to buy the means they deem most effective in the effort to convince undecided voters to cast their vote for the candidate of their political party. These activities mostly consist of finding out where

31_{Federal Election Commission, Federal Election Campaign Laws § 30118, 77-82.} 32_{Lawrence Lessig, Republic, Lost: Version 2.0, 110-111.}

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19 these undecided voters are and tailoring the strategy of the representative to the specific needs and wants of the undecided group of voters. Concrete research into the amounts spent on election research and eventual ad buying by candidates is really only conducted for candidates competing for the presidency, but through FEC filings for election disbursements between January 2011 and December 2012 show that the average disbursement of the top 50 spending candidates running for a House seat in the 2012 election was approximately $5.008.856 with a median disbursement of $3.841.510. John Boehner, then speaker of the House, spent almost as much as the numbers three and four34 on the list combined with $21.197.801.35

The second question is quite a lot harder to get a concise answer to. Academic literature is undecided on fundamental questions like: Is money a deciding factor in the election of a specific candidate?36 Is there demonstrable influence of money on the decision making process of a representative once in office? 37 Does donating to a political campaign result in more access to the candidate and what is the amount needed to get noticed by a candidate?38 The thesis posited in this paper will aspire to add to the body of data already gathered in the field.

5. Amendments to H.R.1: Full-Year Continuing Appropriations Act,

2011

When in 2011 the overall Democratic majority that was the result of the 2008 election had been broken in the midterm elections, the House changed color and the Senate remained under Democratic control. This resulted in a House that was undeniably more conservative than the Senate which caused unprecedented legislative gridlock. Bills that passed the House were often blocked or completely rewritten in the Senate, after which the House refused to agree to these changes. This dynamic was the

34

#3 Michelle Bachman: $13.315.535, #4 Bill Bloomfield: $9.822.215.

35_{Federal Election Commission Filings: Congressional Candidate Table 8e, Top 50 House Campaigns by} Disbursements January 1, 2011 - December 31, 2012.

https://transition.fec.gov/press/summaries/2012/ElectionCycle/24m_CongCand.shtml Accessed: April 29, 2017 36

Steven D. Levitt, "Using Repeat Challengers to Estimate the Effect of Campaign Spending on Election Outcomes in the U.S. House," Journal of Political Economy 102, no. 4 (1994): 777-98.

http://www.jstor.org/stable/2138764

37_{Ansolabehere, De Figueiredo, Snyder, “Why Is There so Little Money in U.S. Politics?,” 105–130.} 38

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start of a new period of political partisanship and polarization in both houses of Congress, a Congress that was the least productive in the history of American politics.39

Immediately after the new Congress was sworn in, the new era of gridlock and Congressional obstruction was revealed in the form of the debate about the 2011 budget. Normally, the budget for the ensuing fiscal year is passed before the end of the current one, but in fiscal year 2010, the Democratic Congress failed to pass its budget because of disagreements with the President about continuing deficit spending levels.40 Eventually the disagreements were pushed on past the midterm elections by the passage of a series of so called “continuing resolutions” in December 2010, to keep the government funded for the period up to March 4th 2011 when the new Congress was supposed to be up and running. This resolution essentially funded the government at 2010 levels.41

After the midterm elections, when the Republicans had won back the House, the debate about the budget for FY2011 erupted again with a vengeance. The bill that will be discussed here was the first effort by the new Republican House majority to present an alternative to the proposed 2011 budget that was drafted by the Obama administration.

Because the fiscal year the United States government adheres to, begins on October 1st of the previous calendar year, the 2010 Continuing Resolution ensured funding for the government, avoiding a government shutdown, but it also shortened the time in which the changes that the FY2011 budget would bring could be implemented. This wouldn’t have been a problem if the new Republican

majority had intended to maintain or increase the funding provided in the new budget, but this was not the case. H.R.1 proposed to cut overall non-security discretional spending by 14.6% over the 2011 fiscal year.42 This amounted to an immense 24.9% cut for the same kind of spending for the remaining year, because of the fact that five months of the 2011 fiscal year had already expired at the time the

39_{Chris Cillizza, “The least productive Congress ever” The Washington Post (17 July 2013)} https://www.washingtonpost.com/news/the-fix/wp/2013/07/17/the-least-productive-congress-ever/?utm_term=.65d5cf3cf8cb Accessed: 5 July 2017

40_{Jared Allen, “Dems won’t pass budget in 2010” The Hill, (22 June 2010)}

http://thehill.com/homenews/house/104635-dems-wont-pass-budget Accessed: 18 June 2017

41_{Continuing Appropriations and Surface Transportation Extensions Act 2011, Public Law No: 111-322, Statues} at Large 124, 111th Cong. 2nd Sess. (22 December 2010) , 3517-3531.

42_{James R. Horney, et al. Center on Budget and Policy Priorities, House Bill Means Fewer Children in Head} Start, Less Help for Students to Attend College, Less Job Training, and Less Funding for Clean Water. (Washington DC, 1 March 2011) http://www.cbpp.org/research/house-bill-means-fewer-children-in-head-start-less-help-for-students-to-attend-college-less#_ftn Accessed: 9 June 2017

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21 bill passed the House on February 19th 2011. Security spending proposed in the bill, the appropriations for the Departments of Defense, Homeland Security and other agencies deemed vital to National Security, would actually increase slightly by less than a per cent.43 Despite the fact that this bill would never actually pass the Senate in its original form in 2011 or reach the President’s desk at all, the amendment process to this bill is very interesting. Not only because it was the first contentious bill to be introduced to the House after the 2010 midterm elections, but because of the heavy austerity measures it proposed to reduce the booming deficit without raising taxes. The measures in the 2011 budget were both applauded for their rigorous cutting of unnecessary bureaucracy by some

conservative commentators44, but mainly heavily criticized by mainstream news sources because of harsh cuts to education, healthcare, nutrition and social safety net programs.45

The amendment process to H.R.1 started early in the morning of the 15th of February and ended with the final vote on passage on the 19th of February at just over half past four in the morning, where voting commenced perfectly along party lines save for a few un-cast votes.46 In this time, a staggering 103 amendments were introduced with a request for a roll-call vote and a further 58 where a vote by acclamation was deemed adequate. 35 votes of these 103 will be under scrutiny here, because of their clear bias toward one of the five specific industries or business sectors outlined earlier. Nineteen of these 35 amendments were in some way related to the Oil, Gas, Coal or mining sector, eight to the Defense sector, four to the Healthcare industry, two to the Financial industry, one to Telecom and one related to the Healthcare, Fossil fuel and the Financial sectors in concert.

5.1 Contents of the Amendments

The reason of the disproportionate number of amendments that would be beneficial to the Oil, Gas, Coal or mining sector was the continuing effort by the Republican House majority to curtail the

43_{Making appropriations for the Department of Defense and the other departments and agencies of the} Government for the fiscal year ending September 30, 2011, and for other purposes., H.R.1, 112th Cong., 1st sess., 2011, (11 February 2011)

https://www.congress.gov/bill/112th-congress/house-bill/1/text/ih?q=%7B%22search%22%3A%5B%22H.R.1%22%5D%7D&r=1 Accessed: 9 June 2017

44_{Glenn Kessler, “The Fact Checker: Democrats keep misleading on claimed budget 'cuts’,” Washington Post,} (4 March 2011).

45

Jennifer Steinhauer, “Cuts to Head Start Spotlight the Challenge Of Fiscal Restraint,” The New York Times, (11 March 2011)

46_{Final Vote Results for Roll Call 147, Making appropriations for the Department of Defense and the other} departments and agencies of the Government for the fiscal year ending September 30, 2011, and for other purposes, H.R.1, 112th Cong. 1st sess. (19 February 2011). http://clerk.house.gov/evs/2011/roll147.xml

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environmental policy initiatives and regulatory efforts introduced by the Obama administration and 111th Congress. 11 of the amendments were adopted in favor of the fossil fuel industry, and 7 were rejected. The majority of amendments adopted were spending prohibitions on, for example, the execution of EPA guidelines issued as a result of studies into climate change, the maintenance of the Intergovernmental panel on Climate Change and the EPA for revoking Mining and waste disposal permits.47 The most impactful of these amendments, however, was the wholesale prohibition of the implementation, administration and enforcement of rules pertaining to greenhouse gas emissions, which was approved by a large margin, with even a few Democrats signing on.48

Most of the Healthcare related amendments were designed to grant Healthcare insurance corporations more freedom in their business practices. One notable example of this is the spending prohibition on the enforcement of the Health and Human Services (HHS) program under the Affordable Care Act (ACA), called the Medical Loss Ratio or MLR. 49 This program prohibited insurance corporations from spending more than 15% of premium incomes for large insurance groups and 20% for small groups on non-healthcare related costs.50 This effectively allowed these companies the freedom to set their own prices on administrative and other non-healthcare related costs, which would directly bolster the bottom line of the company.51

The defense related amendments largely pertained to spending on certain materials, or

proposed across the board cuts to defense. The first group proposed, for example, the defunding of the development of an extra F-35 Joint Strike Fighter engine and the cutting of the V-22 Osprey airplane

47_{Griffith of Virginia Amendment No. 109; Luetkemeyer of Missouri Amendment No. 149; McKinley of West} Virginia Amendment No. 216, H.R.1, 112th Cong. 1st sess., (19 February 2011)

48_{Poe of Texas Amendment No. 466, Making appropriations for the Department of Defense and the other} departments and agencies of the Government for the fiscal year ending September 30, 2011, and for other purposes, H.R.1, 112th Cong. 1st sess. (19 February, 2011)

49_{Price of Georgia Amendment No. 409, H.R.1, 112}th_{Cong. 1}st_{sess. (19 February, 2011)} 50

Suzanne M. Kirchoff, Medical Loss Ratio Requirements Under the Patient Protection and Affordable Care Act (ACA): Issues for Congress, Congessional Research Service, (Washington DC, 2014) 2

51_{Sally Pipes, “HHS Can Target Obamacare's Medical Loss Ratio Rule Right Away,” Forbes.com, (April 17} 2017). https://www.forbes.com/sites/sallypipes/2017/04/17/hhs-can-target-obamacares-medical-loss-ratio-rule-right-away/#300890a77322 Accessed: 5 July 2017

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23 from the Navy budget.52 The other proposed to simply bring back defense spending back to 2008 levels or to reduce it by a percentage across the board.53

The amendments introduced with respect to the financial sector were both introduced by Democrats and were both presented as tradeoff amendments, bolstering a certain agency or

administrative body, whilst cutting another. One increased funding for the Securities and Exchange Commission and the other for Consumer Financial Protection Bureau, whilst cutting funding for sections of the Department of the Treasury and the enforcement division of the IRS respectively. 54 Despite the proposed tradeoff designed to persuade Republican members, these measures to bolster oversight mechanisms in the financial industry failed to pass.

52_{Gutierrez of Illinois Amendment No. 63, Rooney of Florida Amendment No. 2, H.R.1, 112}th_{Cong. 1}st_{sess. (19} February, 2011).

53

Campbell of California Amendment No. 519, Lee of California Amendment No. 141, H.R.1, 112th Cong. 1st sess. (19 February, 2011).

54_{Holt of New Jersey Amendment No. 506, Frank of Massachusetts Amendment No. 458, Making appropriations} for the Department of Defense and the other departments and agencies of the Government for the fiscal year ending September 30, 2011, and for other purposes, H.R.1, 112th Cong. 1st sess. (19 February 2011).

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5.2 Voting Behavior

At first glance, the voting behavior of the ten members of the House leadership in the 112th Congress is somewhat divided along party lines. This is, of course, a logical outcome in a process that has a high impact on the budgetary policy of the entire government and where one party has a clear majority. From the sample of amendments under scrutiny, 23 were introduced by Republicans and 12 by Democrats. The party that introduced the amendment does provide an indication of the outcome of the vote on the Republican side, that is to say, many of the amendments introduced by Democrats were voted down unanimously by the Republican majority. On the Democratic side, however, the predictive power of the introducing party doesn’t apply necessarily. Many amendments introduced by Democrats were just marginally supported by their peers or not supported at all; there wasn’t in fact one Democratic amendment that was unanimously supported by the introducing party. It seems indeed that party line wasn’t adhered to in equal measure on the Democratic side of the aisle as it was on the Republican. Although most votes on the Democratic side voted down Republican amendments, there were many instances where the Democrats were left to vote on their own conscience. This tendency resulted in a very interesting dynamic where the majority party was at times quite heavily supported

23% 71% 77% 71% 20% 3% 6% 37% 9% 3% 0% 6% 0% 3% 3% 20% 68% 46% 14% 20% 77% 23% 23% 26% 77% 77% 26% 17% 77% 77% Figure 3

Voting behaviour on Amendments to the Full-Year Continuing Appropriations Act, 2011

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25 by the opposition in votes that undermined policies introduced during the previous Democratic

Congress and that were supported by the Democratic president.

An answer as to why this is the case could lie in the hypothesis that was posited in the introduction, or rather the reverse of it. Could it be that donors have a decisive influence on voting behavior when the spotlights are clearly on the majority party and its dealings? As can be seen in Figure 2, this is not the case in most instances.

Republicans voted overwhelmingly in favor of their donors interests. Only in specific cases, individual representatives voted against the interests of their donors, which meant that in many of these cases, they also voted against the party line. These votes, however, were in all but one case, a compromise amendment, in which funds were transferred from one agency or program to another. They were therefore, almost certainly, the result of a cost-benefit analysis, where the transfer of funds would not have been to the benefit of their constituents or would have been incongruent with their political ideology.

On the Democratic side of the aisle voting behavior with respect to individual donations is a lot more complicated, mainly because of the lack of enforcement of the party line. It must be said that on most occasions, most Democratic members did vote against the interests of their donors to at least make their voice heard in opposition to the concerted effort by the Republican party to deconstruct most of the legislative achievements of the 111th Congress. At least three of the five Democratic House leadership members voted against the interests of their donors at every chance that was

presented to them, or were not burdened with top5 donor interests and preferences. Others took a more lenient stance toward new proposals and cast their votes more often in concert with the opposition and their donors. This difference is most visible in the respective voting behavior of Steny H. Hoyer and John B. Larson. In many cases, especially where amendments involving the Fossil fuel and Mining sector were concerned, Larson voted unapologetically with the Republicans. This is interesting, because Hoyer is also sponsored heavily by this same sector, but chose to adhere to the party’s interest in maintaining a strong commitment to reducing fossil fuel emissions and sufficient budget for the Environmental Protection Agency (EPA). One correcting factor in this equation could be the fact that John Larson is heavily sponsored by the Defense sector and Hoyer is not. This correction, however, as

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can be seen in Figure 2, accounts only for 9% of the 31% difference in Larson’s voting loyalty to his donors. Interestingly, Hoyer led the opposition to the 2011 budget proposal in his capacity as House majority leader when de Democratic Party was still in power in 2010.55 This would suggest that he was a proponent of a more prudent budget in 2010, but was still in stark opposition to the cuts proposed in H.R.1.

When reviewing the voting behavior of the House leadership of both parties in the 112th congress, it seems clear that adherence to party line is a significant factor in voting behavior and a good reason for most representatives to vote against the primary interests of their top donors. This rule cannot be applied to any and all votes cast by these politicians, who clearly have to balance a more complex set of interests than just these two, to come to their final conclusion with respect to a vote. This also assumes that these representatives make their choices in a completely rational fashion and leaves out emotional and irrational factors. What is clear, however, is that representatives do often vote against the interests of their top donors, especially when they are part of the minority party. Being part of the minority, however, is far from a guarantee of consistent voting against the interests of their donors. John B. Larson’s voting behavior clearly shows that voting for the interests of one’s donors and therefore with the opposition is still possible more than a third of the time, even when the subject is a bill that would cut or defund most of the policy initiatives that the President of the same party established at the start of his tenure. The overall trend, thus, still consists of voting with the general party line, but individual minority members were often swayed on individual votes by arguments or interests presented by the majority party. These arguments could have been political or ideological, although this seems unlikely because of the crippling political polarization that plagued the 112th Congress. The constituents of these Representatives might have been directly or indirectly served by their voting for or against a specific amendment. Another likely explanation, however, is that the perceived favorability to a specific donating business sector of a given amendment was sufficiently persuasive for these Representatives to cast their vote in accordance with the interests of this sector.

55_{Jared Allen, “Dems won’t pass budget in 2010,” The Hill, (22 June 2010).}

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6. Voting behavior concerning legislation in the 112

th

Congress

Despite the fact that the 112th Congress was one of the least productive in the history of the Unites States, the House of Representatives did pass a fair amount of legislation. This legislation often didn’t reach the President’s desk because of the fundamental disagreements the Democratic Senate had with the Republican House majority. The votes on these unsuccessful legislative efforts by the House can none the less give us more insight into the voting behavior of the Representatives under scrutiny.

The first and central part will be dedicated to an in depth study of five bills that were

introduced in the House during the 122th Congress, one bill for each of the five industries that were the biggest donors to the representatives under scrutiny. The second part will take a step back and analyze the overall voting behavior of the representatives across the relevant bills that were passed during the 112th Congress. The first method will provide greater insight into the legislative process and the political context of the bills in question, to come to a better understanding of the personal, political or ideological motives representatives might have weighed in their decision making. The second method will, much like the last one, provide a more blanket assessment of the general patterns that cropped up during voting during the tenure of the representatives in the 112th Congress.

6.1 The Financial Industry or “The Business Risk Mitigation and Price

Stabilization Act of 2012”

This piece of legislation consisted of amendments to the Commodity Exchange Act and the Securities Exchange Act of 1934. It sought to adjust the Wall Street Reform and Consumer Protection Act otherwise known as the Dodd-Frank Act, to exempt “end users” from the “margin requirements” that regular derivative traders must adhere to.56

Before the 2008 financial crisis, financial markets enjoyed unprecedented freedom in their business practices. This was the result of the sweeping deregulation of this industry under the Clinton

56_{Business Risk Mitigation and Price Stabilization Act of 2012, H.R.2682, 112}th_{Cong. 1}st_{sess. (Introduced: 26} March 2011). https://www.congress.gov/bill/112th-congress/house-bill/2682

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administration.57 As a result of the financial crisis in 2008, however, this changed somewhat. The old financial markets that were deregulated in the 1990s were again subjected to government oversight and were required to report products and transactions to Government restrained oversight bureaus or agencies before finalizing them. Despite the importance of these reforms, they were not the most revolutionary reforms the Dodd-Frank Act provided. A new practice of creating very intricate and highly abstruse financial products known as derivatives, had become commonplace on Wall Street. This market had grown almost exponentially from the end of the 1990s until 2008, at which point financial institutions carried a combined exposure of almost $700 trillion dollars in these products alone.58 The regulation of this enormous market was the greatest achievement of Dodd-Frank. These over the counter derivatives, or OTC’s, are mainly used to mitigate risk and to hedge existing and new investments in such a way that market volatility might not impact the derivative holder’s investment as much as it might otherwise.59 A swap, in layman’s terms, is a contractual agreement that stipulates that two entities will exchange payments on a loan or other liability of some sort for a period of time, based on their previous performance and their ability to bear risk.60 These swaps are extensively used in the financial sector to mitigate risk and Dodd-Frank ensured that Swap Sealers (SD) and Major Swap Participants (MSP) were obligated to register critical information at a centrally organized and regulated “Clearing House”.61 This included all necessary information at registration of the SD’s and MSP’s, like credit rating and outstanding liabilities, but also the “clearing” of products before sale and the registration of certain transactions. These measures to increase oversight were further extended by Dodd-Frank by empowering regulators to impose strict margin and credit requirements for “uncleared swaps”.62

These margin requirements, the percentage of a certain financial product one can buy on credit thereby taking on greater risk, were the main subject of The Business Risk Mitigation and Price Stabilization Act.

57

Hacker, Pierson, Winner-Take-All Politics, 210-211.

58_{Guillaume Vuillemey, “Do derivatives make the world safer?,” VOX, Center for Economic and Policy} Research Policy Portal, (12 February 2015). http://voxeu.org/article/do-derivatives-make-world-safer Accessed: 19 June 2017

59_{Vuillemey, “Do derivatives make the world safer?”} 60

Charles L. Hauch, “Dodd-Frank's Swap Clearing Requirements and Systemic Risk,” Yale Journal on Regulations, Vol. 30, Issue 1, (Yale: New Haven 2013). 278

61_{Further definition of “Swap Dealer” and “Major Swap Participant”: Dodd-Frank Wall Street Reform and} Consumer Protection Act, Public Law 111–203 July 21, 2010, 12 U.S.C. 5301, Sec. 721 (33) and Sec.721 (49). 62

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29 Because the U.S. government wanted to limit the amount of risk a financial institution could amass, all institutions buying a derivative or swap were required to have a certain percentage of the actual cost of the product on hand. The Business Risk Mitigation and Price Stabilization Act, however, stipulated exemptions from these requirements for “end users”.63 These “end users” were defined as commercial entities that use derivatives or swaps, but for which the purchase or sale of these products is not the primary goal of the commercial enterprise.64 The argument here was that these commercial entities wouldn’t pose a systemic risk if they were to fail as a result of acquisition of derivatives at a less than reasonable margin. Furthermore, if they weren’t allowed to buy swaps at a margin of their own choosing and were bound to the margin requirements stipulated in Dodd-Frank, a significant amount of liquid capital would be needed at all times to continually meet these requirements. Capital that, according to Michael Grimm the author of the law, could otherwise be used to create jobs or to expand production capacity. Rep. Grimm further stated that “imposing a 3% percent margin on over-the counter derivatives held by S&P 500 companies could cut capital spending by $5.1 to $6.7 billion. That could lead to 100,000 to 130,000 job losses.”65

This very impactful legislation was passed with bipartisan support in the House, but never made it through the Senate Committee on Banking, Housing, and Urban Affairs as S.3480.66

Because of the bipartisan support and drafting of the bill, the voting behavior of the representatives in question was predictably unanimously supportive. The question then is: Was support for the Business Risk Mitigation and Price Stabilization Act justified as a pragmatic adjustment to Dodd-Frank to spur much needed economic growth, or was this legislation unduly beneficial to the financial industry? Because of the fact that no financial institution whatsoever could be exempted from the posting of margin requirements under this legislation, the direct benefit to the financial sector is limited, if not nonexistent. This doesn’t mean, however, that no financial gain could be made by financial institutions

63_{U.S. Congress, Journal of the House of Representatives of the United States, 112}th_{Cong. 2}nd_{sess., March 26,} 2012, H1551. (Remarks by Rep. Scott Garret of New Jersey).

64_{Dodd-Frank Wall Street Reform and Consumer Protection Act, 111}th_{Cong. 2}nd_{Sess. Public Law 111–203,} July 21, 2010, 12 U.S.C. 5301, Sec. 723 (7)(A).

65

U.S. Congress, Journal of the House of Representatives of the United States, 112th Cong. 2nd sess., March 26, 2012, H1552. (Remarks by Michael Grimm of New York).

66_{U.S. Congress, S. 3480, To provide end user exemptions from certain provisions of the Commodity Exchange} Act and the Securities Exchange Act of 1934. 112th Cong, 2nd Sess, (2012). https://www.congress.gov/bill/112th-congress/senate-bill/3480/text

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from adding this exemption to the Dodd-Frank act. The mention by Rep. Grimm of S&P 500 companies for example, requires further scrutiny. The S&P 500, an abbreviation of “Standard and Poor’s 500”, is a stock index of the top 500 publicly traded domestic companies.67

This indicates that not only the small businesses and dairy farmers that were mentioned during House floor proceedings would benefit from this legislation, but the benefactors might well be the largest of American corporations.68 In turn this would indicate that if margin requirements were lifted on the sale of derivatives, the sale of derivatives to these corporate giants would skyrocket, indirectly benefiting the financial institutions that are in the business of selling these products. Therefore I would argue that the drafting of this legislation and the later passage in the House, might not have been as “common sense” or “pro-small business” as the House members would make it appear in their statements.69 In the last section, further elucidation will be provided on the general voting behavior of the House leadership on this bill and other financial legislation.

6.2 The Oil, Gas, Coal and Mining Industry or “Restarting American Offshore

Leasing Now Act”

The debate about energy production in the United States has always been contentious for different reasons ever since the introduction and widespread use of oil-based products by the general population. Yet 2011 seemed to divide the political sphere even more than normally on this issue. Several factors played a part in this, but none more so than three major contentious topics. Firstly, the enormous disaster in the Gulf of Mexico in the spring and summer of 2010 that was caused by a faulty safety system on the Deepwater Horizon, a deep sea drilling operation conducted by BP.70 Secondly, the Obama administration’s moratorium on the granting of offshore oil drilling leases after this disaster and lastly, the ever rising gasoline prices at the pump, which had risen from little more than

67_{Britannica Academic, s.v. "S&P 500". Accessed: 20 June 2017}

http://academic.eb.com.ezproxy.leidenuniv.nl:2048/levels/collegiate/article/S-ampP-500/384803

68_{U.S. Congress, Journal of the House of Representatives of the United States, 112}th_{Cong. 2}nd_{sess., March 26,} 2012, H1552. (Remarks by Rep. William Owens of New York).

69_{U.S. Congress, Journal of the House of Representatives of the United States, 112}th_{Cong. 2nd sess., March 26,} 2012, H1552. (Remarks by Michael Grimm of New York and William Owens of New York).

70_{National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Deep Water The Gulf Oil} Disaster and the Future of Offshore Drilling, (Washington, January 2011).

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31 $1.80 per gallon in January 2009 at Obama’s inauguration, to $3.90 per gallon in May 2011 when the debate about this bill took place.71

The first issue had much to do with the crisis in confidence the American public was subjected to after the spilling of 206 million gallons of crude oil directly into the Gulf of Mexico, killing 11 people and causing the greatest oil-spill related environmental disaster the world had ever seen.72 As a result of this disaster, offshore oil drilling companies faced serious questions about their business practices and the US government and especially the agency responsible, The Minerals Management Service (MMS), faced a great deal of criticism regarding their oversight capacity of offshore oil drilling safety.73 This oversight related debate was partly resolved through the reorganization of the MMS, when on of May 19th 2010 the MMS was renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), on October 1, 2010 the Office of Natural Resource

Revenues (ONRR) split from BOEMRE74 and on October 1, 2011 BOEMRE was divided into BOEM and the Bureau of Safety and Environmental Enforcement (BSEE).75 The debate about the “Restarting American Offshore Leasing Now Act” in the House took place in the spring of 2011, just after the release of a report by a National Commission on the Deepwater Horizon and offshore drilling in early January of 2011, with recommendations about improved oversight and methods that could be utilized to improve safety and mitigation of disasters.76. At the time of the debate, Republican representatives found that the most dire safety issues concerning deep water drilling had been addressed by the administration and the National Commission through the reorganization of the MMS. Democratic legislators, however, still argued for stricter safety measures.

71_{According to data released by the U.S. Energy Information Administration.}

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPMR_PTE_NUS_DPG&f=W 72

Harry R. Weber, “Blown-out BP well finally killed at bottom of Gulf,” Associated Press, (19 September, 2010).

http://archive.boston.com/news/nation/articles/2010/09/19/blown_out_bp_well_finally_killed_at_bottom_of_gul

f/ Accessed: 5 July 2017

73_{Mark Thompson, “Washington's Revolving Door: How Oil Oversight Failed,” Time Magazine, (09 June,} 2010). http://content.time.com/time/nation/article/0,8599,1995137,00.html

74_{Bureau of Ocean Energy Management, OCS Lands Act History, https://www.boem.gov/ocs-lands-act-history/} 75_{Departement of the Interior: Office of the Secretary, “Interior Department Completes Reorganization of the} Former MMS” Press Releases, (30 September 2011).

https://www.doi.gov/news/pressreleases/Interior-Department-Completes-Reorganization-of-the-Former-MMS Accessed: 21 June 2017

76_{National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Deep Water The Gulf Oil} Disaster and the Future of Offshore Drilling, (Washington, January 2011). 293