Money

Washington’s Revolving Door: The Bigs Get Bigger

Washington Post article pointed out President “Obama came into office promising that his administration would hew to higher standards than his predecessors did” when it came to the lucrative revolving door:

But the efforts have done little to slow a tide of groups hiring former top aides as highly paid consultants, speakers and media advisers in an effort to influence the administration — part of a longtime Washington practice in which interest groups seek access to the White House by hiring people who used to work there.

There has been a lot of focus on the movement of individuals and what it means for specific companies and industries, but there has been less focus on what it means for our system of governance.  The short answer is that as the revolving door spins, the bigs will only get bigger.  In other words, big business (or big labor, big education, etc) will play nice with big government and big government will play nice with them. 

Discussing the problems facing the implementation of Obamacare, the Washington Post relayed this little-reported finding:

[Stan Dorn, a senior fellow at the Urban Institute] also pointed to some experiments looking at H&R Block’s efforts to help their tax clients enroll in public benefits.  In one, the tax preparation company filled out the paperwork for clients eligible for SNAP. As helpful as it was to simply fill out the forms, participation in the food assistance program was 80 percent higher when the company took the extra step of submitting the paperwork on the clients’ behalf.

This isn’t the first time H&R Block has found itself in reporters’ crosshairs.  The Washington Examiner’s Tim Carney has the story:

In 2009, the Obama administration hired Mark Ernst, the previous CEO of tax prep giant H&R Block, as IRS deputy commissioner. Ernst became a “co-leader” (in the words of an IRS spokesman) in drafting new regulations for tax preparers.

This seems to clash with President Obama’s executive order barring appointees from working on regulations directly affecting their former employers.

Ernst’s regulations require anyone paid to prepare taxes to get a license, pass a test, pay an annual fee and complete a 15-hour course in tax training every year.

Many paid preparers already meet stringent testing and continuing education standards in order to become “Enrolled Agents.” Absent Obama’s rules, taxpayers have a choice: You could hire an Enrolled Agent or H&R Block, and pay a little more for the added expertise or institutional support. Or you could choose someone like Elmer Kilian, a retired Korean War veteran who, for 30 years, has spent a couple months a year helping his neighbors in Eagle, Wis., file their taxes.

Obama and Ernst’s rule would effectively put Kilian and thousands like him out of business.

That’s why H&R Block supports the rule. A 2010 analysis by investment bank UBS concluded the rules “should help Block” for many reasons, including “add[ing] barriers to entry (or continuation) for small preparers.”

When large companies support massive regulatory schemes, you can almost guarantee a much smaller competitor will bear the burden.  Need another example, just see the fight over the Internet sales tax.

As Heritage Action’s CEO Michael A. Needham and COO Tim Chapman have explained, “The Bigs – Big Wall Street, Big Government, Big Labor, and Big Business – are all protected classes in the American political system.”  This “corrupt nexus” is destroying trust in government and eroding Americans freedoms.

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