Corruption in American Government
DUSTIN GARZA: Corruption has consistently been a pernicious feature of practically every significant government, with the United States being no exception. Corruption can erode confidence in our institutions and slow down government functions to a standstill. Clearly, corruption poses a constant threat to governments, and there are concerns that American corruption has become more pronounced in recent years. The United States scored a 67 on the 2021 Corruption Perceptions Index, its worst score since the inception of the index in 1995. The American public seems to agree with this score; 65% of Americans today say most politicians are corrupt. In response to this growing concern, the Biden Administration has named fighting corruption as a core U.S. national security interest. There is no doubt that corruption can destroy a government from within, but does corruption pose a serious threat to the United States today?
Transparency International, a nonprofit dedicated to fighting corruption, defines corruption as “the abuse of entrusted power for private gain.” Corruption can take many forms, such as bribery, embezzlement and quid pro quo. A comprehensive look at all the corrupt practices in the US government would be virtually impossible, but examining the most prominent examples of possible corruption in the United States may provide insight into whether these concerns are valid.
The most prominent example of corruption in 2022 has been the stock trading by government officials. Between 2019 and 2021, 97 members of Congress traded companies influenced by their committees. Members of Congress are allowed to trade public stocks just like anyone else, but the STOCK Act of 2012 prevents trading based on inside information, and congresspeople have to disclose any transactions by themselves or immediate family members valued at $1,000 or more within 45 days. In light of recent claims, Some have criticized the law, saying that it is not comprehensive enough in preventing members of Congress from using legislative resources for personal gain.
Corruption with stock trading is not limited to Congress. An investigation by the Wall Street Journal found a variety of suspicious trades early in the COVID-19 pandemic. While the U.S. public was largely unaware of the novel COVID-19 in January of 2020, public health officials were on high alert. During this time, officials at Health and Human Services and other health agencies reported much higher stock trading activity. While internal ethics boards cleared these officials of wrongdoing, the timing of these trades has drawn criticism. In the finance sector, several top Federal Reserve officials stepped down after being exposed for trading U.S. stocks while making decisions on U.S. financial policy, breaking the Fed’s ethics rules.
While these examples paint a gloomy picture, there is evidence that corruption surrounding stock trading in Congress is not as widespread as these examples may make it seem. A comprehensive study on the trading performance of U.S. Senators and Members of the House of Representatives from January 2012 to December 2020 did not reveal superior investment performance over the market. While this does not completely absolve every individual in Congress from unscrupulous trading, it does undermine the narrative that government officials are using inside information on a massive scale.
Another area where political corruption can manifest is in campaign finance. Twelve years ago, the Supreme Court ruled on the landmark decision Citizens United v. FEC, which struck down several FEC restrictions on campaign finance and resulted in the permittance of unlimited corporate and individual donations to “independent” political organizations. These supposedly independent organizations, known as super PACs, can coordinate with political campaigns and hence bypass the transparency requirements of traditional campaign donations.
In the 2020 election, Super PACs spent $2.1 billion. That is billions of dollars donated to organizations specifically designed to avoid the anti-corruption laws related to campaign finance. Of course there are bribery laws that prevent lawmakers from explicitly helping corporations in exchange for payment. However, when a corporation spends millions of dollars in support of a political candidate, it raises questions around the corporation’s motivations for these massive donations. Do these corporations hope to receive political influence in Congress in exchange for financial support?
The corruption that Citizens United permits has real world impacts. In Wisconsin, a company registered to an investor of the Milwaukee Bucks donated $150,000 to a super PAC that supported governor Scott Walker. The next day, Governor Walker publicly backed $250 million in public financing for a new Milwaukee Bucks arena. In 2015, presidential candidate Jeb Bush’s Super PAC received $1.3 million from Californian company American Pacific International Capital Inc. However, the owners of the company were Chinese citizens, meaning the Super PAC was used to bypass the ban on foreign campaign donations. These are just two examples of many cases of Super PACs being used as tools of corruption. Many more of these corrupt transactions are likely kept out of public view, helped by the lack of transparency within the structure of a Super PAC.
Lack of transparency is not a problem exclusive to the activities of Super PACs. The government response to COVID-19 also came with an unprecedented lack of oversight. $800 billion was handed out in the Paycheck Protection Program as part of the 2020 CARES act, which was designed to help businesses keep their employees employed. An estimated $76 billion of this money was lost to fraud, as borrowers inflated the number of employees or created shell companies to receive this money. In the interest of getting money out fast, lenders did very little to verify applications, despite concerns of corruption.
It’s easy to see how a lack of oversight can enable corruption among government officials. For instance, last year, a Connecticut State Representative pleaded guilty to stealing $1.2 million from COVID-19 relief funds. This has been the only case so far of a government official misappropriating COVID-19 relief funds, but the truth is that no one really knows where a lot of the money in these funds went. While the unprecedented times of COVID-19 may have necessitated cutting red tape in favor of getting money out quickly, it is important that transparency and accountability return to government spending following the pandemic.
There are of course countless examples of corruption within the U.S. Some examples include major U.S. banks being exposed in 2020 for doing little to stop illegal financial transactions and accusations against President Trump that he has thousands of conflicts of interests after not divesting from his businesses while in office. There are countless other cases of corruption that have gone unnoticed or unreported. However, it is necessary to put these instances of corruption in perspective. While corruption is a pervasive problem, the U.S. still has strong anti-corruption laws and these laws are still enforced in U.S. courts. According to the Corruption Perceptions Index, the United States is still ranked 27th in corruption, higher than most countries. It is the trend towards corruption that is worrisome, not its current state. President Biden’s public commitment to fighting corruption is the step in the right direction, but stronger anti-corruption measures are needed to reverse this worrying trend.
Dustin Garza is a Columnist for On the Record. He is a junior in the college studying Government and Economics. Dustin is particularly interested in law, climate change, and economics.