BOOK REVIEW: ‘Throw Them All Out’

OPINION:

THROW THEM ALL OUT: HOW POLITICIANS AND THEIR FRIENDS GET RICH OFF INSIDER STOCK TIPS, LAND DEALS, AND CRONYISM THAT WOULD SEND THE REST OF US TO PRISON
By Peter Schweizer
Houghton Mifflin Harcourt, $26. 224 pages

Three years ago, then-House Speaker Nancy Pelosi and her husband, Paul, made Hillary Rodham Clinton’s success with cattle futures look like a child’s lemonade stand. The credit card giant Visa was holding an initial public offering, among the most lucrative ever seen. The Pelosis were granted early access to the IPO as “special customers” who received their shares at the opening price, $44. The lucky investors turned in a 50 percent profit in just two days.

Starting on March 18, the speaker and her husband made the first of three Visa stock buys, totaling between $1 million and $5 million. “Mere mortals would have to wait until March 19, when the stock would be publicly traded, to get their shares,” writes Peter Schweizer of the Hoover Institution in his new book. On the surface, it appeared to be quite a gamble. Mr. Schweizer reports that the investment represented at least 10 percent of the Pelosis’ stock portfolio and perhaps as much as half of their equity holdings.

But maybe there was more to it than meets the eye. The Pelosis got their IPO stocks just two weeks after legislation was introduced in the House that would have allowed merchants to negotiate lower interchange fees with credit card companies. Visa’s general counsel described it as a “bad bill.” The speaker squelched it and kept further action on interchange fees bottled up for more than two years. During that time period, the value of her Visa stock jumped more than 200 percent while the stock market as a whole dropped 15 percent.

“Isn’t crony capitalism beautiful?” Mr. Schweizer asks as he finishes recounting this tale in “Throw Them All Out.” The book actually paints a very ugly picture of legislators enriching themselves through earmarks and unpunished insider trading, politically connected companies being shoveled billions of dollars in stimulus funds and public money intended to help the environment, plus all manner of kickbacks and favors.

The worst part: Many of these egregious actions fall within the letter, if not the spirit, of the law and the ethics rules governing Congress. Mr. Schweizer’s subtitle is revealing: “How politicians and their friends get rich off insider stock tips, land deals, and cronyism that would send the rest of us to prison.”

While Sen. John F. Kerry, Massachusetts Democrat, was working on health care reform in 2009, he and his wife began buying stock in Teva Pharmaceuticals. The Kerrys purchased nearly $750,000 in November alone. As the bill got closer to passing, the stock value soared. Big Pharma supported these legislative efforts because they would increase the demand for prescription drugs. The senator and his wife cashed in after Obamacare became law, reaping tens of thousands of dollars in capital gains while holding on to more than $1 million in Teva shares.

The $573 million loan guarantee for the solar company Solyndra has raised eyebrows. About 35 percent of the company was owned by Oklahoma billionaire George Kaiser, who raised money for Barack Obama’s 2008 campaign. Solyndra has since gone bankrupt, the workers have been laid off, but under the terms of the government loan, Mr. Kaiser and his friends still will get paid - before Uncle Sam himself.

Yet “Throw Them All Out” reveals Solyndra is an unremarkable case. Of $20.5 billion that went to Department of Energy loan recipients, $16.4 billion benefited Obama-connected companies. Similarly, more than $10 billion in stimulus grants and loans were paid out to companies owned or run by Obama “bundlers,” i.e., rich people who gather together other major campaign donors.

Note to readers: If you are a bundler, you most assuredly are not part of the “99 percent.” Those millionaires and billionaires frequently are the beneficiaries of such noble-sounding projects as fiscal stimulus, green jobs and alternative energy.

Mr. Schweizer includes an illuminating chapter on Warren Buffett, the Obama-friendly billionaire whom the media portray as a selfless advocate for higher taxes on the wealthy. Mr. Buffett begged for the $700 billion Wall Street bailout because he needed it, urging reluctant Democrats to support the bill. He also made large investments in companies that needed infusions of federal cash, confident that Congress would act on his advice.

“Throw Them All Out” is filled with stories of petty theft and so-called “honest graft.” Mr. Schweizer is unsparingly bipartisan in his criticism of Washington. But there is a bigger issue than individual financial impropriety: the rise of crony capitalism as a threat to genuinely free markets and the whole private-enterprise system.

This book may put a damper on his Washington cocktail-party invites this holiday season, but Mr. Schweizer has performed a valuable service to his country.

W. James Antle III is associate editor of the American Spectator.