Free Lunch (39 page)

This approach will cost us more in terms of the budget for Congress. But it would
save us far more by reducing the giveaways, the rigged rules, and the favors for the rich. Think about all the lawmakers who for a
few thousand dollars cost the taxpayers millions, even billions. Surely paying the real costs of Congress has to be cheaper than
the dishonest system we have now. A free lunch always costs more than an honest one.

Just
debating the idea that we should pay the full costs of Congress would have value, opening our eyes to the subtle ways that we
systematically corrupt our political system. A debate on making members of Congress into public servants, instead of beggars for
favors, would get us thinking as a nation about how every single free lunch cheats us all.

In the
end, we must be the ones who make our government work, fulfilling the promise of the preamble to our Constitution. No one else is
going to do it for us. Reform begins with
you
.

Although my name appears as the author, this book represents the contributions of many
people. Since the reporting in this book extends back more than thirty years, I will surely overlook some of the people to whom I am
indebted. To those I neglect to properly acknowledge, my apologies.

Unnamed sources, on
whom I rarely rely in print, are invaluable for tips about the golden nuggets of fact buried in the mountains of bureaucratic
paperwork created by government and business. To those of you who will go unnamed here, but who will surely recognize your
contributions, my deepest thanks. Sources are the mother's milk of reporting and the most treasured are sources who possess the
integrity to argue the other side, making the case for those with whom they disagree, the better to communicate the significance of
the issues.

The reporters for
Free Lunch
did
marvelous work. Alicia Mundy, the Washington correspondent for the
Seattle Times
,
showed why she has long been one of the very best journalists in the nation's capital. David Wethe of the Fort Worth
Star-Telegram
went to great lengths to document the story of the Texas electricity legislation,
listening to official tape recordings to ascertain precisely how many times the word
no
was spoken in one exchange recounted in the chapter “Trojan Horse.”

I also hired three
young journalists who have the right stuff to carry on the important work of investigating our society into the second half of this
century. Anna Lenzer, who studied science at the University of British Columbia, exhaustively reviewed the record on conversions
of nonprofit health care enterprises to for-profit businesses. Cindy Santos, who studied journalism at the University of Southern
California and created the news Web site ocsource.net about Orange County, California, endured long days in a subbasement
reading official records to find a single elusive document and did superb follow-up interviews. Rachel Monahan, who studied at
Columbia University before reporting for the New York
Daily News
, produced valuable
economic charts with remarkable efficiency. Editors should read these words as recommendations.

Friends found these young reporters. I owe thanks to the author and investigative reporter Wayne Barrett; my
former editor Ed Guthman; and my colleague Louise Story for introducing me to, respectively, Lenzer, Santos, and
Monahan.

Danelle Morton, that rare writer who can be deadly serious or delightfully hilarious,
polished some of my thoughts. Kate Berry of
American Banker
, a student of mine long
ago at the University of Southern California, contributed some additional reporting on health maintenance organizations and
reviewed chapters. Angela Spalding set up my files. Evan Lowenstein hunted down obscure facts using his knowledge of social
sciences.

My friend David Crook, the creator and founding editor of
The Wall Street Journal Sunday
(the nation's largest-circulation business publication)
provided crucial focus when I found myself gasping for coherence in a miasma of facts. My pal Dennis McDougal also offered wry
advice.

Many colleagues at
The New York Times
graciously gave of their time, opened their files, and connected me to sources. In a world where so much stenography and hype
passes for journalism, it is an honor to be associated with these men and women. Among those who dug into their records to
share material were Charles V. Bagli, Walt Bogdanich, Joseph Nocera, and Mary Williams Walsh.

Thanks also go to my colleagues Edmund L. Andrews, Kassie Bracken, Eric L. Dash, Claudia Deutsch, Stuart
Elliott, Milt Freudenheim, Mark Getzfred, Linda Greenhouse, Steven Greenhouse, Diana B. Henriques, Larry Ingrassia, Glenn
Kramon, David Leonhardt, Gretchen Morgenson, Dan Niemi, Floyd Norris, Eduardo Porter, Tom Redburn, Joseph B. Treaster,
Louis Uchitelle, and Margot Williams.

The cooperation of reporters from other news
organizations was superb. I am especially thankful for the help provided by Nigel Jaquiss of
Willamette
Week
in Oregon, Steve Duin and Jeff Manning of the
Oregonian
, Lee
Sheppard of
Tax Notes
, Jim Neff and members of his investigative team at
The Seattle Times
, and Tim Redmond of the
San Francisco Bay
Guardian
. For many reasons I am indebted to these superb journalists: Don Barlett and Jim Steele, Laurie
Becklund, Gene Roberts, Bob Sipchen, Henry Weinstein, and the extraordinarily shrewd Wallace Turner.

Volunteers who read chapters and offered criticism included Jeff Brown, the financial columnist; Nelson
Blish, a patent lawyer and novelist; Ryan J. Donmoyer of Bloomberg News; Michael Graham, a superb investigative reporter turned
screenwriter; Betty Lukas, a retired but never retiring
Los Angeles Times
editor;
Michael Ravnitzky, a genius at finding important but obscure government documents; and Robin Palley, an excellent reporter for
the
Philadelphia Daily News
who became an excellent executive.

At home in Rochester, New York, many people provided valuable insights, including Allen Blair, Joe and
Nancy Briggs, Mark Goldgeier, Nancy Yanes-Hoffman and Dr. Marvin Hoffman, Bob Leahy, Dan Meyers, Geoffrey Rosenberger,
Richard Sands, and John “Dutch” Summers. At monthly lunches, Mike Millard, a Russian and classical history buff, helped me
refine the torrent of raw facts into sensible thoughts.

I am also indebted to many professors,
including Fred Brock at Kansas State University; Dorothy A. Brown of Washington and Lee University; Jack Coffee at Columbia
University; Susan Pace Hamill at the University of Alabama; William D. Henderson at Indiana University; Bruce H. Mann at Harvard
Law School; Tim Smeeding at Syracuse University and Ed Wolff at New York University; Judge Richard D. Cudahy of the Seventh
Circuit Court of Appeals; Dick Armey with his thoughts on subsidies and the self-interest of politicians; and Edward Luttwak on
how government rules affect economic outcomes, often in unexpected ways.

Also, Dean
Baker, Bruce Bartlett, Bill Beach, David Bean, Brenda Breslauser, Nancy Brown, Lynnley Browning, Sheldon Cohen, Bettina
Damiani, Jason Eisdorfer, Chris Edwards, Martin Feldstein, Ann Fisher, Brian Foley, Serge Kovaleski, Paul Krugman, Iris Lav, Greg
LeRoy, Trudy Lieberman, Paul C. Light, Lauren Lipton, Bob McIntyre, Morton Mintz, Jeff Rohaly, Noah Rosenberg, Russell Sadler,
Max Sawicky, Syl Schieber, Chuck Sheketoff, Allan Sloan, Tyson Slocum, Howard Spinner, Dan Steinberg, Paul Turk, Bud Vos,
Jack B. White, Jody Wiser, and Eric Woychik.

My publisher, Adrian Zackheim, shared my vision
and was then exceptionally patient, which says it all. My agent of many years, Alice Fried Martell, more than delivered, as always,
and at key points was a source of encouragement.

Some of my thoughts about society have
been influenced by my relationship with Kevin Ranger, as fine a young man as I have met, but who, like some of my own children,
attended schools that did not provide him with the quality of education that serves as a springboard for success.

As always I involved some of my eight children, the better for each generation to learn about the world and
each other. My fourth child, Amy E. Boyle Johnston, took time from her own research into the works of Rod Serling to check and
recheck fine details. My youngest, Molly and Kate (to whom we gave their mother's last name) applied their skills to initial
copyediting. Their youthful eyes also spotted cultural references and concepts that might have eluded younger readers but for the
elaborations they suggested. Molly, who graduated magna cum laude with a degree in classics from Bryn Mawr College on her way
to study law at the University of Toronto, enhanced my knowledge of Greek mythology.

Most
of all I am indebted to my wife, Jennifer Leonard, who despite all her hard work to improve our adopted hometown through her
leadership of Rochester Area Community Foundation, always found (or made) time to generously support me in this
endeavor.

This book is based largely on my reporting for
The New York
Times
, that of other reporters, and extensive reporting for
Free Lunch
by me and those retained as reporters for this book. The primary sources for official data are the statistical reports posted on the
Internet by the Bureau of Labor Statistics, the Census Bureau, the Commerce Department, the Congressional Budget Office, the
Federal Reserve, the Internal Revenue Service, and the White House Office of Management and Budget.

I have taken one liberty for clarity. In the few places where people's thoughts are recounted in italics, their
recollections are presented with more formal structure than had they been quoted directly as they recalled their thoughts and
feelings.

Copies of some documents are posted at www.freelunchbook.com and
www.freelunchthebook.com.

Chapter 2. MR. REAGAN'S
QUESTION

On the
surface:
Computed from Bureau of Labor Statistics and Census Bureau data.

Even at $3 a gallon:
McMahon, Timothy. “Gasoline
Prices 1918–2006 Adjusted for Inflation.” Financial Trend Forecaster,
fintrend.com/inflation/images/charts/Oil/Gasoline_inflation_chart.htm.

For the bottom 90 percent:
Picketty, Thomas, and Emmanuel Saez. “Income Equality in the
United States, 1913–1998.”
Quaterly Journal of Economics

(2003), 1–39, updated Table A6 at elsa.berkeley.edu/~saez/TabFig2005prel.xls.

How government encourages:
Data on 150 million
Americans from Prante, Gerald. “Summary of Latest Federal Individual Income Tax Data: Fiscal Fact No. 66,” Tax Foundation,
September 25, 2006, at taxfoundation.org/taxdata/show/250.html.

In ways that most Americans:
Organization for Economic Co-operation and Development
Factbook 2007
at sourceoecd.org/factbook.

Steve Jobs, a founder:
Dash, Eric. “No Charges for
Apple in Options,”
The New York Times
, April 25, 2007, and Apple filings at
sec.gov.

Consider one example:
99.25 percent interest at www.cashcall.com/General/Rates.aspx.

The evidence of a growing:
Transcript of Bush remarks at the Waldorf-Astoria on October 20,
2000, from “A Pause for Humor,”
The NewsHour with Jim Lehrer
, at
www.pbs.org/newshour/bb/politics/july-dec00/alsmith_10-20.html.

There is a reason that 35,000 people:
From Hamilton, Lee. “We Pay a High Price for
Special-interest Lobbying,” The Center on Congress at Indiana University,
www.centeroncongress.org/radio_commentaries/we_pay_a_ high_price_for_special-interest_lobbying.php, and reports at
opensecrets.org.

“A democracy cannot
exist”:
“Roar Approval for Barry,”
Manchester Union Leader
, March 6,
1964, front page.

Chapter 3. TRUST AND
CONSEQUENCES

Half an hour
before daybreak:
“Railroad Accident Report: Derailment and Subsequent Collision of Amtrak Train 82 with Rail
Cars on DuPont Siding of CSX Transportation Inc. at Lugoff, South Carolina, on July 31. 1991,” National Transportation Safety
Board RAR-93-02; “National Transportation Safety Board Safety Recommendation, R-93-18 through-22,” November 30, 1993;
Bogdanich, Walt, “Death on the Tracks: Amtrak Pays Millions for Others' Fatal Errors,”
The New York
Times
, October 15, 2004; Needle, Jodie, “Angel Rises,” South Florida
Sun-Sentinel
, October 9, 1997; 1997; Claybrook, Joan, letter to Rodney Slater, Secretary of
Transportation, October 27, 1997; President, Public Citizen; “A Close Look at Lugoff,” Camden, South Carolina
Chronicle-Independent
, March 1, 2007.

Measure deaths by the distance traveled:
author
e-mail interview with Tom White, Association of American Railroads, April 18, 2007; hazmat.dot.gov/riskmgmt/riskcompare.htm
(adjusted for different measures, one million miles for trains and 100 million for trucks and airliners).

Chapter 4. CHINESE MAGNESTISM

So much capital:
Barboza, David, “China Builds Its
Dreams, and Some Fear a Bubble,”
The New York Times
, October 18,
2005.

About 260 people:
Christian,
Nichole M. “GM President's Council Okays Plan to Sell Magnequench,” Dow Jones, March 21, 1995; “GM Is Quietly Completing
Pact to Sell Indiana Magnet Plant to Chinese Group,”
The Wall Street Journal
, March
22, 1995; U.S. Congress, House of Representatives, “Report of the Select Committee on U.S. National Security and
Military/Commercial Concerns with the People's Republic of China,” House Report 105-851, Government Printing Office, 1999;
“Production Halted, Doors Closing at Magnequench Plant,” Erler, Susan, Munster, Indiana,
Northwest
Indiana Times
, September 30, 2003; “Bayh Calls for Increased Oversight of Foreign Takeovers with National
Security Concerns,” Office of Senator Evan Bayh, October 6, 2005; Lague, David, “China Corners Market in a High-Tech
Necessity,”
International Herald Tribune
, January 22, 2006.

At the time of the sale:
Butterfield, Fox, “Under
Deng, Running China Has Become a Family Affair,”
The New York Times
, July 2, 1989;
Tyler, Patrick E., “China's First Family Comes Under Growing Scrutiny,”
The New York
Times
, June 2, 1995.

When foreign
governments or firms:
Sanger, David E., “Dubai Deal Will Undergo Deeper Inquiry into Security,”
The New York Times
, February 26, 2006.

Like the Chinese income tax:
Yergin, Daniel,
The Prize
, New York: Free Press, 1993.

As recently as 1985:
From tables at
census.gov/foreign-trade/balance/c5700.html.

Dave
Cummings specializes:
Lucchetti, Aaron, “Firms Seek Edge through Speed as Computer Trading Expands,”
The Wall Street Journal
, Dec. 15, 2006.

In 1990, foreign-owned companies employed:
Scott, Robert E., “Economic Snapshots,” Economic Policy Institute, April 5, 2006,
http://www.epi.org/content.cfm/webfeatures_snapshots_20060405.

In the next decade or two:
Wessel, David, and Bob Davis, “Pain from Free Trade Spurs
Second Thoughts,”
The Wall Street Journal
, March 30, 2007; Blinder, Alan S.,
“Offshoring: The Next Industrial Revolution?”
Foreign Affairs
, March–April
2006.

Chapter 5. SEIZING THE
COMMONS

Mullaly was a
reporter:
“John Mullaly, Park Founder, to Be Honored,”
New York Herald
Tribune
, Oct. 20, 1929; Mullaly life timeline at nynjctbotany.org/lgtofc/mullalypark.html; Mullaly, John,
New Parks beyond the Harlem with Thirty Illustrations and Map
, Record and Guide, 1887
(portions online at Google Books).

The beneficiary
of this exercise:
newyork.yankees.mlb.com; Good Jobs New York, “Loot, Loot, Loot for the Home Team,” February
2006, and other reports at goodjobsny.org.

With
passage of Proposition 13:
Johnston, David [Cay], “The Dead Parks: Insufficient Funding, Drugs and Violence
Drive Many Away from City Recreation Areas,”
Los Angeles Times
, September 3,
1987.

Milton Friedman, the
intellectual:
Friedman, Milton,
Capitalism and Freedom
, University of
Chicago Press, 1962; Parker, Richard, “The Pragmatist and the Utopian,”
The Boston
Globe
, February 6, 2005; Sanera, Michael, “Sanford should end golf subsidy,” February 27, 2006, at johnlocke.org;
Sowell, Thomas, “Priceless Politics,” Townhall.com, February 20, 2007.

Chapter 6. PRIDE AND PROFITS

From St. Petersburg:
U.S. Congress, House of Representatives, Committee on Oversight and
Government Reform Subcommittee on Domestic Policy, “Public Financing for Construction and Operation of Sports Stadiums and
Economic Revitalization and Development in Urban America,” March 29, 2007.

To see how that observation:
Sandomir, Richard,
“Nationals Have New Owner, and Baseball Turns Big Profit,”
The New York Times
,
May 4, 2006.

Even before they moved the
team:
Heath, Thomas, and Lori Montgomery, “MLB Officials Sign Lease for D.C. Stadium,”
The Washington Post
, March 6, 2006.

“The pride and the presence”:
Moynihan, Daniel
Patrick, citing
Cleveland
magazine, September 1996,
Congressional Record
, Vol. 143, No. 4, Page S501, January 21, 1997.

In Seattle, Howard Schultz:
Brunner, Jim, and
Ralph Thomas, “‘Little Hope' for Sonics Now,”
The Seattle Times
, April 17, 2007;
Brunner, Jim, “Tale of Two Arenas, Here and in Denver, Is Revealing,”
The Seattle
Times
, May 29, 2006; and other coverage in
The Seattle Times
, the
Seattle Post-Intelligencer
, and
Seattle
Weekly
.

That Steinbrenner would
eagerly stuff:
Nocera, Joseph, “George Steinbrenner, Welfare Case,”
Esquire
, July 1990; Hackworth, David H., “Defending America,”
Newsweek
, August 8, 1995.

Two other oilers:
Navy T-AO 187 Kaiser Class Oiler Contracts, hearings of the U.S. Congress,
Senate Permanent Investigations subcommittee, May 2 and 4, 1995, Government Printing Office, 1995.

Klein thought:
Interview by Alicia Mundy, Jan. 31,
2007.

Prickly as a cactus pear:
U.S.
Congress, House of Representatives, Committee on Oversight and Government Reform Subcommittee on Domestic Policy, “Public
Financing for Construction and Operation of Sports Stadiums and Economic Revitalization and Development in Urban America,”
March 29, 2007.

Chapter 7. YOUR LAND IS MY
LAND

The Mathes
family:
Records of Sports Facilities Development Authority, Inc. and
City of Arlington v.
Clairwood, N.V., Ramshire, N.V.
, Cause # 91-47154-1, Tarrant County, Texas, numerous news accounts, and
interviews with attorneys Glenn Sodd and Ray Hutchison.

Chapter 8. BOUNTY HUNTERS

Blankenship was not alone:
Wilkins et al. v. Cuno et
al.
, Supreme Court case 04-1724 and related state litigation.

Professor Thomas concluded:
Thomas, Kenneth
P., “The Sources and Processes of Tax and Subsidy Competition,”
hhh.umn.edu/img/assets/6158/Thomas_paper.pdf.

Chapter 9. GOIN' FISHIN'

Cabela's began:
From history at cabelas.com.

Relative to the size:
Ewald Consulting, “Example of
Subsidies Received by Cabela's”; “What Gander Mountain and Ewald Consulting Don't Want You to Know,” and “Despite
Competitor's Claims, Cabela's Brings True Economic Development Opportunities to the Table,” position papers from
Cabela's.

In the three years:
Cabela's 10-K.

Chapter 10. JUST SAY
NO

Lobbying pays fabulously
well:
Shenon, Philip, “Lobbyist Sought $9 Million to Set Bush Meeting,”
The New York
Times
, November 10, 2005.

None of
the politicians:
Justice, Glen, et al., “For Lobbyists, a Seat of Power Came with a Plate,”
The New York Times
, July 6, 2005.

The White House said in 2006:
Philip, Shenon, “Report Finds 82 Contacts Between Abramoff
and Rove,”
The New York Times
, September 28, 2006.