The Solar Bailout – A Remarkable Case of Logrolling

04Oct08

Yesterday’s passage of the financial bailout provides an interesting illustration of logrolling, which is one of the most problematic parts of democratic government.

In theory, politicians elected to Congress are supposed to deal with issues that effect the United States as whole. In reality, politicians are generally concerned with trying to get the Federal government to do favors for the local voters and special interests who got the politician elected.

The problem for such a politician is to get other politicians to vote for these special favors. Why should other politicians vote for your pet projects? There’s nothing in it for them. It does them no good if the Federal government makes your voters happy by spending money in your Congressional district.

The answer, of course, is logrolling. A bunch of politicians get together and agree to vote for each other’s special projects. So a whole bunch of projects that only benefit small groups of people suddenly acquire widespread support in Congress and get passed into law.

These verbal logrolling agreements between politicians become formal contracts through the use of amendments and earmarks. I start by proposing a bill about, say, road construction. The bill includes a specific instruction, an earmark, that will funnel money to a particular road construction company that supports me. You amend my bill to include a loosening of regulations on banks, which helps the big bank in your district, and someone else amends the bill to include something about trade with Japan that will help some union in her district. Through amendments and earmarks, all of our unrelated pet projects get bundled up in one big deal. It has to be that way because we, as politicians, don’t trust each other. So for the deal to work we all want to have our pet projects passed together, as a package, all at once.

That’s how logrolling typically works. But in getting the House and Senate to pass the Paulson bailout plan, Senator Harry Reid has shown us another use of logrolling: logrolling as blackmail.

The House of Representatives voted down the Paulson bailout twice. But Reid knew that some of the representatives voting against the bailout badly wanted to pass tax credits for renewable energy. Renewable energy is currently a very popular with voters, and with good reason. I am strongly in favor of it myself. And the nascent renewable energy industry has been very clear that they need their tax credits renewed before the end of this year in order to maintain momentum in the drive to develop cheap, renewable energy.

Tax credits for renewable energy would easily pass on their own, if they were presented as a measure on their own. The tax credits don’t need any logrolling coalition to get passed. But by amending the Senate version of the Paulson bailout to include the renewable energy tax credits, Reid and other leading Democrats essentially held renewable energy hostage. Politicians were forced to either pass them both or reject them both. Either you vote for this ugly bailout or we’re going to shoot these adorable renewable energy sources.

The tactic worked, as logrolling usually does. We got the renewable energy tax credits we need, but we also got saddled with a Wall Street bailout that is potentially disastrous if the Bush administration maintains its usual level of competency.

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