Friday, July 21, 2006

$ Obscenity

Obscenity: 1. the state or quality of being obscene.
Obscene: 1. offensive to one's feelings, or to pervailing notions, of modesty or decency; 2. disgusting; repulsive
--Webster's New World Dictionary

In today's Tennessean there is an article on Tennessee U.S. Senate candidate Bob Corker's $1.745 million contribution of his own money to his campaign (Corker gives almost $2M to campaign). The article states that it is unlikely Corker will be able to treat this as a loan and repay himself from political contributions.

The rest of this post is done under the following assumptions: 1) Corker will not be repaid directly from his campaign funds, thus this is an expense for him. 2) Because these large personal donations are common, the statements herein are not made in regards to Mr. Corker personally but apply to all candidates in general terms .

These large donations just seem obscene to me and are disgusting and repulsive in their implications. Bear with me please. A U.S. Senator makes $165,200 per year and has a term of six years. Using a 28% tax rate on the cash flows, I present a summary analysis of his senatorial cash flows below. Any revenue from endeavors already in place when elected are not relevant to the analysis, only income derived directly from being a senator is pertinent:

** The candidate earns a -14% return on the $1.745M investment if his only senatorial revenue is from his senate salary (read negative 14%).

** To breakeven (0% return), the candidate must derive an additional $125,608 per year benefit from being a senator beyond his $165K salary.

** To earn an 8% return on his $1.745M investment, the candidate must derive and additional $212,206 per year benefit from being senator beyond his $165K salary.
(8% is a reasonable expected return on an investment; general rule is long term returns are: Bonds ~8%, stocks ~12%)

The implications? We are either electing candidates who have little financial sense (good evidence for this actually), or we are electing candidates who know the financial reward for spending millions is worth the risk. And, that financial reward has to come from some source other than their senate salary that is direct result of being a senator. Thus impying a less than forthright revenue stream.

If a candidate claims to be making such a financial sacrifice to serve his country, his constituents, etc., then the candidate is at best misguided and at worst dishonest. If one wants to serve, then there are much more efficient and beneficial uses of their millions. They would do more service donating to homeless shelters, children's foundations, the arts, hospitals, churches, United Way--pick one. Millions of dollars to any charity has to be better than spending the same to get elected.

Now some candidates, Bill Frist for example, can afford to spend millions as a donation to serve without affecting his other charitable outflow and without being bothered by the negative return. The question in this case is can such an independently wealthy candidate truly represent his constituency? He or she certainly has little in common with the majority. Certainly little in common with me, that is for sure.

Now I am faced with the problem of who do I elect? Someone has to serve. I think I would lean toward the candidate who is not willing to spend beyond reason to land a $165K job. But there are so many other questions one could grill me on based on my statements here.

Bottom line for me, at present, is that spending millions upon millions across this country just to get a few humans elected seems like a obscene waste of God given resources that could be better used elsewhere. It reinforces my growing disgust with politices.

What are your opinions?


Malia said...

It became quite evident to me that Bob Corker was fiscally irresponsible when I started receiving 4-color (full-color copied) campaign fliers in the mail from him two or three weeks in a row. Those things are expensive to print. And to make enough to send to every constituent more than once? Downright wasteful (and obscene) IMHO.

jettybetty said...

I totally agree with you (except since I live in TX--there are different names).

Don't forget the power factor, too. I think humans will do crazy things for power--and a Senate or House seat has a bunch of (perceived) power.

I don't think any of us really want to know what kind of return these politicians are really getting on their *investment*. Obscene might be too nice a word--especially (for me at least) knowing there are so many needs in this world.

And I have no idea who to vote for--it seems everyone is in on it.

JMG said...

The people elected to the senate are independently wealthy business owners. They can afford to "invest" a couple of million on a campaign because, once elected, they pass legisation that benefits the businesses they own. They certainly aren't losing any money on their investments. It's all about greed and power, not about representing the intrests of the people.

Tony Arnold said...

A friend of mine at work made the following comment:

It’s most likely the $10K per speech that keeps your cash flows steady and then the kicker is when you land the big career at a Halliburton for multi-millions. Why do they hire you? Because of all of your friendships on the hill that will get that desperately needed bill passed. If that fails, you can always do an ED commercial.

Ah, the end-game cash flows, gotta love it. But it is all technically on the up and up. The problem is the technically legal end revenue streams are the motivation for being elected and thus the candidates are not honest during the election.

"I stand for ____________________ because I believe in America and its blah, blah,... . Read, "because it gets me elected to a secure cash flow at the end of my term."

Stoned-Campbell Disciple said...

You should probably know that I have a generally low opinion of most politicians . . . regardless of political party. They are rarely in the same ball park that I am in.

Thank you so much for coming by my Stoned-Campbell Blog. I hope you come again.

Bobby Valentine

Justin said...

You could also look at it this way:

maybe Corker knows how much he'll be able to help people by being in a position of power in this country. By setting policy, he can help better peoples lives.

I don't know that that's true... I mean, i would say it'd be better to start a non profit with that kind of cash... however, I think its bad to start judging folks... regardless of if they waste a million dollars on themselves or 100. Depending on percentage of income, someone who buys a hundred bucks of lottery tickets who only makes 500 bucks a month might be more "obscene" than Bob Corker

Tony Arnold said...

I wasn't judging Corker personally, but pointing out the enormous waste of resources for political gain spent by most candidates. Hence my immediate disclaimer in the post: 2) Because these large personal donations are common, the statements herein are not made in regards to Mr. Corker personally but apply to all candidates in general terms .

After approx 30 years (I am 44) of watching politicians closely, I have seen most prosper much more from their time in office than did their constituents from the work they performed. The records speak for themselves.

I agree that spending significant money on lottery tickets, especially when you are struggling financially, is also obscene.

JMG said...

I think the comment from your coworker is right on it. Spend the money to get elected, then pass bills to help businesses who in turn spend money to keep you elected. When you finally do get out of office, you have many connections in high places and you can land a cushy CEO job helping other rich guys stay in office so that they can do you favors while you bilk your employees and consumers out of their money.

It's all about power and greed. Those few honest people who really try to do the right thing don't usually last very long in Washington.

Ayatollah Mugsy said...

Even if they do not earn a return on their investment while serving in Congress, these politicians cash in afterward. Look how many of them go to work as high-priced lobbyists.

Purgatory Penman said...

Tony and all who read him on a regular basis;

Purgatory Penman has been silent for a few weeks. Please go to the blog to learn the reasons for his absence. I hope you will empathsize and, hopefully, find a new mission field that needs you.

As usual, Tony has stated a primary problem with our society and government so succinctly that there is little left to say. The millions of dollars needed to elect someone in our country certainly makes you wonder how the candidate will ever get his/her money's worth. That has been my soapbox rant for some time.