K Street: More shakedown than bribery?

K Street is typically understood as a lever with which business manipulates government, but it's often the opposite -- a tool government officials and former government officials use to manipulate business. Similarly, when you tie together Big Government, the revolving door, campaign contributions, fundraising, and lobbying, the result looks less like business as puppet master, but politicians and their cronies running a racket.

Chuck Schumer for instance, told hedge funds they weren't sufficiently political, and so hedge funds and private-equity firms started pouring tons of money into lobbying and campaign contributions. Then he deployed his banking staffer to K Street where she quickly picked up hedge-fund and PE clients before becoming a top bundler for Schumer.

Former Obama White House aide Anita Dunn is carrying out a different sort of racket, according to Patrick Howley at the Free Beacon:

As White House communications director, Dunn helped President Obama criticize hedge funds as a key factor of the financial collapse—and she has continued that criticism, at least in public, ever since.

An industry outsider who was pitched on Dunn’s proposal told the Washington Free Beacon that he was surprised to see the former Obama official involved in the effort. “First we see Dunn attack us on television,” he said, “and then she tells us to hire her to head off the exact attacks that she herself is hurling at us. The entire thing begins to stink like a protection racket.”

McLean/Clark’s promotional packet for their campaign, entitled “Hedge Funds and a New Vision for Public Affairs,” was sent to hedge-fund professionals. According to the packet, the campaign seeks to counteract the damage that the media and politicians have done to the hedge-fund industry in the public discourse.

McLean/Clark claims they will employ an unprecedented media strategy forcing state and federal politicians to “think twice” about attacking hedge funds, and will provide lawmakers “political cover” for defending the hedge-fund industry. Dunn’s headshot is prominently featured on the list of principals for McLean/Clark’s project.

This isn't so different from the Great Health-Care Cashout, in which the staffers who wrote ObamaCare go to work for the companies most affected by it. When the top staffers for Dodd and Frank cashed out to consult/lobby for the firms affected by Dodd-Frank I wrote of Dodd's chief counsel:

Imagine if she had written a bill shrinking government's role in finance -- then financial firms would have less need for a lobbyist or revolving-door consultant. Imagine a bill that set new rules in stone rather than igniting lengthy, high-stakes regulatory processes -- what use would she be to future clients?

The biggest fuel for the revolving door is government growth.