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Petty Corruption at Large: Pruitt Spends your Tax Dollars on $35,000 Desks and a $43,000 Phone Booth

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This is the first in a series of posts looking at ethics issues in the Trump Administration.

“You are unfit to hold public office and undeserving of the public trust,” Representative Frank Pallone Jr. of New Jersey told Scott Pruitt, current Environmental Protection Agency (EPA) chief, when Pruitt testified before the House Energy and Commerce Committee on April 25th of this year.

Pruitt is indeed unfit. If his business ties to the energy and coal companies that the EPA is intended to regulate didn’t disqualify him heading the agency in the first place, then his use of taxpayer dollars to fund his own lavish lifestyle certainly does.

Pruitt currently faces 13 federal inquiries into his spending and management practices as EPA chief. Here is a summary of current investigations into his spending:

Two investigations pending for a steeply discounted $50 a night condo rented from an energy lobbyist

Last year, Pruitt paid $50 a night to live in a Capitol Hill condo co-owned by the wife of J. Steven Hart, a lobbyist for the fossil industry who has made business requests to the EPA. Pruitt’s rent sat far below far market prices. Federal lobbying disclosures reveal that during the period that Pruitt was renting from Mr. Hart’s wife, several of Hart’s clients awaited the results of pending matters with the EPA.

One active investigation and one completed investigation into a $43,000 phone booth

The Government Accountability Office ruled that Pruitt broke the law when he failed to notify Congress of his purchase of a $43,000 soundproof phone booth. The Financial Services and General Government Appropriations Act requires agencies to notify Congress of spending on office refurnishing exceeding the $5,000 limit. A second investigation into whether Pruitt was allowed to purchase the phone booth in the first place continues.

Four investigations into security spending  

During his first year in office, Mr. Pruitt spent nearly twice as much on security as his predecessors spent each year on average: the EPA spent $3.5 million taxpayer dollars on salary, overtime, and travel expenses for Pruitt’s 20-person security team in 2017. Investigators recently took up allegations that Pruitt improperly used his team for personal travel to Disneyland, a Rose Bowl game, and other leisure destinations.

Two investigations into travel expenses

The EPA Inspector General is taking a closer look at Pruitt’s use of public revenue to fund frequent visits to his home in Oklahoma, his flights on first-class private aircraft and military jets, and his trips to Italy and Morocco. Also under investigation is two weeks of travel in Italy for Pruitt and his aides last June that cost American taxpayers more than $120,000 and a 40-minute flight from Denver to Silverton, Colorado that cost $5,719.

Two investigations into pay raises for Pruitt Aides

Two aides received large raises in a process that failed to comply with usual procedures. After the White House did not approve raises for two Pruitt aides, Sarah Greenwalt and Millan Hupp, Pruitt used a provision of the Safe Water Drinking Act to raise Ms. Greenwalt’s annual salary from $107,435 to $164,200 and Ms. Hupp’s salary from $86,460 to $114,590. Ms. Hupp likely violated federal ethics standards prohibiting personal assistance from a subordinate when she helped Pruitt search for a summer apartment, obtain tickets to the Rose Bowl game, and hunt down a used mattress from the Trump International hotel.

Pruitt has made other outrageous spending decisions not specifically targeted in these investigations. Fox News Research recently tweeted a breakdown of “(E)xpensive (P)ruitt (A)gency” spending, highlighting the purchase of two desks for $70K, 12 customized fountain pens for $1,560, and journals for $1,670.

Interestingly, Pruitt’s scandals sound a lot like petty graft by high-level officials in other countries. In an event hosted by the Open Government Hub in June — “When Heads of State are embroiled in Cases of Serious Crime and Corruption”—panelist David Lewis, executive director of Corruption Watch South Africa, likened the crooked practices of Jacob Zuma, former president of South Africa, to those of Scott Pruitt. Zuma resigned as president in February of 2018 after South Africa’s National Prosecuting Authority reinstated charges of racketeering, fraud, money-laundering, and corruption. Two years prior to his resignation, South Africa’s top court ruled he had violated the constitution by buying a private rural estate with public dollars. Sounds familiar, doesn’t it?

This sort of petty corruption is arguably less harmful than the sort of corruption that allowed Zuma’s business associates to influence the allocation of government contracts, and allowed Pruitt to repeal climate laws at the behest of corporate energy lobbyists. However, petty graft is perhaps more effective at generating the public outrage that David Lewis identified as key to sustaining support for investigations into government officials. Lewis suggested that public opinion is more likely to be influenced by stories about $43,000 phone-booths—by a sense that “grubby hustlers are squeezing private gain from what is meant to be public service”—than it is to be influenced by systemic corruption. Going after frivolous theft at high-levels, he argued, could engage the public by illustrating, in tangible terms, the greed and entitlement of the state.

Environmental organizations, journalists, watchdog groups and congressional Democrats have certainly done much to bring Pruitt’s scandals to public light. How, then, does Pruitt survive?

For one, Pruitt’s ethical transgressions, though well-documented and well-publicized, may not be well-known. A May 2018 poll commissioned by Axios and conducted by HarrisX finds that 48 percent of Americans are not familiar with the scandals surrounding Pruitt and the EPA. Only 16 percent of 2000 survey respondents reported they were “very familiar” and 36 percent were “somewhat” familiar. 17 percent view Pruitt favorably, 22 percent unfavorably. However, 30 percent hold neither view, and 32 percent have never heard of him.

Another reason may be that Pruitt has yet to fall from Trump’s good graces. Politico reporter Jack Shafer writes that the EPA chief “perseveres mostly because the president admires his swagger.” Pursuing personal enrichment at public expense and deflecting outrage, unabashed are two moves out of Trump’s own playbook.

Mounting frustration from Republicans, however, could threaten their cozy relationship. Since the beginning of June, several Republican Senators have publicly voiced concerns about Pruitt’s management of the EPA, but stopped short of demanding he resign. Meanwhile, four House Republicans—Rep. Frank LoBiondo (N.J.), Carlos Curbelo (Fla.), Ileana Ros-lehtinen (Fla.), and Elise Stefanik (N.Y.) —have gone so far as to advocate for Pruitt’s firing. In addition to congressional pressure, it seems pressure from Trump loyalists is needed to sway the president’s opinion on Pruitt. Outrage from the president’s base would likely be decisive in a decision to fire the EPA chief—a decision which Republican Senators have left up to the administration (at least for now).

Your advocacy is critical in spreading information about Pruitt’s ethical scandals to those who are unaware, and in pressuring congressional Republicans to pressure Trump (ideally, before they retire from political office). Sign the Boot Pruitt petition. Share this blog, and other articles about EPA corruption, on your social media accounts and call your Republican representatives to demand they speak out now.

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Poll Reveals Bipartisan Voter Support for Curbing Wall Street’s Power

Public Citizen has always worked to protect consumers’ pocketbooks, defending against proposals that put our economy at risk and ensuring that individuals are safeguarded against wrongdoing by financial institutions. For example, since President Donald Trump took office, the organization has battled the Administration’s efforts to dismantle financial rules designed to prevent the sort of predatory banking behavior that caused the 2008 economic crash. Public Citizen has also opposed appointments of Wall Street insiders to key financial positions, defended against legislation to reduce government oversight of monetary institutions, and fought tax cuts for Big Bank CEOs and other moneyed interests that were enacted at the expense of working class Americans.

However, Public Citizen has played more than just defense in the past year. In addition to fighting harmful proposals, Public Citizen has partnered with the Take on Wall Street campaign to advocate for proactive financial reforms that build on the success of the Dodd-Frank Wall Street Reform and Consumer Protection Act, take further steps to curb the power of Wall Street banks, and build a financial system that better represents the interests of ordinary Americans.

Since its founding in 2016, Take on Wall Street, a coalition of more than 50 national and local organizations, has pressured lawmakers to enact financial reforms to require Wall Street to pay its fair share of taxes, to reduce risk in our economy, and provide more options for underbanked communities. Policies endorsed by Take on Wall Street include: close the carried interest loophole, which allows billionaire money managers to pay lower tax rates than low and middle income workers; close the loophole that allows corporations to deduct some multi-million dollar CEO bonuses; create a Wall Street speculation tax to discourage unstable, short-term betting while simultaneously generating much-needed public revenue; break up commercial and investment banking; and expand access to fair consumer banking services through public options such as postal banking.

Voters on both sides of the aisle support these policy proposals.

2018 survey data from 1,000 likely 2018 voters and 350 “drop-off voters,” voters who consistently cast ballots in presidential elections, but inconsistently in midterms, in 100 congressional battleground districts reveal that:

  • The majority of both likely voters and drop-off voters believe that Wall Street holds disproportionate sway in politics (likely voters: 66% too high, 3% too low; drop-off voters: 64% too high, 5% too low).
  • The belief that Wall Street plays a distorted role in politics is an important determinant of future vote choice. A majority of drop-off voters (59%) report that “curbing Wall Street’s influence” is an issue that will influence their vote decision in 2018.
  • Voters intend to reward candidates who are in favor of decreasing Wall Street’s sway in politics and punish candidates who do not. Majorities of both likely and drop-off voters say they are more likely to support a candidate who refused to accept campaign donations from big banks and Wall Street executives (55% and 60% more likely, respectively).
  • Voters are less likely to support a candidate who has received such donations from big banks and Wall Street executives (51% less likely among likely voters and 61% less likely among drop-off voters).

However, instead of responding to voters’ general belief that Wall Street has too much influence in American politics, President Trump and the Republican majority in Congress have further entrenched the power of financial elites. The GOP-Trump tax bill, passed in December of 2017, amounted to a tax cut for Big Banks, slashing the corporate tax rate from 35 to 21 percent and providing other cuts that benefit Wall Street CEOs and billionaire investors. Similarly, the tax bill’s so-called reforms to the carried-interest loophole left this tax break for rich investment managers essentially untouched. Furthermore, since the law’s signing, companies have bought back their own stocks at record speeds, returning trillions of dollars to shareholders and venture capitalists instead of reinvesting in the workforce or increased production.

The Trump Administration and the sitting Congress have also acted contrary to voter desires on specific measures. For instance, in May 2018, Trump signed a repeal of Consumer Financial Protection Bureau (CFPB) guidance that discouraged discrimination in auto lending. Survey respondents, meanwhile, endorsed penalizing financial companies for ethnic and racial biases. Over three quarters of likely voters (77%) and more than eight in ten drop-off voters (83%) strongly supported “holding financial companies accountable if they discriminate against people based on their race or ethnicity.” This endorsement is consistent across party lines, receiving support from 94% of Democrats (92% strongly), 89% of independents (83% strongly), and 81% of Republicans (64% strongly).

Another proposal that voters also overwhelmingly endorsed is separating commercial banking from investment banking (likely voters: 72% support, including 53% strong support; drop-off voters 71% support, including 53% strong support). This proposal, long advocated by Public Citizen, has bipartisan support: 77% of Democratic, 82% of Independent, and 67% of Republican survey respondents were in favor.

Passing a 21st Century version of the 1933 Glass-Steagall Act (S. 881/ H.R. 2585) would create this banking separation desired by voters across the spectrum. Signed by Congress in the aftermath of the Great Depression and repealed in 1999, the original Glass-Steagall Act forbade commercial banks from participating in investment banking. Commercial banks manage deposit (checking and savings) accounts for individuals and businesses, while investment banks buy and sell stocks, bonds, and other investments. Mixing the activities of federally-regulated, lower-risk commercial banks with those of less-regulated, risk-prone investment banks contributed to the financial crashes of both the early 20th and 21st centuries. Updating and reinstating the Glass-Steagall Act would make it harder for banks to engage in the greedy, profit-driven behavior that exposes ordinary consumers to undue risk.

Instead of moving to reinstate Glass-Steagall, however, the White House is attempting to roll back the Volcker Rule, a provision of the 2010 Dodd Frank Wall Street Reform and Consumer Protection Act. The Volcker Rule, enacted in response to the 2008 financial crisis, prohibits proprietary trading—trading on the bank’s own behalf—and requires banks to prove to regulators that all trading positions are held to benefit customers, not increase profits. Republican-backed changes to the rule would shift oversight powers away from outside regulators and towards banks themselves.

It is important to note that unlike the Glass Steagall Act, the Volcker Rule is not a comprehensive separation of banking sectors. However, like Glass-Steagall, Volcker requirements present barriers to the speculative investment banking that helped cause the 2008 crash. Dismantling the Volcker Rule is another step backwards in achieving the banking reforms that voters endorse.

Even though Trump’s financial agenda flies in the face of voters’ preferences and best interests, it’s not too late to flip this script. Call your U.S. Representative and Senators today and tell them to support the 21st Century Glass Steagall Act and other legislation supported by Public Citizen and the Take on Wall Street campaign. With your help we can counter the power of Big Bank lobbyists and achieve the policies that voters support.

Photo: Aaron Bauer/CC BY 2.0