Unexpectedly Intriguing!
16 June 2008

As Deer in the Headlights, So Are the Congressional Leaders of Our Lives.... In our post, Your Congressional ROI, we built a tool to find what return on investment (ROI) that a corrupt rent seeker might gain by throwing some money into a politician's coffers in return for earmarking some pork barrel spending their way. Today, we're considering the other side of that transaction: the "dividend yield" collected by an elected official in return for "investing" in the spending directed to the rent seeker, for whose benefit they've used their authority to exempt such spending from the oversight of their Congressional peers.

Today's real life example comes to us from the Contra Costa Times' Lisa P. White, who uncovered how California Democratic Party Rep. George Miller delivers millions for campaign contributor. The data we'll be presenting below is taken from figures given in the article.

First, here's a table listing campaign contributions, or in our terminology, "dividend payments," received by U.S. Representative George Miller's (D-CA) political action committee (PAC) and personal election campaign by individuals closely associated with the leadership of defense contractor SecuriMetrics from 2004 through 2007, as well as the amounts of federal contracts that Miller earmarked for SecuriMetrics during that period:

Campaign Contributions to Funds Benefitting Rep. George Miller (D-CA)
Year Contributions to Miller's
PAC
Contributions to Miller's
Election Campaign
Total Contributions
for Miller
2004 $ 5,000 - $ 5,000
2005 $ 5,000 $ 790 $ 5,790
2006 $ 5,000 $ 790 $ 5,790
2007 - $ 790 $ 790
Totals $ 15,000 $ 2,370 $ 17,370

SecuriMetrics was acquired by Connecticut-based L-1 Identity Solutions in 2006. In 2007, the now current CEO donated a total of $300 to Miller's Congressional election campaign after taking the top position at SecuriMetrics, which we're omitting from these totals.

Since military spending is budgeted once every two years, we'll next allocate these contributions with the spending earmarks Rep. George Miller (D-CA) inserted into the defense appropriations bills for 2006 and 2008. In allocating these amounts, we'll assume that the contributions made in 2004 and 2005 went toward the 2006 Defense appropriations bill, while the 2006 and 2007 contributions went toward the 2008 Defense appropriations bill. And then, we'll find the corresponding "dividend yields" for each earmark (campaign contributions divided by the earmarked amount, expressed as a percentage)!

Total Contributions, Earmark Amount and Dividend Yield for Rep. George Miller (D-CA)
Defense Appropriation Bill Total Contributions
for Miller
Earmark for
Campaign Contributor
"Dividend Yield"
2006 $ 10,790 $ 3,000,000 0.36%
2008 $ 6,580 $ 1,600,000 0.41%
Combined $ 17,370 $ 4,600,000 0.38%

While some might argue that these "dividend yields" are embarrassingly low, when you consider that Rep. George Miller (D-CA) didn't risk any of his own money by investing in the company, but rather he "invested" taxpayer money instead (aka "someone else's money"), the rate of return is outstanding! The real question though is whether Miller's "dividend yield" is sufficiently low enough that other government officials might choose to ignore the apparent benefit he received for the sake of saving the cost of pursuing a serious investigation.

Then again, it may be a "low margin, high volume" type business, with "low" profit margins being made up for by processing lots of transactions. With earmarking pork to the nation's rent seekers being such a competitive business, that's the only way an individual politician might be able to keep up with other elected officials, or their staffers out there doing the similar things in the government pork barrel spending market!

And why wouldn't they? As we've just shown, earmarking taxpayer money to pork barrel spending pays politicians dividends! In any case, even though it's almost redundant given how simple the math is, here's a tool you can use to calculate what kind of dividend yield your elected official may be collecting for their own coffers:

"Dividend" and Spending Data
Input Data Values
Campaign Contributions (or "Dividend" Payments)
Value of Pork Earmark (or "Share Price")


"Dividend Yield"
Calculated Results Values
Earmark (Pork) Dividend Yield

Here's the amount of pork earmarked by each individual member of Congress, and here's OpenSecrets.org's site, which maintains a database of campaign contributions to help get you started....

Update: Corrected link for Contra Costa Times' article.

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About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations

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