David Cay Johnston - Free Lunch

HOW THE WEALTHIEST AMERICANS ENRICH
THEMSELVES AT GOVERNMENT EXPENSE
( AND STICK YOU WITH THE BILL )

PORTFOLIO

PORTFOLIO
Published by the Penguin Group
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First published in 2007 by Portfolio,
a member of Penguin Group (USA) Inc.

Copyright David Cay Johnston, 2007
All rights reserved

LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA
Johnston, David C.
Free lunch: how the wealthiest Americans enrich themselves at government expense (and stick you with the bill)/David Cay Johnston.
p. cm.
Includes bibliographical references and index.
ISBN: 1-4295-8146-8
1. SubsidiesUnited States. I. Title.
HC110.S9J64 2008
338.973'02dc22 2007039164

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For Lesli An, Kendall, Marke, Amy, Andrew, Steven, Molly, and Kate, who have each enriched my life beyond measure

A KNOT OF TRAVELERS WAITED IMPATIENTLY ON THE CURB AT RONALD Reagan Washington National Airport, the air heavy and still, trapped beneath an overturned bowl of clouds. Weary and anxious to get to their hotels, they fidgeted, but said nothing as the minutes dragged.

When the shuttle bus finally arrived, everyone hustled aboard, the last few people packing in like so many sardines. The bus lurched forward, off on a circuitous route to the rental car garage.

A thin man began talking out loud, perhaps to relieve the tension from being trapped between strangers and wobbling towers of luggage. Soon everyone knew he had retired from the Agriculture Department, moved back home to Midwest farm country, and discovered he could earn a living because of his knowledge of how Washington works. On behalf of some clients, the man droned on to no one in particular, he had endured three airplane flights this very Sunday to reach the nations capital.

Im here to get money from the government for my clients, the man said.

Thats why were all here, a voice called out. The only reason anyone comes to Washington is to get money from the government.

Everyone laughed. Instinctively, I tapped my pants pocket to make sure my wallet was safe.

A T BANDON DUNES, ON OREGONS RUGGED AND REMOTE SOUTHERN coast, men at play pretend theyre in the eighteenth-century Scotland of Adam Smith.

By the tens of thousands they come from all over the world to three golf courses in the style of the Royal and Ancient Golf Club of St. Andrews, the official shrine of golf since 1754. Smith lived not far from this shrine when he developed the theory of market capitalism that guides economic policy to this day.

The Chicago entrepreneur who created Bandon Dunes, Mike Keiser, describes it as exceptionally, and unexpectedly, profitable. That he earns outsize profits is surprising. America has 16,000 courses. His lie far from the centers of commerce where his players live. When Keiser wrote a check for his first thousand-plus acres, land that had been on the market for years, his wife thought he might as well have tossed the $2.4 million into the wind. But Keiser paid only half the asking price because no one else had the vision to see what could be done to transform the land. Locals knew it as a place to hunt rabbits and occasionally poach a deer by day, while at night amorous teenagers drove down the dirt roads looking for a secluded spot beside the sea.

Gorse covered the land. Gorse is an Irish shrub that grows in impenetrable stands six feet tall or higher. If ignited during the dry season, its oily leaves burn ferociously. Three times in the past century, gorse fires reduced the neighboring town of Bandon to ashes, the last time in 1936.

By car, Bandon Dunes is a hard five-hour drive from Portland. The path goes through the rich farmlands of the table-flat Willamette Valley. It then winds west over the coastal mountains. Getting caught behind a logging truck, a rare reminder of a once vibrant industry, can slow the pace for miles.

Once the road reaches the coast, it is south for an hour to Coos Bay. It is the only urban area for miles and the only deep-water port right on the coast within a days sail north or south.

Nature endowed the area with a temperate climate, clear water, and enough timber and salmon to last forever. But the lumber companies, eager to squeeze out ever-bigger profits, cut faster and faster. The firs and cedars matured at their own pace, however. The imbalance continued until there was little left to cut on the private lands. Then the spotted owl became a cause clbre. That added to pressure on government to allow less logging in the areas national forests. New machinery reduced the need for mill workers, and the Japanese began buying raw logs, removing more blue-collar jobs. As the eighties began, the regions timber business collapsed.

Over the decades the government had dammed rivers and creeks for electricity and water storage. To mitigate the damage to nature, government paid for hatcheries to perform tasks that nature had done for free. Still, the runs of chinook and coho dwindled. By 2006, there were not enough salmon to sustain a commercial fishing season.

For a generation now, it has been hard times in what had been a workers paradise. Families with children moved on. Home-cooked methamphetamine became a scourge. The one hope for a brighter future now lies in all those visitors coming to golf at Bandon Dunes, another 25 minutes down the highway from Coos Bay.

Many of the golfers avoid the long drive, traveling instead in the luxury of private jets. A few arrive in little Learjets with no restrooms. Many more come in private planes the size of junior jetliners. Before the first golf course opened in 1999 perhaps three private jets a year landed at Coos Bay. Now about 5,000 corporate jets arrive annually. Soon that is expected to grow to 7,000 or more private jets, all ferrying players eager to experience what Mike Keiser calls dream golf.