Free Lunch: How the Wealthiest Americans EnrichThemselves at Government Expense (and Stick You withthe Bill)

An Interview with David Cay Johnston

By John W. Whitehead 07/17/2008

To succeed in the long run, rules must have a moral or practical basis and the support of the people. If society says that you may do one thing and not another,there must be some rationale or the rule will be flouted. There is no legitimacy in officials writing rules as they choose simply because they have the power to do so. Such is tyranny.The Founding Fathers recognized this when they took that great leap to create our republic more than two centuries ago. They provided for checks and balances, recognizing the need to limit power and to control it. To many people,power is of little consequence, just as many people care little about beauty or riches. But to those who lust for power, of what use is acquiring power unless they can abuse it? In this, the philosophy of the power monger is no different from that of the cancer cell, which mindlessly seeks growth for the sake of growth until it overwhelms its host.

—David Cay JohnstonHow does a strong and growing economy lend itselfto job uncertainty, debt, bankruptcy and economicfear for a vast number of Americans? In

Free Lunch

How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)

(Portfolio, 2007), David Cay Johnston argues thatthe answer lies in today’s governmental policies andspending that reaches deep into the wallets of themany for the benefit of what he calls the “rapaciousrich.”Johnston shows how, under the guise ofderegulation, a whole new set of governmentalregulations quietly went into effect—regulations thatthwart competition, depress wages and reward misconduct. From how GeorgeW. Bush got rich off a tax increase to a $100 million taxpayer gift to WarrenBuffett, Johnston puts a face on all the “dirty little tricks” that business and

government pull. A lot of people are getting free lunches. However, there is nosuch thing as a free lunch. So who is paying the bill? You and me, the Americantaxpayer.Johnston reveals how we ended up with the most expensive, yet inefficient,health care system in the world, how homeowners’ title insurance became acostly, deceitful, yet almost invisible oligopoly and how our government giveshidden subsidies for such things as posh golf courses.In these instances and many more,

Free Lunch

shows how the lobbyists andlawyers representing the most powerful 0.l percent of Americans manipulated ourgovernment at the expense of the other 99.9 percent. In fact, Johnston revealsthe forces that shape our everyday economic lives—and shows us how we canfinally make things better.David Cay Johnston, a Pulitzer Prize-winning reporter for the

New York Times

,has hunted down a killer the police failed to catch, exposed LAPD abuses,caused two television stations to lose their licenses over news manipulations andrevealed Donald Trump’s true net worth. He has uncovered so many tax dodgesthat he has been called the “de facto chief tax enforcement officer of the UnitedStates.”His last book,

Perfectly Legal

, was a

New York Times

bestseller and washonored as Book of the Year by the journalism organization InvestigativeReporters and Editors. Over his 40-year career, he has won many other honors,including a George Polk Award. He lives with his wife and eighth child inRochester, New York.David Cay Johnston took a few minutes out of his busy schedule to answer somequestions I posed concerning his new book.

John Whitehead: If you could sum up the basic point of your book in aparagraph, what would it be? And why is it important that people read yourbook?

David Cay Johnston: The American economy has been rigged to produce higherprices in some markets, rather than lower prices, to force the American taxpayerto subsidize all sorts of businesses and wealthy individuals—Donald Trump,Warren Buffet and George Steinbreinner, for example, all get gifts from thetaxpayers—and to force you to overpay for products like title insurance when youbuy a house.

Free Lunch

is an expose of government interference with thecompetitive market on behalf of people who are campaign donors.

JW: When you say government, are you mainly talking about the federalgovernment? Or is it all government?

DCJ: I’m talking about government at every level, from cities to the federalgovernment.

JWW: Are you saying that every level of government in the United States iscorrupt?

DCJ: No. I don’t necessarily say that it’s corrupt. If you can persuade thegovernment to give you a benefit, I don’t know that that is inherently corrupt.

JW: But if government officials are not telling the American people aboutsuch benefits, isn’t that corrupt?

DCJ: Many of these things are in the public record. The news media is notreporting on them in some cases. In others, government asserts that to tell youhow your tax dollars are being spent would interfere with the privacy rights of thepeople receiving gifts of government money. This is a fundamental systemicproblem where government is behaving as a power unto itself and is respondingto the interests and wishes of the people who donate to politicians. And thegovernment is forcing the public as a whole to subsidize these wealthy people.This is a major reason that incomes at the very top have been soaring, while forthe bottom 90 percent of Americans incomes have stagnated now for 30 years.

JW: The whole governmental system is set up to benefit the rich?

DCJ: That is exactly correct. My fundamental argument is that government hasbecome a servant of that element of the rich who are rapacious and are milking itfor all they can. It is much easier to mine gold from the public treasury than toearn it in the marketplace. And if you can get the government to put its thumb onthe scale for you, then you are probably going to try to do that. I show how, forexample, that locally owned stores are being pushed out of business by