During the past three decades, the super rich in the United States have increasingly used the government to make themselves richer at the expense of everybody else, a new book says.

And electricity deregulation in Texas is a prime example of that phenomenon, New York Times reporter David Cay Johnston argues in the book, being released today.

"Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill)" is Johnston's latest look at how the wealthy get the government to implement policies to benefit them.

In 2003, he wrote "Perfectly Legal: the Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else." In 2001, Johnston won the Pulitzer Prize for his coverage of inequities in the tax system for The Times.

Rich Policy
In the tax code, sports stadiums, massive retail outlets and electricity deregulation Johnston finds a common theme.

"While unstated, it is the clear policy of the government of the United States and the states to take from the many and give to the few to make the rich richer at the expense of everybody else," Johnston said in a phone interview Wednesday from his home in Rochester, N.Y. "I don't have any problem with the rich getting richer by their own initiative, but this is different."

The wealthy have taken advantage of politicians' increasing need for--and love of--money to get them to undertake policies that shift wealth to those who already have the most, Johnston writes. That's why the army of lobbyists in Washington, D.C., doubled between 2000 and 2006, to 35,000. Of course, thousands more work in the state capitals across the country--including Austin.

By doing so, the wealthy get policies such as tax breaks for businesses that move jobs overseas to take advantage of cheap labor, Johnston writes.

Many who take advantage of such tax subsidies are fond of quoting Adam Smith, the 18th-century Scottish economist who argued that competitive markets with as little government interference as possible were the best way to run an economy.

But Johnston, who's studied economics at the University of Chicago and elsewhere, said those people mischaracterize what Smith said. Smith warned repeatedly of the damage caused "when government interferes with the market by guaranteeing profits or handing out gifts," Johnston wrote.

Bounty Hunters
Those guarantees and gifts, Johnston said, are everywhere in today's United States.

The owners of professional sports teams are among the recipients.

Johnston cited data indicating that, while some individual teams turn a profit in the market, overall each of the sports would lose money if the taxpayers didn't subsidize it. Johnston cites George W. Bush's involvement in purchasing the Texas Rangers as a case in point.

Bush was able to assemble a team of wealthy investors through his skill as a salesman and his influence as the son of a sitting president.

After the purchase, Bush threatened to move the team out of Arlington if voters didn't approve a half-cent sales tax for a new stadium. Instead of buying land for the stadium on the open market, Bush got the local government to invoke eminent domain so it could be bought at prices that one jury ruled were far below fair value.

After the stadium was built, the city entered into a rent-to-own deal with Bush and his partners for a facility that cost $180 million to build. They got it for $60 million--interest-free.

Ray Hutchison, husband of Republican Sen. Kay Bailey Hutchison and a lawyer involved in the deal, estimated that the total tax subsidy was worth more than $200 million.

Bush and his team paid $86 million for the Rangers. Nine years later, they sold out at $250 million.

Bush, who put up $600,000, got $17 million.

Coercion
Johnston also tells of taxpayers forced to pay to eliminate their own jobs and businesses.

Cabela's and Bass Pro Shops are two of the biggest outdoor sporting-goods chains in the country. And both rely heavily on getting state and local government to give them mammoth tax subsidies, Johnston writes.

The subsidies come in the form of free land, decades-long property-tax abatements, tax-increment financing and agreements allowing the stores to pocket the sales-tax revenue they collect.

There are plans for a Bass Pro Shop in Buffalo, N.Y., that would enjoy a total subsidy of $1,700 a square foot--eight times what it costs to build most such stores, Johnston writes.

He also tells the story of John Weaknecht, who has owned a small sporting-goods store in Hamburg, Pa. Weaknecht kept a Cabela's catalog on his counter to show customers that his prices were better.

But when Cabela's came to town claiming it would build a store that would draw as many people as a major amusement park, the town fathers put up a $32 million subsidy. Weaknecht tried to hang on, but he was out of business within two years--and his own taxes helped to put him there, Johnston writes.

Power Play
Three chapters of "Free Lunch" are devoted to electricity deregulation.

Johnston writes that in every state that undertook the experiment, Enron's Kenneth Lay was the driving force behind it. And in Texas, Johnston wrote, there could be dire consequences for lawmakers who opposed it.

To get existing utilities on board, the law forced Texas ratepayers to pay billions of dollars for power plants. In the case of CenterPoint Energy, the utility turned around and sold the same plants for billions in profit and then the company that bought them flipped them for billions more.

Even more problematic is how deregulated electricity markets are set up, Johnston said.

"The evidence is it's extremely easy to rig the market," he said Wednesday.

Indeed, he writes about the manipulation that Texas state regulators accuse TXU of perpetrating.

Road To Ruin
The effect of all the special deals the rich and the powerful are working for themselves? The wealthiest Americans have gotten vastly richer, while most of their countrymen and women actually have to get by on about $75 less than they did a generation ago, Johnston writes.

And, as Adam Smith predicted, the pursuit of subsidies is causing business to make decisions that otherwise would be unsound, Johnston writes.

"Somehow, we need to break this cycle, or it's going to ruin our country," Johnston said Wednesday.

How?

Johnston said it's clear the courts are hostile to schemes to reform the campaign-finance system.

So he has a straightforward idea: "politician finance reform."

It would require the taxpayers to cover 100 percent of the expenses of the members of Congress. Without limit.

But it also would require the members to disclose those expenses in detail. And it would prohibit them from taking trips, meals, sports tickets or anything else from lobbyists. Violators would go to prison.

The new system would cost more in congressional expenses, but it would lead to laws that would save taxpayers orders of magnitude more money than those additional expenses would cost, Johnston said.