Frederick H. Graefe Is Too Big To Fail

As the Democrats begin another compromise of the health care reform bill that they compromised with the Blue Dog Democrats after they compromised it with right-leaning Senate Democrats after the original compromise with an industry-insider task force so that they could compromise it with a couple of straggling Republicans, you may be wondering how the health care reform ever got so watered down. Perhaps you’re still questioning why advocates of single-payer health care reform ideas weren’t even given a seat at the table at the start of the process by the Obama White House.

To find an answer, you might start with a look at Frederick H. Graefe. Oh, I’m not saying he’s responsible for it all. Rather, I think its more accurate to say that Frederick H. Graefe is emblematic of a force of lobbyists and corporations that have thoroughly corrupted the effort to create meaningful health care reform.

Graefe’s name made the news as the source of a comment that health care reform legislation is “too big to fail”. Who is this Frederick H. Graefe, though, and why would he be quoted as a source of special knowledge about health care legislation? Graefe is not a medical doctor. He’s scientist, and he’s never served in a public health position. Frederick H. Graefe is a source quoted by journalists because it’s his profession to advance the private interests of certain corporations in the health care industry, and if getting a journalist to put a quote in an article is what it takes, Graefe will do it.

Frederick H. Graefe is a lobbyist who specializes representing companies that profit from the status quo in health care. His firm represented 11 such companies in 2009 – and no one else – earning 1.5 million dollars doing it.

Mr. Graefe may seem like a small man in this photograph, but that’s because Graefe has gone to great care to avoid having his photograph available online. He’s even replaced his own photograph with the picture of a baby on his lobbying firm’s web site, so as to avoid scrutiny. This tiny image is one of only 2 tiny images of Graefe that I was able to find anywhere online. Nonetheless, Frederick H. Graefe carries a substantial amount of heft – the sort of heft only money can buy.

Yes, Graefe has spent some his own money for donations to political candidates, quite a bit of it over the years, and a moderate amount for the current election cycle. Recipients so far for the current election cycle:

Patrick Leahy – $250
Ron Kind – $500
Bart Stupak – $500
Tom Harkin – $1000
Joseph Lieberman – $1000
Carolyn McCarthy – $1000
Jeff Merkley – $1000
Arlen Specter – $1000
Peter Stark – $1000
Byron Dorgan – $1500
Earl Pomeroy – $2000
North Dakota Democrats – $1000
Moderate Democrats PAC – $1000

That’s just $12,750, more than you or I could afford to give away, but not a whole lot in the big scheme of things. As a lobbyist, however, it isn’t Graefe’s job to spend his own money, but rather to find ways for his clients to funnel their money, translating it into industry-friendly legislative action. Graefe didn’t make 1.5 million dollars in 2009 just to spend $12,750.

Bundling is one way that funneling of money takes place. Bundling is the process through which a group of individuals with common interest all give checks, each one written in the maximum amount allowed for an individual, to one person who then presents the group of checks to a candidate for public office, as if it’s a single donation, even though the total amount is much larger that any individual would be allowed to give. It’s through this process that Frederick H. Graefe brought $40,500 to the Democratic Congressional Campaign Committee, a Democratic Party organization that in turn donates money and resources to candidates for the U.S. House of Representatives.

There are other ways that a lobbyist can get money to move to a certain candidate besides bundling. Lobbyists also arrange events to which other people, aligned with their clients’ interests, are invited to come, bearing money as a price of admission, and access to a particular member of Congress. The Sunlight Foundation has built an excellent network for gathering invitations and reporting on these events. This network identified 5 such events (though there may have been more) hosted in 2009 by Frederick H. Graefe. The events brought the following members of Congress right into Graefe’s lobbying headquarters at 319 Constitution Ave NE, Washington D.C., in order to pick up their piles of money: Baron Hill, John Yarmuth, Allyson Schwartz, and Senate Majority Leader Harry Reid.

Such methods will continue for some time, but they’re likely to be considered old hat now, given the Supreme Court’s decision last year to allow 527 organizations, funded in turn by representatives of corporations, to engage in political campaigning. This year’s Supreme Court decision to allow corporations to engage directly in political campaigning for particular candidates expands the D.C. money game to a huge, practically impossible to track, field of financial play. How lobbyists like Frederick H. Graefe will learn work upon this field is impossible for anyone to predict. It is safe to say, however, that like water flowing to the sea, money will find its way.