Thomas E. Borcherding

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Thomas E. Borcherding a Cash for Comments Economist]] who worked for the tobacco industry through the Robert Tollison/james Savarese network.

[Note the spelling of his name is variable in the tobacco archives: there are 405 references to Borcherding, 14 to Borsherding, and 7 to Borscherding

He worked as a Professor of Economics in the Economics Departmen,t Claremont Graduate School, Claremont, CA and as the Director of The Claremont Center for Economic Policy Studies.

He was born on February 18, 1939, Cincinnati, OH and became a Post-doctoral Fellow at the Hoover Institution of Stanford University in 1974-75 and a Visiting Research Scholar at Hoover Institution in 1979-80. Post-1983 he was a professor of economics at the Claremont Graduate School (later Claremont University at Claremont, CA). He is also a member of the Board of Advisors at The Independent Institute.

Borcherding was a key member of the Committee on Taxation and Economic Growth which was run by Robert D. Tollison and tobacco lobbyist James M. Savarese (this evolved into the larger Cash for Comments network. The CTEG helped large corporations and trade associations counter tax increases, and it's main client appears to have been the Tobacco Institute, who extended the idea into a clandestine Economists' network -- a much larger group of academics who helped the tobacco industry fight proposed tax increase on cigarettes, and tried to counter the declining acceptability of public and workplace smoking.

Robert Tollison was an economist at George Mason University and James Savarese, a lobbyist with Ogilvy and Mather (later with his own lobbying company). Overall, this pair recruited (in total) between 120 and 130 professors of economics (usually Libertarian - Public Choice zealots at State Universities). Some stayed for the duration while others washing temporarily through this lobbying scam. Most of the recruits were members of Tollison's Public Choice Society which had the public-choice libertarian economics guru James Buchanan at its head.

Anna Tollison (wife) also appears to have handled the Society and some network operations, while Savarese had Leslie Dawson (wife of Sam Dawson from United Steel Worker's Assoc/union) and Kelleigh Varnum (aka Kelleigh Varnum-Roffman) as his key assistants.

The recruited professors would be instructed on occasions to write a 1200-1400 word opinion article (known as 'op-eds') for their local newspaper. The subject to be discussed or the claim to be challenged, and any important statistical information and possibly a broad outline, would be sent to them along with the names of (usually two) selected newspapers. They would also be given the name of two local Federal or State politicians to lobby by sending a copy of their article, along with a personal note.

They were paid on the basis of work performed -- at rates which varied between $600 and $3,000 for each article. This was good money for a second-rate State university professor of economics at the time. See longer explanations: Economists' network and the full-blown Cash for Comments Economists Network.


Associates and Associations:

  • L.R Basssett was his main writing associate
  • Member of the Editorial Board of the Cato Journal
  • Hoover Institution Press
  • Fraser Institute, Vancouver, Canada

 

HOW THE NETWORK WORKED

The Cash-for-Comments Economists' Network was run by Savarese through a partnership with Professor Robert D Tollison who used the staff and facilities of the Center for Study of Public Choice at George Mason University to prove cut-out and organisation services. They developed and maintained a network of Economics Professors with at least one on tap in virtually every US state. As one Professor transferred or dropped out (there was a regular turn-over) a new one would be recruited in that State. In all, about 130 university professors were involved in the period 1985-1995, and costs ran to $3 million/year at a time when professor's salaries were in the $30-40,000 pa range. An active network member at a State university could almost double his normal salary.

  The main focus of the group was to write commissioned op-ed articles on a subject determined by the Tobacco Institute. The draft article would then pass back through the network to TI staff, who were essentially public relations experts. Here they were 'improved' and refined; then sent to the Institute's outside lawyers for vetting. Modified articles then returned to the professor, who would then send them to a designated State newspaper as if they were his 'independent expert opinion'. The professors received a base amount for writing and bonuses for successfully planting the article on the newspaper. Some, but not all, received a small (eg.$1000) annual retainer.[2]]

  Published papers would also be copied by the professor and sent to his local Federal Representative and Senator (for a further bonus). Sometimes there were special commissions, but generally the work was writing op-eds and LTE's where they were paid just on results (varied from about $700 to $3000 over the years). Network members could also be called upon to provide witness services and promote the cigarette companies' political/economic line at local ordinance or State legislative hearings. An active professor of economics at a State University could almost double his salary with these activities and with some further appearances, for instance, speaking on the importance of cigarettes in economic terms at major economic conferences, etc.
      Cash for Comments Economists Network   &   Robert Tollison   &   James Savarese   &   Network Document Index

 

Documents & Dates

See his Apr 1984 CV lodged with the Tobacco Institute at the time the Cash for Comments Economists Network was being established.[3]

1939 Feb 18: Born in Cincinnati, Ohio

1961: AB in Economics at University of Cincinnati

1965-66: Post-doctoral (???) Research Fellow, Thomas Jefferson Center for Study of Political Economy, Uni of Virginia

1966: PhD Duke University

1966-71: Assistant Professor of Economics, University of Washington

1971-73: Associate Professor of Economics and Research Associate, [[Center for Study of Public Choice[[, Virginia Polytechnic Institute and State University.

1973-77: Associate Professor of Economics and Commerce, Simon Fraser University, Vancouver Canada

1974-75: Post-doctoral Fellowship, Hoover Institution, Stanford University (but see above)

1976: ??? GAP YEAR

1977-84: Professor of Economics, Simon Fraser University (?? conflict below??)

1978-79: Visiting Professor of Law and Economics, Faculty of Law, University of Toronto

1979-80: Visiting Research Scholar, Hoover Institution

1980 Spring -- Became Co-editor of Economic Inquiry

1980-83 Vice Director of Simon Fraser University's Center for Economic Research

1983 Fall -- Became Professor of Economics, Claremont Graduate School and a Research Associate with the Claremont Center for Economic Policy Studies.

1984 Apr: Patricia Milita of 'Ogilvy & Mather' (O&M) reported in the 'April Monthly Report' of 1984 to Peter G. Sparber (TI Vice President)

"We identified an economist, Tom [Borcherding], to testify against California Senate Bill 1961, which calls for excise tax increases. The agency prepared his testimony, which he will give May 2. [4]

1984 Apr 30: This 109- page DRAFT Tobacco Institute Cigarette Excise Tax Plan' was being developed to covertly battle against a tax proposal being considered by the Reagan Administration; they were facing a budget crisis. The tobacco industry suspected that the Administration (under pressure to create tax cuts for the wealthy) was about to extend the life of a temporary excise tax which had been imposed on cigarettes (16¢ per pack).

They had an urgent requirement for some 'independent' experts to lobby on their behalf at the State level. Their lobbying budget specified the average cost per State worth lobbying:

  • One public finance economist for 10 days @ $1,000, [Total $ 10,000] including meetings with coalition members and/or the Governor's staff; research and preparation; and testimony.
  • One economist for a union workshop on the tax issue, [Total $5,000] including 3 or 4 training sessions over the course of a convention.
  • Six economists @ $5,000 and one senior economist @ $20,000 for a tax symposium, including publishing of the proceedings at $3,000. [Total $53,000] The senior economist would play an oversight/organizational role and would be responsible for editing the proceedings. Such a symposium would be staged for regional or national impact.
  • One economist provided to a public employee union to do original research on the need for adequate services to be funded by broad-based taxes; this would include the final report and testimony. [Total $ 25,000]

Also included in this bundle was draft copy and designs for a couple of different booklets aimed at different States, and others aimed at labor/union and racial groups. It also identifies the Congress Committeemen and state Assemblymen who should be targetted as most likely to be influenced, and it had an appendix which lists economists who can be enlisted to help.

Potential Economic Consultants:
Following is a list of economists in key states who might assist us as consultants. We have begun contacting them to ensure their willingness and expertise. We are asking each about past experience; work with similar issues; previous work with the industry; published articles or research; and speaking availability. As discussed in the body of this program, our intent is to have a group of individuals who we can call upon regularly to testify, conduct special research projects, and discuss their research and/or views on excise taxes with the media.

Tollison is the most influential and prestigious on this list; he was hired to consult on federal tax issues, to publish books promoting the cigarette industry's position, and to oversee efforts of the other cash-for-comments economists throughout the country. See last page

They are already designating key states for the economists to influence through op-eds and politicians, and allocating a recruited academic to perform their lobbying services. Yoram Barzel is the only name on the above list who appears to have had second thoughts. He resisted the Institute's overtures entirely -- although they quoted his papers extensively.

1984 Jul The following month the Tobacco Institute circulated a formal document to the cigarette company members:

Cigarette Excise Tax Plan.
The plan augments our basic lobbying efforts by relying on groups outside the industry -- some not regularly associated with the industry -- to argue against excise taxes for us.

It is an ambitious program, based on the notion that many of the most effective protests against tobacco taxes will come from groups philosophically distant from The Institute. Many such groups agree with us on the excise issue, even though they disagree with us on other matters.

At the federal level, supporting Congressional members from the tobacco states is essential to our lobbyists. The tobacco members consistently vote as a unified group -- something that is rarely seen in Congress today. They are our lobbyists' most important resource.

The program recommends that economic and other consultants assist us in developing, "packaging," and presenting our anti-excise arguments in legislative testimony or meetings with coalition members. Resources:
Economic consultants with different areas of expertise will conduct research and act as spokespersons for The Institute and organizations supported by The Institute. Specific activities with economists are discussed throughout the tactics.

Tactics:

  • Stimulate reputable public finance economists at key state universities to determine the validity of state revenue forecasts, perhaps on behalf of state business organizations and present arguments against excise taxes in various forums; e.g., meetings with potential coalition members or budget officials.
  • Encourage economists to make the case against regressive taxation in meetings with potential coalition members and legislators.
  • Retain public finance economists affiliated with non-profit organizations to research the subject and use their findings in forums such as:
    • Private meetings with state legislators or staff ;
    • formal testimony before government bodies ;
    • targeted media appearances;
    • speeches before business, civic, labor, and other groups ;
    • tax symposia in key states where the proceedings could be published for use in other states ; and
    • articles which raise the visibility of key arguments in the business, academic, and popular press.

Strategies:

  • Presenting specific members of the House Ways and Means and Senate Finance Committees with arguments prepared by economists with whom they share some common interest; e.g college affiliation, service on the same commission.
  • Gaining the support of Citizens for Tax Justice (CTJ), the most influential labor/liberal tax reform group in the country, in opposition to excise taxes.
  • Relying on the AFL-CIO -- via The Bakery, Confectionery, and Tobacco Workers Union -- to ensure that the labor/liberal tax package that emerges in the next session of Congress does not include tobacco.

Appendix: A list of economists in key states who may be willing to act as industry and third-party spokespersons on the tax issue. Following is a list of economists in key states who might assist us as experts receiving honoraria. We have begun contacting them to ensure their willingness and expertise. We are asking each about past experience; work with similar issues; previous work with the industry; published articles or research; and availability.

Cash-for-Comment Economists
State Economists   and their institutions
California Thomas Borcherding, Claremont College
Connecticut William McEachern, University of Washington
Florida Richard Wagner, Florida State University
Georgia Fred McChesney, Emory University Law School
Illinois James Heins, University of Illinois
Mass. Harlan Platt, Northeastern University
Minnesota Thomas Stimson, University of Minnesota (St.P)
New York Harold Hochman, City University of New York
Ohio David Klingaman, Ohio University
Penn. Mark Pauly, University of Pennsylvania
Texas Charles Maurice, Texas A&M University
Wash.DC. Robert D Tollison, George Mason University.
Wisconsin Burton Weisbord, University of Wisconsin
"Our intent is to have a group of individuals whom we can call upon as needed to testify, conduct special research and discuss their research projects and/or views on excise taxes with budget officials, potential coalition members, legislators and the media."[5]
[The only change here is that Yoram Barzel from the University of Washington, had dropped out. (There was always a regular turnover)
This was the core Cash for Comments Economists' Network. Over the years they recruited over 160 professors of economics.]

1984 June The U.S. Treasury Department held tax simplification hearings throughout the country. O&M was involved in six out of the eight hearings, hiring local academicians in each city to prepare and deliver testimony against excise taxes. They also arranged media coverage for the academicians and traveled to each city to coordinate their activities. [6]

At the hearing in Los Angeles on June 12, 1984 Thomas Borcherding gave testimony. Excerpts of this testimony were later published in a brochure issued by the Committee on Taxation and Economic Growth called: ...The U.S. "Deserves to Have a Tax System Which Looks Like Someone Designed it on Purpose." [7]

Robert D. Tollison has create this committee with Borcherding and three other economists (Harold M. Hochman, Fred McChesney and Dolores T. Martin) after this series of hearings, however, it was basically an operation run by O&M. In a TI document it was described as "an informal committee of economists from 42 states who have collectively and individually participated in activities on behalf of the tobacco industry in the areas of excise taxation and public smoking." [8]

1984 Nov 20 Ogilvy & Mather PR (O&M) is organising for the Tobacco Institute the first economists forum at the Public Choice Society meeting in New Orleans, Feb 21-23. (Note: at this time James Savarese worked for O&M's PR division)

The topic would be "Public Choices About Tax Reform." William F. Shughart II, an economist from Clemson University, would chair the panel. Those who would present papers would be:

  • Thomas Borcherding, from Claremont Graduate School. Subject: "Tax Reform and Simplification: A Public Choice Perspective."
  • Harold Hochman, from City University of New York. Subject: "The Value-Added Tax: Do We Need Another Excise Tax?"
  • Fred McChesney, Emory University Law School. Subject: "Tax Reform in a Rent-Seeking Perspective: The Role of Interests."
  • Gary Anderson, an economist from George Mason University, would be the discussant.

Bob Tollison would be responsible for getting us on the program. He and Jim Savarese would work with each of the people to ensure that each paper contained a clear anti-excise tax message. Shughart and Anderson would also mention excises in their presentations. We will be obtaining CV s from Anderson and Shughart, who Jim and Bob Tollison know well. The other economists have all worked with us before.

Savarese's estimate of the costs for running this Economists' Forum project with the three papers at $2,000 each and Gary Anderson with $1000, plus travel, hotel, administration, etc. was $16,000. [9]

This appears to be the first operation of what was to become the Cash for Comments Economists Network

1985 June 18 Hearing on the Federal Excise Tax's sunset provision (due Sept).

The planning document lists Industry and Allied Witnesses -- Supportive Members of Congress,

Members of the Virginia, Kentucky, Georgia and Carolina delegations are being asked to request time to testify and/or join in a statement in support of the sunset. This group includes Reps. Bliley, Matcher, Fuqua, Hopkins, Sundquist, Broyhill and Rose.

Other Supportive public officals and related groups include:

  • Maryland State Senator Clarence Mitchell. Sen. Mitchell is chairman of the National Black Caucus of State Legislators. Has requested time. We have drafted statement.
  • National Council of State Legislatures will request time and submit its resolution, in favor of sunset, for the hearing record. Not yet settled on spokesman.
  • National Governors Association is being asked to submit statement, prepared by us, for the record.
  • U.S. Chamber of Commerce will request time. Will draft own statement against excises generally. Spokesman not selected as of this writing but Philip Morris will encourage presentation by Richard Rahn.

• Joe Trevino of the League of Latin American Citizens has requested time; will develop own statement with Institute help.

1985 June 19 Thomas E. Borcherding gave his testimony against increasing excise tax on tobacco before the House Ways and Means committee [10] [11].

1985 Nov 15 1985 Thomas E. Borcherding again testified, but this time to the California Senate Committee on Revenue and Taxation, during the Interim Hearing on Tax Reform in San Diego [12][13]

1986 June 10 The TI archives contain a letter Borcherding sent on June 10, 1986 to the 'General Services Administration' of PMFS in which he complains about new non-smoking rules. [14]

1986 Aug In an TI evaluation, Thomas Borcherding was considered to be knowledgeable but with a tendency to lecture the legislators. They thought he could be very good before the right audience like a public debate, but not for a legislative body. [15] One of the general weaknesses found in that evaluation was

"The Tobacco Institute shows up as the funding organization. The motives of the industry are called into question for undertaking such a program." [16]

SEE Cash for Comments Economists Network and C4C (Doc Index) for further details.

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