Harold M. Hochman

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This article is part of the Tobacco portal on Sourcewatch funded from 2006 - 2009 by the American Legacy Foundation.

 

Harold M. Hochman (also known as Hal Hochman) was the William E. Simon Professor of Political Economy at Lafayette College in Easton, PA. Before that he taught at the City University of New York (1975-1992).

He was an associate of Robert D. Tollison and James M. Savarese in two cash-for-comments networks of academics. He was a key member of the Committee on Taxation and Economic Growth which helped large corporations and trade associations counter tax increases.

He also became a leading member of the Tobacco Institute's clandestine Cash for Comments Economists' Network -- a large group of academic economists who helped the tobacco industry fight proposed excise tax increase on cigarettes, and tried to counter the declining acceptability of public and workplace smoking.

RELATED ENTRIES
Cash for Comment Economists Network
Network Documents Index

C4C Network Phases

The Cash for Comments Economists' Network developed in five clearly identifiable phases.

  • Phase 1. (c 1979) Professors Robert D Tollison and Richard Wagner were recruited by George R Berman (Philip Morris and Devon Management Resources) to provide propaganda writing services to the International Committee on Smoking Issues (ICOSI) which met in Brussels under the direction of Mary Covington.
  • Phase 2. (c late 1983) Tollison and Wagner were transferred to the control of Ogilvy & Mather PR (James Savarese) in the USA under the control of the Tobacco Institute. They were joined by economics professors Harold M Hochman, Fred McChesney, Thomas Borcherding and Dolores Martin to form the Committee on Tax & Economic Growth. The CTEG offered advice on the desirability of low excise taxes on cigarettes to the media and politicians as esteemed members of an 'independent' society or experts.
  • Phase 3. (May 1984) Tollison and Savarese now established the cash-for-comments network for the Tobacco Institute using the Center for Study of Public Choice at George Mason University as a money laundry channel. They recruited 42 professors (they claimed) from the Public Choice Society (some didn't last long) before the end of 1985. Their task was mainly to write op-eds on specified subjects for their local newspapers, and they were paid a bonus for contacting their local Assemblymen and Congressmen. They were also to be available to the tobacco industry's State lobbyists as 'independent' witnesses at ordinance and Congressional hearings on workplace smoking, etc. (The promised 'secrecy' was not well preserved within the Tobacco Institute).
  • Phase 4. (c 1986) Savarese and Tollison now formed a formal partnership Savarese & Associates and expanded the network to include at least one professor of economics in each State (some States had two). Payment was increased; there was a regular turnover, but the numbers stabilised. Eventually the Tobacco Institute became annoyed with the mark-up that the partnership added to its bills, and sent in the auditors. They didn't like what they found.
  • Phase 5. (c. 1996) The Savarese/Tollison partnership continued with a few of Tollison's close associates, but the bulk of the network broke away and began to operate directly to the Tobacco Institute under the leadership of Robert Higgs and William Shughart through the Independent Institute think-tank.

 

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.[1]]

  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 & TimeLine

1957 B.A. Yale University, Economics

1959 M.A. Yale University

1965 Ph.D. Yale University

1975-92 Teaching economics at the City University of New York (1975-1992) 1984 June In June 1984 the U.S. Treasury Department held tax simplification hearings throughout the country. Maureen Delanty of O&M wrote in her monthly report on July 6, 1984 to Peter G. Sparber (TI Vice President)

"We participated in six out of the eight hearings, hiring local academicians in each city to prepare and deliver testimony against excise taxes. We arranged media coverage for the academicians and traveled to each city to coordinate their activities. [2]

1984 July 16 Samuel D. Chilcote (President of TI) wrote in a letter dated July 16, 1984 "On short notice, we were able to encourage the testimony of different economists at six of the eight hearings. They presented their personal views on excises, which coincided with our own, and in some cases personal views on other aspects of taxation." [[3] This proves that O&M was doing all of this on behalf of TI. All five economists who formed the committee plus Roger Kormendi participated in these hearings.

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."[4]
[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 Harold Hochman became involved in several pro-tobacco activities for the Tobacco Institute (TI) through Ogilvy & Mather (O&M). In June 1984 the U.S. Treasury Department held tax simplification hearings throughout the country. In six out of the eight hearings O&M was active, "hiring local academicians in each city to prepare and deliver testimony against excise taxes. [O&M] arranged media coverage for the academicians and traveled to each city to coordinate their activities." [5]

1984 June 20: Patricia Milita of Ogilvy & Mather PR has written to Michael Kerrigan, a Regional Director at the Tobacco Institute.

Following is the information you requested on The Tobacco Institute's involvement in the U.S. Department of Treasury's tax simplification hearings in your region.

  • So far, one hearing has been held in the Northern Sector: in Minneapolis on Tuesday, June 19. Dolores Martin, an economics professor at the University of Nebraska, presented testimony at that hearing. We arranged interviews for her with KSTP-AM (radio) and KSTP-TV (both are St. Paul stations). A copy of her testimony and a biographical sketch are attached.
  • The next hearing [June 25] in your region will be in New York on Monday, June 25. Harold Hochman, an economics professor at Baruch College of the City University of New York, will testify. Hochman's testimony (subject to his revision) and biographical information are attached. We are seeking media coverage for him.
  • The final hearing is scheduled for Thursday, June 28 in Springfield, Illinois. We are now preparing testimony and seeking both an academician and a small business spokesperson to present testimony at that hearing. [6]
Harold Hochman and Dolores Martin were members of the Committee on Taxation and Economic Growth run by O&M at that time for the Tobacco Institute.

1984 July Samuel D. Chilcote (President of TI) wrote in July 1984 about Hochman's testimony

New York (July [sic] 25)
Dr. Harold Hochman, Economics Professor at Baruch College of the City University of New York, spoke on the negative social and economic effects that would result from a change in the tax base to consumed income. Additionally, he spoke on the significant costs to society imposed by federal excise taxes on selected goods. Hochman was interviewed by WNBC-AM and photographed by Cable News Network and the Bergen County Record (Hackensack, N.J.). Reporters from these outlets were given copies of his testimony. [7]

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." [8] Robert D. Tollison started that committee with Harold Hochman and three other economists (Thomas E. Borcherding, Fred McChesney and Dolores T. Martin) after that series of hearings, although it was basically an operation run by O&M / James Savarese and Associates. Or as TI put it "Ogilvy & Mather and Jim Savarese worked with Professor Bob Tollison (George Mason University) in organizing 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." [9] On January 31, 1985 M. Hurst Marshall (Tobacco Institute Vice President) sent a list of economists who could "assist TI on the federal cigarette excise tax issue" as an attachment of a letter asking to spread this information to their lobbyists. [10] [11] Harold Hochman was on that list representing New York togehter with Professor Kenneth V. Greene. That list was like a memberships list of the 'Committee on Taxation and Economic Growth'.

1984 July 16 Samuel D. Chilcote (President of TI) wrote in a letter dated July 16, 1984 "On short notice, we were able to encourage the testimony of different economists at six of the eight hearings. They presented their personal views on excises, which coincided with our own, and in some cases personal views on other aspects of taxation." [[12] This proves that O&M was doing all of this on behalf of TI. All five economists who formed the committee plus Roger Kormendi participated in these hearings.

1984 Sep 6 In the 'August Monthly Report' Patricia Milita of O&M wrote to Peter Sparber:

  • "Agency wrote copy and began coordinating design for a brochure based on testimony before the Treasury Department. We will have a comprehensive estimate by 9/10/84. Black and white sketches of economists are $500; color are $850. We are proceeding with sketches as each economist submits his or her photograph."[13]
Roger C Kormendi was an Associate Professor of Economics at the University of Chicago (later Michigan) and Director of Research at the Mid-America Institute for Public Policy Research. This ultra-libertarian think-tank later changed its name to Catalyst Institute and it is now part of the extreme corporate-backed libertarian Atlas Group network of think tanks.

The booklet was called '...The U.S. "Deserves to Have a Tax System Which Looks Like Someone Designed it on Purpose."' was issued under the name, the Committee on Taxation and Economic Growth consisting of all the aforementioned economists minus Roger Kormendi. Nothing is mentioned about O&M or TI. In the preface of the brochure it said:

"The Committee on Taxation and Economic Growth opposes excise taxes and believes government should seek other ways to raise revenue. The following excerpts, taken from public testimony before the U.S. Treasury Department, present some of the strongest arguments against excises.' [14]

Patricia Milita wrote in that same O&M 'August Monthly Report' that they had "Hired Roger Kormendi to prepare testimony for submission to the Senate Finance Committee."[15] An excerpt of his written statement for the Senate Finance Committee was published in 1985 in a TI booklet called "Excise Taxes: the Fairness Issue" together with excerpts of statements from other people including several members of the 'Committee on Taxation and Economic Growth'. end_page=15

1984 Nov 2 Patricia Milita of O&M reported on November 2, 1984 to Peter Sparber

  • Produced and delivered 2,000 copies of the U.S. Treasury Department brochure. All members of the Committee on Taxation and Economic Growth received copies.
    • Obtained a P.O. Box for the Committee on Taxation and Economic Growth.    [16]

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. [17]

This appears to be the first operation of what was to become the Cash for Comments Economists Network Hochman was a foundation member.

1985 June 10 The O&M's Maureen Delanty reported on June 10, 1985 to Susan Stuntz (TI Issues Manager) in the 'May Monthly Report'

Delivered brochure on health care financing. We also printed stationery for Committee on Taxation and Economic Growth for cover letter signed by Bob Tollison. Distribution list is being compiled and brochure will be mailed as soon as possible.

  • Continued to prepare op-ed articles on tax reform and work with area economists to place in newspapers in home districts of members of House Ways & Means and Senate Finance Committees. We are collecting originals of all published articles for distribution at TI and elsewhere.
  • Arranged for Citizens for Tax Justice and Harold Hochman, professor at City University of New York, to testify before Representative Rangel on the taxation of low-income wage earners. This involved coordination of testimony with the subcommittee and making final revisions on Hochman's statement." [18] [19]

1985 Aug 15 An anti-excise article called "Does the American Tax System Need to Be Reformed?" written by William J. Hunter (Marquette University), Dennis E. Logue (Dartmouth College), William F. Shughart, II (George Mason University), and Harold Hochman was published on August 6, 1985 in the Sun Herald (Colusa, CA) and on August 15, 1985 in the Globe (Dodge City, KS). [20]

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References

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