Cashing In On Congressional Connections

Retired Illinois congressman getting rich working for special interests that once sought his help in U.S. House – and he's not the only member of his family getting paid.

Retired U.S. Rep. Jerry Costello (D-Ill.) spent his entire congressional career on the House committee that oversees railroads, highways, transit and aviation – where he became known as a dependable advocate for transportation interests in his Downstate district and beyond.

A months-long investigation by the Better Government Association found that connections forged by Costello during his 24 years in Congress appear to have paid big dividends for one of his sons, and are now proving lucrative for Costello as he works as a lobbyist and consultant for transportation businesses and other groups he went to bat for as a federal legislator.

While apparently legal, Costello's new private-sector role raises new questions about whether ethics rules need to be tightened to ensure the legislative process is driven by the public interest, not self-interest.

Members of Congress – like elected officials serving in the Illinois General Assembly, Chicago City Council and other legislative bodies – have been criticized for decades for taking campaign donations from special interests seeking their legislative support. But the BGA's findings go beyond that practice and into the "revolving door" of politics – where elected officials leave office, then shill for special interests they once dealt with on the legislative front.

Among the BGA's findings, according to interviews, federal records and other public documents:

  • As a congressman, Costello pushed hard for the Air Force to award a $35 billion tanker contract to Boeing. Now Boeing is paying Costello – who left Congress in January 2013 – $10,000 a month as a lobbyist. The aerospace giant also hired Costello's son John as an Illinois lobbyist while the senior Costello was still in the House.
  • Costello is widely acknowledged as "the patron saint of Scott Air Force base" because of his successful work in Congress to keep it open during several rounds of base closings. Now Costello is part of a lobbying team paid $25,000 a month to keep Scott off the chopping block in future waves of base closings.
  • While in the House, Costello secured millions of federal dollars for the Madison County Transit District for new buses and a new terminal in his congressional district. The agency now pays him $7,000 a month as a lobbyist.
  • As a congressman, Costello was a strong advocate for "short line" railroads and their efforts to renew a federal tax credit for track maintenance every few years. An industry group called the Short Line Tax Policy Coalition hired Costello's son John as an Illinois lobbyist as this issue was debated in Congress.
  • As a legislator, Costello helped the freight railroad industry in an ultimately successful 2012 fight against trucking interests, which wanted Congress to allow longer and heavier trucks on the nation's highways. At the same time, the Illinois Railroad Association, a freight trade group, paid Costello's son as much as $60,000 a year to lobby in Springfield.

During an hour-long telephone interview, Costello said it was understandable why certain clients – especially those he helped while in Congress – would seek him out.

"They knew that I was knowledgeable. I had experience," said Costello, 64.

Officials with Public Citizen, and Citizens for Responsibility and Ethics in Washington, both government watchdog groups in Washington, D.C., say hiring a relative is one more way special interests can try to curry favor with members of Congress – beyond donations to campaign funds and pet charities.

But Costello said his son's lobbying on state matters was separate from the federal issues that he was engaged in, and that clients who hired his son didn't get special consideration from Costello as a result.

His son John did not return repeated phone calls or emails.


Jerry Costello is no longer in Congress, but his congressional campaign accounts remain flush with cash, which he can spend virtually however he wants.

Ex-U.S. Rep. Jerry Costello may have retired but his campaign fund did not.

Costello – who left Congress at the start of 2013, and now works as a lobbyist and consultant for special interest groups – has a major advantage over colleagues in the influence trade. When he retired, he had $1.6 million in unspent congressional campaign funds, more than any retiring member of the U.S. House that year, and an additional $260,000 in Leadership PAC funds, according to federal campaign disclosure records.

He has wide latitude in how he can use the leftover funds, because, according to Paul Ryan, senior counsel at the Campaign Legal Center, "federal law mainly concerns how the money comes in, not the spending."

Lobbyists are expected by lawmakers to make campaign contributions, usually out of their own pockets. Costello has been able to dip into his political war chest instead.

Since he retired, he has given out $53,100 to his friends in Congress, including money to his former colleagues from Illinois. (Costello represented the congressional district on the Illinois side of the Mississippi River, east of St. Louis, for more than two decades.)

And although the funds were raised for federal campaigns, there is nothing to restrain him from spending it on politicians in Illinois, where he also lobbies.

Since retiring, he has donated $35,000 to Gov. Pat Quinn; $25,000 to the Illinois Democratic Party, headed by Illinois House Speaker Michael Madigan (D-Chicago); another $10,000 directly to Madigan; and $20,000 to Costello's son Jerry II, for his re-election campaign for state representative.

Costello has made charitable donations, also allowed by law, including $35,000 to the Cong. Jerry Costello NFP Charitable Corp., which supports southern Illinois nonprofits such as food banks. And his campaign has given $10,000 for scholarships at Southwestern Illinois College, according to Federal Election Commission records.

Costello's wife Georgia is the $163,898-a-year president of the school.

Between the two funds, Costello has $1.63 million left, which he can spend as he pleases so long as it's not for personal expenses.


Those who leave Congress are banned from lobbying former colleagues for a year, but they're allowed to provide advice to special interests seeking congressional help, and they're allowed to lobby federal bureaucracies and other governmental agencies.

In 2013, during his first year out of Congress, Costello set up a solo lobbying practice in his hometown of Belleville, and earned at least $200,000 in fees, according to interviews, and disclosure reports that must be filed by federal lobbyists.

Costello told the BGA he has even more clients for whom he gives advice, but because he does not directly lobby government officials for them, those fees do not have to be disclosed.

This adds up to be a lucrative "retirement" for Costello, who draws a $60,000-a-year federal pension for his years in Congress, according to calculations by the National Taxpayers Union, plus state and local pensions totaling another
$19,000 annually for earlier government jobs in Illinois.

Boeing Lift-Off, Costello Touchdown

Boeing was one of Costello's first lobbying clients after he left office. Though he wouldn't discuss specifics, House records show he was hired to lobby on aviation issues before the Federal Aviation Administration, which regulates the airspace and the airline industry.

Headquartered in Chicago, Boeing paid the former congressman $90,000 for nine months last year and renewed his contract for 2014, at $10,000 a month, Costello said.

In 2008, Costello lead a bipartisan group of 11 Illinois lawmakers protesting an Air Force decision to reject Boeing's bid for a $35 billion contract for aerial refueling tankers. At the time, Costello and others argued that awarding the job to EADS, a European company, would cost Americans jobs. On the floor of Congress, he questioned "whether the EADS tanker provides the best value for our military and the American taxpayer."

Boeing had claimed the selection process was unfair, and later won a ruling by the Government Accountability Office to re-open bidding. This time, in 2011, Boeing won the contract, a decision applauded by Costello.

"Boeing is the very best aerospace company in the world, it is one of the nation's largest and most successful companies, and its workforce is truly outstanding," Costello said at the time.

Costello helped Boeing in Congress and Boeing returned the favor. In August 2010, after talking with Boeing for five years, Costello announced Boeing would open its first manufacturing plant in Illinois, creating 125 jobs in Costello's district.

Costello told the BGA he "worked very hard" to persuade Boeing to expand to Illinois.

In August 2009, Costello's son John, a Springfield-based lobbyist, was hired by Boeing to work on state issues. The son, who lobbied for Boeing through 2011, did not have to disclose his fees under Illinois law and he did not provide details of what he worked on.

Boeing spokesman Gayla Keller would not comment on the company's hiring of Costello or his son, saying simply: "Boeing works with a variety of parties to advocate on behalf of its businesses in both the commercial aviation market as well as the defense market."

Bye Scott? Jerry's Still On Case

During Costello's time in Congress, no single accomplishment was more significant to his constituents than preserving Scott Air Force Base, with 13,000 military and civilian personnel.

U.S. Rep. John Shimkus (R-Ill.) from a nearby district called his friend Costello "the patron saint of Scott Air Force Base."

Costello's successful strategy was to make Scott indispensable by increasing the number of military units based there, such as the 126th Air Refueling Wing of the Illinois Air National Guard – which brought hundreds of new jobs to his district from Chicago.

The base has grown by 40 percent in the past decade, officials said.

Still, local business leaders worry about the next round of base closures and have hired Costello to help, this time as a private consultant.

The Leadership Council of Southwestern Illinois hired the team of Costello, retired Air Force General Duncan McNabb and the Washington, D.C.-based lobbying firm Smith, Dawson & Andrews for 18 months, for a fee of $450,000, according to Ellen Krohne, executive director of the Leadership Council. Costello declined to disclose his share of the fee.

Krohne said Costello's experience made him the perfect hire.

"We think he is the very best person for the job," she said.

Fare Play At Transit System?

The Madison County Transit District is flush with money, unlike Chicago-area transit operators.

Costello helped put the Madison County transit agency on sure footing with millions in federal grants, including $18.4 million used to replace old buses in 2011, according to a transit agency press release.

In December 2011, Costello said he "worked closely" with U.S. Transportation Secretary Ray LaHood to obtain a $13.8 million federal grant for Madison County transit and the City of Alton to connect bike paths and bus service to Alton's new Amtrak station. The construction is part of an ongoing project to build a 110-mph Chicago-Alton-St. Louis train line.

Jerry Kane, who runs Madison County transit, told the St. Louis Post-Dispatch that winning the grant was a "near miracle," given the intense competition among transit agencies for federal funding.

And now, miracle worker Costello is one of the transit agency's Illinois lobbyists, earning $7,000 a month to advocate for its interests in Springfield, according to Costello.

Carrying The Freight

Costello has been an ardent supporter of freight railroads, a big industry in his district, as a cost-effective way to ship goods. Five of the seven major national freight lines pass through his old district, positioned just east of the Mississippi River bridges that lead to St. Louis and beyond.

As such, Costello has worked aggressively for tax incentives and policies that help freight railroads.

The industry in turn hired his son as a lobbyist.

For example, the Short Line Tax Policy Coalition hired John in 2009, according to disclosure records on file with the Illinois Secretary of State. The Washington, D.C.-based coalition has one issue, a federal tax credit that helps pay for track rehabilitation and maintenance for "short line" railroads – feeder lines that carry freight from factories and farms to national rail networks. Lacking state government issues, the coalition's rationale for paying a lobbyist in Springfield is unclear. John was its only lobbyist outside of Washington, according to disclosure reports compiled by the National Institute on Money in State Politics.

The federal tax credit expires every few years and needs to be extended, a cause Costello endorsed time and again.

In a 2010 speech Costello rallied support for the tax extension among colleagues saying, "short line railroads are too important to our economy." In 2011, Costello and three others sponsored another extension.

The tax coalition employed Costello's son from 2009 through February 2013, shortly after the lawmaker left Congress. The coalition did not respond to requests for comment.

Costello said his support for the tax break didn't hinge on employing his son.

"I will tell you I was a supporter of the short line tax credit for many, many years, probably before [his son] was, certainly out of college," said Costello. "It is not like, 'Oh you hired my son and so I'm going to vote for an issue that you're interested in.'"

The Son Also Rises

Costello was also in the freight railroad industry's corner on one of its most pressing issues of recent years, the potential competition from super-sized trucks.

In February 2012, he and U.S. Rep. Lou Barletta, (R-Pa.) successfully led a campaign beating back legislation that would have allowed longer, heavier trucks on highways throughout the country.

Costello and a Barletta spokesman told the BGA the congressmen acted out of concern, not for the railroad industry, but for the public, because the larger 97,000-pound triple trailer trucks would be a hazard to other motorists and would damage road surfaces.

"If you take a Southwest Airlines 737 and put it on the interstate and put a triple trailer next to it, the triple trailer is as long as the 737 aircraft. So it's a safety issue," said Costello.

It was also a major victory for the railroad industry.

From 2008 through 2012, Costello's son John picked up three more clients whose members or owners include large national railroad companies: the Illinois Railroad Association, the Terminal Railroad Association of St. Louis, and the Alton & Southern Railway Company, according to Illinois secretary of state records.

While the younger Costello did not have to publicly disclose his fees, the Illinois Railroad Association reported on its publicly available tax forms that for two years it paid $60,000 a year for lobbying, at a time he was their only outside lobbyist.

'The Best Lobbyist'

Like his friend former U.S. Rep. Bill Lipinski (D-Ill.) before him, Jerry Costello's base pay will soar as he cashes in on contacts and expertise developed while serving in the House. Last year Lipinski reported on congressional disclosure forms $550,000 in lobbying income.

Costello said he chose to represent only clients whose issues he finds interesting, and believes in. He said he has turned down clients.

Another of Costello's lobbying clients was the owner of a Sauget, Ill., hazardous waste incinerator in his district which had a history of emissions violations and was on notice that the U.S. Environmental Protection Agency intended to impose limits on the amount of lead, arsenic and mercury to be burned, federal records show.

Veolia Environmental Services hired the former congressman to lobby on permitting issues at the southwestern Illinois location and paid him $60,000 over a five-month period, according to congressional records. The permitting issue remains under review.

Costello said he advised Veolia but would not give further details. The company did not return phone calls or emails.

A 2005 study by Public Citizen found that 43 percent of retired congressmen become lobbyists.

Melanie Sloan, of Citizens for Responsibility and Ethics in Washington, said former members like Costello make great lobbyists but she is troubled by lobbyists' success in swaying decision-makers in Washington.

"They're not giving taxpayer money to the best project, but to the best lobbyist," she said. "Decisions are based on campaign contributions and connections."

This story was written and reported by the Better Government Association's Chuck Neubauer and Sandy Bergo. They can be reached at chuck.neubauer@gmail.com or sandybergo@gmail.com, or at (312) 427-8330.

 

About the Authors
  • Chuck Neubauer

    Chuck Neubauer is a special contributor for the Better Government Association.
  • Sandy Bergo

    Sandy Bergo is a special contributor for the Better Government Association.