Grassroots graft.

• Author: Hood, John

When it comes to corruption, state governments are second to none.

Let me stipulate right up front that Washington is a fetid swamp of scandal. During the past two decades, whatever respect Americans might have had for their national political leaders has steadily sunk into the soft muck of Watergate, Abscam, Iran-Contra, Whitewater, Filegate, Chinagate, Fornigate, etc.

I'll make a bold statement, however. Government corruption is less rampant in Washington than in Albany, Sacramento, or (especially) Little Rock. It is striking that many of the Clintons' most egregious ethical lapses - involving state pension funds, kickbacks, shady land deals, illegal federal loans, and cattle futures - occurred while Bill was governor of Arkansas. Presidents and congressmen make headlines with giggling interns and intricate campaign finance irregularities. State politicians still do it the old-fashioned way: lobbyists with sacks of money, all-powerful committee chairmen who give themselves state contracts, business executives who pay cash for government appointments or regulatory nods.

State officials do this sort of thing a lot - mostly because they keep getting away with it. They typically face less scrutiny than national politicians do, and they have many opportunities to enrich or impoverish individual firms. By contrast, Congress does things that affect whole industries, making it simultaneously more powerful and less amenable to garden-variety graft.

While political observers can count on a couple of hands the federal legislators who've resigned in disgrace during the last decade - Dan Rostenkowski and Bob Packwood come to mind - recent scandals in state legislatures have embroiled dozens, if not hundreds, of lawmakers in tawdry investigations and costly prosecutions. In the last few years, newspapers have been rife with stories of corruption in states such as Arizona, South Carolina, Rhode Island, Kentucky, New York, New Jersey, New Mexico, and Massachusetts. And no one knows what the final body count will be in poor Arkansas, where the Whitewater investigation has turned into a broader scandal of bid rigging, insider deals, and thievery throughout state government.

Let me illustrate my point about state corruption with a few examples. Beginning in the late 1980s, the Kentucky state legislature underwent two major scandals, both involving regulatory oversight.

In the first case, lawmakers enacted measures in 1988 and 1990 that hurt a small harness racing operation on the Ohio River. Its owner sought relief in the state capital, only to be told by a prominent lobbyist that it would probably cost around $100,000 - in campaign cash to various lawmakers - to make his problems go away. The racetrack owner, to his credit, didn't pay up. Instead, he went to the FBI, which began an elaborate sting to catch lobbyists and lawmakers in the act of buying and selling votes for cash. The feds eventually netted 11 bribery convictions, including one involving the speaker of the state House.

The second Kentucky scandal involved health care regulation. Humana Inc., based in Louisville, got a special exemption from state licensing rules for some of its health care facilities. Later, an investigation found that a Humana vice president had paid...