After 40 years in journalism, Brighton resident David Cay Johnston is at the top of his profession. He won a Pulitzer Prize for his investigative reporting at the New York Times in 2001 and was a finalist for the prize in 2000 and 2003.

His 2004 book, "Perfectly Legal," which detailed the way the superrich get away with evading taxes, spent a month-and-a-half on the New York Times bestseller list and was named Book of the Year by the Investigative Reporter and Editors organization.

More importantly, it got results. Eight people went to prison for a minimum of six years each. Congress passed six new laws.

Johnston has just published "Free Lunch," an even more provocative book, as indicated in the subtitle: "How The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill)." The book has cracked the top 10 on Amazon.com.

In it, he covers a wide swath of territory, from big-box stores that wipe out local businesses and receive tax breaks to a health-care industry more concerned about the bottom line than our welfare.

Johnston's reputation was firmly in place three decades ago. In "The Executioner's Song" (1979), Norman Mailer referred to him as a "top-notch professional" and discussed the insightful questions he came up with for death-row prisoner Gary Gilmore. (For a biographical sketch or to read an interview about "Perfectly Legal," go to March 24, 2004 in the archives on City Newspaper's Web site.)

In a recent interview, Johnston talked about his new book and the following is an edited version of that conversation.

Before we get into specifics, what is your book's overriding message?

Under the guise of market reforms, deregulation and getting government out of the way, new rules have been put into place that take money from the pockets of ordinary Americans and funnel it to the super-wealthy in ways that people have no idea about.

In many of the big retail stores you walk into, like Wal-Mart and Cabela's [outdoor supplies], you pay sales taxes and they never get to the government. The owners of the store get to keep the taxes you are required by law to pay. That's outrageous.

It's called Tax Increment Financing, TIF. The theory is these stores bring new jobs and economic development, but they don't. People don't spend more money on retail because there's a new store. In the book I tell the story of Jim Weaknecht, who, even though he had lower prices and gave better service, was put out of business due to subsidies given to Cabela's. This is going on all over the country.

You also discuss subsidies given to sports teams at the expense of parks and libraries, even though the positive economic effects of new stadiums are seasonal.

We're starved for money for public parks, but we're throwing $2 billion a year at commercial ballparks. They all argue that they create economic growth. Nonsense. They take business that would otherwise be at movie theaters, nightclubs and restaurants and concentrate it in one place - ballparks.

But I'm sure you've heard the argument that a professional team adds to the cachet of a city, attracting businesses and helping the economy.

Los Angeles hasn't had a major football team for years. It seems to be doing fine. I don't have any objection to sports teams, but let's have a free market.

There's an argument that this is the blue collar, beer-drinking guy's subsidy. People who like art museums get money for that, so why shouldn't they? One, art museums don't have a market; there's clearly a market for sports. And two, the amount of money going to sports is out of proportion - $2 billion a year to the owners of about 100 teams in the big four sports.

If only people followed politics like they do sports.

When Karl Marx wrote that religion was the opiate of the masses, he did not anticipate the rise of commercial sports.

Among recent outrages, you discuss Apple founder Steve Jobs' backdated stock options. Shareholders are happy that the company's stock has more than doubled this year. Why is this reward wrong?

Stealing is stealing. Steve Jobs was granted a bunch of stock options at a meeting of the board of directors that never took place. There's a story in the book about a guy who was told by the Supreme Court that he will rot in prison for 50 years because he stole nine videotapes to give to his children at Christmas. But you can steal $400 million or $1 billion through backdated stock options issued at a board meeting that never took place and you get to keep the money.

Federal prosecutors who went after this kind of abuse were fired. Why?

First, they went after a tiny handful, very few. We know now that the Justice Department became politicized under the current administration, that they went after Democrats, that they timed the prosecutions and investigations for maximum political advantage.

This is a very, very scary thing, that the government can use its enormous power to go after people in the other political party. In modern times, this has never happened. The outrage that's been expressed by former prosecutors and former attorney generals over this has not been matched by public outrage. That's what I find astonishing.

Reading your book, I found myself asking: Where is that outrage?

There are two fundamental issues. Reading skills get worse and worse. I was recently handed a memo written by an MBA. It was atrocious, full of spelling and grammatical errors and poorly conceived. When many people read the newspaper they get the words off the page, but they don't get the context. I recently learned that in some high school English classes, they don't have students read the book; they show the movie.

The second factor is: We're rich. Being poor in America is not like being poor in Guatemala, Egypt, or India. A lot of people say, I have a roof over my head, a television, I eat pretty well, what do I care? When I was a boy, growing up poor, all of the adults I knew read two, three, four newspapers. They paid attention to elections; they understood that government was fundamental to their economic lives. A lot of people say, why pay attention to the government? I'd rather see what Britney Spears isn't wearing on TV.

Is the media partly to blame?

There's a difference between the serious journalism of a handful of newspapers - the New York Times, the Wall Street Journal, the Washington Post - and, although their finances are deteriorating badly, the better regional papers - the Philadelphia Inquirer, the Boston Globe, the Los Angeles Times - and the news that most people consume, which is local and national TV produced on the cheap.

It costs almost nothing to cover a fire or an automobile accident. We're actually lucky here in Rochester. I turn on the news and I'm surprised at how many pieces are done that are about something substantial.

Then you have this other area - left and right - of shouting opinion-mongering. Opinions are cheap; serious news gathering is very expensive. I have literally spent more than $10,000 over a sentence. That was the cost of proving a particular fact that ended up being one sentence in the story.

There was a CSX train derailment in East Rochester last year. No one was hurt, but in the book you discuss another CSX incident where passengers were killed.

A jury in Florida found that CSX had saved $2.4 billion by not properly maintaining its railroads for safety, which meant the stock was worth more than it would be otherwise and executives got a lot more money. They also left a lot of dead bodies in their wake.

In one case it killed eight people, including a police sergeant. The jury awarded $50 million in punitive damages to send a message. But there was no message because Congress requires that any punitive or actual damages paid by the railroads be picked up by the taxpayers if an Amtrak car is involved.

What incentive do I have as the head of a railroad to make the railroad safe? We've adopted all sorts of policies that induce moral hazards. You can make a lot of money, and if what you do kills people or damages the environment, the taxpayers will pick up the bill for your bad judgment. Guess what? We get a lot of bad judgment.

And the head of CSX at the time was former Treasury Secretary John Snow, who was proud of his cost-cutting. But equally outrageous was his pension.

When he left the company, Snow got a pension, not for the 25 years he worked for the railroad, but for 44 years. It wasn't based on the average of his last three years' salary; it was his salary, his bonus, his long-term compensation, stock options, and other stuff. He walked away with $70 million.

This is going on throughout business. Government rules allow this and enable it. The rules have been rewritten to benefit a narrow segment of people, and that segment is getting unbelievably wealthy. The increase in income between 2003 and 2005 for the top 1 percent of Americans - just the increase - is equal to the income of the bottom 57 percent of Americans.

You also write about the incredible, but in some ways illusory, wealth created by hedge funds.

I read this morning about one hedge-fund manager who, in the first nine months of this year, made $2.7 billion. That's $100 million a day, $4 million an hour. It's ego. See how smart I am! How do they do it? They have some money from their investors and money that they borrow from the bank where you put your paycheck and your savings.

As we saw in the collapse of the Long Term Capital Holdings hedge fund, it appears that for every $1 the investors had put up, they borrowed $250. That's a prescription for disaster. We see that now in the sub-prime mortgage market where all these people bought houses with no money down, completely leveraged. A lot of the houses were overpriced because people didn't care. There's a big moral hazard here.

The genius of the Constitution was recognizing we need to limit power, that people given unlimited power do outrageous things. We have allowed that to slip away.

One of my core arguments is that we now worship people; we idolize them, because they are rich. That's not a proper way to measure people. We have this whole industry of glitzmongers. Go to eBay and you can buy a dress that was worn by Paris Hilton. This is idolatry.

You discuss a lot of hidden subsidies, but sometimes the government just takes peoples' property under eminent domain laws.

Alexander Hamilton said one of the two purposes of government is to protect your property and yet we now have this system where rich men and businesses who covet your land can take it. And the US Supreme Court has said it's an allowable public policy to take your land for private purpose.

So when George Bush and his friends wanted to build a baseball stadium to make themselves rich, they not only had the taxpayers finance the whole deal, and let them have the benefits of the taxpayers' money - a tax increase went into George Bush's pocket - but they were unwilling to pay the market rate for the land. They had the government, in the form of the Arlington Texas Sports Authority, condemn the land that they wanted and take it.

You also examine the case of a Toledo woman who had a business repairing cars and trucks, but the city wanted the land for a Jeep factory.

Not only do they end up taking her land and paying her a tiny fraction of what it's worth, the case gets all the way to the Supreme Court and they never discuss the merits. They only say she has no right to complain. Tough luck! Your land was taken by the government? You were paid pennies on the dollar? Your case will not be heard.

To add insult to injury, she's paying taxes that are being turned over, in effect, to the Chrysler Corp. And what did they take her land for? A job-creating factory? No, they took it for a lawn at the edge of the factory.

This is going on all over the country. And who are the people at the forefront of violating these market principles? The very politicians - George Bush chief among them - who say we need to have markets make decisions. Yeah, I want the market to make the decision unless I can have the government step in and take your land to make me rich.

One of the most important issues you discuss is how the health-care system became an enormous profit center and a less efficient system.

Maximizing return on investment is the right standard for taking care of capital. But we've applied that standard to taking care of people's health. The result is we spend roughly twice as much of our economy on health care as other modern industrial countries and we live shorter lives.

I rely, as my fact source in the book, on the CIA, because it's unimpeachably pro-American. CIA statistics show that our health-care system ranks below Cuba in some measures. It ranks down with Croatia and other countries we don't think of as being in the forefront of medicine. We have superb trauma care and technology but, overall, we have lousy, very expensive health care.

I show how the big health-care profiteers got their money from the government to start these businesses that made them millionaires.

What went wrong? It seems like there are new health-care horror stories every week.

The fundamental problem is, all our politicians talk about health insurance. No one talks about police insurance, lifeguard insurance. If you're in the waves drowning, the lifeguard doesn't look through a manual and say, "Oh, that person paid to be rescued, but not on Tuesdays when it's overcast. Sorry, you drown."

We literally do that in health care. I have personal friends who died because of this system. The notion that our concern here should be for the welfare of insurance companies is absurd. Adam Smith tells us that public policy should be designed to improve the lot of most people and we're not doing that.

The policies that we're pursuing to give a free lunch to the rich are making us uncompetitive, poorer, less healthy, and cause us to die earlier.

Does this apply to our local health-care system?

No. I show examples of companies far smaller than Blue Cross/Blue Shield that made people billionaires. They do it by converting from a nonprofit, community service to a for-profit company.

I went to Howard Berman [former Blue Cross/Blue Shield C.E.O.] and said, "Howard, you could have done this." He said, "Yes, I could have." He would have made at least $100 million right up front. I said, "Why didn't you do it?" He said, "Because it would be wrong." This is a man of moral fiber. [Berman retired as president and C.E.O. of Lifetime Healthcare, the parent company of Excellus in 2003. He then became vice president of Lifetime for three years. In 2002, while still president and C.E.O., he earned $1.45 million. As vice president, Berman earned $1.6 million in 2003, $1.69 million in 2004, and $1.75 million in 2005.]

Why is it that our elected representatives do not seem particularly interested in doing anything about the corruption you describe?

Washington is out of touch with real people. When you talk to members of Congress, it's astonishing what they think the issues are. It's like they're from another planet. It's all the result of the campaign donor-finance system. We've created a political donor class, and that's who these guys listen to.

When you fall in love you spend all your time thinking about the other. Members of Congress spend all their time thinking about what the people who are giving them campaign contributions want. If you don't contribute, you can't get access. So what these folks think about is not the concerns of ordinary Americans, it's the concerns of the people who provide them with campaign contributions, jet rides, and golf trips.

What are the consequences of this kind of corruption?

In Oregon, there are counties that have stopped sheriff patrols. In Kentucky, they've been letting criminals out of jail. Schools have stopped art and music programs because there is no money.

How can it be that half the wealth in this country has been created since Ronald Reagan was elected? We, in real terms, are fabulously richer. For every dollar that the economy put out in 1980, it now puts out $1.67. But are you 67 percent better off than you were in 1980? Incomes, on average, are lower than they were in 1980.

All that money is being diverted and given to these politically-connected folks at the top whose wealth is just stunning. This is corporate socialism. Our great national myth is that we redistribute from the hard-working, entrepreneurial, successful class to the indolent. In fact, we take from the hard-working, ordinary Americans and give to the very, very rich so that they can be richer still.

In "Free Lunch" you propose a novel solution.

Since it's clear that the efforts to deal with campaign finance haven't worked, I think we should try something different. The answer is right in the Constitution. Every member of Congress has a franking privilege; they can send out all the mail they want. My thought is we should do the same thing with politician financing.

Once you're elected to the Senate or the House, we will pay all of your expenses. You will give us a receipt for everything. We'll pay to have someone follow you around to keep track. You'll file reports, and we'll put them on the Internet.

Senator, if as a member of the Public Health Committee, you really need to inspect that sink behind that bar in Tahiti and you need to charter a jet to get there, we'll pay for it. We'll also disclose every aspect of what you did and the voters can decide whether to throw you out.

We'll cover your expenses, but if you go down to that resort in Tahiti and you take a free shot of whiskey, you go to prison. Zero tolerance for politicians is the policy I'm suggesting.

Why is such a seemingly harsh solution necessary?

When [former Congressman] Dan Rostenkowski went to prison, it was over $30,000 or $40,000. Politicians will sell out the taxpayer to the tune of billions of dollars for enough campaign contributions to make sure they get elected the next go-round against a strong opponent.

A free lunch always costs vastly more than one you pay for. Will it make it more expensive to have Congress? Absolutely. Will we save money? We will save a fortune.

A lot of this seems personal to you.

I wrote the first deconstruction of a gang drive-by shooting in America 25 years ago for the Los Angeles Times. We've always had gangs, but not like we do now.

When I was a poor kid growing up in Orange County, California, 6, 7 years old, I could get on my little bicycle and there were half-a-dozen places I could go without spending any money. There was the Y, the Boys Club, the library, the park, and there were college students paid to run programs. We have radically cut all of those back.

Teenage boys get into trouble. You need to keep them busy. "Idle hands are the devil's workshop" is not a new idea. We starve young peoples' programs for money; we get gangs. In response to gangs, we spend more money on police.

And that leads to another issue you write about: the subsidy for the burglar-alarm industry.

Even though crime has dropped dramatically, the number of people with burglar alarms has exploded. The burglar alarm industry gets all of its profits from a hidden subsidy. A quarter of that subsidy, $500 million a year, goes to one company - Tyco, which was at the center of the Wall Street scandals.

The subsidy is, you pay $1 a day to have the service. If the alarm goes off and they call the police, it costs $50. Only one house in five has a burglar alarm, so 80 percent of people pay for a service that only [the other] 20 percent get. And burglar alarms don't catch any crooks. Ninety-nine percent of alarms are false.

The result of this is, in part, that lots of murderers and rapists and bandits get away because the police resources that could be devoted to these crimes are diverted to this. I show in the book that, at one time, for every $1 the LA police department spent investigating murders they spent $1.25 investigating false burglar alarms.

What would you like the effect of this book to be?

If enough people read this book, they will have a new lens through which to interpret all sorts of events going on around them. I think it will help them make better decisions about the kind of government they want.

[Johnston will appear on Bill Moyers' Journal, WXXI/Channel 21, cable 11, at 10 p.m. on Friday, January 11]