Power Game (49 page)

“What on earth are we doing?” Moynihan bellowed to his colleagues. “This system is collapsing. We’re showing we’re here representing quite narrow economic interests. That’s the notion of Madison—contending factions. It’s my steel company against your ranches. But we’re not reforming the tax law. We’re making it worse. And we’re putting in jeopardy the trust of the American people.”
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Packwood, a master of the tax code but still unproven as a strong committee leader, was embarrassed. Worried about the committee’s image, he stopped its work on April 18, fearing the loss of another $100 billion in giveaways that would have sunk the tax bill financially and left his committee standing nakedly as the captive of special interests. “Clearly we were voting egregious exceptions [to the tax law] that were not justifiable economically, substantively, or politically,” Packwood conceded to me.

The White House was getting embarrassed, too. “We were thinking we were going to have to jettison the whole idea,” Chief of Staff Donald Regan told me.
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“because the bill was getting to be just nothing but logrolling and a bill for special interests.”

Within a week, Packwood dramatically shifted course, slamming the door on $50 billion worth of tax loopholes for wealthy individuals and imposing a stiff minimum tax on business and individuals. This provided
the money for a dramatic cut in the top personal tax rate from fifty percent to twenty-seven percent. When the bill finally passed by a 26–0 vote in May, committee members applauded Packwood, but an overflow of lobbyists, listening on an audio system in a basement room, broke out in hisses.

The press and other senators gave Packwood credit for a 180-degree turn against the special interests. Unquestionably, Packwood rescued not only the possibility of a tax bill but the notion of reforming the individual side of the tax code. He was creative and daring beyond anyone’s expectations, snatching a brilliant personal victory from the jaws of disaster. But he did not turn sharply against special interests.

With the major exception of the real estate industry, the package developed by Packwood and his core group of senators—Bill Bradley, John Chaffee, Jack Danforth, Pat Moynihan, Malcolm Wallop, and George Mitchell—did not revoke the industry privileges adopted earlier. The real estate industry, which had pumped nearly $1.3 million in PAC contributions to Finance Committee and Ways and Means Committee members, felt furious and betrayed. “It’s kind of like the mating habits of the black widow spider,” Wayne Thevnot, president of the National Realty Committee, protested to reporters. “The female has her fun, then she kills the male and devours him.”

But other industries came off pretty well. The special nuggets treasured by the oil and timber industries, the insurance industry, small businesses, the smokestack industries, and others remained in the bill. Packwood also kept favorable depreciation rules, important to many corporations. Later, House Democrats forced some corporate concessions: depreciation write-offs were stretched out, and defense contractors lost the special accounting rules that Danforth had won for them (causing Danforth to turn against the bill). What revived the tax bill was the general impression that Packwood had held the special interests at bay—though actually he was not as hard on them as on the loopholes of the wealthy. Unquestionably, the tax bill was an improvement on the existing system, but it still had plenty of nuggets for special interests—testimony to effective lobbying.

Nouveau Riche Lobbying

The lionizing of Packwood by his Senate colleagues in 1986 signaled not only admiration at his legislative craftiness, but relief among other politicians that Packwood had kept them all from going over the brink
of greed. As Moynihan suggested, political Washington was troubled about its appearance of venality.

Jitters about the potential for scandal explain much of the derision that rival lobbyists and politicians heaped on Michael K. Deaver, who made the cover of
Time
magazine on March 3, 1986, as Washington’s newest high-flying influence peddler. Deaver was pictured, suggestively, phoning some high-level contact (the president?) from the back seat of his chauffer-driven Jaguar XJ6 limousine. In less than a year after resigning as President Reagan’s White House deputy chief of staff, Deaver had lined up six-figure contracts representing Canada, Mexico, Singapore, Korea, Puerto Rico, CBS, TWA, Phillip Morris, and Rockwell International. Deaver later landed a $500,000 contract with Saudi Arabia. A British company was dickering to buy his firm for $18 million.

In the White House, Deaver was a public-relations wizard. He was also the closest confidant of both the president and Mrs. Reagan. I remember watching Nancy Reagan break down in uncontrollable tears at a small Rose Garden ceremony on the day that Deaver formally left the White House staff. It was as if she were losing a son.

The closeness of that relationship was widely known. Nearly a year after he left the president’s staff, Deaver still played tennis on the White House court, kept his White House security pass, and received the president’s daily schedule. Those were extraordinary privileges that made him attractive, especially to foreign clients, and also made him a mark for jealous rivals. His angling for a splashy
Time
cover photo with the boast “There’s no question I’ve got as good access as anybody” only intensified criticism. By taking a high profile, Deaver made himself a target. When his publicity turned sour, Deaver lost his White House privileges as well as contracts with Canada, Mexico, and Singapore. The British firm backed away from buying him out.

In an official investigation, Deaver faced accusations that he had violated laws against lobbying former government officials within a year of leaving office and against dealing with officials on matters in which Deaver had had substantial involvement while he was in government. In one incident, Deaver, as Reagan’s right-hand man, was accused of having taken part in a dozen government meetings about problems with Canada over acid rain, and having helped arrange the appointment of a special presidential envoy to Canada and then stepping into a $105,000 lobbying contract with Canada. A second accusation was that within that first forbidden year, Deaver had lobbied National Security Adviser Robert McFarlane about Puerto Rico’s interests in
American tax laws. A third contention was that he had contacted another national security official on behalf of the Korean Broadcasting Corporation, and helped set up a meeting with President Reagan for a South Korean trade envoy. A fourth was that he had lobbied Budget Director James Miller on behalf of Rockwell International, builder of the B-1 bomber, again within the forbidden year and that he improperly used high-level government contacts in behalf of Trans World Airlines. The affair led to formal charges that Denver had lied to a grand jury and a congessional committee investigating his activities and his conviction in mid-December 1987 on three charges of perjury involving the Korean, Puerto Rican, and TWA incidents.

Deaver’s initial response was that he knew the law and had not violated it. His argument was that he had been on the White House staff, and that McFarlane, Miller, and NSC staffers—while part of the Executive Office of the President—were technically with other agencies, not part of the White House proper. Deaver lashed out at innuendos that he was trading on his long relationship with the Reagans. “I do not believe that my friendship with them is either a commodity to be exploited by me or a legitimate basis for my being hounded in the press or anywhere else,” he declared. “In my view, the suggestion that after twenty years of selfless service I would suddenly begin to use that relationship for personal gain is not only mean-spirited but is also an implicit attack on the integrity of the president.” But later Deaver told a grand jury that he did not remember several of the specific contacts of which he was accused; that became the basis of the perjury charges against him.

The thrust of Deaver’s political defense in public was that he was not doing anything different from what a lot of other people were doing, except with higher visibility and a bigger payoff. In large measure, he was right. What
The Washington Post
headlined as the “Deaver syndrome” became inside-the-beltway shorthand for a wider phenomenon of high officials rapidly cashing in on high government posts. In the Reagan years, the revolving door between government service and private profit turned ever more richly. David Stockman sold a book for $2 million; Donald Regan and Jeane Kirkpatrick for about half that figure; David Fischer, Reagan’s appointments secretary, left the White House and picked up a $20,000-a-month retainer merely for helping wealthy contributors to the
contra
cause get in to see the president. Plenty of officials left the administration or Congress, where they were making between sixty and seventy thousand dollars a year,
and became consultants or lobbyists making a quarter of a million, half a million or even a million dollars a year.

Foreign governments and businesses, angling for an inside track, became the biggest clients of nouveau riche lobbying. The Justice Department reported 7,650 foreign agent registrations in 1985, including plenty of former government officials. In one year, Justice disclosed, Japanese firms and agencies spent $23.5 million on close to a hundred American lobbyists. In recent years, they have included former Reagan National Security Adviser Richard Allen; former Carter Transportation Secretary—now Senator—Brock Adams; former Director of Central Intelligence William Colby; former U.S. Trade Representative William Eberle; Robert Gray, former inaugural cochairman for Reagan in 1981, and retired Admiral Daniel Murphy, chief of staff to Vice President Bush. Plenty of other nations paid big money. The going fee structure broke through $300,000 a year in the late 1970s and just kept climbing.
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The gold-plated lobbying, high-priced foreign contracts, and big PAC war chests all underscore the blatant influence of money in the new power game. At neither end of Pennsylvania Avenue was a strong code of ethics set by the city’s two prime political leaders, President Reagan or Speaker O’Neill. Each tolerated laxity. Both were old-fashioned politicians whose style was rewarding allies and turning a blind eye to their darker sides. Reagan’s easy tolerance was legendary. While presidential counselor Ed Meese was not formally prosecuted, many in Congress felt Meese lacked a sense of propriety in accepting loans from people whom he rewarded with government jobs. The close Senate Judiciary Committee vote on his nomination as attorney general in 1985 was a sign of disapproval. Meese was back in trouble again in 1987 for failure to make the full financial disclosures required by law. Lyn Nofziger, another Reagan intimate and former White House official, was indicted on July 23, 1987 on six charges of illegally lobbying former White House colleagues on behalf of Wedtech Corporation and Fairchild Industries, two military contractors. Echoes of Deaver. Nofziger, who wound up with Wedtech stock worth $750,000, was charged with violating the 1978 Ethics in Government Act, forbidding a former government official from lobbying his former agency within one year of leaving government.

Without a strongly voiced public philosophy from the top, the ethics of public service suffered from a general climate of laxity. Reagan’s lusty advocacy of free-enterprise individualism and go-for-the-gold sloganeering was read by many as a barely disguised doctrine of greed for
politicians as well as ordinary people. To be sure, some politicians put a premium on virtue and self-restraint; many others had spasms of conscience. I have heard senators, congressmen, and lobbyists privately echo the sentiments of Ken Schlossberg, a former congressional staffer turned lobbyist, worried that excess was corrupting the game.

“I don’t mean to suggest there is something fundamentally foul about the familiar relationship between politics, campaign fund-raising, and lobbying,” he said, admitting his own part in the money game. “Like anything else, within acceptable limits the relationship can be ethical and legitimate. Unfortunately, in today’s Washington, those limits are long gone.”
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Enough senators were similarly troubled for forty-seven to cosponsor a bill to reform the campaign financing system in 1987. The bill called for limits on PAC contributions to each candidate and offered modest government subsidies to senators and their challengers, as inducement to accept voluntary ceilings on campaign spending. Its sponsor, Democrat Dave Boren of Oklahoma, said that it was needed “to protect the integrity of our election process.” By June, a fifty-three-vote majority was lined up to support the bill, but a Republican filibuster stalled action for weeks, and the Democrats had to set the reform aside.

Certainly, there have been other periods of American history when graft and corruption were more rampant than today. A mental flashback to the Nixon campaign and its sordid record of under-the-table cash payoffs and millions of dollars in illegal slush funds is a reminder that fifteen years ago things were much worse. But as Barry Goldwater asserted, the sheer volume of PAC money has made the appearance of venality seem pervasive. Without some reforms, many politicians and lobbyists are fearful that some scandal of blatant vote buying will bring a voter backlash and blow the lid off the PAC-man game and big-bucks lobbying. For the most astute Washington players clearly fear that deep-pockets, me-first politics has gotten out of hand.

At the most vulnerable and uncertain period in the saga of the monumental 1986 tax bill, Senator Bob Packwood of Oregon called an extraordinary press conference. What made it so unusual was that Packwood, chairman of the powerful Senate Finance Committee, a politician who clearly basks in the limelight, summoned the press but
not
to hear him speak. Packwood turned center stage over to a Senate staff aide, a man far more accustomed to working in the shadows, as so many thousands of government bureaucrats do.