Clinton’s Corporate Cabinet
The Business of Government
by Nadav Savio
MICHAEL DUKAKIS’S LOSS to George Bush in the 1988 presidential election left the Democratic Party leadership desperately assessing blame and searching for some way to capture the seemingly unreachable White House. By creating and working with the Democratic Leadership Council (DLC), Bill Clinton believed he could achieve that goal. As a founder of the DLC, Clinton hoped to forge a "new Democratic Party," one that could win back both voters and corporate contributors lured away by the Republicans’ feel-good imagery and conservative fiscal policy. As president, Clinton has seen his plan come to full fruition in a cabinet that looks less like America than like American Express or Philip Morris.
Now, more than ever, multinational corporations are multi-partisan; entrenched corporate influence extends well into the Democratic Party, once dismissed by conservatives as the party of organized labor. The Clinton cabinet’s corporate ties are especially troubling to environmental, consumer and labor activists who had hoped for a change from the preceding administrations’ business bent. Neither Reagan nor Bush appointed as many millionaires to cabinet positions as Clinton has.
Among the cabinet positions of most interest to business are those overseeing trade, finance and commerce. As well, the secretary of state will play a key role in negotiating U.S.—and U.S. corporations’—global interests. It is worth examining the past and present corporate ties and activities of Clinton’s appointees in these key areas in order to gauge the tack the new administration is likely to take on such important issues as the pending North American Free Trade Agreement (NAFTA), reform of the nation’s health care system, the management of taxpayer assets and worker and consumer protection.
Perhaps the cabinet agency most attuned to corporate concerns is the Treasury Department. By all accounts, Clinton’s Treasury Secretary Lloyd Bentsen has been a dependable ally of business throughout his congressional career. "The joke about Bentsen is that he never met a tax break he didn’t like," says Dean Baker, staff economist for the Washington, D.C.-based Economic Policy Institute (EPI). In 1986, for example, then-Senator Bentsen, along with Senator David Boren, D-Oklahoma, pushed to preserve tax breaks for the real estate, oil and gas industries in that year’s major tax-reform legislation. As recently as last year, Bentsen supported efforts to reinstate lucrative tax breaks for those industries by reversing key portions of the 1986 Tax Reform Act. Given Bentsen’s allegiance to corporate interests, it is hardly surprising that business Political Action Committees (PACs) contributed 89 percent of the $2.5 million in PAC contributions Bentsen received for his most recent reelection bid, according to Open Secrets, a review of congressional campaign spending. Journalist Sam Smith reports that "when he [Bentsen] became head of the Senate Finance Committee in 1987, he invited corporate lobbyists who contributed $10,000 to his re-election campaign to monthly breakfasts.
After the story became public—dubbed ‘Eggs McBentsen’—Bentsen cancelled the meetings and returned the contributions."
The business community is well aware of the influence it has gained on Capital Hill by its contributions. Following his nomination, Bentsen received glowing praise in the press from, among others, Charles J. DiBona, president of the American Petroleum Institute, top business lobbyist Charls Walker and Paul Taylor, vice president of the National Association of Industrial and Office Parks, a real estate industry organization.
Bentsen’s deputy treasury secretary, Roger Altman, is even more directly linked to the corporate world than his boss. As a treasury official in the Carter administration, Altman helped to manage the federal bailout of the Chrysler corporation, one of the more egregious examples of government-sponsored corporate welfare to date. More recently, as vice chair of the New York investment banking firm, the Blackstone Group , Altman completed four of the six largest acquisitions of U.S. firms by Japanese corporations, including Sony ’s much-publicized takeover of CBS Records and Columbia Pictures. "Altman and [assistant to President Clinton for economic policy and former Goldman Sachs chief executive Robert] Rubin are obviously both big-time Wall Street characters," Baker says, "which makes one wonder what sort of legislation they would be willing to consider."
At the Commerce Department, former Democratic National Committee (DNC) Chair Ron Brown will have extensive opportunities to return favors to corporations such as RJR Nabisco , MCA , Sony, Philip Morris and Atlantic Richfield (ARCO), each of which donated more than $100,000 to Brown’s DNC. As a lawyer, Brown represented American Express , Japan Airlines , Oman , Zaire , Gabon and a coalition of 21 Japanese electronics producers. He formerly represented deposed Haitian dictator "Baby Doc" Duvalier, lobbying the U.S. government on behalf of the human rights-abusing Haitian government.
Brown has offered to recuse himself for only one year on issues handled by his former law firm, Patton, Boggs and Blow , which represents New York Life Insurance , Mutual Life Insurance and, formerly, BCCI . Citing his "very far-reaching recusal," a Brown spokesperson told Multinational Monitor, "I don’t see there being any problem or potential problem." Critics, however, say Brown’s failure to recuse himself from dealing with current and former clients for his entire time in office belies the likelihood of undue outside influence at the Commerce Department.
Past events do not encourage those who fear Brown may be tempted to trade political power for money or favors. Reports have surfaced that Brown and Thomas Boggs, a major Clinton fundraiser and former law partner of Brown, also ran a waste treatment company which was granted a $210 million contract with New York City just before the DNC selected New York for its 1992 convention site. While Brown has denied any connection between the contract and the selection of New York, the city subsequently rescinded the contract and Brown resigned from the company’s board. Reports of similar dealings appearing in both the New York Times and Washington Post suggest Brown used inside influence to gain a contract for Capitol Pebsco Inc., which he founded, to manage $100 million in Washington, D.C. city employee pensions. Another company has charged that Capitol Pebsco was not the lowest bidder for the lucrative city contract, but Capital Pebsco District Director Lawrence Johnson insists, "That’s been dealt with. ... We’re the lowest bidder."
Laura D’Andrea Tyson, the new chair of the President’s Council of Economic Advisors, is known as a liberal for her advocacy of industrial policy, a view that the federal government should actively intervene in the economy to promote strategic industries; she is also a friend of the electronics and other high-tech industries. As a professor at the University of California at Berkeley, Tyson co-founded and co-directed the Berkeley Roundtable on the International Economy, a University of California trade and technology research organization which has been heavily financed by the Silicon Valley businesses and trade groups on whose behalf Tyson advocates government intervention. Critics worry that Tyson’s “industrial policy” will be implemented as nothing more than a big business subsidy policy. “To have an administration coming into power that is explicitly committed to moving money from taxpayers’ wallets into high-tech companies and politically favored industries is going to mean a lobbying field day for every company and trade association,” Brink Lindsay, director of regulatory studies at the CATO institute, told the San Francisco Chronicle. “There’s no lobbyist worth his salt who can’t make a plausible argument for why his client industry is the linchpin of U.S. strategic interest and deserving of support.”
Making corporations’ case to Tyson will be former colleagues and peers of Washington lawyer-lobbyist Mickey Kantor. Advocates of political reform have decried Kantor’s nomination as United States Trade Representative (USTR) as a continuation of the sort of revolving-door lobbyist influence which has helped fuel voter dissatisfaction with the federal government. As a partner in the law firm of Manatt, Phelps, Phillips & Kantor, the new USTR has represented Philip Morris, Occidental Petroleum, Martin Marietta, ARCO and a host of other companies. Kantor has been especially involved in tobacco industry lobbying and legal efforts. According to a joint 1992 report by the Public Citizen Health Research Group and the Advocacy Institute, "In 1987 he represented the Beverly Hills Restaurant Association, a group organized by the [industry funded] Tobacco Institute to oppose an ordinance making all restaurants smoke-free. After the city council unanimously passed this ordinance, the first of its kind in California, Kantor filed a suit to repeal the ordinance. ... Legal fees were paid for by the Tobacco Institute." In addition, Manatt, Phelps, Phillips & Kantor has represented GE , United Airlines and NEC .
Named Secretary of Energy, Hazel O’Leary has been lauded for her emphasis on energy conservation and commitment to moving away from the country’s dependence on oil. However, O’Leary’s past work as executive vice president for corporate affairs for Northern States Power of Minnesota, a major private utility company, suggests she was more concerned with company profits than with environmentally sound energy policy. "She was a spokesperson for a very pro-nuclear utility," says Peter Grinspoon, director of Greenpeace’s nuclear power campaign, "and we basically think that in much of her experience at Northern States Power she was on the wrong side of the trench." O’Leary has led several efforts by Northern States to pursue environmentally questionable practices over opposition by environmental and other groups. The utility, for example, is attempting to store radioactive waste from its Red Wing nuclear reactor near a Native American reservation on the Mississippi River plain. While the plan has been approved by state regulators, the conflict is still being contested in court. Native Americans have joined environmental groups in fighting the plan. Separately, O’Leary led Northern States’s attempt to burn PCB-contaminated oil at a separate facility. A permit was granted, but later blocked by state lawmakers. While environmentalists have offered only muted criticism in light of O’Leary’s conservation efforts, it remains to be seen whether her commitment is to energy efficiency or profits for nuclear power companies. According to Grinspoon, "It’s still too early to tell."
As a lawyer for the O’Melveny and Meyers firm, new Secretary of State Warren Christopher represented Exxon in lawsuits related to the oil giant’s pollution of Prince William Sound. In 1985, Christopher helped E.F. Hutton conduct damage control in the aftermath of the company’s check-floating scheme in which the financial giant took advantage of the lag between when its checks were written and when they actually cleared to earn millions of dollars in interest over several years. Along with such cases of aiding known corporate wrongdoers, Christopher served on the board of Lockheed and Southern California Edison , and his former firm represents IBM , United Airlines, Occidental Petroleum , Fuji Bank , Mitsubishi and Banker’s Trust . Christopher also lobbied for the European chemical conglomerate, CEFIC . Such corporate—in particular oil industry—ties suggest the potential for business interests to help shape key U.S. foreign policy decisions during Christopher’s tour of duty.
"The corporate crew"
Corporate influence does not automatically dictate policy; the Clinton administration’s cabinet members may spurn the corporate pandering feared by their critics. In addition, not all of the Clinton appointees have strong corporate ties and some appointees, such as Secretary of the Interior Bruce Babbit, have earned praise from citizens’ organizations. Big business’s former representatives and friends do, however, occupy key positions in the new administration, and they are likely to provide access and influence to their old colleagues. Says EPI’s Baker, "They’re pretty tied in with the corporate crew. ... It’s certainly caused worry in terms of how fair their programs will ultimately be."