Dick Gephardt's Spectacular Sellout
In March, months after the government gave an unprecedented $85 billion to AIG, the insurance giant released a list of counterparties, exposing some of the world's top financial institutions as the real recipients of the bailout. First among its peers, Goldman Sachs got a whopping $12.9 billion, despite having claimed in September to be insulated from AIG's troubles. Based on these revelations, Maryland Democratic Congressman Elijah Cummings, who had dogged the financial industry since the crisis began, told his staff to prepare a letter calling for an investigation.
Two Congressional staffers familiar with the matter told The Nation that a draft was circulated to House members on March 23. Within hours, Cummings's office had received a phone call from a lobbying firm hired by Goldman Sachs, making an "insistent but polite" request for a meeting. Cummings, intending to send the letter regardless, granted the audience, and so it was that top Goldman executives like president Gary Cohn and CFO David Viniar arrived the next day. They brought someone else too, a big-name Democratic politician with serious populist credibility: Dick Gephardt.
While Gephardt spent most of his twenty-eight years in national Democratic politics quietly promoting and voting with establishment interests, he is best known for his friendship with labor and advocacy for universal healthcare during two presidential runs. In 2003 he harshly condemned corporate crime, which he said "ruined people's lives for selfishness and greed," and launched his candidacy claiming, "Every proposal I'm making, every idea I'm advancing has a single, central purpose: to revive a failing economy and give working Americans the help and security they need." So why, six years later, was he on Capitol Hill representing one of the biggest players in the largest economic crisis since the Great Depression? And further, why was he recently working for Visa to kill credit card reform, helping Peabody Energy stymie climate change legislation and consulting for UnitedHealth Group alongside Tom Daschle to block meaningful healthcare reform?
As autumn sets in, the progressive agenda on which Barack Obama rode to victory last November has stalled, even with Democrats controlling every branch of government. Key aspects of healthcare reform, like a public option, appear dead; climate change legislation, having narrowly passed the House in June, awaits an uncertain fate in the Senate; the Employee Free Choice Act and financial industry reforms have gone off the grid. Behind all these setbacks is a pattern: with little outright opposition, corporate interests have insinuated themselves into the legislative process to co-opt attempts at reform. As a result, the big-ticket items are rotting away, key provisions have been removed and bills are being weakened beyond recognition behind closed doors.
Certainly there are still those in Congress willing to stand up to pressure from lobbyists--like Cummings, who, after meeting with Gephardt and the Goldman Sachs executives, sent his letter anyway, launching an investigation by TARP inspector general Neil Barofsky. But the broader momentum is with the corporate interests, thanks to players like Gephardt who have escorted them to the bargaining table. In a town where everyone seemingly has a price, Gephardt has distinguished himself, selling his reputation as a pro-labor, pro-universal healthcare, pro-environment expert and advocate to his new corporate masters, giving their efforts to kill and maim reforms a familiar, friendly face in the Democratic establishment. As a result, Gephardt has become a highly sought-after and very effective lobbyist. He has also betrayed nearly every principle he once claimed to hold.
When Gephardt ran for president in 1988, his ads claimed he had "defeated the strongest lobbying effort in history," and even in his waning Congressional years, he hardly seemed a defender of lobbying. "I'm running for president because I've had enough of the oil barons, the status-quo apologists, the special-interest lobbyists running amok," he proclaimed in February 2003. By January, his run for the presidency was over; a year later, he gathered with friends in St. Louis for a retirement party. Many politicians and celebrities paid homage: via video, Bill Clinton and Jimmy Carter lavished praise on him, and sportscaster Bob Costas called him "the best president America never had." When a reporter asked Gephardt about his plans for the future, he said he was going to spend some time with his family and consider a couple of employment opportunities.
On January 1, 2005--before Gephardt's term had even expired--the Congressman's son-in-law signed papers to form a consultancy firm based in Delaware called Gephardt and Associates (now the Gephardt Group). But for most of 2005 it lay dormant as Gephardt joined corporate boards and advised a few big-name companies. Banned from lobbying Congress for a year, he soon discovered there were places outside Washington that needed influencing.
Like California: when Governor Arnold Schwarzenegger introduced legislation that would have opened the door to increased infrastructure privatization in January 2006, Democrats in the legislature balked. So Goldman Sachs, standing to benefit from these policies, sent Gephardt as an emissary to Sacramento, hoping to persuade the state to monetize infrastructure by levying tolls and then leasing roads to private investors for decades. "I've done some work with Goldman Sachs in their capacity as adviser to both the City of Chicago and now the State of Indiana," Gephardt told California lawmakers at a February 14, 2006, hearing, before extolling the virtues of infrastructure privatization if "negotiated properly."
Several years on, the results have been lackluster. In certain cases, poorly negotiated contracts with little oversight have allowed high tolls and, because of failure to estimate the true value of the infrastructure, have given the private sector windfall profits at the expense of local communities. Transit grids have been fragmented, causing unpredictable congestion, leading to significant litigation.