The McAuliffe Problem

Many Democrats are inhibited as reformers by one other factor--Democratic national chairman Terry McAuliffe. He is their main money guy, an ebullient and fabulously successful fundraiser who's close to both Clintons, Gephardt and Daschle and other potential candidates, AFL-CIO leaders and hundreds of fat-cat contributors. McAuliffe is also thick with Gary Winnick, chairman of Global Crossing, the failed telecom company that is now in the cross-hairs of SEC and Congressional investigations. Winnick cut his pal in at the takeoff and McAuliffe reaped up to $18 million on an investment of $100,000. McAuliffe's good fortune was shared by other early investors like the AFL-CIO-affiliated Union Labor Life Insurance Company, which also made spectacular gains from Global Crossing and, according to BusinessWeek, cut in some union officials. Were other deserving Dems befriended in this way? McAuliffe categorically denies ever having suggested to anyone that they invest in the company.

His problem is, Global Crossing looks a lot like Enron: The insiders sold early; the employees, ordinary investors and pension funds got trashed big-time. Global Crossing is the fourth-largest bankruptcy in US history but lacks the sophisticated artistry of Enron's complex financial deceptions. That distinction doesn't help Democrats much. "People are reluctant to make the arguments that need to be made for the Democratic agenda," one of them said. "They don't want to hurt Terry."

McAuliffe may be more meaningful as symbol of the money culture that engulfs the Democratic Party rather than as suspect financier. In a 1999 interview with the New York Times, he freely discussed the many collateral business deals he entered into with big-time party contributors--real estate projects, credit-card franchises, even tangled transactions with wealthy Republicans. "You help me, I'll help you. That's politics," McAuliffe explained.

Yes, that is politics, but the ancient maxim of personal loyalty seems to have been relocated now--more relevant to private fortunes than public interest. Anne Bingaman, former antitrust chief in Clinton's Justice Department and wife of the New Mexico senator Jeff Bingaman, went to work for Global Crossing to lobby the Federal Communications Commission. She reportedly earned an astonishing $2.5 million in less than a year. Tom Daschle's wife, Linda, who lobbies for airlines and aircraft manufacturers, helped design the $16 billion bailout rushed through for the airlines after 9/11--the legislation in which majority leader Daschle stiffed labor's plea for aid to laid-off workers. Ruth Harkin, wife of Iowa Senator Tom Harkin, heads the Washington office of United Technologies and sits on the board of the National Association of Manufacturers. None of this suggests anything untoward or even unusual. The point is merely to illustrate that in the rarefied social milieu of high-powered Washington, most Democratic senators live a long, long way from the rank-and-file Democrats who put them in office.

The active liberal-labor organizations in Washington are naturally hesitant to make a stink about this disconnect. Embattled and outnumbered, they worry about losing Democrats for their top-priority issues, let alone challenging them on every business-banking vote. However, if these activists could jointly develop a mechanism for calling wayward Democrats to account--that is, threatening convincing reprisals at the next election--things might change. They would not necessarily defeat incumbents, but if they knocked 5 or 10 percent off a senator's or representative's vote count, it would produce a true religious experience for the apostates. If they don't, the party is likely to continue down Joe Lieberman's slippery slope.

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