Chapter 1

MOCK DEMOCRACY

In a democracy, everyone is free to join the argument, or so it is said in civic mythology. In the modern democracy that has evolved, that claim is nearly meaningless. During the last generation, a "new politics" has enveloped government that guarantees the exclusion of most Americans from the debate -- the expensive politics of facts and information.

A major industry has grown up in Washington around what might be called "democracy for hire" -- business firms and outposts of sponsored scholars devoted to concocting facts and opinions and expert analysis, then aiming them at the government. That is the principal function of all those enterprises along Washington's main boulevards like K Street -- the public-relations agencies, the direct-mail companies and opinion-polling firms. All these work in concert with the infrastructure of think tanks, tax-exempt foundations and other centers that churn out reams of policy ideas for the political debate. Most are financed by corporate interests and wealthy benefactors. The work of lobbyists and lawyers involves delivering the material to the appropriate legislators and administrators.

Only those who have accumulated lots of money are free to play in this version of democracy. Only those with a strong, immediate financial stake in the political outcomes can afford to invest this kind of money in manipulating the governing decisions. Most Americans have neither the personal ability nor the wherewithal to compete on this field.

The contours of this barrier are embedded in the very texture of everyday political debate itself. Citizens have been incapacitated, quite literally, because they do not speak the language. Modern methodologies of persuasion have created a new hierarchy of influence over government decisions -- a new way in which organized money dominates the action while the unorganized voices of citizens are inhibited from speaking. A lonely congressman, trying to represent the larger public interest, finds himself arrayed against an army of authorities -- working for the other side.

Beyond the fact of unequal resources, however, lies a more troubling proposition: that democracy is now held captive by the mystique of "rational" policymaking, narrow assumptions about what constitutes legitimate political evidence. It is a barrier of privilege because it effectively discounts authentic political expressions from citizens and elevates the biases and opinions of the elites.

This mystique, not surprisingly, is embraced and exalted by well-educated citizens of most every persuasion, the people who are equipped with professional skills and expertise, including the dedicated reformers who attempt to speak for the larger public. After all, it is the basis for their own primacy in political action. Yet the premise of rationality, as the evidence demonstrates, is deeply flawed and routinely biased in its applications.

For those who are active every day in the conventional politics of governing, this proposition may not be so easy to grasp. Indeed, it will seem quite threatening to some of them, for it challenges their own deeply held beliefs about how politics is supposed to work and puts in question the meaning of their own political labors. Ordinary citizens, those who are distant from power, will have much less difficulty seeing the truth of the argument -- that information-driven politics has become a convenient reason to ignore them.

Jack Bonner, an intense young denizen of K Street, has the squirrelly enthusiasm of a salesman who can't stop talking about his product because he truly believes in it. What Bonner's firm sells is democracy, not the abstract version found in textbooks, but the living, breathing kind that occurs when people call up a senator and tell him how to vote. Bonner & Associates packages democratic expression and sells it to corporate clients -- drug manufacturers and the cosmetic industry, insurance companies and cigarette makers and the major banks.

Jack Bonner's firm is an exotic but relatively small example of the vast information industry that now surrounds the legislative debate and government in general. You want facts to support the industry's lobbying claims? It pumps out facts. You want expert opinions from scholars? It has those in abundance from the think tanks corporate contributors underwrite. You want opinion polls? It hires polling firms to produce them. You want people -- live voters who support the industry position? Jack Bonner delivers them.

When the Senate was debating the new clean-air legislation in 1990, certain wavering senators received pleas from the grassroots on the question of controlling automobile pollution. The Big Brothers and Big Sisters of the Mahoning Valley wrote to Senator John Glenn of Ohio. Sam Nunn of Georgia heard from the Georgia Baptist Convention and its 1.2 million members. The Easter Seal Society of South Dakota lobbied Senator Thomas A. Daschle. The Delaware Paralyzed Veterans Association contacted Senator William V. Roth, Jr.

These groups and some others declared their opposition to the pending clean-air amendment that would compel the auto industry to improve the average fuel efficiency of its cars substantially. The measure would both conserve energy and reduce the carbon-dioxide pollution that is the main source of global wanning. These citizen organizations were persuaded to take a stand by Bonner & Associates, which informed them, consistent with the auto industry's political propaganda, that tougher fuel standards would make it impossible to manufacture any vehicles larger than a Ford Escort or a Honda Civic.

Vans and station wagons, small trucks and high-speed police cruisers, they were told, would cease to exist. The National Sheriffs Association was aroused by the thought of chasing criminals in a Honda Civic. The Nebraska Farm Bureau said rural America would be "devastated" if farmers tried to pull a trailer loaded with livestock or hay with a Ford Escort.

For twenty years, whenever the government has attempted to improve auto safety or environmental protection through new regulation, the auto industry has always made similar groans -- satisfying tougher standards would be impossible without dire social and economic consequences. The industry warnings have always proved to be false, but the innocent citizens recruited to speak for Detroit probably didn't know this history.

Jack Bonner was thrilled by their expressions of alarm and so was the auto industry that paid him for them. Bonner's fee, which he coyly described as somewhere between $500,000 and $1 million, was for scouring six states for potential grassroots voices, coaching them on the "facts" of the issue, paying for the phone calls and plane fares to Washington and hiring the hall for a joint press conference.

"On the clean-air bill, we bring to the table a third party -- 'white hat' groups who have no financial interest," Bonner explained. "It's not the auto industry trying to protect its financial stake. Now it's senior citizens worried about getting out of small cars with walkers. Easter Seal, Multiple Sclerosis -- a lot of these people have braces, wheelchairs, walkers. It's farm groups worrying about small trucks. It's people who need station wagons to drive kids to Little League games. These are groups with political juice and they're white hot."

In the textbook version of democracy, this activity is indistinguishable from any other form of democratic expression. In actuality, earnest citizens are being skillfully manipulated by powerful interests -- using "facts" that are debatable at best -- in a context designed to serve narrow corporate lobbying strategies, not free debate. Bonner & Associates does not start by looking for citizens whose self-interest might put them on the auto industry's side. It starts with a list of the senators whose votes the auto industry needs. Then the firm forages among those senators' constituents for willing bodies.

"We sit down with the lobbyists and ask: How much heat do you want on these guys?" Bonner explained. "Do you want ten local groups or two hundred groups? Do you want one hundred phone calls from constituents or a thousand phone calls?"

Bonner's K Street office has a "boiler room" with three hundred phone lines and a sophisticated computer system, resembling the phone banks employed in election campaigns. Articulate young people sit in little booths every day, dialing around America on a variety of public issues, searching for "white hat" citizens who can be persuaded to endorse the political objectives of Mobil Oil, Dow Chemical, Citicorp, Ohio Bell, Miller Brewing, U.S. Tobacco, the Chemical Manufacturers Association, the Pharmaceutical Manufacturers Association and dozens of other clients.

This kind of political recruiting is expensive but not difficult. Many of the citizens are no doubt flattered to be asked, since ordinary Americans are seldom invited to participate in a personal way in the larger debates, even by the national civic organizations that presumably represent them. In a twisted sense, Jack Bonner does what political parties used to do for citizens -- he educates and agitates and mobilizes.

Since members of Congress are not naive, they understand the artificiality well enough. They know that many of the 400 million pieces of mail they receive each year are contrived by interested parties of one kind or another. Heating authentic voices from the grassroots, however, provides them with a valuable defense on controversial votes, especially when a senator intends to vote with the auto-industry lobbyists and against cleaner air. Public opinion, as every senator knows, is with the air.

"Obviously," Bonner said, "you target senators inclined to go your way but who need some additional cover. They need to be able to say they've heard from people back home on this issue. Or we target people who are genuinely undecided. It's not a good use of money to target senators who are flat opposed or who are already for you."

Corporate grassroots politics, as Bonner likes to emphasize, is really borrowed from the opposition -- the citizen "public interest" organizations, especially in the environmental movement, who first perfected the technique of generating emotional public responses with factual accusations. "Politics turns on emotion," Bonner said. "That's why industry has lost in the past and that's why we win. We bring emotion to the table."

The democratic discourse is now dominated by such transactions -- information and opinion and scholarly expertise produced by and for the self-interested sponsors. Imagine Bonner's technique multiplied and elaborated in different ways across hundreds of public issues and you may begin to envision the girth of this industry. Some firms produce artfully designed opinion polls, more or less guaranteed to yield results that suggest public support for the industry's position. Some firms specialize in coalition building -- assembling dozens or hundreds of civic organizations and interest groups in behalf of lobbying goals.

This is democracy and it costs a fortune. Democracy-for-hire smothers the contemporary political debates and, while it does not always prevail, relatively few Americans have the resources to hire a voice for themselves. David Cohen of the Advocacy Institute, which trains citizens in how to lobby for their causes, recognizes a kind of class system emerging in the political process itself. "We are moving to a system," he said, "where there are two different realms of citizens -- a society in which those with the resources are going to have the ability to dominate the debate and outcomes while others are not going to be able to draw on the tools of persuasion." If democratic expression is reduced to a question of money, then those with money will always have more.

In previous times, reformers wrote devastating critiques about the "capture" of government regulatory agencies by the industries they were supposed to regulate. The Civil Aeronautics Board became the puppet of the airlines. The Bureau of Mines was owned by the coal industry. The Federal Communications Commission belonged to the broadcasters. The occasional exposés sometimes produced reforms though the basic problem endured.

Now, however, it is not an exaggeration to say that democracy itself has been "captured." The forms of expression, the premises and very language of debate, not to mention the rotating cadres of experts and managers, are now owned in large measure by relatively few interests, much the way that powerful industries came to own regulatory agencies. Democracy is held captive, not just by money, but by ideas -- the ideas that money buys.

Some citizens have discovered that the best way to avoid being overwhelmed by the "shadow government" of K Street is to proceed stealthfully in the legislative arena -- to launch sneak attacks before the information industry notices.

Year after year through the 1980s, Representative Byron Dorgan of North Dakota pursued this lonely strategy, as he tried to get Congress to curb the profligate buildup of junk bonds and corporate debt. As a former state tax commissioner, Dorgan understood that the Wall Street takeover deals were cannibalizing productive companies and leaving U.S. corporations dangerously overleveraged. Junk bonds didn't become a visible political issue until they started collapsing in the late 1980s, threatening the solvency of S&Ls, banks and insurance companies. But Dorgan could have explained it to people years before.

"I've been giving Wall Street fits," he said, "and they're furious with me and my constituents don't quite understand why I care because we're not exposed to hostile takeovers and stuff like that in North Dakota. But, starting in 1982 when I saw what was happening on Wall Street, I just got much more interested in junk bonds and mergers."

Dorgan set out to eliminate the federal tax deductions for the interest paid on junk bonds -- the implicit federal subsidy for the deals that made the explosive buildup of corporate debt possible. If these tax breaks could be removed or scaled back, Wall Street would find fewer opportunities for raiding companies and breaking them up or leaving them mired in debt.

But the congressman did not launch a noisy campaign to alert the public to the threat posed by junk bonds. Nor did he push the Ways and Means Committee on which he serves to take up the matter directly. He did not make speeches or call press conferences. Dorgan knew all those would be futile -- and would simply alert the opposition to his intentions.

Instead, Representative Dorgan practiced the kind of guerrilla politics that is sometimes possible in the parliamentary confusions of Congress. He literally tried to sneak his amendments into tax measures before the other side found out about them. These were like midnight forays against the opposing army of lobbyists and financial experts (and sometimes even occurred late at night when legislators were weary and the army was asleep). Sometimes, he even succeeded.

Byron Dorgan's personal campaign against junk bonds illustrates how much the legislative process has been distorted by the presence of the K Street industry. Indeed, though he was representing a potentially popular cause, Dorgan's approach was the reverse image of Bonner & Associates, which, though representing industrial clients, went to the "grassroots" in search of popular support. Dorgan's effort is public-spirited but secretive. Bonner's is flamboyantly "democratic" but driven by narrow special-interest objectives.

The flourishing of junk bonds posed an issue of government tax policy with profound economic implications and ought to have aroused a great political debate during the 1980s. Yet there was no debate. Dorgan understood there was nothing to be gained by provoking a democratic dialogue on the subject.

"If you have a controversial idea in this town," Dorgan explained, "the last thing you want to do is raise it up the flagpole where everybody can see it. It's not difficult now for a business to launch thousands of pieces of mail on Capitol Hill and that scares off everyone."

Dorgan chose as his point of attack the gargantuan budget reconciliation measures that move through Congress each year late in the session and are loaded down with hundreds, even thousands of legislative riders. The confusion and complexity of these measures gives an alert legislator the chance to sneak all kinds of things into law without arousing the enemy.

"In reconciliation," he explains, "you have a bill that's ninety-six pages long and with 140 different tax changes which are all little pockmarks on the tax code. If my provision is number eighty-nine on the list and it's not very clearly described, it's likely you can get it passed with about seven and a half seconds of discussion."

In 1987, Dorgan scored in this manner by attaching an amendment that created a 50 percent excise tax on the so-called "greenmail" deals in which a corporate raider is bought off by the corporation under attack. The tax would take the profit out of "greenmail" and save millions for stockholders and targeted companies. Dorgan's amendment was accepted without debate -- before the lawyers and lobbyists from Wall Street brokerages awoke to the threat.

If they had known, the lobbyists could have buried Dorgan in elaborate, authoritative argumentation ostensibly proving that his amendment would unhinge the financial system and destroy jobs. Members would have been buried in mail from protesting clients and constituents. Nor would any lobbyist need remind the politicians that both political parties depended heavily upon the generosity of the corporate raiders for campaign money. During the 1988 election cycle, 240 of the leading dealmakers in leveraged buyouts contributed $3.5 million to Republican and Democratic candidates.

Congressman Dorgan struck again in the 1989 reconciliation bill with an amendment restricting the so-called "payment-in-kind" junk bonds -- a form of discounted debt paper in which the lenders are not paid any actual interest yet the borrowing corporations can still claim a federal tax deduction for making interest payments. The massive takeover deal engineered for RJR Nabisco involved $9 billion in these so-called PIK bonds and might not have gone forward without the hidden and illogical federal tax subsidy.

Salomon Brothers, Morgan Stanley and Drexel Burnham (before it became defunct) all came after Dorgan, but since it was too late to stop the measure, they turned their attention on the Treasury Department where the new tax law would be interpreted in new regulations. "They're trying to screw me at the office of Tax Policy," Dorgan said.

That same tear, Dorgan staged another successful ambush this time on the House floor in the savings and loan bailout legislation. His amendment prohibited the troubled S&Ls from investing in junk bonds. "Had I proposed that in committee a year and a half earlier, I'd never have gotten anywhere," he said. "The committee would never have scheduled hearings, never would have reported it. It would have been swatted away like an annoying fly. On the House floor, it carried by thirty votes -- just because by now it's impossible to say you're voting for junk bonds."

In broad daylight, Dorgan's argument was a winner, but that is not where most matters get settled. The complex and necessarily drawn-out processes of legislative decision making are dominated by what Dorgan calls "the shadow government" -- the elaborate mechanisms of persuasion that surround most issues.

"All of us who work here are frustrated by the shadow government," the congressman said. "The way attorneys do business in this town is by finding an issue and then going out and recruiting a coalition for it so maybe forty businesses will feed his resources. They write op-ed pieces, they lobby Congress, they write to stockholders and generate a blizzard of computer mail."

Byron Dorgan draws a grim summary of the consequences: "Ideas are the enemy of progress here. At least to some extent, that's true."

While industry and finance generally had their way in the politics of the 1980s, on one important issue they were devastated -- the Superfund legislation enacted in 1986. Among the outrages of the Reagan years, nothing aroused public opinion more effectively than the scary stories of these man-made toxic swamps and their threat to human life and the environment. Popular anger was aggravated further by the revelations of scandalous industry fixes at the Environmental Protection Agency. With citizens fully aroused, Congress was enabled to pass a very tough measure that assigns the cleanup costs where they rightfully belong, not to the general taxpayers, but to the specific companies that created the mess. The discredited Reagan White House was in no position to resist. Popular opinion clearly won the day.

In the months after its defeat, industry did not sulk aimlessly but instead began to plan for the long-term counterattack. By mid-1987, it had created a Coalition on Superfund, a group that would sponsor authoritative analyses on how the Superfund law was working and perhaps recommend "improvements." Major environmental organizations would be invited to join the project, but the founding members were the leading culprits in hazardous-waste pollution -- General Electric, Dow, Du Pont, Union Carbide, Monsanto, AT&T and others. They were joined by major insurance companies that were also potentially liable for huge losses -- Aetna, Cigna, Crum & Forster, Hartford and others.

The Superfund Coalition illustrates a sophisticated form of political planning that might be called deep lobbying. It is another dimension of mock democracy -- a system that has all the trappings of free and open political discourse but is shaped and guided at a very deep level by the resources of the most powerful interests. The Superfund Coalition is more representative because it demonstrates the strategic skills of the corporate interests and the depth of their sophistication and patience as well as the depth of their wallets.

Other participants come and go in the political debate, especially unorganized citizens, who cannot always afford continuous involvement. They are temporarily aroused by an issue, see reforms enacted and then move on to other concerns. But the corporations do not go away from the legislative debate, even in the off-seasons. By their nature, the people and institutions with large amounts of money at stake are always at the table, fighting over the same points year after year. It is their business to be there. Their profits depend on the outcomes.

If they lose in 1986, the companies begin immediately to prepare the ground for the next fight in 1991 or 1992. The purpose of the Superfund Coalition was to target public opinion in the distant future -- five or six years hence when the Superfund legislation would be up for renewal.

The companies' shared objective, according to an organizing memo prepared by Charls E. Walker Associates, the corporate lobbying firm, was to create "an equitable system of allocating costs" for the cleanup. In simple English, they wanted to escape the onerous financial burdens that Superfund imposed. To achieve this, the coalition members understood that they would have to convince the uninformed that the law was not working. "The nature of changes will depend on the emotional climate at the time of reauthorization and public perception of problems with the existing law."

Given the public's skepticism of industry claims, this could not be accomplished by public-relations hacks. The corporations would have to finance high-quality research and concentrate on "the building of key allies in industry, Congress, the administration, academia, think tanks, the media and select environmentalists." The initial budget was set at $840,000 a year -- a lot of money for political "research" but a pittance compared to the billions the companies might save by changing the law.

To develop the Superfund Coalition, Charls Walker's firm, which specializes in tax issues, formed a joint venture with another consulting firm whose specialty is environmental issues, William D. Ruckelshaus Associates. Ruckelshaus had served twice as EPA administrator, first under Richard Nixon and again when President Reagan called him back in 1983 to restore EPA's tarnished reputation following scandals of nonenforcement. Recently returned to private life, Ruckelshaus assigned the Superfund project to F. Henry Habicht II, who himself had recently resigned as assistant attorney general in the Justice Department for environmental enforcement.

The corporate coalition sought out participation by "select environmentalists" (the planning memos called this "outreach") and chose the Conservation Foundation headed by William K. Reilly to undertake the large research project that the companies wished to fund. Other groups were invited to take part too -- the Sierra Club, the Natural Resources Defense Council, the Environmental Defense Fund, the Audubon Society -- but they didn't like the smell of what was unfolding. They denounced the coalition as a scheme to undo the new Superfund law even before it had a chance to work.

Once the industry coalition became controversial, its sponsors decided to retreat a bit from such high visibility. "I thought what we ought to do was shift management of the study to the Conservation Foundation and let them run it and throw in some EPA money," Ruckelshaus said. "If the study was funded by industry, the results would be suspect."

EPA cooperated in this strategy, despite some congressional complaints, and in 1988 EPA Administrator Lee Thomas contracted with Reilly's organization for a $2.5 million study of the Superfund law. The taxpayers were now picking up the tab for research the polluters had originally envisioned as their political counterattack. The Conservation Foundation said it would deputize a "policy dialogue panel," including the interested industries and environmentalists, to help steer the project to the right questions.

The Superfund law, it is true, wasn't working -- partly because the affected corporations were stubbornly resisting their financial liabilities and partly because EPA was itself quite slothful, cleaning up only a handful of hazardous sites each year from the backlog of thousands. Now, the two main delinquents -- EPA and the corporations -- were teaming up to ask what the problem was.

The larger point is that an informal alliance was being formed by two important players -- government and business -- to massage a subject several years before it would become a visible political debate. There was nothing illegitimate about this. After all, it was only research. But the process that defines the scope of the public problem is often where the terms of the solution are predetermined. That is the purpose of deep lobbying -- to draw boundaries around the public argument.

The political alignments first established by the Superfund Coalition proved to be quite productive for the corporate sponsors, regardless of what happened in Congress. William K. Reilly left the Conservation Foundation before the research was completed because in 1989 he became the new EPA administrator himself. He was appointed by George Bush on the strong personal recommendation of William Ruckelshaus, who by then had become CEO of Browning-Ferris Industries, one of the largest companies in the waste-disposal sector.

Henry Habicht, who had managed the industry's Superfund Coalition for the Ruckelshaus firm, also went to EPA, as the deputy administrator, Reilly's second-in-command and, by many accounts, the man who managed the agency day by day. Lee Thomas retired to private life in Atlanta where his consulting firm was awarded a research contract on Superfund questions from -- guess who -- the Superfund Coalition.

None of this influential back scratching guaranteed, of course, that General Electric, Dow Chemical and the other corporations would ultimately get their way, but it prepared the ground for political battle on their terms. As an exercise in deep lobbying, their craftsmanship was to be admired as a nifty feat of triangulation. Three EPA administrators, past and present, as well as important environmental groups were recruited to hold hands with corporate America in the high-minded task of making Superfund into a better law.

By the fall of 1991, the polluters were beginning to get the kind of headlines they had hoped for when they created the Superfund Coalition four years earlier. Various authorities were being quoted on how flawed and wasteful the Superfund law was. And some of these experts worked for the very same companies lobbying to escape their financial obligations. At the top of the front page ofThe New York Times,there was this news:

Experts Question Staggering Costs of Toxic Cleanups

A NEW VIEW OF THE PERILS

Most Health Dangers Could Be Eliminated for a Fraction of Billions Now Estimated

If anyone is an authority on how modern democracy works, it is Tommy Boggs, the son of a former Democratic majority leader, a good friend and fundraiser for many members of Congress and one of Washington's premier corporate lobbyists. In an interview with theNational Journal,Boggs explained how the system has changed:

"In the old days, if you wanted a levee in Louisiana, you voted for a price support program for potatoes in Maine. Nobody knew what was going on. Now, all of a sudden, there's this tremendous need for a public rationale for every action these guys take."

As lobbyists will tirelessly explain, their basic function in politics is to provide information, fact-filled arguments that provide what Boggs called a "public rationale" for the governing decisions. Many cynical citizens automatically reject that bland explanation as evasion, a self-serving cover for the black bags stuffed with cash. Tommy Boggs and his peers, it is true, do handle lots of money for election campaigns and they perform other ingratiating tasks for politicians unrelated to information gathering. Nevertheless, what the lobbyists say about their role is essentially correct.

Information, not dirty money, is the vital core of the contemporary governing process. This simple truth about the system is difficult for many people to accept, especially middle-class reformers, because it raises an unsettling paradox about the nature of democracy and what exactly has gone wrong with it. "Information" that leads to "rational" choices is supposed to be a virtuous commodity in the political culture. Democracy, it is presumed, can never get too much of it. After all, the lobbyists who inundate politicians with facts are only doing what ordinary citizens, including the reformers, can do themselves.

The reality is that information-driven politics, by its nature, cannot produce a satisfying democracy because it inevitably fosters its own hierarchy of influence, based on class and money. Lawyers or economists or others who are highly trained become, in a sense, supracitizens whose voices are louder because they speak the expert language of debate. Ordinary citizens who lack the resources or a strong personal financial incentive are priced out of the argument -- and that means most citizens. The playing field of democracy tips toward those few who have the money to acquire the information and a compelling economic motivation to purchase influence over political decisions.

Many

Excerpted from Who Will Tell the People?: The Betrayal of American Democracy by William Greider
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