Fall of the Rovean empire?

Drunk on power, the Republican oligarchs overreached. Now their entire project could be doomed.

Published October 6, 2005 9:33AM (EDT)

For 30 years, beginning with the Nixon presidency, advanced under Reagan, stalled with the elder Bush, a new political economy struggled to be born. The idea was pure and simple: centralization of power in the hands of the Republican Party would ensure that it never lost it again. Under George W. Bush, this new system reached its apotheosis. It is a radically novel social, political and economic formation that deserves study alongside capitalism and socialism. Neither Adam Smith nor Vladimir Lenin captures its essence, though it has far more elements of Leninist democratic-centralism than Smithian free markets. Some have referred to this model as crony capitalism; others compare the waste, extravagance and greed to the Gilded Age. Call it 21st century Republicanism.

At its heart the system is plagued by corruption, an often unpleasant peripheral expense that greases its wheels. But now multiple scandals engulfing Republicans -- from suspended House Majority Leader Tom DeLay to super-lobbyist Jack Abramoff to White House political overlord Karl Rove -- threaten to upend the system. Because it is organized by politics it can be undone by politics. Politics has been the greatest strength of Republicanism, but it has become its greatest vulnerability.

The party runs the state. Politics drives economics. Important party officials are also economic operators. They thrive off their connections and rise in the party apparatus as a result of their self-enrichment. The past three chairmen of the Republican National Committee have all been Washington lobbyists.

An oligarchy atop the party allocates favors. Behind the ideological slogans about the "free market" and "liberty," the oligarchy creates oligopolies. Businesses must pay to play. They must kick back contributions to the party, hire its key people and support its program. Only if they give do they receive tax breaks, loosening of regulations and helpful treatment from government professionals.

Those professionals in the agencies and departments who insist on adhering to standards other than those imposed by the party are fired, demoted and blackballed. The oligarchy wars against these professionals to bend government purely into an instrument of oligopolies.

Corporations pay fixed costs in the form of legal graft to the party in order to suppress the market, drastically limiting competitive pressure. Then they collude to control prices, create cartels and reduce planning primarily to the political game. The larger consequences are of no concern whatsoever to the corporate players so long as they maintain access to the political players.

The sums every industry, from financial services to computers, spends on lobbying are staggering. Broadcast media firms spent $35.88 million in 2004 alone on lobbyists in Washington, according to the Center for Public Integrity. Telephone companies spent $71.97 million; cable and satellite TV corporations, $20.22 million. The drug industry during the same period shelled out $123 million to pay 1,291 lobbyists, 52 percent of them former government officials. The results have been direct: The Food and Drug Administration has been reduced to a hollow shell, and Medicare can't negotiate lower drug costs with pharmaceutical companies. In the 2004 election cycle, the drug industry paid out $87 million in campaign contributions for federal officials, 69 percent of them flowing to Republicans.

Whereas almost all lobbying before the Bush era was confined to Capitol Hill, now one in five lobbyists approaches the White House directly. Consider the success story of one Kirk Blalock, a former aide to Karl Rove as deputy director of the Office of Public Liaison, where he coordinated political links to the business community. Now, one year out of the White House, he's a senior partner in the lobbying firm of Fierce, Isakowitz and Blalock, boasting 33 major clients, 22 for whom he lobbies his former colleagues in the White House. Indeed, the Bush White House boasts 12 former lobbyists in responsible positions, from chief of staff Andrew Card (American Automobile Association Manufacturers) on down.

"The number of registered lobbyists in Washington has more than doubled since 2000 to more than 34,750," reports the Washington Post, "while the amount that lobbyists charge their new clients has increased by as much as 100 percent."

Macro- and microeconomic policies are subordinate to the circular alliance of oligarchy and oligopoly. Government expenditures have raced to the fastest pace of increase under Bush since President Lyndon Johnson's Great Society. But the spending is not intended to prime the economic pump. Nor is it invested mainly in public goods such as infrastructure or schools; nor is it used to expand the standard of living of the middle and working classes, whose incomes and real wages are rapidly shrinking. Instead it is poured into military contracts and tax cuts heavily weighted to the very wealthiest, who do not in turn invest in productive capital. As a result, the largest budget surplus in U.S. history has been transformed into the largest deficit, whose bonds are principally held by Asian banks, a shift that presages a strategic tilt of global power and long-term threat to national security. The illusion that as the post-Cold War unipolar power the U.S. faces no countervailing forces is undermined by the administration's constantly draining deficits. Thus 21st century Republicanism reverses the policies that brought about the American century.

Under Ronald Reagan, the unanticipated consequences of supply-side economics -- instead of tax cuts fostering increased government revenues, they blew a black hole in the budget -- has under Bush been a conscious policy following the Reagan lesson. The reason is to apply fiscal pressure on government, making its regulations more pliable for manipulation in the interest of oligopoly and therefore the Republican political class. Just as macroeconomic policy is the plaything of politics, so is microeconomic policy. Environmental degradation, lowered public health and urban neglect are indifferent byproducts.

The Republican system is fundamentally unstable. Bush has no economic policy other than Republicanism. As the economic currents run toward an indefinable reckoning, the ship of state drifts downstream.

In stable systems, individuals are replaceable parts. Republicanism as constructed under Bush is a juggernaut that cannot afford to scrape an iceberg.

The Republican scandals converge on operators who are the center of the oligarchy. Their own relationships are complicated and tangled. But the outcome of the scandals affecting these major actors will inevitably unravel the Republican project.

On Monday, Tom DeLay was indicted by a Texas grand jury for money laundering of corporate contributions through his political action committee, a crime that carries a life sentence. DeLay had resigned on Sept. 28 as House majority leader after being handed his first indictment for felony conspiracy. Even as DeLay proclaimed himself a victim of injustice -- "I am indicted just for the reason to make me step aside as majority leader" -- he proclaimed that he would rule "with or without the title."

As DeLay shouts defiance, federal prosecutors close in on one of DeLay's "closest and dearest friends," Jack Abramoff, whose largess to DeLay over the years, including lavish trips to Korea and Britain, are part of the investigation. Abramoff's bilking of millions from Indian tribes has brought other Republican figures, including lobbyist Grover Norquist, a key DeLay advisor, and Ralph Reed, a central character in the religious right, under legal scrutiny.

At the same time, special prosecutor Patrick Fitzgerald, investigating the exposure by senior administration officials of the identity of CIA operative Valerie Plame, has completed his inquiry by receiving the testimony of New York Times reporter Judith Miller, and must issue any indictments before his grand jury expires on Oct. 28. Within the White House, Karl Rove, feverishly mustering wavering conservative support for Bush's nomination of his personal lawyer and White House legal counsel, Harriet Miers, to the Supreme Court, awaits.

Bush never much liked DeLay. DeLay criticized Bush's father, for which there can be no forgiveness, and he criticized him, too. When DeLay wanted to slash the earned-income tax credit, Gov. Bush, beginning his presidential campaign in 1999 and seeking to establish his bona fides as a "compassionate conservative," said DeLay wanted to balance the budget "on the backs of the poor."

DeLay, the former exterminator from Sugar Land, Texas, a suburb of Houston, who had called the Environmental Protection Agency "the Gestapo," had risen from the Texas Legislature to the U.S. Congress. Once known for his boisterous reveling as "Hot Tub" Tom, he became born again, and his right-wing politics always had a forbidding punitive undercurrent. When he became Republican whip, he hung a whip on his office wall. He relished his nickname, "the Hammer." Asked to put out his cigar in a restaurant because it violated the nonsmoking rule, he bellowed, "I am the federal government."

DeLay never really respected Newt Gingrich, who had led the Republicans out of their 40-year wilderness to control of Congress and become speaker of the House. Despite Gingrich's penchant for vituperative personal attacks on Democrats, DeLay thought he was soft. There was something of the lost boy about Gingrich, who collected dinosaur bones, loved to visit zoos and speculated about outer space. DeLay also felt that Gingrich had fallen under the seductive spell of President Clinton and conceded too much to him. DeLay plotted coups against Gingrich and finally succeeded after the Republicans lost seats in the 1998 midterm elections. DeLay worried that Gingrich would weaken in the struggle to impeach and remove Clinton, and because of Gingrich's mistress on the House payroll, which made him doubly vulnerable. DeLay coerced House Republicans to impeach Clinton, threatening moderates that he would fund primary opponents and deny them advantageous committee assignments. Without DeLay, there would have been no impeachment. After the Senate acquitted Clinton, DeLay preached at his local church that Clinton had been impeached because he had "the wrong worldview."

The center of DeLay's operation was the K Street Project, the pay-for-play system by which businesses and lobbyists kicked back to the Republican Party in exchange for legislation. He kept a little black book noting which lobbyists were good and which were bad, who deserved favors and who punishment. One reporter, believing that the story about the black book was apocryphal, asked DeLay, who proudly showed it to him.

Of all the lobbyists on the good list, Jack Abramoff ranked at the top. Abramoff's provenance as a scion of Beverly Hills, Calif., could not have been more fortuitous for a career in the Republican Party. His father was president of the Diners Club franchises, owned by Alfred Bloomingdale, a member of Ronald Reagan's kitchen cabinet. Abramoff parlayed his connections and money into a campaign that gained him the chairmanship of the College Republicans in 1981, Year 1 of the Reagan era.

Abramoff's campaign manager was a radical right-winger named Grover Norquist, and the two of them recruited a zealous younger activist to carry out their orders, Ralph Reed. Reed required College Republicans to recite a speech from the movie "Patton," replacing the word "Nazis" with "Democrats": "The Democrats are the enemy. Wade into them. Spill their blood! Shoot them in the belly!"

Norquist was the first to point out the political potential of evangelical churches to Reed, imagining that they could be turned into Republican clubhouses. During the week of George H.W. Bush's inauguration, Reed encountered Pat Robertson, the right-wing televangelist, who recruited him on the spot to run the Christian Coalition. "I want to be invisible," Reed explained. "I do guerrilla warfare. I paint my face and travel at night. You don't know it's over until you're in a body bag. You don't know until election night."

Norquist himself underwent a metamorphosis from gadfly to player with the Republican takeover of Congress. His Wednesday meeting became a place where conservative groups from the National Rifle Association to the Christian Coalition plotted strategy. Norquist opened it up to lobbyists, who paid exorbitant fees to be part of the action. They, too, were then coordinated. Norquist was especially close to Gingrich, a relationship he used to build up his own lobbying business behind front groups such as Americans for Tax Reform. Once Gingrich was toppled, Norquist used Abramoff to link him tightly to DeLay.

Karl Rove, whose political career began as chairman of the College Republicans in 1971, was well acquainted with the Abramoff circle for years by the time he began planning George W. Bush's presidential campaign. He was not enamored of anti-tax crusader Norquist, who had made a grandstand gesture of assailing Gov. Bush in the mid-1990s for suggesting raising taxes to support schools. But, for the campaign, Rove made peace with him.

In 1997, Reed left the Christian Coalition to found his own lobbying firm, Century Strategies. He sent Abramoff an e-mail: "Hey, now that I'm done with the electoral politics, I need to start humping in corporate accounts! I'm counting on you to help me with some contacts." Rove soon recruited Reed for the upcoming Bush campaign, setting him up as a consultant for Enron.

When Sen. John McCain defeated Bush in the Republican primary in New Hampshire, Reed came into play. South Carolina was Armageddon. Suddenly, McCain was beset by a series of vicious accusations, including racial slurs about an adopted daughter and dirty tricks.

Marshall Wittman, who had worked as director of the Christian Coalition under Reed, had joined McCain's staff, though Reed had attempted to bring him along to the Bush campaign. "Ralph was very, very, very close to Rove," Wittman told me. "Ralph asked me in 1997 if I wanted to work on the Bush campaign. Rove was operating everything. Rove parked Ralph at Enron. Ralph told me before the New Hampshire primary that he would do what it took to eliminate McCain as an opponent if he posed a challenge to Bush. He would do whatever it took, that means below the radar, paint his face. Ralph has a dual personality, Dr. Jekyll and Mr. Hyde, charming in public and then ruthless and vicious."

Abramoff grew ever closer to DeLay, helping DeLay's former aides who had become lobbyists, who also assisted his business. Abramoff took millions from various Indian tribes and then lobbied against them so they would pay him more. Norquist complained to Abramoff about a "$75K hole in my budget from last year," and his pal put him in the deal. Reed was hired to use the religious right to campaign against the casino that the Tigua tribe had contracted Abramoff to help them open. Meanwhile, Abramoff forced the Choctaw tribe, another client, to kick back $1.5 million to the Alabama Christian Coalition. Norquist acted as the go-between for the money, funneling it ultimately to Reed's efforts.

Eventually, the Senate Indian Affairs Committee exposed the various scams; it does not seem ironic that the committee's chairman is McCain. Soon, the Justice Department was investigating. Norquist and Reed have both appeared in front of the grand jury. Reed is running for lieutenant governor of Georgia. "Ralph has notions he'll be president of the United States," said Wittman.

Abramoff is under investigation by a grand jury in Guam for illegal contracts and money laundering and another grand jury in Fort Lauderdale, Fla. In that case, a former business partner in the SunCruz casino boat company with whom Abramoff had had a dispute was allegedly murdered by three hit men, who have been indicted for the crime. Abramoff's business partner Adam Kidan made payments from company funds of $30,000 to one of the killers' daughters, who performed no services for the company, and $115,000 to a firm the hit man owned. Reportedly, Abramoff is not under suspicion for the murder, but he was indicted in August for bank fraud in the case.

Last month, another player in the ring was arrested -- David Safavian, a Bush White House official, director of the Office of Federal Procurement Policy, in charge of overseeing $300 billion in federal contracts. Safavian had been Abramoff's lobbying partner in the mid-1990s before he became Norquist's lobbying partner. Before he was elevated to his sensitive post in the White House, he had been chief of staff at the General Services Administration, where he tried to help Abramoff grab two federal properties in Washington. On Wednesday, Safavian was indicted on five counts of perjury and obstruction of justice. (Safavian's wife, Jennifer, is chief counsel on the House Government Operations Committee, overseeing the investigation into the Bush administration's response to Hurricane Katrina.)

Meanwhile, the grand jury in the Valerie Plame case prepares to conclude its work. In August, it called Rove's assistant Susan Ralston to testify. As it happens, she had formerly been Abramoff's assistant. And it was revealed that before she allowed people to meet with Rove, she cleared them with Norquist. Rove, for his part, often used Abramoff and Norquist as his conduits to DeLay.

Now all the investigations are coming to a climax. Will it mean the decline and fall of the Rovean empire? "Rove is the ultimate center of everything," said Wittman. "All roads lead to Rove. If it's Rove, everything collapses. People say there is no indispensable man. That's not true."

But more than the fate of one man or even a ring around him is at stake. For decades, conservatives created a movement to capture the Republican Party and remake it in their image. Under Bush, Republicanism as a system dominates.

With astonishing arrogance and bravado, the Republican oligarchy wired politics and business so that they would always win. But in believing that they actually possessed absolute power they have overreached. Now their project teeters on the brink.

By Sidney Blumenthal

Sidney Blumenthal, a former assistant and senior advisor to President Clinton, writes a column for Salon and the Guardian of London. His new book is titled "How Bush Rules: Chronicles of a Radical Regime." He is a senior fellow at the New York University Center on Law and Security.

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George W. Bush John Mccain R-ariz. Karl Rove Newt Gingrich Republican Party Ronald Reagan