By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
VIRTUALLY THE FIRST White House action of Bill Clinton's second term--reported by the press 48 hours after the polls closed--was to hire three new lawyers for the counsel's office to work on the burgeoning scandals from the first four years. Further signalling just how worried Clinton really is about the mushrooming investigations, both prosecutorial and congressional, was the appointment of the president's new chief of staff, Erskine Bowles.
Even more conservative on economic issues than his predecessor (deficit hawk Leon Panetta), Bowles is the scion of a wealthy North Carolina family that used its riches to elect a gaggle of its patriarchs to important statewide offices, and he's married to an even wealthier textile heiress (her lucre accumulated in an industry noted for its union-busting and exploitation of women and black workers, historically underpaid compared to their white male counterparts). Bowles's views were formed as a banker at the Wall Street firm of Morgan Stanley. The house that J.P. Morgan built is hardly a training camp for populists, and the fact that Jesse Helms quickly and enthusiastically endorsed Clinton's choice says a lot about the rightward tilt of the new "bipartisan" era the president has proclaimed.
But most of the national media overlooked Bowles's role in the Whitewater-related scandals. Bowles, who raised big bucks for Clinton in the '92 campaign and played an important role in the transition, was rewarded with a presidential appointment to head the Small Business Administration. According to sworn testimony by two of his top deputies, Bowles leaked secret SBA information on its investigation of Judge David Hale to then-chief of staff and Clinton boyhood pal "Mack" McLarty.
Hale, you'll recall, operated a scam called Capital Management Inc., which defrauded the SBA of some $300,000--the money came from an SBA program designed to help disadvantaged minorities--by lending it to a fictitious company set up by Susan McDougal, who with her go-go banker husband was the Clinton's Whitewater partner. Hale later pled guilty to the SBA fraud, and Susan McDougal was convicted for it by a Little Rock jury.
At the McDougals' trial, testimony and documents showed that at least $50,000 from the SBA fraud found its way into the Whitewater account; Hale has sworn that he was pressured into making the illegal loan by Bill Clinton.
Even during the transition, before Clinton took the presidential oath, top political aide George Stephanopoulos contacted the SBA in regard to the defrauded program. "He said they were aware of this program and thought it had been very beneficial to Arkansas," according to deputy associate SBA administrator Charles Shepperson. But the only SBA-licensed agency in Arkansas under this program was Hale's Capital Management.
Testimony and records obtained by the Senate Whitewater investigation showed that Erskine Bowles was extensively briefed on Capital Management before his confirmation as head of the SBA. Furthermore, Bowles's two deputies swore that he'd told them he'd briefed Mack McLarty on the progress of the SBA probe of the Hale firm, and that he received a draft indictment of Hale well before it was handed down. Grilled about all this by the senators, Bowles became another of the Clintons' serial amnesiacs: He "couldn't recall" having briefed McLarty on it. Not a word of all this found its way into the New York Times profile of Bowles following his latest appointment, so naturally network TV news remained similarly silent.
Thus, naming the millionaire financier Bowles as chief of staff not only cemented Clinton's conservative shift on economics, it ensured that this right-hand man can be counted on to keep the lid on the ethical sewer that is now the target of multiple probes.
This is all the more important to Clinton since Bowles's arrival meant the unceremonious firing of Harold Ickes, the deputy chief of staff who hitherto headed the White House's damage control (some would say coverup) team on the scandals. Ickes, a veteran of liberal presidential campaigns from Eugene McCarthy to Jesse Jackson, was the key agent in Clinton's highly effective co-optation of his party's progressive wing. But even though he proved his loyalty to the president by his own amnesia before two congressional committees--for which he is currently under investigation for perjury by the Whitewater special prosecutor--Ickes was shown the door at Bowles's insistence.
That nicely illustrates that there's some truth in the maxim coined by radical-populist Texas politician Maury Maverick: In politics, a liberal is a power junkie without the power.