Partners in POWER: The Clintons and Their America

Re: Partners in POWER: The Clintons and Their America

Postby admin » Fri Jun 24, 2016 9:50 pm

Part 2 of 2

Hillary soon called back their talisman from the first statehouse victory, Dickie Morris. Between clients, many of them now right-wing Republicans in the vogue of the 1980s, Morris made his reappearance in Little Rock in 1981. By several accounts, he spent long hours at the law office and at the Midland Avenue house charting the campaign just as he and Clinton, at an easier time three years before, had plotted not only winning the governorship but Pryor's elimination of Tucker as well. Now Clinton was likely to face the jobless and still ambitious Tucker himself in the gubernatorial primary, and Morris and he discussed how to build on the attacks and negative images they had confected so effectively for Pryor.

But the consultant's advice, according to some who heard it as well as read internal memos, now went well beyond the primary or the general election. Morris was facing not the confident, trade-fluent politician who had unctuously dismissed him but a deeply shaken, unappeasably remorseful loser. With a sense of vindication and personal dominance he now pressed on a ready audience the most self-serving nostrums of the career politician. Clinton must make his use of every popular cause, even Republican initiatives, in order to shield himself from attacks and, if possible, find his own enemy to demonize, so as to deflect controversy to others and define himself in a safe middle. In the 1981-82 campaign some would call it "getting one's shots," inoculating oneself against any dangerous image or label -- in Clinton's case, acquiring immunity by admitting past mistakes and adopting some version of the conservative criticism of his record. Most crucial, Morris instructed him, he must do nothing in governing that he would not say or do in the midst of a political race, make no dispensation for policy or leadership in a term that was simply another phase of the endless campaign. "You're always running. That's all you do," one remembered as the kernel of the indoctrination. Heaped on top of Clinton's already frightful sense of vulnerability, the ultimately apolitical, antidemocratic cynicism of his acrid Manhattan handler further fixed the mode of a comeback and subsequent career.

Meanwhile, inside the camp and despite the relative anathema Dickie Morris represented to most of Clinton's close retainers, the new, softer, flossier Hillary continually "played 'bad cop,'" as Judith Warner put it, "to complement his often too-accepting manner." Again and again, many remembered, she struck out at what she saw as staff laxity and her husband's own gullibility or slackness. Friends found themselves making some casual observation in their presence, only to have Hillary suddenly seize on it to drive home her side of a private argument. Carolyn Staley recalled a time on Midland Avenue when Hillary burst out at hearing Staley take for granted a report about Clinton's record in the press. "She just screamed, 'See Bill! People do believe what they read in the paper!'" Clinton invariably responded sheepishly. "By now she ate him for breakfast," quipped a friend who grew up with him in Hot Springs. Some thought it another mark, too, of deeper differences of character between the two. "But facing opponents, standing on principle, defending himself on views that were possibly unpopular, wasn't Bill's strong point," Warner concluded. "It was hers."

If Bill Clinton tended to be politically craven and vacillating, too prone to expediency or unprincipled compromise, those traits were only reinforced by the tactics and people he and Hillary adopted together for the comeback -- as much at her insistence as out of his desperation. "Hillary ... was somewhat disturbed by Clinton's excessive self-flagellation, but apart from a few offhand comments she kept her peace," Warner reported. "It was her respect for what he chooses to do," Betsey Wright offered.

Temperamentally repugnant as Hillary might find some of his public remorse, whatever her "respect" for his choices, the essence of their crafted comeback was to be accommodation and concession -- like her own new eye shadow, hair tints, and tightly managed public persona. It was also, after all, the convention of their local advisers and of the national Democrats recoiling from the Reagan victory, the resort of the Blairs and the Vernon Jordans alike. "Hillary was always very, very comfortable as the Democrats went right," an old friend would say. "She had sold out corporate and yuppie as fast as any Washington lawyer." Who was to say where "principle" lay for a shattered young politician equating office with life and a far more composed wife, the Rose partner, untroubled in the cause of the firm's clients, of the old power and privilege she served in Arkansas? Their differences always a matter of style more than of character or root values, their mutual strong point would remain a single-minded dedication to their own inextricable advance.

Her discipline would have unintended, ironic consequences in the long run. To curb the philandering as well as make the early public comeback more efficient and discreet, she now hedged about his time and schedule as much as possible. When a driver was caught indulging Clinton's "campaign stops" at bars and clubs for the inevitable female "constituents," Hillary promptly fired the young man, adamant that Clinton be escorted by "professionals." Later, back in the mansion, she would insist for similar reasons that he have Arkansas state troopers as bodyguards and drivers, men whom she first trusted, then soon came to despise for what she saw as their dutiful good ole boy collusion in the governor's extramarital indulgences. Later still, as the Clintons were finishing their first year in the White House, a few of the same troopers would reveal glimpses of the couple's tortured private life in Little Rock, an expose that indirectly led to the media and legal inquiries into Whitewater.

Clinton himself seemed, as always, to shrug at the short-lived, ultimately ineffectual efforts to rein in his sexual habits. Aides remembered how much he welcomed his wife's much larger role in the campaign, comfortable now with Hillary as a media filter and political strategist, even more active and publicly prominent than in their earlier races. "Make no mistake about it," said one, "she ran things in those two years of his recovery at a level beyond Clinton or Betsey Wright." At the apparent nadir of their fortunes she found, too, a fresh authority and warmth with Clinton, speaking to his rawest vulnerabilities and feelings. Judith Warner recorded Hillary's coaxing and encouraging him, as one might a frightened and sullen child, to attend Little Rock's annual lampoon show for press and politicians in April 1981. "Make them laugh, and you'll see they love you again."

After the performances and applause for both of them, however, there was no doubt about the depth of her own submission. For their ambition, their comeback, she was "willing to knuckle under," as their Arkansas friend Brownie Ledbetter said with characteristic bluntness. "This new personality or person that I was developing," Hillary would say vaguely of the change begun in 1981-82. "She was a bit uncertain how to describe it," said another of her new exterior, "because whatever it was, it wasn't her real self."

On February 28, 1982, she stood next to Clinton holding Chelsea, now two, as he formally announced his reelection bid. "I don't have to change my name; I've been Mrs. Bill Clinton since the day we were married," she responded archly to press questions, admitting she would be "strictly 'Mrs. Bill Clinton' for a while," though still signing her legal briefs Hillary Rodham. Barely a month later, weeks before the primary, wearing her studied new wardrobe and hairdo, she pointedly changed her voter registration to Hillary Rodham Clinton.


On a chill Monday night in February 1982 Clinton performed for the entire state what he had been doing before smaller audiences almost constantly for more than a year. In a thirty-second television ad repeated throughout the week, viewers saw a sad-eyed Clinton biting his lip and staring intently into the camera. The focus was at such close range that the top of his newly styled hair and even the tip of his drawn-up chin were off the screen, his face looming with sudden intimacy in living rooms all over Arkansas.

Deeply apologetic for what he had been and done as governor, he asked their forgiveness, especially for those license fees. He had learned from defeat and from all the people he had talked to since leaving office, and he wanted and deserved a second chance. "You can't lead without listening," he summed up the bitter lesson. Crafted in part by Dickie Morris, by a Little Rock ad agency, and by other out-of-state political consultants and approved by old backers like Carl Whillock as well as by Hillary, Wright, and other advisers, it was still largely Clinton's own much-rehearsed script and emotion. "A humble pie advertising campaign," Starr called the matching spots on television and radio. "The airwaves," he noted, "were saturated with them."

Beyond public view his campaign was less contrite, often fierce and cynical. By the summer of 1981, only seven months after moving out of the mansion, Clinton was locked in battle for the 1982 gubernatorial nomination against the other defeated prodigy, thirty-eight-year-old Jim Guy Tucker. The Democrat reported that both candidates were "burning up Arkansas highways seeking support in the hinterlands." That autumn Wright ordered a poll showing enough Clinton popularity to raise major early money, financing the ubiquitous "humble pie" ads the next spring. Meant to reassure and solicit, however, the survey did not match him against rivals like Tucker and foreshadowed none of the slashing among the two young politicians in the primary, much of it echoing Republican rhetoric. When Tucker promised teachers a pay raise, Clinton attacked him for pandering to "special interests." For his part, Tucker deplored Clinton's "palace guard" of radicals in the governor's office and the way he coddled criminals, commuting so many sentences "I find it hard to imagine." Typically, Clinton reacted with television commercials apologizing for commuting sentences or for being "out of touch," implying he was misled by alien staff. Privately, he lashed out at the Arkansas Education Association for endorsing Tucker. "You are trying to end my political career," he told AEA leaders early in 1982, "and I will beat your brains out." Like his rupture with the labor unions in 1976, the episode began, despite public amenity from time to time, a bitter behind-the-scenes feud. Just as antilabor animus shaped his later governance, the rancor with teachers in the desperate 1982 comeback was a furtive influence for years to come in Clinton's educational policy and politics, including his much-advertised Arkansas school reforms.

Beyond Tucker and Clinton the primary field of five included Joe Purcell, a former lieutenant governor and attorney general who had run a losing race for governor in 1970; an obscure state senator; and the perennial gadfly turkey farmer Monroe Schwarzlose. Though Betsey Wright's vaunted organization was now "sputtering," as a reporter saw it that winter and spring, Clinton overwhelmed them all with money. By February, with Maurice Smith tapping heavily into contacts around the state and region, Clinton raised some $200,000 on top of the intensive, costly ad campaign already bought and begun. Altogether he took in nearly $800,000, then a record for Arkansas primaries and, at that, only part of the backing. As always, the money had come from wealthy individual backers, bond brokers and stockbrokers, oil and land fortunes, the state trucking, merchandising, and agribusiness giants, insurance companies, the medical industry, banks, corporations, and various other large interests as well as from the proliferating Arkansas lawyers, consultants, and agents who represented them.

To all of them he would repeat his ritual contrition, accepting the interests' characterization of his callow and misguided regime, implying a far more "mature" conservative rule to come. It had all been a matter of personal style and attention, something he could outgrow. "I made a young man's mistakes. I had an agenda a mile long," he said on the eve of the primary. "I was so busy doing what I wanted to do I didn't have time to correct mistakes." But whatever the public smears and apologies, it was in the suites and by checkbook that Clinton quietly eliminated Jim Guy Tucker, the only formidable obstacle to the comeback. Tucker ran without substance or program, his empty theme "the Arkansas way" and his comparatively few ads focused on images of him playing the guitar and hunting. In the end the former congressman had simply gone broke while Bill Clinton, as usual, cornered the market in political dollars. Starr found a dispirited Tucker at his headquarters days before the primary, "out of money, members of his staff . . . at each other's throats."

Clinton won his first political resurrection with only 41.7 percent of the Democratic vote and was forced into a runoff against Purcell, who extolled "clean" politics, called every opponent "my friend," and refused to criticize a rival. "How about the devil, Joe?" someone asked. "The devil is my friend," Purcell replied earnestly. His forbearance was little help in what followed.

Clinton's "organizational machine," as one account put it, "went into overdrive for the runoff." In the coda to the most expensive primary in Arkansas history, the barrage of Clinton ads and apologies ran constantly. Public attacks on a benign Purcell likely to appear unseemly, there was now a concerted whispering campaign about the fifty-eight-year-old candidate's health, false rumors so virulent that at one point reporters were sent scurrying to local hospitals after anonymous calls about "old Joe" collapsing on the campaign trail.

Even though Purcell had bravely stood up to a racist and red-baiting opponent in the 1960s and held a creditable civil rights record for an Arkansas politician, slurs about his racial views were bruited about in the black community and substantial money was dispensed to leaders and organizers in Little Rock and the Delta. "There was beau coup cash crossing the brothers' palms in that election. You better believe it," said an African American lawyer who witnessed the get-out-the-vote payments to ministers, funeral parlor owners, and other traditional "drops" for the money. Once more the cynical supposition and silence of the local press was numbing. "It was simply taken for granted that in some communities, particularly in the Delta, black votes were for sale and had been bought," Meredith Oakley of the Democrat wrote, explaining with embarrassingly unveiled racism the lack of reporting by her colleagues on the ubiquitous allegations of bribery and kickbacks in 1982. On runoff day, black voters appeared for Clinton in record numbers; Purcell was actually shut out in one large ghetto precinct.

The onslaught of smears and corruption broke even the loser's legendary equanimity. Despite a formal "do right" pledge among Democrats, despite a lifetime of party loyalty, in a farewell press conference an embittered Joe Purcell refused to endorse Clinton in the general election, many of his aides furiously offering to work for Frank White.

When it was over, Bill Clinton had the nomination by a margin of thirty-two thousand votes out of nearly half a million cast -- the slim, harshly won margin of a comeback, a career, and ultimately a presidency.


At a candidates' forum in North Little Rock in May 1982 Hillary Rodham appeared in her husband's place just after the governor delivered his familiar criticism of Clinton's first-term record. "Frank White, I hope you're still out there to hear this," she said, "lighting into" the florid Republican, according to a reporter, as he tried in vain to ignore her and mingle with the crowd. Afterward someone asked about the force and obvious emotion of her counterattack. "Well," she said matter-of-factly, "politics is conflict."

It was not a sentiment much associated with Bill Clinton then or later. Even some inside the campaign thought Hillary chiefly responsible for the aggressiveness in the primary and in the still harsher race against White in the general. Her sternness and discipline were unrelenting. On a campaign flight back from a tiring string of appearances by both of them in western Arkansas, Clinton had cheerily agreed to aides' suggestion that they all go out for an impromptu party that night at a favorite capital bar -- despite the fact that White, a teetotaler, had made a minor issue of drinking by the Clinton staff. Listening to the exchange, Hillary was livid. "I can't believe you'd say all right," aides heard her screaming at him above the roar of the small aircraft's engines. "She yelled at him all the way to Little Rock," one remembered.

Such scenes in front of staff or friends -- Clinton typically absorbing her sharp reproaches in embarassed silence -- tended to obscure how much he passively resisted, evaded, and himself aggressed in other settings and times, often on more serious matters. "He rebelled against the pressure in his own way," said a friend. Her withering temper also eclipsed his own anxious anger and venom in the comeback, always there beneath the happy or ingratiating politician's manner.

Out of office, struggling to come back, Clinton remained the darling of the Gazette, most of whose reporters and editors showed unconcealed enthusiasm for his reelection. Apart from occasional, usually tame editorial criticism, neither the respected Little Rock daily nor any other media in the state reported in depth on either of the Clintons, least of all on the Rose firm and the ganglion of political-business connections of which Hillary was an active part. Throughout the 1980s the Clintons would enjoy relative impunity from the scrutiny of investigative journalism, making the later uncovering of their provincial world by outsiders all the more unexpected. In 1982, though, there was still the right-wing and potentially troublesome Democrat, embodied in a vain, raspy John Robert Starr and his record of superficial but barbed "exposes" of Clinton and his first-term cabinet.

Their remedy was simple. Having met, carefully courted, and visibly impressed Starr at a political dinner early in 1982, Hillary pointedly began to have lunch with him, pressing on him the more conservative, more "responsible" bent of her husband's politics. "They knew that . . . Starr had a tremendous ego, that he was weak, that they could pander to him," said rival Gazette reporter and editor Ernest Dumas. "We found it nauseating." Frequent lunches with Hillary only began a routine of lavish attention to their onetime nemesis, including regular tips and calls from campaign press secretary Joan Roberts and others and "standing orders," as another remembered, "to check with Starr every morning, see what he wanted, and give it to him."

"It worked like a charm," a fellow editor said. Almost immediately, Starr was praising Clinton. "He is no longer a radical," Starr wrote on the eve of the runoff against Purcell. "He is still a bit of an idealist, but his idealism has been tempered by realism that one can learn only from rejection and defeat." They had "made a deal," the editor said later, that Starr would not remind voters of Clinton's old blunders if his comeback remained a "clean campaign." "Clinton is liberal, but he is not as liberal as he was and is more liberal than he plans to be," Starr wrote approvingly that October.

Whether liberal or conservative, Little Rock reporters almost never ventured into the uncharted wilderness of serious power and systemic corruption in Arkansas politics and economics. As it was, the fawning and feeding begun with Hillary's tete-a-tete at lunch in 1982 assured Starr's discretion in covering Clinton for the next ten years. "Nauseating" as the Gazette found the toadying to Starr, its own compromise and neglect were too much akin to the Democrat's, and together the two papers left it to others to unearth, only well after the 1992 election, the unseemly origins of the presidency -- in many ways too late for Arkansas, the Democratic Party, and the nation.


To the alternating delight and disgust of the press and the public, Clinton waged in the 1982 general election his own portion of what became one of the most acrimonious campaigns in state politics. "Bill Clinton was the dirty campaigner," Starr told a colleague years later, though he had tactfully withheld that conclusion at the time. "I hope you don't want me to try to out-Frank White Frank White ... to get down on that level," Clinton announced to a radio audience, describing vividly how the governor had set out to "poison the people's minds against me last time by being constantly critical." White, he maintained, was only a tool of special interests, a governor in the habit of "shaking down" those who did business with the state. ''I'm not kidding," he told a crowd in Magnolia. "He's got half a million dollars because the people who wanted decisions from the governor's office paid for them."

It was all "an outrageous abuse of public trust," Clinton repeated in speech after speech. He reminded audiences that White had watched the doubling of the price of prescription medicine for Medicaid recipients while giving an added $12 million tax exemption to big businesses. As a recession deepened nationwide and unemployment soared in poor Arkansas, utility rate hikes had cost consumers $130 million and boosted utility profits 50 percent, in some measure because Frank White had dismantled Clinton's energy office, removed its watchdogs, and packed regulatory bodies with industry flacks. At one point Clinton signed with a flourish a petition to vote on a constitutional amendment to make the state public service commission an elected rather than an appointed body, a proposal that unnerved many of his own powerful supporters before it was eventually struck from the ballot in an industry-backed legal challenge for "faulty" language. "He toyed with it, but he knew that one would disappear into the Bermuda triangle," said a journalist with a wink.

White proclaimed his 1980 election a "victory of the Lord" and sponsored a "creation science" act (promptly struck down as unconstitutional). Prone to accepting rides on corporate jets and asking business friends publicly "how to do the job," he soon became known by capitol reporters as "Governor Goofy" and was guilty of most of what Clinton charged. Like some in Arkansas politics, he had ties to the interests that were at once too naked and too artlessly explained. White tried to argue that Clinton's own close friends, contributors, and campaign officials -- most prominently, Mack McLarty of ARKLA and Richard Herget of AP&L -- were members of utility boards with the same connections Clinton now deplored. The governor of Arkansas would go on television with a live leopard to remind people that apologetic Bill Clinton wouldn't change his spots. His commercials featured twanging Texan actors impersonating Arkansans who declared that they were voting for good ole Frank.

Yet neither then nor later could the jowly, voluble Republican quite tar Bill Clinton with the same brush -- the corporate tax breaks, compromised regulation, favors to contributors, cozy rides on company jets, and more. "No matter how hard Frank hammered, he and other right-wingers couldn't have it both ways," said a state government attorney who worked for both men. "They couldn't say Bill was a radical and also a sellout to the big boys at the same time, and besides that there wasn't anything wrong with the big boys when Republicans ran with 'em too." It all amounted to an impenetrable hypocrisy, institutionalized in the state's unique politics of pride, submission, denial.

Through the autumn the two camps flailed at each other in what one observer characterized as "an unending series of negative spots threatening wholesale prisoner releases, massive utility rate increases, devastating harm to the elderly, and even mass gun confiscations should the other be elected." Against White the "interest-dominated plutocrat," as Diane Blair saw it, "Clinton was just a caring and concerned down-home Baptist family man who wanted nothing more than another chance to fight the fat cats in behalf of the little guy." The Gazette called his commercials "cute, sophisticated, and nearly always negative." Yet the sheer wealth and demagoguery of the campaign were reinforcing. Nervously, some thought even frantically, Clinton poured much of his gushing campaign money into five major polls and several lesser surveys in September and October alone -- and each seemed to indicate that he did better with the electorate, even raised more money, if he matched White blow by blow, charge by charge. "They were watching it like a prize fight," said a Clinton supporter, "and they loved to see blood."

Clinton would tell friends later, "If you have twelve good people who really believe in you, you can still carry a rural county." By the climax of the 1982 run, Betsey Wright and the richly financed campaign had in fact mobilized thousands around the state with what she called "a passionate mission." They organized telephone blitzes that in some counties reached every listed number, regardless of registration. With military precision they mobilized the African American vote. "You and I know there's no such thing as a real Democrat for White," Clinton reportedly told black audiences. "You and I both know what they ought to be called: 'White Democrats for White.'" One civil rights lawyer observed, "They waved everything in front of 'em but white sheets with eyeholes, and knowing Arkansas, it was enough to scare hell out of everybody anyway."

Still, no strategy was more decisive than the candidate's "new" wife. She would take a full year off from Rose to manage the race and in effect run herself, making almost as many stops as her husband did, taking their daughter with her when it was opportune but often leaving the little girl with Dorothy Rodham or sitters. The Little Rock press and others welcomed what they called her "major shift in attitude": "Eight years in Arkansas have almost totally eradicated most of those Yankee tendencies, leaving behind a first lady who embraces her adopted state with the characteristic fervor of a convert ... accepted by a remarkable number of Arkansans." Starr had it on reliable authority that "some of those who still don't think Clinton is a real person are now convinced that Hillary is." They "know her now as Mrs. Bill Clinton," a Gazette writer recorded approvingly, and "are already calling her by yet a different name -- Chelsea's Mommy."

In the final weeks of the race Bill Clinton took nothing for granted. "He shook every hand at every stop," a worker said of Clinton. "He worked like a demon." Woody Bassett remembered him standing in the freezing rain in the middle of the night as the shift changed at the Campbell Soup plant in Fayetteville and moving on to another plant at six in the morning, then to a dawn breakfast and reception as the campaign day was just beginning. Privately, he alternately cajoled and strong-armed Democratic county chairmen and trade associations as never before. Betsey Wright had talked about the "up-beat feeling" after a lengthy meeting with party officials. "More like beat-up," one remembered long afterward.

Three weeks before the election Bill Clinton, carelessly answering a questionnaire from the National Rifle Association, said he would favor the reporting of firearm sales to a central computer system for law enforcement, prompting White and the NRA to denounce his suggestion as dreaded gun control. Within hours Clinton had taped and was broadcasting a radio commercial denouncing gun control in principle; he "saturated the airwaves with it, up to and including election day," reported John Brummett.

In addition to the ads, he immediately circulated thousands of pamphlets repeating his dedication to the NRA position
and, in the process, even managed to attack White's handling of sportsmen's license fees. The blanketing commercials and flyers were luxuries afforded by his swollen campaign chest. "It was a marvel of backtracking and recovery," said one aide who was involved. On a crowded, crucial Saturday of appearances, Clinton suddenly changed his schedule and went back home to Hempstead County for a Frontier Day Festival, to be seen and photographed, as a reporter noted, "admiring and fondling the antique guns that would be on display there."

On election eve he amazed aides by recalling his exact vote totals, county by county, in the 1980 race and by methodically, accurately predicting his likely numbers now. The next day he crushed White with nearly 55 percent of the vote, winning thirty-two counties lost two years before and becoming the first governor in Arkansas history to come back from defeat for another term.

There were several measures of the triumph. As in the primary and runoff, the decisiveness of his black support was graphic. In a race won by seventy-eight thousand votes statewide, the ninety thousand African American votes he took in Little Rock and the Delta were clearly the margin of victory.

Former President Bill Clinton accused protesters of defending gang leaders and crack dealers, who killed the black lives protesters say matter, while stumping for his wife, Hillary, at a presidential campaign event in Philadelphia.

The protesters from the movement for black lives were present to call attention to Clinton’s crime policy, which increased sentencing minimums for federal offenses, and how young black Americans were criminalized as “super-predators.” They also called attention to the devastating impact of welfare reform and policies in the War on Drugs, which Bill Clinton strengthened.

Bill Clinton responded, “I don’t know how you would characterize the gang leaders, who got 13-year-olds hopped up on crack and sent them out in the street to murder other African American children. Maybe you thought they were good citizens. She didn’t. She didn’t. You are defending the people who killed the lives you say matter. Tell the truth.”

-- Bill Clinton Says Black Lives Matter Protesters Defend Gang Leaders, Crack Dealers, by Kevin Gosztola

So, too, was the more than $1.6 million he assembled for the richest campaign ever waged for the statehouse. Only later was the abiding reality of Arkansas power evident in a careful reading of the campaign finance lists: almost a fourth of Maurice Smith's big contributors to Bill Clinton represented major lobbies in the state, and they had given to Frank White as well.

For now, however, none of that seemed to matter among the once and future governor's jubilant volunteers, many of them still, as in that first race for Congress in 1974, hopeful idealists seeing their articulate, attractive champion as an exception to the state's gangrenous old politics. For scores of workers and supporters it was once more a triumph of youthful progressivism over the special-interest misrule of a buffoon Republican; it was a fresh challenge as well to the venal, torpid Democratic legislature. "AN OBSESSED CLINTON," the gratified Gazette headlined afterward, "LED THE DEVOTED IN NEAR-PERFECT RETURN TO POLITICAL GLORY."

In contrast to his morose seclusion and fugitive appearance two years before, Clinton came early to his headquarters on West Capitol as the initial returns heralded victory. When he entered, as the accommodating Starr recorded for posterity, the gathering "exploded in exultation."
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Re: Partners in POWER: The Clintons and Their America

Postby admin » Fri Jun 24, 2016 9:54 pm

15. Washington II: "A Little Too Much Like What It Really Is"

As the Clintons were making their comeback in Little Rock, the tyranny of political money was transforming the nation with historic consequences.

Dominance of wealth was the congenital disease and disgrace American democracy was supposed to avoid. In national myth, George Washington might be the symbolic father of his country, his own political accommodations to money suitably muted, but Alexander Hamilton and his mercantile patrons in the Northeast and the planter oligarchs of the tidewater were its political-economic godfathers, practicing what Jefferson called "the general prey of the rich on the poor." Now furtive, now garish -- a subject most histories discreetly overlooked and politicians duly ignored -- money was the arbiter of most Congresses and presidencies after the Civil War. Power came to be embodied not only in wealthy individuals but in the vast corporations spawned by industrial concentration and conformity.

Yet as late as the 1970s it was still possible to run for the US House and Senate for sums that did not necessarily pawn the candidate -- less than $100,000 in some states, far less in others. Even presidential money and its legendary abuses could still seem slight in retrospect. In 1960 John Kennedy drew laughter from the press, and no awkward questions, when he disarmingly referred to stories that his wealthy father had corrupted the crucial West Virginia primary -- as indeed he did with last-minute payoffs of thousands of dollars, not to mention what FBI wiretaps later showed to be large Mafia donations on behalf of the future president. Old Joe Kennedy, his own fortune made in smuggling and stock market manipulations typically condoned by local and national governments, had sent his son's campaign a stern telegram. "Don't buy one vote more than necessary," JFK mockingly quoted it as saying. "I won't pay for a landslide."

By the next decade contributors were doing just that, and no one was laughing. All proportion vanished with the cost of the new manipulative weapons of media campaigning. Consultants, polls, and the inevitable television ads devoured millions. After 1976 the cost of running for the Senate rose sixfold, the House fivefold, the presidency more than sevenfold. A typical 1980s senator spent $3.6 million for a seat, soliciting an equivalent of more than $12,000 every week of a six-year term. House races averaged a half million, demanding $5,000 raised week in, week out over the two years in office. In both chambers 60 to 80 percent of contributions now commonly came from outside the home state or district, from interests far removed from constituents. In Capitol Hill's version of the quick and the dead, there were now only two kinds of politicians -- those "never free of the money-raising fixation," as one put it, and those retiring or dying in office.

As costs soared, corrupt money poured in. It reached a climax in the Nixon campaigns of 1968 and 1972, awash in bribes from rogue corporations and even foreign juntas. Watergate brought sensational if only partial exposure. In the open for a moment, abuses long known in Washington prompted the obligatory shock and reform. Under hasty new laws, individual contributions were limited to $1,000 per candidate in each primary and general, $25,000 a year for all federal races. Political action committees might hand $5,000 to each federal candidate with no limit on their total. For the presidency, both individual and PAC donations were eventually confined to primaries, with $40-50 million publicly funded for the general election. But Watergate laws only channeled the cash into new currents, creating a surface of legality while corruption swirled beneath.

For would-be presidents, money would be more powerful than ever in an electoral system deliberately designed to put a premium on winning the first primaries. Money anointed the front-runners for both Democrats and Republicans, rewarding the early winners and turning a summary thumbs-down on the losers, effectively sealing the nominations of the two kindred parties before most of the nation ever voted. In the general election cash -- "soft money" -- flooded into the system through a cavernous loophole. Given to parties free of restrictions on candidates, it bought the White House outright in spite of the partial public financing of campaigns.

In sums of $100,000 to $200,000 or more, fat cats supposedly tamed by reform were by the late 1980s passing out a total of more than $30 million to each presidential ticket. Hedging their bets, several individuals and interests showered cash on both sides. Insurance, tobacco, liquor, oil, and entertainment companies, banks and brokers, arms merchants, developers, the most prominent manufacturers and the more discreet sweatshops, a flourishing medical industry, the vast military-industrial-energy combines of the cold war -- all these interests and many more swelled the coffers of the men competing for the White House. They became the faceless makers and breakers of the American presidency.

On Capitol Hill, as at the White House, rich individual donors outspent all others. But it was the political action committees that most vividly embodied the corporate seizure of power in Washington. The money coup d'etat of the 1970s and 1980s coincided with a major resurgence of big business in the manipulation of politics and government, an intervention more massive and concerted than any in the annals of oligarchic politics. By the early 1970s -- with the continuing growth of federal regulation, with huge budget or tax largesse for those who could control legislation, and with new sophistication about means and ends, about the sheer corruptibility of politicians -- corporate America moved from shareholder to full-fledged proprietor.

The stakes were enormous -- multiple tax exemptions and credits, preferential interest rates, subsidies to entire industries, tariffs, banking and bankruptcy laws, licenses, contracts, and myriad other concessions worth hundreds of billions. In the early 1970s corporations had sent only a handful of agents to Washington. By the end of the decade more than four hundred of the Fortune 500 corporations had encamped in "public affairs" offices. Hundreds of other large interests hovered with hireling lawyers, consultants, trade groups. Most of all, there were their PACs. Multiplying from five hundred in 1974 to more than four thousand by the 1990s, they passed out tens of millions a year. What had once been the old game of the rich or of big business winning government favors now became a continental shift of power.

The wealthy ruled. For the 249 members of "Team 100" who gave George Bush $25 million in 1988, there were returned favors to make nineteenth-century spoilsmen blush. A grateful White House killed a two-year-old criminal investigation of a team member's company. It approved a questionable airport project with windfalls for another team investor. It revised the Clean Air Act to benefit a product and a corporation after a Team 100 stalwart intervened with the president himself. It reversed a twenty-six-year-old government practice and standing presidential policy of imposing tariffs on foreign cement. It made suitable arrangements as the savings and loan bailout became what one witness called "a bottomless welfare program for the politically well-connected," and members of Team 100 were some of the biggest purchasers of forfeited real estate from the Resolution Trust Corporation. On and on went the deals, tax shelters, environmental exceptions, regulatory interventions, friendly appointments. According to a detailed accounting by the Washington watchdog agency Common Cause, the 249 members of Team 100 who contributed $25 million received in return -- in subsidies and concessions, issues evaded or ignored -- federal favors worth well over $100 billion.

"When these political action committees give money," Bob Dole, Republican leader of the Senate, would say in his dour sarcasm, "they expect something in return other than good government." Taking millions himself, a major violator of even tepid campaign finance laws, the former prosecutor from Russell, Kansas, was in a position to know. Every law and most lawmakers were reliably assumed to have a price. Two hundred medical PACs gave $60 million to both parties in congressional races between 1982 and 1992, ensuring that any "reform" would be written by the industry itself.

Arrangements were mutual. On top of the usual campaign funds, senators and representatives took generous gifts to their own personal "back pocket" or "leadership" PACs, dummy foundations or other fronts from which, in turn, they dispensed donations to fellow members in their own monied patronage. Until the practice was ended by public outrage in the early 1990s, they might also pocket unlimited amounts of unused campaign moneys at retirement or take large honoraria for speeches to interest groups that already funded them and commonly drafted the speeches themselves. But even after the retirement and honoraria scandals, the politicians merely devised inventive new schemes for personal payoffs and enrichment, from payment for their "academic" lectures and political training courses to backing of "issues" groups and committees. "I guess we have our own united ways," laughed a young congressman.

Author and journalist Philip Stern documented a typical case in which AT&T's PACs put out $1.4 million in the mid-1980s and received special tax exemptions of over $12 billion, a net return of 867,145 percent on the investment. By the same measure, General Electric realized a 673,759 percent return on its political money, Sears, Roebuck 510,581 percent, and so it went.
The real killing of the 1980s was never on Wall Street, political donors knew, but more discreetly in the marbled corridors and paneled committee rooms of the US Capitol. While politicians extolled risk taking and free markets, enough money in the right places made Washington in the 1980s and 1990s as close to a sure thing as any venture on the planet.

By 1992 less than 1 percent of the gross national product would be spent on human welfare, and most of that was taken by Social Security. Altogether states would spend less than $23 billion (some $262 per family) on welfare; meanwhile, the nation spent $87 billion (or $1,000 per family) to bailout the executives of failed savings and loans.
Washington would grudgingly appropriate $25 billion for food stamps, nearly $30 billion for subsidies to agribusiness, and another $100 million each year for international market promotion for more than a dozen Fortune 500 companies. It was, after all, what the political money had paid for. Harper's editor Lewis Lapham described in his 1993 book, The Wish for Kings, a reality Washington knew only too well:

The politicians dress up the deals in the language of law or policy, but they are in the business of brokering the tax revenue, . . . redistributing the national income in a way that rewards their clients, patrons, friends, and campaign contributors. They trade in every known commodity -- school lunches, tax exemptions, water and mineral rights, aluminum siding, dairy subsidies, pension benefits, highway contracts, prison uniforms -- and they work the levers of government like gamblers pulling at slot machines. As with the subsidizing of the farms and the defense industry, so also with the paying off of the bad debt acquired by savings and loan associations. Except for the taxpayers (who, as always, didn't know what was being promised in their name), none of the ladies and gentlemen privy to the workings of the swindle took the slightest risk.

By the late 1980s Washington's most prominent figures were its parodies -- Senate Democratic majority leader George Mitchell, Republican minority leader Dole, and assistant leader Alan Simpson; in the House, Democratic Speaker Thomas Foley, majority leader Richard Gephardt of Missouri, GOP minority leader Robert Michel of Illinois, and minority whip Newt Gingrich. They would average more than $250,000 a leader among the millions passed out by the health industry over 1982 to 1992. From insurance companies, drug makers, hospitals, and others, the reform-stifling money was again only a small portion of the millions the same men garnered altogether, election after election, from other interests for other issues. Much of their slush funds came from PACs -- 70 percent of House Speaker Foley's war chest in 1990, for example. Each session they might also take hundreds of thousands in blatant "conflict of interest" cash from those for or against legislation that they effectively controlled from introduction to passage.

No tribune of the money tyranny would be more mercenary -- or more casually hypocritical -- than the fiercely ambitious future Speaker of the House, Newt Gingrich. While savaging Democratic Speaker Jim Wright in 1987 for ethics violations in accepting special-interest favors, Gingrich was quietly -- sometimes secretly -- building an empire of political finance large enough to dwarf Wright's typical graft. By the early 1990s, as he got ready to make a first nationwide bid to be Speaker, his GOPAC had accumulated over $7 million, the Friends of Newt Gingrich campaign committee over $6 million, a front foundation another $2.3 million, all in the cause of the pudgy, driven politician who would be ruler of the House. Though a loophole in the reporting laws would allow many of the donors to remain hidden, they were, for the most part, what the New York Times eventually described as "a predictable array of bankers, health-care executives and other benefactors whose contributions could raise conflict-of-interest questions when Republicans act on proposals governing business." They would be known as Newt, Inc.

A restless young academic described by the press as "an environmentalist critical of the business establishment" when he first ran for Congress in the mid-1970s, the protean Gingrich swiftly evolved into a self-styled "conservative revolutionary," decrying handouts to the poor and brazenly promoting any policies or legislative schemes that could enrich his sponsors in insurance, finance, pharmaceuticals, telecommunications, or other interests. While he denounced socialism for the inner cities, his affluent suburban Cobb County, Georgia, would be the third-largest recipient of federal funds of any suburb in the nation, its take 55 percent higher than the national average, its gated, guarded white subdivisions bolstered in part by weapons contractor Lockheed, in whose Pentagon contracts Gingrich found no small incentive.

With his artfully cultivated fortune Gingrich would erect a sophisticated 1990s political machine of indoctrination and recruitment, fealty and favor -- all with a cocky confidence and insouciance and with a contempt for his Democratic rivals so richly deserved that critics were largely disarmed. "The first duty of our generation is to reestablish integrity and a bond of honesty in the political process," he told the conservative Heritage Foundation in a 1990 speech. Even Dole had called him and his ranks "the young hypocrites," but the bold disingenuousness was in many ways the essence of the money tyranny. The Atlanta Journal and Constitution would later more aptly quote one of his GOPAC donors, a real estate developer who had given nearly $200,000. "My dad used to say," Fred Sacher recounted unabashedly, "'What we've got to do is just get those corrupt, dirty Democratic crooks out and put in some nice clean Republican crooks.'"

In the boom that began in the 1970s -- in the politicians' greed and the interests' unprecedented aggressiveness to match -- the parasites multiplied as never before, a caste of lawyers, fixers, and advisers without substantive portfolio, men and a handful of women who raised the money, implicitly peddled the influence, and frequently ended up, as part of their reward, in government themselves, in cabinet offices or in other prominent positions.

Alongside them grew the thriving industry of campaign consultants and those who concocted political ads, technicians and soothsayers who, like the money pushers, were thought to command special gifts, and high fees in any case. From the White House to the back rows of Congress, they were widely consulted on all matters affecting money and elections, which was to say, sooner or later, everything in American politics.

Some thought the result "an aristocracy of money," others a seedy oligarchy worthy of some minor satrapy. By any name, it produced a largely permanent Congress. Incumbency alone gave senators a more than six-to-one advantage in PAC funds, representatives ninety-seven cents of each PAC dollar in the House, and both groups three to four times more money overall than challengers. Through much of the 1980s there was a numbing 97 percent reelection rate in the House regardless of party. From 1988 to 1992 thirty-three of thirty-nine Republican incumbent senators won reelection, forty-two of forty-five Democrats. They outspent challengers by $200 million. Seats open owing to retirement or death were the only chance for renewal. But those races, too, were quickly dominated by special-interest money that captured the winners, most of whom soon became money-obsessed, entrenched incumbents themselves.

In 1990 a self-motivated Democratic challenger named David Worley was making inroads against a corrupted and brazenly hypocritical incumbent by attacking him on congressional pay raises and other issues. Yet Worley found his own Democratic Party refusing to support him because he had violated a backroom bipartisan deal on Capitol Hill not to fund challengers who raised the pay-hike issue against either party. Outspent by $1.5 million to $333,000 in a race he might well have won with comparable support, Worley narrowly lost by 974 votes out of 151,000. The winner was Newt Gingrich.

By the 1980s the oppression of money made the US Congress less competitive, with less turnover, as Ronald Reagan once observed, than the old Soviet Politburo.


For Republicans, lost was the heart of the old faith, a genuine restraint and skepticism about intrusive government. Behind the worn ideological facade of limiting the state, ever-hungry and pragmatic business donors to the GOP now required just the opposite -- proper management and manipulation of the government appropriations on which they had developed, said one observer, "an abject dependence."

Glib opportunists like Gingrich made careers of railing against the "liberal welfare state," urging cuts in services for the poor and minorities while pushing deregulation and privatized services. By 1992 the GOP had occupied the White House for a dozen years, controlled the Senate for six years during the 1980s, held the balance of power in the House for more than a decade, and for years had dominated the federal courts. Yet over the same period the demonized federal government grew larger, more expensive, more bureaucratically ponderous. While taxes were reduced for the wealthy and corporations fattened at the public trough, Republicans had stoutly refused to address vast middle-class "welfare," including education, highway, and farm budgets. The fastest growing federal spending during the Reagan-Bush era was on GOP constituencies, the agribusinesses, for example, that received an extra $20 billion in 1986, "nearly three times," as one account noted, "the entire federal contribution to Aid to Families with Dependent Children that year." Meanwhile Ronald Reagan "piled up more debt, in inflation-adjusted dollars, than Roosevelt and Truman had incurred to win World War II," David Frum wrote in the Wall Street Journal. "In just four years, George Bush accumulated three times more debt ... than Woodrow Wilson had taken on to fight World War I."

Hypocrisy this grand called for the oldest of political tricks: acting out of self-delusion, calculation, or a combination of both, the Republicans simply lied. They would blame taxes on the indolence and demands of the poor, regulations on the antibusiness venom of a phantom liberal elite. Debt they ascribed altogether to Democrats. Amid the social ravages of their political economy, they would spend hundreds of millions to change the national subject from politics and economics to the cultural fears and social resentment their oligarchy had so aggravated by unprecedented inequity. The middle-income sectors were to be convinced that their problem, their enemy, was the poor -- and not simply people down on their luck, as Americans had defined the victims of the depression in the 1930s, but rather a class apart, separate and ultimately menacing.

A single mother with three children was expected to practice rugged individualism on $400 a month while corporations and their inflated upper payrolls were doled out billions. "The problem is that corporate welfare has created a culture of dependency that has encouraged certain industries to live off the taxpayers," an independent research group found in the early 1990s, charting over $51 billion in direct subsidies to large businesses and, in a single session of Congress, another $53.3 billion in special tax breaks. More than ever before, America's corporations depended on government's suborned taxes, budgets, regulations, and other benevolence. It was always done discreetly, in congressional committee markups, secret budget negotiations, and deals few saw in crucial detail. Serving such furtive politics, Republicans became the quintessential party of centralized power and state intervention. Descendants of Calvin Coolidge and Barry Goldwater evolved into special pleaders for tax breaks and government dispensations -- capitalists by blustery political day, socialists for their engorged patrons by still legislative night.

Politics was not somehow apart from the system; it was the system. The capital's silence was captured in the epigram of an elderly western senator. "Be careful what you say, boys," he once warned his colleagues. "It looks a little too much like what it really is."

Among the Democrats the ironies seemed still sharper. "What was once the party of the common man," wrote Ronnie Dugger, "is now the second party of the corporate mannequin." Whether the Democrats had ever been quite so democratic, there was no doubt about what had happened by the 1990s. "The whole tragic decline of the Democratic party," one of its many disillusioned voters would write, "can be traced to the soft, manicured hand from which it is accustomed to feeding." Three hundred pairs of hands would be there for the 1992 election. A Democratic version of Team 100, donors were accorded the accurately proprietary title of "trustee" for their gifts of $100,000, "managing trustee" for $200,000. As with the GOP, money set the bounds for Democratic policies, which in wan mimicry of Republican practices produced everything from bloated Pentagon budgets to regressive taxes. Even the remnant of Washington's Democratic think tanks and promotional groups were now commonly founded and effectively run by lobbyists for the interests and financed -- "de facto owned," admitted one of their directors -- by corporate money.

The epitome of the courtesan organization, the Democratic Leadership Council, in which Governor Clinton himself was prominent, again and again took tens of thousands in corporate underwriting in the 1980s to discover the virtues of more corporate-oriented Democratic policies. Accordingly, the council and its satellites churned out policy papers and "reform" proposals, advising that Democrats should practice fiscal responsibility by cutting social programs and avoiding awkward revisions of the tax code. They could win back the great resentful middle of the electorate, the council told its members, by indulging popular resentment of the poor in sterner welfare measures, zeal on crime, and other issues that did not intrude on more basic questions of money and power. Naturally enough, DLC financial patrons included several who were also generous in their support of President Reagan and President Bush and some of the most reactionary GOP senators and congressmen. Meanwhile, beyond Washington, the skylines and back streets of American cities, so long the political preserve of Democrats, reflected the same venality. To believe the party was redeemable, critic Norman Solomon wrote, "you'd have to forget the ... miserable urban Democrats who run our big cities, hacks utterly in the grip of local real estate and banking interests who promote downtown development above all else."

Like its state clones, the national Democratic Party was bereft by the late 1980s not only of meaningful financial support from and contact with ordinary voters but of independent ideas and alternative policies. Typical citizen contributors were now in their seventies, a dwindling vestige of New Deal loyalty. Local parties had degenerated into voter-turnout operations that sent volunteers home after the job had been done, with no further help needed. While Republicans aggressively recruited younger grassroots contributors to their corporate-approved and corporate-enriching "populism," Democrats could find no genuine popular cause not at odds with the aims of their own backers among the same interests. And it was the chief intellectual distinction between the two parties in the 1990s that Democrats, unlike the zealots of the GOP, could not even conceal their betrayal beneath a demagogic fig leaf. The real cost of the Democrats' co-option was that their space on the national stage was silent. Corruption rendered them mute and intellectually sterile, leaving the theater to Republican mythology, with its social divisions and political diversions. Worse than the loss of their integrity, the Democrats had surrendered the very terms of the political dialogue.

Reduced to a countinghouse, the party saw its millions in "soft money" controlled by congressional leaders or a presidential candidate -- and at the state level by governors and legislators indebted to the interests. "If the Democratic party began to act like a real political party, the money would be cut off," wrote a longtime Washington journalist on the eve of the 1992 election.

But then Washington also understood that the tyranny of money would loom over any new president, especially a Democrat. If he did not confront it immediately and unequivocally, regardless of the culpability of his own party and past, his every other promise would be betrayed.


Only slowly over the 1980s and 1990s did the toll of the corruption become clear. In the richest agricultural economy in history, farmers despaired as their homesteads were auctioned off. In the cities of the world's last superpower, families boarded up their windows against the anarchy of gang violence. There were waiting lists at the most fashionable restaurants and long lines of the hungry at shelters and soup kitchens. In the guise of national security, government planes took off secretly from remote airfields in the South to fly illegal arms to Central America and elsewhere, returning with drugs to be sold by a criminal empire on the streets of Little Rock and Knoxville, Los Angeles and New York. Capitalism triumphed in the cold war, and in the United States the largest single private employer was an agency for temporary help.

The historical adjustment to world economic challenges would have been difficult enough, the transition to a new postindustrial economy a national trial. But coinciding with the money tyranny in Washington, the impact was in many ways lethal.

Jobs vanished at a rate and with a finality worse than in the Great Depression. Nearly two million disappeared in manufacturing alone, and hundreds of thousands more than official figures ever acknowledged. There were layoffs, plant closures, the flight of corporations and export of jobs abroad. In the place of once-decent pay millions found only minimum wages, instead of full-time employment only part-time work stripped of benefits and rights. The average earnings in 1994 were some 15 percent less than two decades earlier. Even as American workers' efficiency and productivity rose, their wages stagnated or fell -- breaking what the New York Times called "one of the most enduring patterns in American economic history." Meanwhile farm values plunged along with collapsing commodity prices. Their unions broken or impotent, their land sold at auction, American workers and farmers returned to a vulnerability and powerlessness not seen since the nineteenth century.

They were only part of a larger decay of the economy. Never before had the country been so challenged by competition from abroad. Its aging infrastructure and industrial base were already straining in the 1970s. The fabled American commerce of the midcentury faced retooling and renewal at best. Yet by 1992 even that ominous condition seemed some distant, nostalgic past. Arresting the decay meant confronting corporate America and the whole elaborate structure of power by which business folly and abuse were protected, sometimes rewarded. It was the very task a money- and corporate-dominated government could never do.

When it was needed most, investment in plants and equipment had fallen drastically. A vast accumulation of wealth at the top had once again failed to "trickle down." Instead, there was plunder of healthy corporations and institutions. Speculators made fortunes seizing and destroying businesses through stock manipulation. Executives once answerable to shareholders, if not to the moral restraint of public leadership, sacked company holdings for salaries and other perquisites nearly 150 times the wages of their employees. Savings and loan institutions sank in an orgy of shady loans at the cost of hundreds of billions in depositors' ruin and taxpayers' liability.

America went from the world's greatest creditor to its deepest debtor, the annual budget deficit approaching $400 billion and the national debt climbing toward an unimaginable $4 trillion. As a conservative convert in the early 1960s Ronald Reagan liked to draw gasps from his audiences by evoking the Democrats' scandalous national debt as dollar bills stacked "eighteen miles high." By the time he and George Bush left Washington, as one writer reckoned, the same figurative pile reached over 250 miles.

The binge of spending and debt came alongside a deliberate impoverishment of public services. Washington slashed domestic social programs by more than a third between 1981 and 1989, aid to cities by 63 percent, housing by 82 percent, jobs programs and other services by more than half. As support for schools fell over the decade by more than 35 percent, America invested less in education than did any other industrialized nation and trailed most in literacy as well as science. Once proud of its quality of life, America came to rank behind even Third World countries in the health of its babies.

Of the fifty to sixty million Americans -- one-fourth of the nation -- living in poverty in the early 1990s, at least three million were homeless and seven million more at risk. In 1993, 26 percent of American children under the age of six were officially poor. Despite working full time, nearly ten million American workers -- and eight million spouses and children -- remained poor. Moreover, they represented more than twice the number of adults on welfare. By 1994 nearly one in five fulltime workers were counted among the poor even by woefully unrealistic government measures of poverty. Their curse was neither welfare dependency, lack of education, nor poor skills but the oldest economic disadvantage of all -- low wages. More than thirteen million full-time jobs -- one in every six and nearly half again more than in 1979 -- now paid less than it took to raise a family of three out of poverty. In 1970 the minimum wage had been more than 50 percent of the average worker's salary; by the early 1990s it was 30 percent and still declining in relative terms.

As part of the same trends there was a relentless growth in the old impoverished black ghettos. By 1992 nearly six million blacks lived in urban slums, 36 percent more than in 1980. Half of all African American children were born and raised in poverty. There was no question about the social disintegration in such neglect -- abuse, illness, suicide, drug addiction, a pandemic of crime, the costly cycle of imprisonment and still more crime.

The collapse of public services, the economic exclusion, and the profound cynicism and alienation were inseparable. The nation now led the world in the percentage of children living in poverty, teen pregnancy, murders of young males, and murders by handguns for all ages. Five million of its children under twelve went hungry every month. It imprisoned more of its citizens than the former totalitarian Soviet Union had. In social and class terms, the nation's penitentiaries were de facto prisoner-of-war camps, though without benefit of the Geneva Conventions. In many urban communities of color, police were a veritable occupying force, their implicit role to contain as well as control. Though politicians and the media found it too frightening to call by its right name, there raged in many US cities in the 1990s a virtual race and class war.

Nationwide, race was only the knife edge of a larger crisis, whose essence was class. The poor of 1992 numbered twice as many whites as nonwhite, especially in the so-called New South, where blacks, though they could at last hold office in the local courthouse, were still, as one book portrayed it vividly, "surrounded by white merchants who own and run everything else." Single-parent families, the uneducated, unemployed, and unemployable, the poor and near poor, always a paycheck or two from disaster, were in every locale, including the more than five hundred suburban communities newly classified as poor by 1989 and the hundreds soon to follow. An official study in the mid-1980s found that more than half of all Americans over twenty-four died in relative poverty, their assets "at the low end," as the report discreetly put it. A 1993 report revealed that five million of the elderly, despite incomes above the official poverty line, were suffering what was delicately defined as "food insecurity."

The wreckage included the once-thriving middle class, though more than 50 percent of the adult working population now received hourly wages, which were what traditionally defined the working class. Median family income, mired at $35,000 in 1990, no longer purchased the status of a generation earlier. Suddenly the children of Middle America were half as wealthy as their parents had been, and with less chance for college, career, property, or secure retirement. Home ownership, once the proud badge of the middle class, became a privilege of the relatively wealthy. Hundreds of thousands of Americans refinanced their homes because their wages were stagnant or they lost their jobs. Equity fell by a record $300 billion over the 1980s. The median cost of a new home rose fivefold in twenty years. Combined with falling real wages, the spiraling costs cut in half, to a little over 30 percent, the percentage of families able to buy their own homes. It all struck at the heart of what Georgetown professor Carroll Quigley had taught the young Bill Clinton about America's unique "future preference," the nation's stoic readiness to sacrifice and postpone so long as there was the prospect of "a better future."

No condition was more telling than the crisis in health insurance at the beginning of the 1990s. Neither destitute enough for Medicaid nor old enough for Medicare, the working poor and middle class accounted for most of the thirty-seven million Americans without health insurance and the sixty million more with inadequate coverage, all facing ruin in a major illness. As premiums shot up nearly 200 percent and medical costs tripled, the employer-paid insurance common in the postwar covered less than a third of the nation's families. The ravenous $800 billion yearly cost of the medical industry -- 14 percent of the gross national product and nearly twice that of other advanced countries -- undermined even larger businesses. But its massive burden, like much else, had been shifted to fall most heavily on the least affluent, the least powerful. By the early 1990s experts estimated that a hundred thousand deaths took place each year simply because the uninsured victims could not afford basic health care; lack of health insurance, something uncommon in other civilized nations, caused three times more fatalities in the United States than AIDs.


In the sum of suffering and shattered dreams, there had been a historic change in the political economy of the United States. By 1989, before most Americans realized the first shot had been fired, the class war was effectively over. While the ranks of the poor were teeming and the middle class was shrinking by the millions, those reporting incomes of a half million dollars or more grew from 17,000 in 1980 to nearly 200,000 by the end of the decade. Those earning between a quarter million and a million dollars a year rose by some 700 percent, and multimillionaires by unprecedented numbers. These inequities in wealth were far greater and more swiftly inflicted than any since the inception of the nation.

Few causes and effects were so direct as the dominance of money in politics and the emergence of an economic and political overclass. Altogether, there was the largest gap of money and power separating the rich from other income earners anywhere in the developed world. "The once-egalitarian United States," said an analysis of the 1990 census, was becoming "more stratified and polarized than Europe." As economist Timothy Smeeding would document for the Congress in the early 1990s, the nation tolerated "a level of disadvantage unknown to any other major country on earth." This would be the America that Bill Clinton wanted to govern. How much he truly understood of the national forces at work would never be altogether clear in the campaign, though his apparent empathy for the suffering and complaints of ordinary people became a compelling part of his candidacy.

The Washington he ran against was a deeply ingrained culture with its own tribal habits and mores, a culture of complicity the new president, if his promises were to have a chance, would have to understand and confront as directly as he faced the other challenges. To both Washington and the nation, in any case, he came from his own peculiar history in the Arkansas of the 1980s, a place with its own money tyranny, human toll, ugly secrets. And that, too, would eventually have to be seen for what it really was.
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Re: Partners in POWER: The Clintons and Their America

Postby admin » Sat Jun 25, 2016 3:04 am

Part 1 of 2

16. Little Rock III: "Best of the New Generation"

To the bond dealers it was Slam City, and Forbes named it America's "scam hot spot." Even in a decade of legendary excess, rampant speculation, and corporate intrigue, of celebrated greed and flamboyant wealth, there was a stark contrast in Little Rock between its outward appearance and its inner reality. "A wide open town in a wide open state where a lot of money got made fast with no questions asked," one federal agent remembered. "I didn't know what life in the fast lane really was," said a Wall Street broker, "until I got to little old Little Rock."

Below the white heights and a trendy new west side of shopping malls and residential sprawl, the city of 175,000 might still appear languid and provincial, its venerable black ghetto cordoned off by a freeway, the poorer bottomland of North Little Rock often veiled in a haze of pollution beyond the gray-brown moat of the Arkansas River. A sparse, stubby new skyline rose over the worn downtown, its somewhat incongruous high-rises the monuments of homegrown fortunes like Stephens and Worthen Bank. Beneath them the heart of the city remained implacably shabby and forsaken, too many blank storefronts, too many parking lots paved over the empty sockets of failed enterprise. "On a business day," thought one visitor, "the place seems as sleepy as some others on a peaceful Sunday."

The taller buildings stood in contrast as well to the grinding want of the rest of Arkansas -- some two million people who remained among the poorest in the nation, their average yearly income less than the $20,000 annual fees at the Little Rock Country Club. The old colony was always there, not far from the capital's modern glass towers, in communities riven by railroad tracks, race, and caste; in the polluted company towns of the Ozarks; in the migrant workers' shanties sprawled on the southwestern flats; and most of all in the Mississippi Delta, with its Third World privation, its houses with dirt floors, bleak counties where infant mortality was worse than in much of Africa or Central America and where the only viable industry was likely to be the local crack house. "The economy of plantations and sharecropping gave way to no economy at all," Memphis journalist Guy Reel wrote of the Delta in the early 1980s. "The dirt was all anyone knew."

More than ever, the affluent and powerful of Little Rock lived comfortably apart. More than ever, from corporate suites, law firms, and banks, from the corridors of the legislature, from discreet political fund-raisers emulating the political money parties in Washington, they controlled it, held it at bay -- in part, as always, by laughing contemptuously at what surrounded them. "How do you measure the wealth of the average Arkansas household?" went a familiar joke. "By the number of dogs killed when the front porch collapses."

Behind the tinted windows of Little Rock's skyscrapers, in offices grafted onto the now-fashionable old Quapaw quarter, there was an air of showy new money and brash prominence. To many it seemed symbolized by savings and loan magnate Jim McDougal, gliding through town in an unmistakable blue Bentley or in one of his twin green Jaguars. His voluptuous wife, Susan, starred in a familiar local television commercial, wearing a skintight outfit and spurring her white stallion over the countryside to promote land development schemes with names like Gold Mine Springs, Maple Creek Farms, or Whitewater Estates. Diamond Jim and Hot Pants, as the couple was known, were intimate social friends, political backers, and business partners of Governor Clinton and the First Lady. Diamond Jim was in succession a statehouse aide, legislative liaison, and principal fund-raiser for the governor. Hillary, in turn, was not only intimately involved in their joint real estate venture but also worked as a lawyer on special retainer for the McDougals' Madison Guaranty, the savings and loan that soon became notorious for the profligate spending, borrowing, and shuffling of depositors' money and government loans that fed a lavish lifestyle and an intricate if gossamer web of interwoven companies, including the cash-hungry Whitewater half owned by the Clintons.

In the Little Rock of the 1980s few questioned such ties to publicly insured and regulated institutions or even a sitting governor's close, collusive partnership in the manipulation of other people's money. So natural a part of the political and economic landscape went unexamined by the capital's media, still widely thought to be among the most vigilant in the New South. "There was a certain selectivity in what they chose to cover," Democrat columnist Meredith Oakley wrote afterward. About the Clintons' flashy friends and other backers in Little Rock there was acceptance of their simply being on the make, whatever the stakes or methods, however dubious or seedy the atmosphere. It was "the milieu of a David Mamet play," the Wall Street Journal said, "in which glib five-and-dimers swim along the edges of the real economy, living on fancy talk, cutting corners, and hoping that one of the big boys will offer them a piece of the $100 sure thing."

The "big boys" and some of the "real economy" were there, amid Arkansas's enduring poverty, with a magnitude and force unique in the nation. Even the high-living McDougals, with their statehouse intimacy and bountiful flow of cash, could seem almost modest beside the larger boom. In the shade of a state government known for its agreeable regulation and its friends in high places, there was a torrent of money, a wheeling and dealing unlike anything in the history of the region. In the early 1980s billions poured through Little Rock bond houses. Around what they called "the pit" in firms like Lasater and Company, eager bond daddies worked the phones in a frenzy. Accounts might appear overnight with huge earnings and just as swiftly and mysteriously vanish. "Bo knows bonds," one of them would say later with a grin about the proverbial fast-talking southern salesman.

Among the issues they hawked were a publicly insured state agency called the Arkansas Development Finance Authority. ADFA was to be a model of Governor Clinton's economic development policy, a program to ease financing for low-income housing and small businesses, which were too rarely supported by conventional capital. Instead the bond agency would become what one person called a "piggy bank" for the politically connected, discreetly shunting its privileged finance to crony companies, its expensive legal work to favored law firms, its lucrative underwriting to select Wall Street houses and local bond brokers -- almost all of them backing Bill Clinton. Under a scheme quietly contrived by the Rose firm, ADFA at one point planned to channel nearly a hundred million dollars in taxpayer-guaranteed bonds to capitalize a vast profiteering in nursing homes partly owned by Stephens. With similar license the authority husbanded other deals of suspect character, including investment of state money in surreptitious offshore companies, commonly with records that later proved lost or not quite complete.

Immense amounts of money, often shady, seemed everywhere, from local fly-by-night ventures to exotic foreign transactions, from the levies of the Arkansas River to the shores of the Persian Gulf. Begun by a peddler pushing Bibles, belt buckles, and the proverbial southern bonds, the mammoth Stephens, Inc. now dealt in billions worldwide. The financial house took public burgeoning local companies like Wal-Mart and Tyson and made them all still vaster fortunes. By the 1980s Stephens not only stood atop the local economy with control of banking, utilities, and other holdings but counted numerous politicians among its income-producing properties. From its Little Rock headquarters the combine now reached out as well to international clients and partners in the Middle East and Asia. Stephens had brokered the first penetration of legitimate American business by the infamous BCCI. Through a company called Systematics it provided sophisticated computer services for banks, services that came to afford intimate and privileged access to financial systems throughout the world -- and that some saw as lending itself to alleged links with the shadowy new computerized world of post-cold war espionage, to money laundering and front companies, to intelligence agencies' surveillance of private bank accounts and manipulation of funds.

Table of Contents:

• Part 1: Jim Norman sends a memo to the White House, which leaks it to a Starr assistant.
• Part 2: Charles O. Morgan threatens to sue anyone who says Systematics has a relationship with the NSA.
• Part 3: Vince Foster oversaw covert money laundering by Systematics.
• Part 4: Hillary Clinton and Web Hubbell represented Systematics during the BCCI takeover of First American.
• Part 5: Philosophical musings on the meaning of this investigation.
• Part 6: The curious tentacles (and strange denials) of Systematics….

-- Allegations Regarding Vince Foster, the NSA, and Banking Transactions Spying, by J. Orlin Grabbe

As if to trumpet its ultimate power, the Stephens empire would go on, at a fateful juncture in the 1992 election, to put up a few of its millions to rescue -- if not ransom -- a future president of the United States.

In late 1996 Tyree mailed me a detailed set of diagrams and a lengthy narrative explaining the exact hows and whys of the murder of Danny Casolaro and an overall view of the Promis saga that is not only consistent with what is described by Seymour in The Last Circle but also provides many new details. Asked about Mike Riconosciuto for this story Tyree would say only that, "He's very good at what he does. There are very, very few who can touch him, maybe 200 in the whole world. Riconosciuto's in a class all by himself." Those documents, as later described to me by RCMP Investigator Sean McDade, proved to be "Awesome and right on the money."

The essence of those documents was that, not only had the Republicans under Meese exploited the software, but that the Democrats had also seen its potential and moved years earlier. Nowhere was this connection more clearly exposed than in understanding the relationship between three classmates from the U.S. Naval Academy: Jimmy Carter, Stansfield Turner (Carter's CIA director), and billionaire banker and Presidential kingmaker (Carter's Annapolis roommate), Arkansas' Jackson Stephens. The Tyree diagrams laid out in detail how Promis, after improvement with AI, had allegedly been mated with the software of Jackson Stephens' firm Systematics. In the late seventies and early eighties, Systematics handled some 60-70% of all electronic banking transactions in the U.S. The goal, according to the diagrams which laid out (subsequently verified) relationships between Stephens, Worthen Bank, the Lippo Group and the drug/intelligence bank BCCI was to penetrate every banking system in the world. This "cabal" could then use Promis both to predict and to influence the movement of financial markets worldwide. Stephens, truly bipartisan in his approach to profits, has been a lifelong supporter of George Bush and he was, at the same time, the source of the $3 million loan that rescued a faltering Clinton Campaign in early 1992.

-- Promis, by Michael Ruppert

But then, the speculators and bankers, however immense their reach, were hardly alone in netting the profits washing over Little Rock. So flush was the moment that Internal Revenue Service monitors noted warily a "major increase" in the number of large cash transactions in Arkansas, despite the state's chronically stricken economy. The IRS began to alert other law enforcement bodies to what its agents called the region's "enticing climate" for drug trafficking and money laundering. As it was, the worst official suspicions rarely matched the grainy picture emerging in law enforcement files and other documents.

At raucous parties on sprawling estates and aboard private jets, cocaine lay piled in ashtrays, was passed about on silver platters or in small vials, was even bagged in festive pouches hanging as ornaments from Christmas trees. Regular party guests -- powerful businessmen and politicians from Arkansas and beyond -- had "all the coke they could snort," as one witness told the police -- and were supplied, too, with pretty teenage girls from Little Rock high schools as well as with the most fashionable black prostitutes from the capital or Memphis or New Orleans, women who later told stories of suffering cigarette burns and other abuse in the houses and suites of some of the city's most wealthy and prominent citizens. "They were animals," said a West Memphis sheriff’s deputy who listened to some of the accounts.

It was all done with seedy abandon and, for most involved, utter impunity. Drug dealers corrupted local police for protection, hiring off-duty officers as bodyguards, and in any case kept up a steady stream of contributions to local officeholders and charities. At one point gruesome testimony moved prosecutors to bring a few cases. But inquiries never went too far, and the token convicts were soon forgotten, the most famous among them pardoned by Governor Clinton. "I guess there was an accountability of sorts," one official would comment bitterly. For their own purposes at least, according to government informers, representatives of organized crime made videotapes of the politicians cavorting at the parties.

PATTY-ANNE SMITH was sixteen years old when she fell under the ruinous influence of Dan Lasater, friend and patron of the Clinton brothers. She was a cheerful, gregarious girl, a cheerleader at the North Little Rock "Ole Main" High School. Her nicknames were Muffin and Precious. She was still a child, but not for long.

"I was a virgin until two months after I met Dan Lasater. He plied me with cocaine and gifts for sexual favors and I finally gave in and slept with him," she said in a police statement at the offices of the U.S. Attorney in Little Rock.} At the time Lasater was 40, more than twice her age. Under his tutelage she soon became addicted to hard drugs. She would help herself to the limitless store of cocaine in the kitchen wall-safe at Lasater's apartment at I2B Quapaw Towers. "I could get an eight-ball whenever I wanted it. I carried a vial of it around at school." [2]

Lasater arranged for a corrupt doctor to give her "a pelvic examination and prescribe birth control pills." Once on contraceptives, she was made available to Lasater's business colleagues, including Arkansas State Senator George Locke. [3] In the end Patty-Anne fled Arkansas after it was explained to her that he planned to use her "as a semi-prostitute to 'entertain.'''

Patty-Anne was not the only victim. Michelle Cochran, then 19, had much the same experience. "He used drugs and money eventually to seduce me. As a result of the relationship I became addicted to cocaine," she told the State Police. [4] So did Gina Hartsell. Lasater flew her to Las Vegas in one of his private jets, enticed her with cocaine, and seduced her that night at the Bob Hope Suite of the Riviera Hotel. Before long she was so addicted that she "would sometimes get up and snort cocaine in order to start my day." [5]

But it was Patty-Anne Smith who suffered the most traumatic loss of innocence. The feds tracked her down in 1986 as a witness in a joint state-federal probe of the Lasater cocaine ring. When they found her she was a "basket case," in the words of one investigator, working as a "drugged-out party girl" at the Tahoe Beach and Ski Club in California. [6]

As I read through her statement in the narcotics files of the Arkansas State Police eight years later, I wondered what had become of her. By all accounts she had simply vanished, and for good reason. She had been threatened by Lasater's enforcer. "Chuck Berry told me that I was one of Dan Lasater's most trusted people and knew a lot about cocaine and his personal life," she told the Arkansas State Police. "If I ever betrayed his personal trust and hurt Lasater in any way I would not 'see daylight' to tell about it anymore." [7]

She was not easy to find. First I had to track down her mother, who then passed messages back and forth thinking that I was one of her daughter's numerous suitors. Apparently, she approved of my Oxford accent, which generally seemed to go down well in Arkansas. I eventually met up with Patty-Anne in Florida. She was still beautiful, making a living as best she could on the margins of the jet set. Blessed with the beautiful lithe body of a fashion model, she had green eyes, long blonde hair, and a slight rasp in her voice.

How did it all start? I asked her as we sat on the terrace of an Art Deco cafe, looking out over the Atlantic.

"I was working at Busters, as a seating hostess. It was a Friday night. He came in with a large entourage and wanted a table. The place was packed, but I somehow managed get them seated and he gave me a hefty tip. I'd never seen a $100 bill before .... A few hours later he called me up, wanted me to come over to a party. He said the chauffeur was waiting for me outside with a limo. I thought it was kind of neat." [8]

"I was the youngest of all the girls. We were like hens in the roost, with the rooster," she explained. "We girls got along in a bitchy kind of way because we didn't want to be expelled from the roost .... He bought us all."

"I'll never be the same sweet Patty I was, I'll never trust people again. It's made me the cynical bitch I am now." Her mother knew that something awful had happened, but Patty-Anne was too ashamed to confess her story. The shame lingers. "How can I marry now, or have children? I have too much explaining to do."

She had moved fifteen times, tormented by her nightmares, too frightened to venture near Little Rock. "I knew a lot more than I should have known. I was there in the apartment at 12B when Dan did his business dealings. I'd be corning and going with champagne, and I'd hear the conversations," she said. That was how she learned that Lasater was mixed up with the Contra supply operation in Nicaragua. "I didn't think anything of it at the time. Then all that stuff broke in the news years later, and I thought 'wow.'''

The Clinton brothers were part of the scene. "I met Bill Clinton several times, he'd know my name and I thought he was a wonderful person, but I can tell you that he was never acting like a governor when I saw him." She claims to have witnessed him taking cocaine on two or three occasions, although only one of them stands out in her memory. It was late at night, around one in the morning, in a room off the kitchen in Lasater's residence. The only people present were Patty-Anne, Lasater, and Bill Clinton. "He was doing a line. It was just there on the table."

Given the circumstances, that allegation is, obviously, impossible to verify, but Patty-Anne's general testimony was used in 1986 by federal authorities to help convict Dan Lasater of "social distribution of cocaine."

What is possible to verify is that Bill Clinton and Dan Lasater are rewriting history when they now claim they hardly knew each other. [9] The reality was spelled out in the sworn deposition of Corporal Barry Spivey, a State Trooper who served on Governor Clinton's security detail from 1979 to 1984. Spivey is not one of the troopers who came out publicly against Clinton. He gave this interview because he was compelled under subpoena.

Spivey: "I can recall flying on Dan Lasater's Lear jet. It was nice. It impressed me, I recall .... I flew from Little Rock to Lexington, to the Kentucky Derby, the Governor and I and Dan .... There was other times that Governor Clinton took flights with Dan personally or in Dan's plane. But that was the only time I was with him."

Q: "Do you remember Dan Lasater coming to the Mansion?"

Spivey: "Well, he dropped in. Just kind of off-the-cuff, drop-in things .... Day and night, weekends, all day. He just came when he wanted to. I wouldn't log Dan in because I knew that he and Bill were friends .... Dan was never shown in through the front door. Dan went in through the kitchen .... You just didn't go through Miss Liza's kitchen unless you were part of the kitchen circle."

Q: "How many times would you say you took Governor Clinton down to Dan Lasater's?"

Spivey: "Six, eight, ten times. A lot of times he'd say stop and he'd jump out and run in and I'd circle the block and he'd jump back in. Sometimes I might park and sit there for an hour .... I know he went a lot more times than when I was with him, when the other guys were driving .... He went by there a lot." [10]

-- The Secret Life of Bill Clinton: The Unreported Stories, by Ambrose Evans-Pritchard

Meanwhile, in the remote pine-forested Ouachita Mountains, some 160 miles to the west on the Arkansas-Oklahoma line, in country once the refuge of border bandits and anarchists, local officers happened onto suspect air traffic, stores and truckloads of weapons, and even Spanish-speaking strangers carrying out military exercises in camouflage uniforms. Nearby a local IRS agent and state police investigator glimpsed the silhouette of a multibillion dollar gunrunning, drug-smuggling, and money-laundering operation, an enormous criminal traffic carried on for at least five years with what the US government's own documents secretly recorded as the collusion of organized crime, the Central Intelligence Agency, and other Washington institutions. By their sworn statements, couriers for the operation carried duffel bags stuffed with cash into local Arkansas banks, then watched as obliging bank officers apportioned the money among the tellers for cashier's checks, each transaction just under $10,000 to evade the IRS reporting requirement.

A tentacle of the Iran-Contra scandal, and only part of a larger, still darker underworld of national security policy run amok, the vast crimes were effectively sanctioned by Ronald Reagan's White House and later covered up by George Bush's. Yet what went on in the Ouachitas in the 1980s was essentially condoned as well by a third and future president then sitting in the Little Rock statehouse, where the drugs and intrigue were topics of avid interest and frequent discussion among the governor and his state police escort. The episode was destined to be known for the obscure town where the principal smuggler and government operative based his aircraft, a tiny Arkansas county seat named Mena.

Over it all, linked directly and indirectly to the people and even the more bizarre events, was Arkansas's gregarious young leader, who by the mid-1980s seemed to have taken up permanent residence in the governor's imitation Georgian mansion. There was no longer any doubt about Clinton's accommodation to the state's largest interests old and new, or about their stake in him. "Put sessions" were what the gatherings were called at which the local movers and shakers came together to "just put up or shut up," as business editor Kane Webb described the ritual. In his 1982 comeback and afterward, Clinton would raise some $10 million from them, an average of over a million dollars a year. When he made his long-expected run for the presidency in 1991-92, they would be there with millions more.

Yet there was something now beyond the usual statehouse favors and the ceaseless ambition. The palpable ethic of Little Rock, of the 1980s as an era, became that of the Clintons as well. Albeit in different ways perhaps, he and his impressive wife were personally very much a part of the city's racy new style, drawn like Mamet characters into the ethos and habit of its grasping.

As she had done earlier in the commodities market, the First Lady of Arkansas took advantage of the easy money. She swiftly joined the McDougals in their fast shuffling of loans and land and assumed an active role in exploiting with punitive real estate contracts the specially targeted, often gullible low-income elderly buyers of Whitewater lots. Typically, too, she used her political status to garner lucrative retainers or seats on corporate boards and was one of a handful of Little Rock insiders in a high-yield franchise investment scheme spun by a figure who, like Red Bone, would be discovered afterward to be shrouded in allegations of fraud and manipulation.

Meanwhile, commonly said to care little about making money, an impression he casually cultivated, the governor was privately avid in his own financial pursuits. He unabashedly solicited friends like Jim McDougal for not only campaign funds but even legal retainers for his wife. "McDollars," Clinton would laughingly call the money that always seemed available through the owner of Madison Guaranty. From other friendly banks he borrowed, without collateral, hundreds of thousands of dollars that went into his personal campaigns and toward other uses for which there was no comprehensive accounting. Beyond the ten million dollars in recorded campaign contributions, he extracted more from the large interests to wage elaborate propaganda in the service of his legislative agenda and his national reputation, again evading a complete reporting of the funds.

In the vivid recollection of aides who handled the wads of bills, the governor was provided thousands of dollars each year in "pocket money," cash that went for everything from petty kickbacks in friendly precincts to payments made by state troopers for gifts for his mistresses -- all this, too, evidently unreported on tax returns or in other accounting by a Bill Clinton who meticulously ticked off dollars and cents in tax deductions on discarded underpants and socks. Not least, there were the incessant favors, the gifts, the flights on corporate planes and on the private jets known for their ashtrays filled with cocaine, the complimentary suites and boxes, the parties with the teenage girls and tortured prostitutes.

According to numerous witnesses who slowly emerged from the shadows, drug orgies were hardly the governor's only sensual pleasures. According to their sworn testimony and the consistent accounts of several of the women themselves, his state trooper bodyguards served as veritable procurers of sexual partners, both the consenting and the simply vulnerable, as Bill Clinton swept through public appearances from conventions to county fairs or made his habitual forays into nightclubs in Arkansas and elsewhere while traveling on official business. For hours of their official shifts, troopers stood lookout, the state limousine furtively tucked away up a driveway or around the corner. The governor's sexual compulsions on and off public time were common knowledge in some Arkansas circles, even among the "selective" Little Rock press, and, like his business associations and financial practices, were unexamined, condoned, accommodated.

To those who had access to official files and insider knowledge, the abuse of Hillary Clinton and the exploitation of young women, even the misuse of public office in the conduct and coverup of the acts, could seem comparatively trivial. One of the governor's closest friends and principal backers, the beneficiary of commissions on hundreds of millions of dollars in state bond transactions, was a drug dealer of some magnitude, one of Little Rock's cocaine party hosts who was also under suspicion for narcotics smuggling elsewhere in the nation.

Other influential Clinton friends and contributors, too, had thick investigative dossiers, several with the special code numbers reserved for suspects appearing with some frequency in the records of the federal Narcotics and Dangerous Drugs Information System. Police files brimmed with allegations of drug running, ties to organized crime, and even murder alleging the involvement of a well-known Arkansas businessman and some of the governor's closest supporters.

In many ways Bill Clinton knew the underworld reality as well as he knew the relatively open issues of state governance he described so impressively to visitors. He was known for expounding on almost anything of import in his small, self-conscious state. Yet about the darker provinces in Arkansas, about much that made the place far more than its hillbilly caricature -- from the debauchery of the powerful to the immense wealth and influence to the international intrigue and crime -- the voluble politician was uncharacteristically reticent. On some subjects, it seemed, even Bill Clinton would say as little as possible.


In his 1983 inauguration speech Clinton movingly evoked his roots in Hope, telling the old story of how Eldridge Cassidy had wept because he was too poor to buy his little girl Virginia an Easter frock. "It was very humble and watery," recalled an aide. Meanwhile Hillary Clinton moved back into the mansion with a relish and design that struck even casual observers. To the comparatively modest inaugural ball -- "no Camelot now," a reporter noted -- the reinvented First Lady wore a decidedly traditional gown, what the editor of the Democrat's society page thought "a pleasing set of feminine contradictions" and a less reverent observer called "something you'd find at the Eastern Star dance in Pine Bluff." Their friends from out of state were "shocked," as one recalled, that the carefully coiffed and made-up Hillary now also spoke with an audible southern drawl. "I had to think twice," said a Yale Law School classmate.

In place of what Starr had deplored as the young "squirrels," there was now banker and money raiser Maurice Smith, "grizzled, gravel-voiced ... unprepossessing ... one of a series of father figures in Clinton's life," as Oakley saw him, a good ole boy who "knew where the skeletons were buried but ... had no interest in disinterring them." Just below Smith was the acerbic Betsey Wright, serving again as guardian of Clinton's public image and political flanks.

His staff had shrunk to fourteen members from the seventy-eight it had been four years before, and only one member was from outside Arkansas, compared to twenty-six in the past. Clinton for now closed the Arkansas office in Washington, renouncing out-of-state travel or national forums as ardently as he had once sought them. "Gone native," the staff of the National Governors' Association would say sarcastically of the thirty-seven-year-old politician they watched move with such expedience from local to national poses.

There was an anxiously displayed new accommodation in legislative policy as well, what an intimate witness called "the care and feeding of the interests." Even the conservative Starr thought Clinton's second-term agenda a "pale shadow" of his first administration's. Utility reform now went unmentioned, the Grand Gulf swindle he had played against White all but forgotten. Even before Tyson and the shipping combines lobbied for it themselves, Clinton on his own initiative would press for the truck weight concessions they had wanted two years earlier. To the mounting distress of the small public-interest community in Arkansas that still supported him, he acquiesced from the outset in corporate environmental abuses and continued company dominance of state regulatory commissions.

The young governor might still occasionally rail against a faceless "they" who financed his opponents in the legislature as lavishly as they bankrolled him, though it was now public indignation with a broad Clinton wink. "He knew it was popular to attack them, but he was on the phone with them before and after, telling them it was just good politics, keeping and making peace," recalled a legislative aide. "He became a student of the political process, not truly governor but ultimately a master of what elects and what doesn't," said a supporter at the time. "Any real policy would have gotten in the way. He wouldn't offend the money."

At meetings early in the second administration the governor might still ask aides who was most affected by the action they were discussing. Were there people not present who really cared? "But that happened less and less," said a participant, "and there were fewer and fewer voices in the room other than the status quo." As in the first term, as in his campaigns, Clinton would continue to promise and renege, appeasing each audience as it came, infuriating even his most consistent clients among the interests with an incorrigible vacillation and evasiveness. "The son of a bitch couldn't ever really be trusted. Ever!" one of them would say years later.

Yet not even his habitual caprice could balance the constant calculus to satisfy the patrons. "He never challenged them again," a prominent Arkansas Democrat said of the corporate giants. The craven wont of the comeback now became his fixed political method and governmental custom. The "care and feeding" evident in the first weeks of the second term would shape power and politics in Arkansas for the rest of the decade and beyond.

The widely publicized "reform" of Arkansas education in 1983 -- an episode the Clintons were to advertise as a major achievement in running for the White House -- embodied what many saw as both the best and the worst of the administration and, in any case, was a fateful prototype of the ill-fated national health reform to come.

By every measure, the state's schools had long been a disgrace, among the poorest in the nation in terms of course offerings, dropout rates, teachers' salaries, number of accredited districts, or any other standard. "They do worse," a member of the state Board of Education said of Arkansas students in 1980, "the longer they stay with us." At once symbol, cause, and effect, the deep-seated mediocrity in education went to the core of Arkansas's tormented, defensive self-image of backwardness, and Bill Clinton was to play effectively, sometimes brilliantly, on that paradoxical mixture of pride and prejudice.

Policy that the Clintons later presented as a bold, original initiative actually derived far more from the political moment and the work of others. Even in Arkansas, educational reform had been a recurrent if ultimately vain theme for governors dating back to the postwar McMath administration. By 1983 state supreme court decisions made necessary at least some overhaul of the system, and education had also become a fashionable issue among the newer generation of modernizing, mercantile-minded southern governors in states from Mississippi to South Carolina, from whose already evolved reforms the Clintons would borrow "liberally," as one reporter put it. In that setting what now unfolded would make education a kind of emblem of Clinton governance: a pressing problem both simple and subtle, addressed with seemingly dramatic solutions, soon immersed in expedient, often contradictory politics, and ending with a substantive result far less meaningful than the eventual claim.

As late as the transition -- there had been no real commitment to such a major initiative during the 1982 campaign -- the Clintons settled on the priority and potential of the issue and moved quickly to seize the political moment. "Slick Willie ... dominated the regular, do-nothing session of the legislature," one skeptical editor noted of the weeks after his second inauguration. But with the newly reelected governor lobbying energetically, the 1983 legislature did create an Educational Standards Commission to hold public hearings and recommend reforms, though some believed -- aptly, it turned out -- that most measures had already been decided by the governor's office. Kindergartens, mandatory attendance, smaller teacher-student ratios, a small raise in teachers' salaries, new course requirements, a longer academic year, limits on teachers without appropriate credentials, and more -- the proposals were a roll call of what was starkly absent in the old system. "Only in a state like Arkansas," one writer concluded, "would such a minor package ... be labeled 'reform.'"

Yet the most startling innovation for many -- bringing a "statewide gasp," said one account -- was the governor's appointment of his wife to chair the commission, thrusting her into the political process more openly than ever before, to act now as advocate and lightning rod for an issue on which they were both banking heavily. The selection was more than political calculation. Reelection hardly stanched the draining emotional wounds of the defeat and comeback. "The period preceding her appointment had been one of the most turbulent of their marriage," Nina Martin wrote of those months in 1982-83. Now, in a pattern to be repeated often, the formal, overt sharing of power, whatever the intimate balance between them, proved to be both personal appeasement and adept politics. Hillary Clinton plunged into the effort with obvious ardor. "She did it with more delight than in anything I'd ever seen her do in Arkansas," said a friend. "She was really ready."

The job seemed both to compensate for the accumulating pain and betrayal in the marriage and to vest her all the more in the fate -- and myriad compromises -- of her husband's persona and politics. By then some of her oldest friends thought that her lot was long since cast, others that the educational reform was still a watershed, a point from which she might yet have somehow turned back or aside. "After she got out front on the education thing," said one of them, "there was no doubt about where she'd end up, or how consciously she chose it."

Together in the promotion of a public policy, the Clintons were unlike anything the state had ever seen and in many ways more concerted and collaborative than they would be again until the 1992 presidential run. While the governor worked what aides called "the inside," restlessly lobbying legislators, school superintendents, and others, the First Lady crisply held the often tedious pro forma public hearings in each of the state's seventy-five counties, ate her discreet lunches with Starr, and courted, impressed, and ultimately won over the broad public they had targeted. The audience was ready, albeit in an Arkansas still prone to use deplorable education as an excuse for much else and always opposed to the taxes involved in paying for a better system. Most important, they encountered no real opposition among the dominant interests. "The good suits," as they were known, would at least be neutral, if not supportive. In fact, Clinton would raise more than $130,000 from wealthy contributors and major companies for television ads and other promotions selling better schools as a tool for economic development, a source of jobs, and a spur to state pride. He merchandised the proposed legislation as if it were a consumer product, pitching educational standards to the public, said one account, "as a way of giving them something for their money."

Even with powerful backing and broad consensus, however, the Clintons were never to confront the basic problem of school district consolidation, the one essential reform that could have given meaning to the rest. Splintered into its local enclaves and preserves, most of Arkansas would never have the resources or renewed talent to make the new standards truly count in terms of a more educated populace. Though longer years of mandatory attendance, more course offerings, and higher salaries for teachers would be legislated, these changes would occur within the old and overweening system. "Real change meant going to the grungy heart of education as pork and bureaucracy," said someone who worked on the reforms in the statehouse -- "the difference between policy as playing politics and policy as real problem solving and reform whatever the difficulty." In the end even the Clintons' limited improvements, modest by national standards, would be mortgaged by that failure.

After the statewide hearings and just before legislative action, they responded to the urging of Starr and others (and ignored the despair of many of their supporters) by adding to the package a one-time qualifying test for teachers. Questions of competence were all too real, but the test, the governor's office understood, was a case of class cannibalism in a state where teachers, whose pay was at the bottom of the scale nationally, still made as much as 50 percent more than Arkansas's average wage. As expected, the test aroused angry opposition from the Arkansas Education Association as well as from civil rights groups rightly fearful of the toll on black teachers. Their cries provoked the calculable backlash. At a stroke the Clintons could now cast the essential issue of reform as teacher accountability, and teachers as a whole and blacks in particular as ready scapegoats before the poor white electorate.

As the corporate-financed ads and other statehouse pressures intensified through late 1983, polls soon showed a two-to-one margin in favor of the teacher testing. It was with that condition that the rest of the new school standards eventually passed the legislature at the end of the year. Later leaked to the press, the test was a cruel mockery. While rates of failure were predictably higher in the most impoverished black districts for all the usual cultural and political reasons, and some 3.5 percent of teachers flunked despite repeated attempts, several of those who took it in Little Rock's White Heights "came out laughing," as one journalist recounted. Anyone with an eighth-grade education, even in Arkansas schools, might have passed, Meredith Oakley noted cautiously, proof only that most teachers "were at least as competent to stand at the front of the classroom as the average Arkansan."

The same "average Arkansan" was to suffer the new tax levy that was the other precondition of the package. Having promised a 1 percent increase in the state's notoriously low corporate and severance taxes and having proposed the teacher test "as a bone to businesses ... to give them accountability in return for a tax hike," as one version described it, both Clintons would now stand by in studied silence while the interests -- many of the same giants who had given to their propaganda fund -- quietly turned their lobbyists full force on legislators to block any rise in corporate or severance rates “The big boys were for better schools so long as the rednecks paid," a ranking woman in the Clinton administration recalled. "Spectacle to behold, spectacle to behold," drawled a lawyer who saw it at the capitol. "Lots of winkin' and noddin' Arkansas-style." In the process and with the same ethic, Clinton would earnestly promise antipoverty and senior-citizen groups a rebate on any tax affecting the poor, then casually abandon them by refusing to press the relief against the opposition of legislative barons and corporate lobbyists.

When it was over after a six-week special session of the legislature in the autumn of 1983, the entire cost of the stillborn reform typically fell on those least able to afford it -- in a regressive one-cent rise in the sales tax -- "the largest general tax increase in the state's history," one journalist recorded. "Business and utility interests emerged unscathed," Oakley noted. Country club fees were specifically exempt from the sales tax. With Jim Blair lobbying, a third of the new funds would be siphoned off, without even the pretense of higher standards, for state colleges and universities as mediocre as the lower schools, leaving elementary and secondary institutions far less of the regressive tax money than ever planned, for reforms already more guise than substance.

Outwardly Clinton scored a public-relations triumph. Conservative local critic Paul Greenberg deemed it Clinton's "finest hour" and proclaimed that the governor "came of age as a political leader" and that "Slick Willie [was] almost invisible at the special session." The change, due largely to Hillary, "wouldn't be the first time that the key to a man's growing up would prove to be a woman." It was a verdict about both of them widely shared in local journalism and lore.

Only later was there deeper public scrutiny of the actual effects of the legislation, let alone the raw politics that enveloped it. Like the rest of the Clinton legacy, the sum of his education policy, including the new standards, could not be fairly drawn until the 1990s, though year after year from 1983 on, even with the added funds, the state remained consistently among the worst two or three in the nation in spending per capita on public schools, while most of the other dismal indicators there at the beginning remained largely unchanged. Few understood the implications of the $130,000 given to the governor by the interests to sell the package, the subsequent cynical lobbying against progressive taxes to which both Clintons acceded, and then the almost perfunctory statehouse treachery on the rebate for the poor.

If teachers came away feeling exploited and deceived by Hillary's expedient resort to the testing issue and then her sudden disappearance from the process after her public accolades -- and just when the corporate lobbying and sordid inner politics began -- they were not alone. Scarcely a year into Clinton's second term, there was a gathering sense of his emerging pathology as a political leader. "I think he's a habitual liar. He's done it all his life, and it's just the way, business as usual," former close aide and fund-raiser Bert Dickey would say later, echoing a judgment that began to form for many in the 1983 maneuvering. "I don't think he's got a conscience. He can be true-blue one minute and then the next minute you're out of there." At the same time, aides and others found an imperious double standard. A legislative assistant thought Clinton "very casual about the truth himself yet very scrupulous about what somebody else told him." One of his liaison lobbyists observed that, "beginning with that second term and particularly in education, which meant so much to his reputation and national ambition, Bill himself was tougher and more ruthless than anyone in getting what he wanted. He was abusive and full of violent language at any hint of betrayal by anybody he thought was an underling."

A decade later some saw the education-reform episode reflected in the extravagantly promoted but ill-fated effort at national health insurance reform. Once again, the First Lady was thrust out to hold hearings and impress the audience, and once again, supposedly open reforms were secretly sabotaged beforehand. Once again, there were promises and betrayals, an elaborate outer image and hidden inner politics. In Washington, however, the opposition would be far more formidable than Arkansas' scapegoated teachers or civil rights groups. The insurance combines, the medical industry, and more would be arrayed against change with overwhelming force, and there would be a crushing defeat. Once again, too, the First Lady would leave the field just as the real politics began, unable to confront either her husband's habitually refracted politics or the deeper power of the system she professed to understand and challenge. "If you knew what truly happened in the education deal," one of their statehouse aides would say, "you didn't need a crystal ball for what was going to happen to health reform in Washington. You just knew."

At the end of 1983 in Little Rock, however, the Clintons basked in victory, and much of the state in the impression, if not the reality, of change, the all-important "feeling better about themselves" that the governor and his wife would repeatedly bring to an abject constituency. Through her skillful public rounds Hillary especially had "engag[ed] the people of Arkansas for the first time in a real conversation about education," former Clinton education aide Don Ernst said afterward. For many it was enough. That new standards, persuasively presented as reform, had passed the notorious legislature seemed proof of statesmanship, especially since the governor and his wife had "faced down a long line of special interests,” by which Greenberg and others meant the teachers and the blacks. Demagoguery on the test, collusion with the interests, failure to confront consolidation -- all seemed subtle and obscure by comparison. So, too, was a larger precedent: an avowedly populist governor artfully turning on people ostensibly of his own constituency, isolating or stigmatizing them on class or racial grounds to appease what he saw as broader support. It was a foreshadow of what would be called "the Bubba factor," a consummate cynicism taken into the presidential race of 1992 and later into the White House.

After only a year of his second term Bill Clinton stood at the zenith of his popularity in Arkansas. He was still unrivaled in his own party and faced no credible Republican opposition on the way to a historic third term in 1984. The first such extended tenure for a governor since Orval Faubus, reelection would bring sweeping patronage in commissions and other bodies that would make him the most powerful chief executive in state history. Then, just as that historic victory and power appeared certain, there was a fleeting intrusion of that other, darker Arkansas, stirring private turmoil behind the public facade and frightening Bill Clinton into a needless last-minute debt that would haunt his presidency.


Roger Clinton's locally famous name began to appear in the narcotics files of local and federal law enforcement agencies in the first weeks of 1984, and some officers believed there had been even earlier reports that were subsequently purged. It was in the late spring of that year, as Virginia remembered, that she first learned that twenty-seven-year-old Roger was in trouble for drug dealing, though "Bill had known for weeks that this moment was coming." What her sons had actually known and done, however, and for how long, not even Virginia was prepared to face.

Roger's dissolution had posed a potential embarrassment since Clinton's first term in the mansion, though each time the episode was fixed or covered up. After Roger was arrested in 1981 for ignoring repeated speeding tickets, the governor quietly arranged for his release to the custody of a relative who chaired the state's Crime Commission. Clinton had already appointed his half brother to, of all things, the Crime Commission's Juvenile Advisory Board, though Roger would soon be removed for nonattendance. There was another troublesome arrest, this time for drunk driving and possession of narcotics, in March 1982, on the eve of Bill's carefully orchestrated announcement for reelection. Containment required intense intervention behind the scenes, and after a year of maneuvered postponements the charges were discreetly dropped. "The sheriff’s office and the prosecutor succumbed to political pressure," one journalist wrote after the fact. "They leaned till they cracked," said a lawyer who knew the case. Knowing what lay in store for them if they brought charges, local authorities generally continued to look the other way through 1983 as Roger repeated his father's pattern of public drunkenness and brawls.

According to later testimony, including police stakeout video film, informers' hidden tape recordings, and his own statements to investigators, Roger Clinton had begun using cocaine in the late 1970s and was soon addicted. Eventually he was slave to a four-gram-a-day habit, snorting the drug some sixteen times during his waking hours and "getting close to a lethal dose," as a therapist told the court. He supported the addiction and a rakish lifestyle by dealing drugs himself, with contacts in New York winding all the way to the Medellin drug cartel in Colombia; he had, on occasion, walked smugly through Little Rock's small airport with what he described as "thousands of dollars" in cocaine hidden on his person. "I can get you a quarter pound," the half brother of the governor would be heard saying to a wired police informer in negotiations for $10,000 in cocaine during the early 1980s. "I can get you what you want if you come up with the cash." Yet it was clear from the evidence, too, that Roger Clinton was hardly one more petty drug dealer and addict. As his own trial and related ones revealed, the drug trade flourishing around him involved some of the most noted figures in Little Rock and around the state.

Arkansas's role in the contra war and in an arms-for-drugs supply network goes back to the early 1980s and the airport at Mena, Arkansas, discussed in this column two weeks ago. A federal investigation aided by the Arkansas State Police established that Barry Seal, a drug dealer working for the Medellin cartel as well as with the C.I.A. and the D.E.A., had his planes retrofitted at Mena for drug drops, trained pilots there and laundered his profits partly through financial institutions in Arkansas. Seal, at this time was in close contact with North, who acknowledged the relationship in his memoir. These were the years in which North was constructing his covert supply lines for the contras.

-- Chapters in the Recent History of Arkansas, by Alexander Cockburn

"I don't wannna tell ya too much, 'cause truthfully ya don't have a need to know. But Terry I been workin' with several federal agencies for the past couple of years as ya probably suspicioned. In the course of that business, a person can't help but run across some real sensitive information. It seems some major players in the Medellin Cartel, whom I personally know, ran across some knowledge that's very valuable to both the Republicans and the Democratic Party. Real national security stuff. It seems some of George Bush's kids just can't say no ta drugs, ha ha ha ha ...Well, ya can imagine how valuable information like that would be, can't ya? That could get ya out of almost any kind of jam." Seal paused for a moment then asked, "Ya ever play Monopoly? The information I got is so good it's just like a get-out-of-jail-free card ... ha, ha, ha, ha YEEHAWWWWW..."

-- Compromised: Clinton, Bush and the CIA: How the Presidency was Co-opted by the CIA, by Terry Reed & John Cummings

"The Contras needed weapons for their rebellion against the Sandinistas. When the CIA approached the Contras in the early 80's they promised total support in weapons, training, and money required to sustain the operations. This is what prompted the Nicaraguans to begin open recruiting against the Ortega-led Sandinista government. But, as time went on, the U.S. renigged on their promise to the rebels. Not only did the U.S. cut money needed for medical and food supplies for the Contra camps, but they also refused to provide the weaponry needed to stay alive. This left the Contras in a hell of a spot. William Casey met with Adolfo Colero and it was decided that the Contras would get the much needed money and weapons in exchange for cocaine. Casey put Ollie North over the project. North, at the CIAs promptings, recruited Seal to oversee delivery of the products, and a man named Ramon Navarro (Medellin Cartel) to train the Contras in the manufacturing process. Colero was the "point man" for the Contras. He dealt with Washington and others as needed. Contra leader Enrique Bermudez was tasked with getting the cocaine kitchens built and protected. Bermudez had solicited three other Contra commanders to assist in this project. Their names are Commander Fernando, Commander Franklin, and Commander Marlan. Ramon Navarro supplied the cocaine paste and raw coca leaves to the Contras. The U.S. provided the equipment. It was delivered to the camps by Chinook helicopters (CH-47) out of Ft. Campbell, Kentucky (159th Aviation Battalion). It was Barry's job to deliver the finished product and monies to destinations as dictated by Mr. North.

-- The Chip Tatum Chronicles: Testimony of Government Drug Running, by Chip Tatum

Only occasionally did a major news outlet seek to square this circle, such as during Noriega’s drug-trafficking trial in 1991 when U.S. prosecutors called as a witness Colombian Medellin-cartel kingpin Carlos Lehder, who, along with implicating Noriega, testified that the cartel had given $10 million to the Contras, an allegation first unearthed by Sen. Kerry.

-- The Warning in Gary Webb’s Death, by Robert Parry
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Re: Partners in POWER: The Clintons and Their America

Postby admin » Sat Jun 25, 2016 3:05 am

Part 2 of 2

MAS was founded in December 1981 by drug traffickers Carlos Ledher Rivas and Jorge Luis Ochoa Vásquez. The leader of the Medellín drug cartel, Pablo Escobar Gaviria (d. 1993), was also believed to be among the patrons of MAS. This group was originally directed particularly against guerrilla groups, such as M-19, that had been kidnapping drug kingpins for ransom. Eventually it became a right-wing death squad that targeted leftist politicians, students, and other activists. MAS is believed to function as an umbrella organization for a number of right-wing paramilitary groups of which 128 could be identified by 1988.

-- Inside the Dixie Mafia: Politics of Death, by John Caylor

Nazis and their sympathizers are rarely boring. At the very least, they are revolting and perhaps even ridiculous. At best, they are surreal. One such case is that of Carlos Lehder Rivas, [27] a former kingpin of the Medellin drug cartel of Colombia: neo-Nazi, multimillionaire drug lord, convicted felon, prosecution witness against former Panamanian President and Santeria practitioner Manuel Noriega, and huge John Lennon fan.

Lehder's father was a German engineer who managed to emigrate to Colombia before the end of the war. Carlos Lehder himself was born in 1947, the product of a union between his German-born father and Colombian mother. His parents divorced shortly after Carlos was born, and his mother took him to New York City, where he eventually wound up selling pot in the Bronx as a teenager before getting arrested for grand-theft auto at the age of twenty-six. He had been stealing cars since he was eighteen.

By 1975, he was out of jail and back in Bogota. Three years later, and Carlos Lehder was one of the richest men in the world. He had understood that the key element in any narcotics operation was transportation, and -- with his newly acquired pilot's license -- he set up a marijuana transport system that was the marvel of South American criminal enterprises.

Not content with being a mere drug trafficker, however, Carlos Lehder decided he wanted to run the country. By 1983 he had formed a political party -- the Movimiento Civico Latino Nacional (MCLN) -- a rabidly nationalist, anti-American, anti-Communist, and neo-Nazi party in which Hitler was extolled as "the greatest warrior in history," [28] and Lehder's own open involvement in the drug trade was nothing less than a means of toppling the imperialist forces (the United States) and destroying their influence in Latin America. He opened a resort hotel, the Posada Alemana (German Inn), a pastiche of Bavarian-style architecture, with a statue of Lehder's idol, John Lennon, as centerpiece of the hotel's disco: a club which blared a constant stream of Beatles music at all hours of the day and night. The statue itself is worthy of attention for here Lennon is depicted in the nude, wearing only a Nazi helmet, holding a guitar, and with a bullet hole in his heart! How the peaceful, antiestablishment and pro-love pop singer and composer was linked with Nazism in Lehder's mind is anyone's guess; perhaps Mr. Lennon's marriage to a Japanese woman was enough to convince the drug dealer that Lennon's sympathies were with the Axis powers?

In any event, Lehder's many speeches to the press and to crowds of curiosity-seekers in his hometown of Armenia consistently invoke this theme of Nazism and the drug trade, equating cocaine with the atomic bomb: the secret weapon of the Nazis in their ongoing struggle against capitalism and American imperialism. Most DEA agents regarded these speeches as the ravings of a coked-up narcotraficante ... but then there was that little matter of a military coup in Bolivia, a coup masterminded by drug-runner and former Gestapo chief Klaus Barbie with the assistance of a secret Masonic organization based in Italy.


At the end of the war, and with a price on his head and a warrant for his arrest, Barbie managed to find employment with American intelligence in Germany, specifically for the US Counter Intelligence Corps, or CIC. [32] As a Nazi turned informer and spy, Barbie entered into such illustrious company as Reinhard Gehlen, Otto Skorzeny, and SS Colonel Freddy Schwend. Barbie soon proved very useful to his American handlers, developing an intelligence network that extended from penetrations within French intelligence all the way to Eastern European emigre groups and intelligence services there.

But Europe got too hot for Barbie. Wanted by the French for war crimes committed in Lyon, Barbie knew his days of enjoying the patronage of his American superiors were drawing to a close. The Americans could not afford to let Barbie fall into French hands, for fear that he would reveal American intelligence operations against them. (To the Americans, the French intelligence service was riddled through with Communists and could not be trusted. They spent almost as much time spying on their Allies as they did keeping tabs on the Soviet Union.) So, they arranged his escape along the ratline to South America; and for this purpose they used the offices of a Croatian priest, Dr. Krunoslav Draganovic, himself a war criminal and Fascist (a member of the dread pro-Nazi Ustase) wanted by the Yugoslav authorities but who enjoyed the protection of the Vatican nonetheless. [33] …

After a series of adventures, Barbie found himself (and his entire family) a new home in Bolivia in 1951 with a visa made out in the name of Father Roque Romac (the pseudonym of yet another Croat war-criminal priest, a Franciscan who ministered to his newfound flock in the area of Cochabamba) and for a while Barbie was the perfect bourgeois businessman. Then, forming and cementing relationships with the underground Nazi cult in South America -- and among men such as Skorzeny, Freddy Schwend, Eichmann, and many others -- Barbie, as "Klaus Altmann," began to carve out a position of influence in the various shifting military regimes in La Paz. It will be remembered that Bolivia had been host to German immigrants for years before the war began, and was a target of US intelligence efforts (notably under Dulles) to neutralize their influence on Bolivia's political life. [35] Barbie fell in with the German emigre community, and -- linking up with wheeler-dealer Freddy Schwend and, eventually, Italian pro-Fascist terrorist Stefano delle Chiaie -- found himself a lucrative position as a lieutenant colonel in Bolivian Intelligence! [36]

Schwend and Barbie began running guns between Bolivia, Peru, and Chile using their contacts in the Kamaradenwerk (the informal association of ex-SS officers organized by Luftwaffe ace and Hitler pet Colonel Hans Ulrich Rudel) and among the more fascist of the various Latin American governments who became their clients and, occasionally, their suppliers as well. The gun trade eventually led them into the drug trade, where the abilities of Barbie as a military organizer were enhanced by the arrival of Stefano delle Chiaie. Delle Chiaie enjoyed a serious reputation abroad as a master terrorist who had been responsible for a series of lethal bombings throughout Italy in the late sixties. He had also been involved in an aborted military takeover of the country in 1970, and had to flee Italy for the relative safety of Franco's Spain. It was in Spain that he met -- and cultivated -- "El Brujo," Argentina's own version of Rudolf Hess: Jose Lopez Rega, self-professed Rosicrucian, Peronista, mystical advisor to Isabel Peron, founder of the notorious AAA death squads ... and member of Propaganda Due, P-2, the supersecret Masonic society dedicated to the overthrow of the Italian government and its replacement by a Fascist regime. [37] Lopez Rega was an intimate of such men as P-2 founder Licio Gelli who spent many of the postwar years in exile in Argentina, plotting to restore pro-Fascist, anti-communist governments in South America as well as in Europe and using his own version of Hitler's "dangerous element," the initiatory secret society P-2, as his vehicle for bank manipulations and the subversion of governments.

As we shall see in the next chapter, delle Chiaie would also become involved with Michael Vernon Townley, the American terrorist and spy who planned and organized the assassination of former Allende minister Orlando Letelier in Washington, D.C. on behalf of Chile's secret police, DINA. Townley, of course, was a frequent visitor (and adviser) to Colonia Dignidad.

With all this talent cropping up in Bolivia, it was inevitable that the phenomenon known as "narco-terrorism" would be born. Elements of Italian, Argentine, and Bolivian mercenaries -- trained and led by former SS officers -- formed the security detail (known as the melodramatically nomenclatured Fiances of Death) for Bolivia's drug smugglers and even warded off violent attacks from Colombia's rival Medellin cartel. For some time it seemed that Barbie and his friends could not reach any higher and then came July 1980 and the Garcia Meza military coup, masterminded in part by Klaus Barbie and Stefano delle Chiaie and funded by Argentine intelligence and the shadowy P-2.

The coup ushered in a new period of severe and brutal military repression in the country, as perhaps could be expected of a government created and managed by drug smugglers, terrorists, Fascist cultists, and Nazi war criminals. Carlos Lehder's inspiration had obviously been the Meza/Barbie coup, and Nazi gatherings took place rather openly in La Paz complete with swastika banners and raucous singing of the "Horst Wessel Song" in Bolivian clubs and bars. Barbie continued as chief of "internal intelligence" and delle Chiaie went abroad to forge links between the government of Bolivia and such legendary homicidal madmen as Major Roberto D'Aubuisson of El Salvador, the man who ordered the assassination of Bishop Romero. At home, Barbie concentrated on removing all opposition to his growing narcotics trade ... with the approval and assistance of the government.

-- Unholy Alliance: A History of Nazi Involvement With the Occult, by Peter Levenda

There was also more to know about Gomez. In November 1985, the Federal Bureau of Investigation (FBI) learned from an informant that Gomez’s two brothers had been large-scale cocaine importers, with one brother arranging shipments from Bolivia’s infamous drug kingpin Roberto Suarez.

Suarez already was known as a financier of right-wing causes. In 1980, with the support of Argentina’s hard-line anticommunist military regime, Suarez bankrolled a coup in Bolivia that ousted the elected left-of-center government. The violent putsch became known as the Cocaine Coup because it made Bolivia the region’s first narco-state.

By protecting cocaine shipments headed north, Bolivia’s government helped transform Colombia’s Medellin cartel from a struggling local operation into a giant corporate-style business for delivering cocaine to the U.S. market.

Flush with cash in the early 1980s, Suarez invested more than $30 million in various right-wing paramilitary operations, including the Contra forces in Central America, according to U.S. Senate testimony by an Argentine intelligence officer, Leonardo Sanchez-Reisse.

In 1987, Sanchez-Reisse said the Suarez drug money was laundered through front companies in Miami before going to Central America. There, other Argentine intelligence officers, veterans of the Bolivian coup, trained the Contras in the early 1980s, even before the CIA arrived to first assist with the training and later take over the Contra operation from the Argentines.

Inspector General Hitz added another piece to the mystery of the Bolivian-Contra connection. One Contra fund-raiser, Jose Orlando Bolanos, boasted that the Argentine government was supporting his Contra activities, according to a May 1982 cable to CIA headquarters. Bolanos made the statement during a meeting with undercover DEA agents in Florida. He even offered to introduce them to his Bolivian cocaine supplier.

Despite all this suspicious drug activity centered around Ivan Gomez and the Contras, the CIA insisted that it did not unmask Gomez until 1987, when he failed a security check and confessed his role in his family’s drug business. The CIA official who interviewed Gomez concluded that “Gomez directly participated in illegal drug transactions, concealed participation in illegal drug transactions, and concealed information about involvement in illegal drug activity,” Hitz wrote.

-- The Warning in Gary Webb’s Death, by Robert Parry

New York and Medellin suppliers began extending credit to Roger Clinton on learning "who his brother was," Maurice Rodriguez, one of the middlemen, testified. Roger's frequent drug-buying trips to Manhattan reached a peak in the fall and winter of 1983 after Bill's reelection and as his popularity and power in Arkansas soared. On trial, the younger Clinton would deny or evade any implications that he was blackmailed or otherwise exploited by his drug connections to exert influence on the governor. "Both sides were 'Jack be nimble, Jack be quick' about that subject," said a government attorney who monitored the case. "They were all Arkansas lawyers and it was enough they had Roger. They didn't want the other cans opened." The potential for corruption was obvious. One state police tape recorded Roger being propositioned to persuade Bill Clinton to help remove a ban on new buildings in Hot Springs in return for a kickback from the profits on the sanctioned construction, but Roger denied ever having done anything improper.

Yet according to the local narcotics officers who made the tapes, video surveillance footage showed Roger discussing various payoffs of $30,000 to arrange government approval of sewer lines for a large development that was an interest of a close Clinton friend and major contributor, multimillionaire bond broker and later convicted drug dealer Dan Lasater. "I need $10,000 for my brother to take care of EPA regs and other environmental oversight problems," the officer quoted Roger as saying on the tapes, which were turned over to the state police, never to be presented at trial. City police officers who shot the tapes were told the portions dealing with imputed involvement of the governor had been forwarded to the Public Integrity office of the Justice Department in Washington early in 1984, but then they heard no more. "I guess they just got lost," one officer said bitterly a decade later.

At the least, Roger Clinton put on an impressive show of his intimacy with the state's chief executive. Had he ever taken women for sex "over to your brother's place," a wired informer once asked him. "Yeah. There was the mansion and the guest house," Roger answered. "Oh, they love it." Even sketchy state trooper entry and exit logs at the governor's mansion would bear him out, showing him coming and going at the family quarters or the guest house, often accompanied by "females," "girl," or "a friend," at least thirty-six times after February 7, 1983, the height of his drug trafficking. The guards recorded visits within days of his July 1984 indictment and as late as January 13, 1985, only two weeks before his sentencing, when the registry showed "Roger in with two females to change for party." Commonly the logs might note "Roger and girl" going to the mansion for two hours or more during the night, then Roger moving to the guest house alone and leaving from there late the next morning, though with no further record of the whereabouts or eventual departure of "girl." ''They used the home of the governor as a whore hotel," said one narcotics investigator.

On one of the 1983-84 videotapes filmed by local narcotics officers, Roger Clinton was said to tell a supplier jauntily, "Got to get some for my brother. He's got a nose like a vacuum cleaner." Years later, after the suspicious murder of her husband, Jane Parks, the resident manager of an expensive Little Rock apartment complex, would tell Ambrose Evans-Pritchard of the London Sunday Telegraph that during the summer of 1984 Roger Clinton had been a nonpaying guest there for two months. The governor was "a frequent visitor," the Telegraph reported. "There was drug use at these gatherings ... and she [Parks] could clearly distinguish Bill's voice as he chatted with his brother about the quality of the marijuana they were smoking. She said she could also hear them talking about the cocaine as they passed it back and forth." As at the mansion, there were said to be numerous women, often strikingly young. Tenants complained of the noise made by the partying Clinton brothers in B107.

There would be still others to substantiate similar accounts. A teacher and social worker named Sally Perdue would describe similar occasions in her late-1983 affair with Bill Clinton when he would smoke marijuana and use cocaine regularly, pulling joints out of a cigarette case and shaking cocaine out from a small bag onto a table in her living room. "He had all the equipment laid out, like a real pro," Perdue told a reporter. Still another witness, a convicted drug dealer and informant named Sharlene Wilson, who was a bartender at Le Bistro nightclub in Little Rock, testified to a 1990 federal grand jury in Arkansas that she had sold cocaine to Roger Clinton as early as 1979 and had watched, at both Le Bistro and at the infamous toga parties at the Coachman's Inn on the outskirts of the state capital, as Roger passed the drug to Bill, who "would often snort cocaine."

Roger Clinton's world had begun to unravel in the winter of 1983- 84. Beyond the savage addiction that left him so dissipated physically -- he had "eyes and nose like an announcement," a friend said later -- someone had stolen $8,000 of cocaine from his car, slashing the top of a new convertible Virginia had given him. Aghast at the vandalism, Virginia had started to call the police. But when Roger nervously insisted they could not report the incident, as she told the story later, she suspected and did nothing. Her other son apparently had no illusions. Roger Clinton would later admit that his drug creditors had threatened his mother and even Bill, though there is no record that the two half brothers ever discussed the problem. Instead of advising Roger to go to the proper authorities with his predicament or reporting the convertible slashing himself, the governor of Arkansas simply moved to get his drug-dealing relative out of town. According to an FBI report, Bill Clinton had swiftly gone to his friend and backer Dan Lasater, imploring him to find a place for Roger at his thousand-acre thoroughbred farm outside Ocala, Florida. "Clinton asked him [Lasater] to give his ne'er-do-well half brother Roger a job," said one summary of the FBI document. Lasater did just that. "Mr. Lasater remarked at that point that he owed the governor a lot of favors," John Fernung, the farm's manager, said afterward.

Roger not only took the job but asked Lasater to loan him the $8,000 he owed his drug connections, money the millionaire handed over as quickly as he had the job Bill Clinton requested. Cocaine dealers were "putting the heat on him and something might happen to his brother and mother," Lasater told the FBI Roger had said. If Ocala was intended to be more than a hideout, however, it was hardly the place for an addict's recovery. Those who worked there described the same sorts of wild drug parties for which Lasater was known in Little Rock. It was suspected that the racehorse trading business was being used as a mechanism for the laundering of drug money. On one holiday, according to a trainer and veterinarian, small pouches of cocaine were hung as favors on a huge Christmas tree, and an eager guest nearly set the house ablaze when he lunged for a packet and toppled the densely lit tree. "You could tell Roger Clinton was really strung out the whole while he was at the farm. I just remember he was always using, always saying he had been on the phone talking to his brother the governor, not worth a damn as hired help," recalled a senior employee. "I was told we were stashing him for some politician Mr. Lasater was working." At that, the favors from the contributor may also have gone beyond refuge and the $8,000. When Roger returned to Arkansas, eventually to face narcotics charges in Hot Springs, his team of defense lawyers would feature the same prominent attorney, William R. Wilson, Jr., who then represented Lasater and Company in Little Rock and who in 1993 would be appointed a federal judge by President Clinton. Assisting Wilson would be his partner, Stephen Engstrom, who would be called to aid Betsey Wright in countering state troopers' testimony about the president's alleged cover-up of his personal excesses in Arkansas.

The videotape and wire recording case developed against Roger Clinton by both local police and state investigators might well have been quietly quashed if not for dissident state police who schemed to get at least some of the evidence out. "Some troopers put it out on the street where it couldn't be ignored," said an investigator. "They took a real risk." One former federal prosecutor remembered clearly, "Roger Clinton was about to be swept under the rug by both the US attorney and the local boys, no question about it." In any case, in the spring of 1984 the younger Clinton was back from Lasater's Florida haven and was now the target of a federal grand jury investigation. By the time state police commandant Tommy Goodwin formally told the governor in June of the imminent indictment of his half brother -- "Goodwin knew of that investigation real early and had alerted Bill Clinton directly," said one officer -- the case was "already handled" by federal prosecutors, as Goodwin told a reporter later, insisting that the governor could not have interfered. "Just go ahead and handle it like you would any other case," Goodwin recalled the politician's stoic response.

But dissidents in Goodwin's own ranks were convinced that Clinton would intervene and they managed to get details of the case to Hillary Rodham Clinton as well, counting on her to force the governor to keep his hands off as a political precaution. By the dissidents' account, the First Lady reacted exactly as they hoped, rushing to Clinton with her own report on Roger and ordering that he do nothing to warn his half brother or stave off the arrest, actions that might be exposed and used against them in the 1984 reelection campaign or later. "I don't think she ever knew how much coke Bill had snorted with Roger or how many girls they'd done together," said one state policeman, "but we knew she'd tell him to feed ole Roger to the feds for the sake of his career, and that's what he ended up doing." On August 2, 1984, as he later recounted to the press, Goodwin came to the capital to tell the governor that the indictment of Roger Cassidy Clinton on six counts of drug dealing and conspiracy was about to be announced. Clinton called a press conference for a brief statement with no questions, reading his remarks red-faced and "visibly shaken," as a reporter noted. "My brother has apparently become involved with drugs," he said with irony and hypocrisy only a few insiders could appreciate, "a curse which has reached epidemic proportions and has plagued the lives of millions of families in our nation, including many in our state."

The five waiting men were clearly taken aback when Governor Bill Clinton stepped from the vehicle with his aide, Bob Nash, and led the entourage into the World War II ammunition storage bunker that would serve as the meeting place.

In a low tone, Cathey turned to Terry and said: "Shit! I was afraid he'd show up. That'll certainly upset our agenda. I'm glad Johnson is here. He'll be able to handle him."

The waiting group of five had expected Nash, but not his boss, Arkansas' Commander-in-Chief, Bill Clinton. By his mere appearance, Clinton was risking exposure of his involvement in unauthorized covert operations. But he seemed desperate.

The meeting had been called at Camp Robinson, an Army facility outside Little Rock, to get some problems ironed out. In addition to the governor and his aide, the "guest list" included Max Gomez (Felix Rodriguez), John Cathey (Oliver North), resident CIA agent Akihide Sawahata, Agency subcontractor Terry Reed -- and the man in charge, the one who would call the shots. He called himself Robert Johnson.

Johnson had been sent from Washington to chair this very delicate operational briefing that would hopefully extricate the Agency from its entanglement in what was becoming a messy situation in Arkansas....

Cathey began the briefing.

"Governor Clinton," he said switching to his toastmaster tone, "I'm glad you could attend tonight's meeting with us. We're both surprised and honored. Bobby (Nash) didn't inform us you would be attending ... However, let's get down to it....

Terry viewed this meeting as his initiation into the inner circle. But this impromptu appearance by Governor Clinton, however, would expose Terry to yet more things that he had no "need to know." It would also confirm his suspicions that operations in Arkansas were being run with Clinton's full knowledge....

"Gentlemen," Cathey said, "this meeting is classified Top-Secret. The items discussed here should be relayed to no one who does not have an operational need to know. I repeat Top-Secret. There are to be no notes taken."...

Johnson, Cathey said, was the personal representative of CIA Director William Casey and had been sent to chair the meeting. Casey was too important to show his face, Terry assumed. But he felt honored, and yet surprised, to find he'd been dealing with someone so closely connected to the Director of Central Intelligence, the top of the intelligence pyramid.

"Thank you," Johnson said. "As Mr. Cathey mentioned, I am the emissary of Mr. Casey, who for obvious security reasons could not attend. We are at a major junction of our Central American support program. And I am here to tie up a few loose ends. As you are all aware, the severity of the charges that could be brought against us if this operation becomes public ... well, I don't need to remind you of what Benjamin Franklin said as he and our founding fathers framed the Declaration of Independence ..."

Cathey interrupted. "Yeah, but hanging is a much more humane way of doing things than what Congress will put us through if any of this leaks out." This marked the only time during the briefing that laughter was heard.

"This is true," Johnson replied. "And therefore, Governor Clinton, I'm going to find it necessary to divide this meeting into groups so that we don't unnecessarily expose classified data to those who don't have an absolute need to know. We can first discuss any old business that concerns either "Centaur Rose" or "Jade Bridge", and I think that you will agree that afterwards you and Mr. Nash will have to excuse yourselves ..."

Clinton was visibly indignant, giving the angry appearance of someone not accustomed to being treated in such a condescending manner.

"It seems someone in Washington has made decisions without much consulting with either myself or my aide here, Mr. Nash. And I'd like to express my concern about the possible exposure my state has as you guys skedaddle out of here to Mexico. I feel somewhat naked and compromised. You're right, there are definitely some loose ends!"...

Nash interjected: "Sir, Governor Clinton's concerns are that there may be some loose ends cropping up from the Mena operation in general. As you know, we have had our Arkansas State Police intelligence division riding herd on the project. And that has been no simple task. Even with some of our ASP officers undercover over there, we couldn't have gained any real inside knowledge had it not been for Mr. Reed's ability to report it directly to me. This thing about Barry Seal getting Governor Clinton's brother involved is what's got us all upset. I mean, as we speak, there's an investigation going on that could spill over onto some very influential people here in Arkansas, and people very close to the governor personally ..."

Johnson looked like he was getting irritated. Clinton had not been scheduled to be there and his original agenda now was being discarded.

"Hold on!" Johnson shot back. "Calm down! Mr. Casey is fully in charge here. Don't you old boys get it. Just tell me what has to be taken care of, or who needs to be taken care of, and I'll fix it for you!"

Johnson boasted to the group that Attorney General Edwin Meese, by arranging the appointment of J. Michael Fitzhugh as U.S. Attorney in Western Arkansas, had effectively stonewalled the ongoing money laundering investigations in Mena where the Contra training operations had been centered. It was his impression, Johnson said, that everything was now "kosher" and the "containment" was still in place. Operations "Rose" and "Bridge" had not been exposed because federal law-enforcement agencies had been effectively neutralized. But Johnson said he was now concerned that the "drug" investigation there might expand beyond his control and unmask the residue of black operations.

Now the meeting was starting to turn into a shouting match, Terry quietly observed that Clinton appeared on the verge of losing his well-rehearsed, statesman-like demeanor. Stopping investigations around Mena had helped the CIA and its bosses in Washington, but it had not solved any of the governor's local political problems. And these same problems were threatening to unveil the Mena operations.

It was the spring of 1986, just over a month after Barry Seal's assassination in Louisiana. Clinton was facing a very tough and dirty reelection campaign. His Republican opponent was certain to be ex-Governor Frank White, the only man who had ever defeated Clinton. The newspapers were filled with stories about Clinton's brother, who had been convicted and served time from federal drug trafficking charges, giving White the dirt he needed to launch a serious and damaging political attack.

Roger Clinton had "rolled over" and turned informant, enabling the Feds to begin an investigation of investment banker Dan Lasater, a close personal friend and campaign contributor of Clinton's. This investigation, it was clear, could spill over into Lasater's firm, possibly exposing CIA money-laundering and other possible illegal activities. [1]

The investigation of Clinton's brother had been carried out largely by disloyal state police officials who were backing White, and without Clinton's knowledge, when the inquiry was first initiated. Terry wondered whether a "coup" was building? Clinton was clearly in big political trouble, and his demeanor now was not the cool and composed man people saw on television. Perhaps the CIA and the Reagan administration wanted another "presidente," a Republican one, in its banana republic?

Rumors were also running wild that the bond underwriting business, in which Lasater was a major figure, had been used to launder drug money. In addition, candidate White had another big issue to run with. He would charge later that Clinton was directing choice state legal work as bond counsel to the prestigious Rose Law firm, where his wife, Hillary, was a senior partner. And Clinton had to be fearful that exposure of the Mena operations would be the death blow to his reelection hopes. And, if that weren't enough ammunition, the governor was also facing a possible state budgetary shortfall of more than $200 million.

By his comments, the governor's political problems and his potential exposure were clearly on his mind. Clinton showed his contempt for the young man from Washington as he lost his composure, jumped to his feet and shouted: "Getting my brother arrested and bringing down the Arkansas bond business in the process isn't my idea of kosher! You gents live a long way from here. Your meddling in our affairs here is gonna carry long-term exposure for me! I mean us. And what are we supposed to do, just pretend nothing happened?" He was angry.

"Exactly, pretend nothing's happened," Johnson snapped back. "It's just like the commercial, you're in good hands with Allstate. Only in this case, it's the CIA." Johnson paused, took a deep breath, and continued. "Mr. Clinton, Bill, if you will, some of those loose ends you refer to here were definitely brought on by your own people, don't you agree? I mean your brother didn't have to start shoving Mr. Seal's drugs up his nose and your friend, Lasater, has been flaunting his new wealth as if he's trying to bring you down. We're having to control the SEC and the IRS just to keep him afloat.

"Our deal with you was to help 'reconstruct the South,''' Johnson sniped, using a term Southerners hate, since it reminds them of the post-Civil War Yankee dominance of the South. "We didn't plan on Arkansas becoming more difficult to deal with than most banana republics. This has turned out to be almost comical."

"Bobby! Don't sit here on your black ass and take this Yankee shit!" Clinton yelled at Nash in an appeal for support. "Tell him about Seal bribing those federal agents!" It was getting to resemble a verbal tennis match as volleys were being lobbed, each one with more intensity. From the comment about Seal, Terry concluded that Clinton did in fact have his own intelligence network, too.

"Why, Mr. Clinton, with racial slurs like that, the federal government could terminate educational busing aid here," Johnson wryly shot back. "I thought Arkansas was an equal opportunity employer!"

Nash touched the governor's arm, coaxing him back into his chair.

Johnson continued, "The deal we made was to launder our money through your bond business. What we didn't plan on was you and your token nigger here to start taking yourselves seriously and purposely shrinking our laundry."

"What do you mean by shrinking the laundry?!" Clinton asked still shouting. By now, Clinton's face was flushed with anger....

Arkansas desperately needed new businesses -- and so did the CIA. It had plenty of black money, but that alone was not enough. "You can't kill an enemy by lobbing dollars at him" was the phrase Cathey had used with Terry to explain the CIA's dilemma of having the monetary resources to fund the Contras, but no legal way to deliver it directly. The Agency was barred by Congress from converting the cash into weapons and training the Contras needed on the battlefield, at least not through traditional Department of Defense suppliers.

Under Director William Casey's plan, the CIA needed other companies that would be a source of secretly-produced weapons that would find their way into the hands of the Contras. These selected businesses needed payment to perform these services for the CIA, and that cash came to them conveniently in a legal and undetectable manner, through ADFA, in the form of industrial development loans backed by tax-free development bonds. The CIA should have been showing a profit through accrued interest on their secured investments. But a problem had arisen. As Johnson had said, the "laundry" was shrinking.

And Johnson was not happy about that as evidenced by the way he was firing back at Clinton. It was apparent that Johnson knew Clinton and his people had not abided by his agreement with the Agency.

"Our deal was for you to have 10 per cent of the profits, not 10 per cent of the gross," Johnson sternly admonished Clinton.

"This has turned into a feeding frenzy by your good ole boy sharks, and you've had a hand in it, too, Mr. Clinton. Just ask your Mr. Nash to produce a business card. I'll bet it reads Arkansas Development and Finance Authority. We know what's been going on. Our people are professionals; they're not stupid. They didn't fall off the turnip truck yesterday, as you guys say. This ADFA of yours is double-dipping. Our deal with you was to launder our money. You get 10 per cent after costs and after post-tax profits. No one agreed for you to start loaning our money out to your friends through your ADFA so that they could buy machinery to build our guns. That wasn't the deal. Mr. Sawahata tells me that one of ADFA's first customers was some parking meter company that got several million in ... how shall we say it ... in preferred loans.

"Dammit, we bought a whole gun company, lock, stock and barrel and shipped the whole thing down here for you. And Mr. Reed even helped set it up. You people go and screw us by setting up some subcontractors that weren't even authorized by us. Shit, people who didn't even have security clearances. That's why we're pulling the operation out of Arkansas. It's become a liability for us. We don't need live liabilities."....

Clinton had paused for a moment to ponder Johnson's words. "What do ya' mean, live liabilities?" he demanded.

"There's no such thing as a dead liability. It's an oxymoron, get it? Oh, or didn't you Rhodes Scholars study things like that?" Johnson snapped.

"What! Are you threatenin' us? Because if ya' are ..."

Johnson stared down at the table, again took a deep breath, and paused. It appeared he wanted to elevate the tone of the disintegrating exchange.

"Calm down and listen," Johnson said. "We are all in this together. We all have our personal agendas ... but let's not forget, both the Vice President and Mr. Casey want this operation to be a success. We need to get these assets and resources in place and get them self-sustaining and prospering on their own while we have the chance. This is a golden opportunity. The timing is right. We have communists taking over a country in this hemisphere. We must all pull together and play as a team. This is no time for lone wolves. Mr. Seal is an example of what happens to lone wolves. They just don't survive in the modern world of intelligence.

"I'm not here to threaten you. But there have been mistakes. The Mena operation survived undetected and unexposed only because Mr. Seal carried with him a falsely created, high-level profile of a drugrunner. All the cops in the country were trying to investigate a drug operation. That put the police in a position where we could control them. We fed them what we wanted to feed them, when we wanted to feed them; it was our restaurant and our menu. Seal was himself a diversion. It was perfect until your brother started free-enterprising and now we have to shut it down. It's as simple as that. Mr. Seal was a good agent and it's a shame he's dead. But, hopefully, our new operation will build on Seal's success in sustaining our Contra support effort while goddamn Congress dilly dallies around as the Russians take over Nicaragua."

Clinton just glared back. "That was a good sermon, but what can you specifically do to end this investigation concerning my brother and the bond business?"

"Your brother needed to go to jail," Johnson said staring at the governor. "As governor you should intervene and make things as painless as possible now. As far as the money investigation goes, Mr. Meese is intervening right now. There will be no money investigation. The U.S. attorney's office (in Little Rock) is 'getting religion' as we speak. *

"There may be nothing we can do about your friend Lasater's drug problem. I suggest that he and everyone else caught with their pants down take the bad along with the good and do a little time -- as your brother has. It's a shame. But bartenders shouldn't drink. If some of our people are going to be in the drug business as a cover, they should do as Mrs. Reagan says and 'just say no'."

Johnson had applied the balm and now the massage began. "Bill, you are Mr. Casey's fair-haired boy. But you do have competition for the job you seek. We would never put all our eggs in one basket. You and your state have been our greatest asset. The beauty of this, as you know, is that you're a Democrat, and with our ability to influence both parties, this country can get beyond partisan gridlock. Mr. Casey wanted me to pass on to you that unless you fuck up and do something stupid, you're No. 1 on the short list for a shot at the job you've always wanted.

"That's pretty heady stuff, Bill. So why don't you help us keep a lid on this and we'll all be promoted together. You and guys like us are the fathers of the new government. Hell, we're the new covenant."

-- Compromised: Clinton, Bush and the CIA: How the Presidency was Co-opted by the CIA, by Terry Reed & John Cummings

Damage control began immediately. Local narcotics officers who had developed much of the original and most compelling evidence against Roger -- and the most damning for the governor -- were deliberately excluded from the arrest and systematically cut out of the subsequent investigation and evolution of the prosecution's case. "We had a lot more than just Roger, like Lasater and who owned who in places like Springdale, and buys that included the state police," said one local officer close to the case. "But Roger cops out, our narcs get taken out, and the case stops there." On August 14, represented by Lasater lawyer Wilson and his partner Engstrom, Roger Clinton was arraigned before Oren Harris, a former Democratic congressman and one of the more infirm judges on the federal bench, who was known locally for his relative deafness, his dim eyesight, and "a propensity," as Meredith Oakley noted, "for nodding off during prolonged testimony." Roger pled not guilty to every count. After less than ten minutes before the doddering Harris, he was released on $5,000 bail, with trial scheduled for November 9, days after the general election. Governor Clinton, spokesmen assured the public, "had no idea he had even tried drugs," as a reporter summed up the claims, "let alone that he had become addicted to cocaine."

Roger continued to come and go at the mansion with some abandon. Virtually from the hour of the arraignment there had been negotiations to arrange a plea bargain, so long as the formal admission of guilt came only after the election. In return for testifying against certain accomplices, the younger Clinton would avoid his own potentially revealing trial, face fewer counts, and receive a lighter sentence. In partial preparation for the plea bargain and sentencing, Roger and his immediate family attended token sessions of counseling on drug addiction and codependency. Even these cursory sessions, which both Virginia and Bill described later in general terms, opened the "rawest wounds," as one account put it. Though neither Virginia nor Bill mentioned it, it was Hillary who, according to Judith Warner, her biographer, "took a leading role in the discussions and was quite astute at pointing out patterns and weaknesses to the assembled family." Warner adds pointedly that, "though he was grateful, her participation didn't always endear her at the time to her husband." According to friends who heard contemporaneous accounts from Virginia, her daughter-in-law raised unexamined questions of denial and irresponsibility and other topics that sent the mother away in tearful fury and the thirty-eight-year-old governor into yet another round of distraction and debauchery.

On November 9, 1984, three days after his half brother's resounding victory at the polls, Roger Clinton was back in court to change his plea to guilty of conspiracy and a single count of drug distribution. He was "one tentacle of cocaine distribution in Arkansas," said Republican US attorney Asa Hutchinson, though most of the other arms of the figurative monster would never be pulled in. In a subsequent trial Roger testified for the government to convict a boyhood friend, Sam Anderson, Jr., a Hot Springs lawyer and the son of Virginia's old attorney. But there the inquiry stopped for the moment. "I guess I'm going to do Roger's time for him," Anderson would say bitterly the following March. In his last days at large the younger Clinton took women in and out of the governor's mansion for parties and went on with his cocaine habit despite the certainty of discovery before sentencing. On January 28, 1985, when Roger again appeared before Judge Harris, now "exceptionally alert," as Oakley saw him, there was no denying that he had used drugs consistently even after his arrest and during his months on bail. A dour, publicity-conscious Harris suspended the three years on the distribution charge but for the count of conspiracy imposed two years in the federal prison at Fort Worth. Both the governor and Hillary stood there with a lip-biting Virginia as Roger Clinton -- " a fourteen-year-old in a twenty-eight-year-old's body," as his mother now came to see him -- was summarily handcuffed and driven off by marshals. At no point in the five months of bargaining, suppression, and calculated betrayal of cohorts had there been an inkling of the videotaped footage implicating the governor or even of the graphic physical evidence of Roger's addiction, which would have belied the governor's bland protestations of ignorance. "I feel more deeply committed than ever before to do everything I can to fight illegal drugs in our state," Bill Clinton said in a rehearsed statement outside the courtroom as his half brother was taken away.

In the little more than a year Roger served in prison, as Virginia told the story later, he would "grow up some." Out on probation in the spring of 1986, he worked with a construction crew building bridges "on the winding old Benton highway," Virginia recorded, "the one Bill and I had taken years before on those horrible Sundays when we had gone to visit my mother in the state mental hospital."


As that small drama of the darker Arkansas played out, largely in the shadows, honors poured in on the attractive young couple in the governor's mansion -- one world oblivious, as usual, of the other. Bill and Hillary Clinton were named Public Citizens of the Year by the National Association of Social Workers. Esquire magazine celebrated them as among the "best of the new generation," young leaders of "courage, originality, initiative, vision and selfless service," who had received "a torch . . . passing between generations . . . approaching the full bloom of adulthood." With the endorsement of an admiring Starr, even the once-critical Arkansas Democrat proclaimed Hillary Rodham Clinton "Woman of the Year."

Clinton would run for reelection with a nervous zeal. For a time he had put out rumors that he might run for the US Senate against Pryor or take just one more term as governor before challenging Bumpers in 1986. "I think he was always toying with one idea or the other," said an aide. "Pryor was kind of a friend, though that wouldn't have stopped Bill if he thought he could beat him, and he downright hated Bumpers" -- the latter a feeling that a Gazette editor called "entirely mutual." Clinton's "original script,” as Starr and others saw it, would have had him running for the Pryor seat in 1984. But the 1980 defeat had obviously altered timetables, and the extraordinary power of a third term and beyond in the statehouse still seemed to promise the ultimate prize of the presidency. The local spoils were historic. A third term -- with control of even more autonomous commissions and boards, bodies most crucial to the big interests -- would be the guarantor of Little Rock's most powerful political machine of the century, allowing the governor "to literally walk off with the state of Arkansas," as one old pol told a reporter years later, "dome and all." Looking beyond even that, Clinton quietly raised more than $100,000 to push a state constitutional amendment on the 1984 ballot establishing a four-year term for the governor beginning with the 1986 election, a provision that would allow him to run for the White House in 1988 and still hold on to the governorship and its base for yet another attempt at the presidency in 1992.

The political landscape of their base was still vintage Arkansas. To Congress the Second District would elect that year former Clinton director of public safety and sheriff Tommy Robinson, who called a black appointee to the federal bench a "token judge" and had promised he would not "coddle" convicts, which some of his audience understood to mean black prisoners, with "fried chicken and watermelon" but would have them "out on the road gang cleaning the ditches where there are copperheads and water moccasins." Opposing court-ordered consolidation and at least partial desegregation of the Pulaski County schools in and around Little Rock, Robinson's celebrated political ad of 1984 showed "a little white girl waiting for a school bus on an ominously dark and empty country road," as Diane Blair described it in her scholarly book on state politics. "Arkansas ain't part of the Midwest yet," Paul Greenberg wrote of the Robinson ad.

With typical irony, both national and local Republicans continued to portray the state Democratic combine as "a plaything of the left." Apart from ritual differences in platform that disappeared in practice, the GOP demagoguery could be reduced to what one aide laughingly called "contributor envy." By 1984 the governor had assembled the most impressive list of corporate and individual donors ever recorded in the state, and one of the more notable in the nation for a non federal politician. Investors in neither "playthings" nor "the left," his backers included Union Pacific, Pepsi-Cola, Weyerhauser, Reynolds Metals, Wendy's, Paine Webber, Salomon Brothers and other investment houses, Washington patron Pamela Harriman and several others of her ilk, even Hillary's onetime anathema Coca-Cola -- in addition to the Rose Law Firm, the Lasaters, the usual anonymous donors, local banks, utilities, and other giants. Other contributors beyond ideology reportedly also appeared in force. "That was the election when the mob really came into Arkansas politics, the dog-track and racetrack boys, the payoff people who saw a good thing," said a former US attorney who watched the FBI's tracking of organized crime figures and their interests. "It wasn't just Bill Clinton and it went beyond our old Dixie Mafia, which was penny-ante by comparison. This was eastern and West Coast crime money that noticed the possibilities just like the legitimate corporations did."

Local money passed under the table as never before. "If you wanted to sit on the Highway Commission or the Fish and Game Commission or another commission, well, it would cost, and that's how they laundered money," former state party official and Clinton fund-raiser Bert Dickey admitted later. Locally prominent, a man with a doctorate in education, Dickey, like many others, was approached early by the campaign to do some crude money laundering. Asked to give $3,000 to Clinton, he demurred. Would he and his wife then give a hundred each? "Well, yeah," Dickey recalled his answer. "So they gave me twenty-eight hundred-dollar bills and said, "Put this in your farm account and write two checks [to the Clinton campaign] for fifteen hundred dollars.'" What if the IRS checked on him? Dickey asked. "We'll just tell them you sold a piece of used farm equipment to somebody and they paid you cash." During the 1984 campaign, according to several accounts, the unrecorded or soon-to-be-laundered cash flowed in such a gush that it was carried around by the bagful, often in stacks of "banded money" brought fresh from some bank by special aides designated to tote the sacks just as they held on to the governor's briefcase and billfold.

As usual, special betrayal was reserved for Arkansas's black community, whose pivotal vote was always a crucial Clinton advantage. "It's impossible to overestimate the importance of Clinton's lock on the blacks," one politician said, echoing a widespread view among those who knew the state's electoral realities. Yet at any sign of restiveness in the vital, ordinarily quiescent bloc, the governor could enlist reactionary allies to put it down. "He called me once and said the blacks were on his ass," the Democrat editor Starr remembered. "I told him, ‘Don't worry. I'll go after the blacks -- I'll get them so mad at me they'll forget about you.' I called them ‘pip-squeak preachers.''' Meanwhile the black share of plentiful campaign funds was duly dispensed as "walking-around money." An aide who claimed to have guarded and carried the bags of money later told the American Spectator that it was variously handled in 1984 not only by Betsey Wright but also by black aide Robert Nash and Delta boss Rodney Slater, and by Democratic National Committee agent Carroll Willis. Wright or Nash, by this account, often handed "paper bags of cash over ... for safekeeping in the governor's mansion or the official car," from there to be given back to Nash, Slater, or Willis for doling out. "We'll just have to spread a little money around," the aide recalled Betsey Wright's typically saying, adding himself, "That's the real world. That's how things happen." Supposedly limited to individual amounts of fifty dollars "to stay within the realm of the law," as Willis claimed later in denying any wrongdoing, the black payments in fact, as several witnesses remembered, came and went in rolls and stacks, with local bosses expected to "spread it out." Those in the ranks who didn't get their cut were not above calling the governor directly to complain about inequities. "That motherfucker hasn't spent that money! He hasn't spread it around," the aide in charge of the bags remembered Clinton's yelling at a diffident Bobby Nash in a characteristic outburst. In 1984 Arkansas's black votes again went overwhelmingly for Clinton, some precincts by more than 90 percent. "Stunning numbers," said an analyst looking at the figures a decade later, "what the mathematicians call 'unnatural anomalies.'"

Interviewing Clinton in 1984 about his education initiatives, southern author Marshall Frady found the ultimate desire scarcely hidden in the still young and prodigal governor. If the school reform was an "authentic passion" for Clinton, there was something more. "Within his eager earnestness," Frady wrote, "one also sensed an instinct for close pragmatic computations, and a ferocious ambition already larger than his native state could contain."

In the general election, with Roger yet to change his plea and with no politically damaging evidence in the case yet bruited, Clinton crushed his hapless and relatively unfunded Republican opponent, a Jonesboro contractor named Woody Freeman, by more than 200,000 votes and twenty-seven percentage points. Yet at the eleventh hour, leading by more than twenty-five points in the polls, the governor "panicked," as one campaign aide put it. "He came up with this sudden obsession about some last-minute turnaround," said another who traveled with him, "as if something was going to blow open, which is what it would have taken since people hardly knew anybody named Freeman was running." Insisting on a flurry of thirty-second television commercials to blanket the state during the last week, Clinton found that even the hundreds of thousands in laundered and other tainted money had been committed. He turned to aide and mentor Maurice Smith, asking that the small Bank of Cherry Valley, which Smith owned, grant him a personal loan of $50,000. Made to both Hillary and Bill and secured without collateral, the loan produced the cash that Clinton contributed to his own campaign on October 29, 1984, for the final ads.

Maurice Smith had long coveted the next ten-year seat on the Arkansas Highway Commission, and Clinton promised it to him even though he had long beforehand pledged the same appointment to the candidate of his own First Congressional District backers. This patronage conflict produced the first crisis of his new term in January 1985, "during which," Oakley noted, "Clinton reportedly bit his nails until his fingers bled." In the end the weight of the district machine forced him to renege on his promise to Smith, who would be compensated with a prompt appointment as a University of Arkansas trustee. Three years later Smith was made executive director of the Highway and Transportation Department. "The catch was," said an aide, "Bill still felt after the commission screwup that he ought to get that loan paid back faster than he might have otherwise." To erase the debt, Clinton decided, he would turn to a source that during 1984 had provided "a constant flow," as one account described it, his old friend Jim McDougal.

As his third term began, however, none of this was publicly visible. Unlike their modesty of 1983, the Clintons planned an extravagant inaugural. A regal First Lady was photographed on the mansion staircase wearing a three-piece ensemble of gold lame, her makeup by Chanel, her faille shoes by Yves Saint Laurent, her hair by Little Rock's own Hair Care, Inc. Under huge American and Arkansas flags in the Governor's Hall at the Convention Center, there would be a thousand-pound ice sculpture of the old Confederate statehouse and screens displaying a continuing show of Arkansas scenes. It was, the Gazette declared, "the party of the year."
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Re: Partners in POWER: The Clintons and Their America

Postby admin » Sat Jun 25, 2016 3:06 am

Part 1 of 2

17. Washington III: "A Culture of Complicity"

Not long after the Clintons entered the White House, when it was clear they came heavily burdened by their past, it was fashionable in Washington to look back disdainfully at poor provincial Arkansas, at the seamy associations and inveterate practices that mortgaged a new administration. Only a few people were willing to recognize how much the settings were alike -- how much the Little Rock that was the crucible of the Clinton presidency was only a smaller version of the culture on the Potomac.

Like Little Rock, Washington had its own ruling interests and oligarchs, its native caste of panderers and plungers, a quaint, corrupted legislature, a compromised executive, an incorrigible bureaucracy, insatiable lobbies, and, not least, its own media whose shallowness and self-absorption amounted to collusive mediocrity. Not yet facing up to the futility and fraud of promised change by a changeless regime, never quite appreciating what they were up against, the rest of America was not so different from the Ozarks or Delta after all. If Washington regarded the Clintons' Arkansas with condescension and contempt, it was in many ways seeing only itself.

As early as 1980, historian James David Barber recorded the disappearance of the old Washington, the familiar "village of ambition." Taking shape, he saw, was quite another reality: "something more fundamental than the circulation of elites or the shuffling of structures. Something more powerful. Something visceral. Something at the heart of the enterprise ... a set of inherited modes of belief and expectation that gripped the city's practitioners at least as powerfully as did the organization charts ... a set of mores -- values thought natural -- increasingly divergent from the country's common sense.... Inside the capital city, isolated from the criteria of performance the rest of us took for granted, a peculiar tribal ethic had developed, subject to anthropological analysis."

By the early 1990s political Washington had evolved into the republic of fix and favor that was the reality behind the facade of the Clinton administration, and which would rule with a force and permanence beyond any single presidency or Congress, law or institution. For most of those who made careers and fortunes in and around the system, differences of race or class, ideology or policy, personality or party were superficial, almost ephemeral. What mattered most -- the daily reality of governance -- was their own part of that "peculiar tribal ethic."


Congress lived by its own institutionalized connivance, the "backslapping, backpedaling, backstabbing ways of Washington," as one observer called it. The evolution on Capitol Hill was graphic. "The difference between Congress now and fifteen years ago is the difference between chicken salad and chickenshit," longtime Democratic pol Robert Strauss confided to a Canadian ambassador in the early 1980s. "If you don't understand that, you'll understand nothing about Washington."

Money contorted careers from the outset, determining who would run, who survived the cockfight for the rare open seat. Wealthy individuals and corporate interests were there to welcome the new congressman or senator, generously paying off campaign debts, a favor never forgotten. The money pushers also shaped the clawing for committee assignments in a Capitol where "PAC heavens" -- committees dealing with energy, finance, weapons, and other founts of federal subsidy -- were vital to the inevitable next election. Part of the congressional leaders' fearsome power was to reward pliant freshmen with seats on those committees and to punish would-be reformers to the hell of lesser ones.

New members naturally thought themselves free agents. "You don't lie awake those early nights thinking of your corruptibility," one remembered. But few resisted the old rotten bargain. By the 1980s the money tyranny commanded the largest majority ever to sit in the United States Congress. Only four of 100 senators and twelve of 435 representatives were independent, well-financed enough to refuse PAC dollars or similar blandishments. The vast majority fell swiftly into the weekly routine of personally soliciting PACs and donors whose interests coincided with their committees, however distant from their own agendas or constituents' interests. The richer the war chests grew, the more hostage the "successful" candidate became. The system pulled freshmen and second-term lawmakers ever further from whatever grassroots loyalty or sensibility they brought to begin with.

Their preoccupation as lawmakers was not domestic or foreign policy but fear of losing. To hold it at bay, they commonly used their staff payrolls to hire campaign organizers and media flacks or provide patronage for contributors and lobbyists. They became obsessed with image, practicing sound-bite government to satisfy the folks back home as well as the interests, ceaselessly mongering "the taxpayers' largesse and Congress's free media," as one veteran put it, "into a steady stream of favorable publicity that no lurking opponent could hope to match." The Hill's quickest death, aides only half joked, was to walk between a sentient member and a television camera.

Unwritten rules were unanimously understood and observed in both the House and the Senate. Senators and representatives routinely schemed to exploit any subject, including natural calamities, for political advantage and predictably evaded any that could not be. "Ask not what your member can do for the issue," went a congressional staff credo of the 1990s, "but rather, what the issue can do for your member." Legislators might vote one way for the sake of appearances, then work discreetly before and after the tally to nullify the effect. At the same time, alongside the anxiety and calculation, the 535 little career dramas, there was knowing contempt for the audience, for the performance. "Let's face it," one Republican told an aide in 1992, "you have to be a bozo to lose this job."

Hard beneath Capitol Hill's oily deference and camaraderie was remorseless cannibalism. "He does exactly what his constituents want him to do -- namely, steal from the voters of other districts," one reporter wrote, describing a typical congressman, "a man," he went on, "with the ethics and moral courage of a hookworm." "All anyone ever wants is a special advantage over the next fellow," Jamie Whitten of Mississippi, chairman of the House Appropriations Committee, said. "Understand that, and you've understood the intent of every law ever passed."

Above all, there were what everyone suitably capitalized as The Numbers -- approval and trail-heat polling back home. "The Numbers run everything," a former House aide explained in a 1992 memoir. PACs and other donors studied them to protect their stake and avoid long shots. Would-be opponents were emboldened or broken by them, bankrolled or written off. When The Numbers were good, a member would "shop around the results ... to prove he [was] still a blue-chip investment," one staffer recalled. When The Numbers were bad or worrisome, they had to be obscured, discounted, reversed.

Unrelieved politics of self-preservation produced flagrant neglect as well as corruption. Members moved warily from issue to issue, sound bite to sound bite, while substantive authority gravitated more than ever to the committee barons, chairmen, and ranking minority figures. Regardless of party, nearly all were mouthpieces for the interests and often the bureaucracies they were supposed to monitor. Intent on limiting its own liability, Congress had shifted responsibility to the states and surrendered prerogatives wholesale to federal agencies. For a moment in the early 1970s, in reaction to executive abuses and grandiosity, the "imperial presidency" of Johnson and Nixon, Congress seemed on the threshold of broad new responsibility, exacting accountability from the executive branch for how laws were carried out and appropriations spent. But the money tyranny soon cut off that progress.

Born to public fanfare and innocent hope, legislation went forth as an administrative orphan, soon to be raped and prostituted. Washington knew the bloody battle of passage was only a prelude to law, that the essence was not in the letter but in the execution, that lobbies and bureaucrats were always out there, ready to capture and twist the law in their own interests. Without sustained oversight, the most explicit and forceful bill was "naked and defenseless."

With less than 10 percent of Congressional testimony under oath, both houses gave up their constitutional duty to draw out the reality of governance in public hearings. Witnesses trooped to the Hill, it was true. Testimony before multiple committees devoured the time of ranking officials and lent an appearance of scrutiny. But most sessions were understood to be ritual performances for the cameras on both sides, and as any watcher of C-Span could tell, questions and answers were politely oblique, rarely if ever touching on the realities of power. "White lies, big lies, lies in all colors and sizes," a House subcommittee chairman described the routine exchange, "and the thing is, the people facing each other know it's one kind of lie or another and almost never the straight truth." Even the Senate had largely defaulted on its confirmation powers, staging a few major hearings for cabinet or Supreme Court appointments, while waving through hundreds of key executive officials without serious attention. Nominees "can be crummy, mediocre, not qualified, even in industry's pocket," an aide told a reporter early in the 1990s, "and if they haven't done anything criminal, they're approved."

A parody of the practice burst into view in the 1991 Judiciary Committee hearings on Bush Supreme Court nominee Clarence Thomas and the testimony against him by Anita Hill. A classic of Washington gender politics, the Thomas-Hill affair had it all. Several women and men would have substantiated Hill's account of sexual harassment. They were never called by a craven committee chairman, Democrat Joseph Biden. Yet under the lash of Thomas's ardent backers, Republicans pursued a patently partisan vendetta against Hill. Just as typically, Democrats cringed at GOP attacks and Thomas's staged outrage at his "lynching." When it was over, a precept of Congress was reiterated. "Possession of the truth can amount to nothing," the New Yorkers David Remnick wrote, "in the face of an overwhelming ambition to win."


Certainly there was no rescue in the Hill's own bureaucracy. Committees multiplied from 38 in 1947 to 283 in 1992, aides from some 600 to nearly 2,000 in the last two decades, employees overall to more than 24,000. The staff as shadow legislative branch were often assumed to be better and brighter than their notorious employers, an assumption frequently shared by the aides themselves. A 1992 account described a typical chief of staff as "a petty humorless despot who regarded himself as far smarter than his boss and therefore the real congressman -- a totally common phenom[enon], apparently." Just as familiar was the staff’s own corrosive cynicism and mediocrity, the same resignation and conventionality that overtook the bosses. "A mil? One lousy mil?" an aide asked sneeringly on hearing about million-dollar poker hands among Wall Street brokers of the 1980s. "I can do ten mil with report language and not even have to ask the chairman."

They called themselves "Hill rats," as a 1992 memoir of the same title by John Jackley announced. "Lord Acton was only half right. Power might corrupt, but absolute power is a blast," the book quoted one of the species as saying. "Hill rats learn self-importance at a very callow age, usually right out of college," a reporter said of the aides thronging the Capitol. If more now came with advanced degrees, most were without intellectual distinction or relevant experience, making them lethally dependent on lobbies, the executive, or private "experts" for substantive knowledge. In droves they whisked through the Hill's revolving door with the same lobbies, bureaucracies, corporate-kept think tanks, businesses, and law firms, often at double or triple their ample congressional salaries. Many arrived the other way -- recycled bureaucrats, retired military officers come to inform and stiffen the amateur civilians on the armed services, intelligence oversight, or foreign relations committees -- all with the same certification and approval of the interests. "He's a brilliant fellow," an "energy lobbyist" said gratefully of one staff director. "He has an intuitive sense of politics." These were people who could be relied on to draft to order, to observe the implicit limits of discussion, to honor the culture that was their ethic as well as their livelihood.

Moving from member to member, even party to party, those who stayed on the Hill levitated to senior committee jobs or the personal staffs of entrenched legislators. Nearly four hundred of them made $108,000 a year or more by the 1990s, living comfortable lives in fashionable Washington enclaves or upscale suburbs of Virginia and Maryland, suitably removed from the America whose laws they wrote. They were, above all, bureaucrats themselves, reflecting and magnifying the mores of the corporate world they paralleled. Even if their patrons or parties were defeated, they were likely to find sinecures with lobbies, captive organizations, or think tanks, perhaps even slip into the bureaucracy.

Discrimination legally denied other public institutions or contractors Congress discreetly reserved to itself. Racism was still subtly the office rule in the 1990s, minorities occupying a small fraction of key staff jobs. Sexism was equally implicit and thus rampant in a workplace where women still occupied preponderantly clerical jobs. Of more than 140 "principal" leadership and committee staff members listed in 1992 in The Hill People, only 26 were women and none were in ranking jobs dealing with the manly preserves of the military, foreign affairs, energy, or intelligence. The overwhelmingly white, affluent, careerist male clerkdom of Congress possessed a unique vantage point from which to measure the toll of the 1980s. They had seen in the ornate committee rooms the intent of the tax windfalls and vast subsidies, had noted in the stream of statistics and wounded witnesses the wreckage of abandoned public services and gross economic inequity, experienced again and again in offices and hallways all over Washington the immutable, banal realities of misgovernment by both parties. "We knew," one senior figure said of the savings and loan scandal. "Hell, yes, we all knew." Yet no line of whistle-blowers emerged from behind the marble columns to explain the abuses. In one of the most scandalous periods in American lawmaking, there were no resignations of note among House or Senate staff members. Congress might encourage executive whistle-blowers, pass statutes to reward or protect them, but its own whistles were mute. Revolving-door careers were obviously more important, collusion rationalized too easily. Faceless Hill bureaucrats were not simply spectators to the tyranny, after all, but an integral part of it.

A bleak generational irony marked the Congress of the 1990s. Members elected in the wake of Watergate reform two decades before had seemed brighter, better educated than any single class to come to the Capitol. Yet they were also more affluent, less connected as a matter of class and sensibility to middle-income and poorer families, more technocratic and more prone, in their glibness and affluence, to the corrupting professionalization of politics. On the surface they might have been legislators straight out of a civics textbook. Yet they became what one reporter called "our elected . . . ruttish whores to big money." For all their promise, their monument was now the singular disgust felt by those who knew their world best. "The House of Representatives," another journalist wrote in language typical of that contempt, "is now widely regarded as a holding pen for unindicted felons."

Exceptions might still arrive, men and a handful of women who spurned the forced conviviality, the worst compromise. But Congress was a place newcomers always found harrowing, ultimately defeating. Sooner or later most succumbed to what one poignant account of a valiant Nebraska freshman called "the encirclement." Even if they escaped the blanketing venality and hypocrisy, they were left no real room for sensibility or imagination, for authentic change that threatened so much, so many. Where expedience and self-interest were the predictable norms, conviction became aberration, principle an abhorred deviance. Those who acted on beliefs could not be trusted and were treated accordingly. "You never know what the bastards will do," a chairman warned a young congressman.

So systemic was the corruption by 1993 that integrity itself seemed part of the contrivance. Of certain Democrats' votes against the status quo, political author Michael Ventura observed, "It's not only tolerated, it's encouraged. Those 'good' Democrats make everything look like a political process -- and most of them know it. If they had any real integrity they'd quit the party." As it was, few found voice for the melancholy, the isolation, the bitter resentment many felt after leaving office. "The most chickenshit institution I've ever been a part of," James Aboureszk of South Dakota said on leaving the Senate in 1978 after one term each in both chambers. Scores shared the sentiment, yet candor was rare. Co-opted by sinecures or traditional pretense, most veterans could be no more honest about the institution after leaving it than while inside.

Publicly derided as never before, Congress responded with neither confession nor authentic reform. Instead it resorted to what columnist Robert Kuttner called "cohabitation," the continuing collusion of officeholders and system regardless of views or personalities. In the larger sweep, partisan politics mattered little. In the postwar era Democrats had nominally controlled the House for nearly four decades, the Senate for more than thirty, inflicting petty oppressions of procedure and prerogative on the Republican minority. But the GOP held the White House for twenty-six of those years, and all the while a de facto coalition of Republicans and conservative Democrats ransomed the actual substance of Congress, with no law or debate beyond their grip. Despite bickering over parking places, patronage, and prestige, the real majority belonged to the money. Nothing was more natural than a bipartisan coalition against genuine reform of the laws and rules regulating campaign finance or the role of lobbyists. Beyond partisan hypocrisy or petty ambition, the "ruttish whores" had far more in common with one another than with the nation. They would stick together to the end.


The presidency was by the 1980s more than ever about money. Its deeper, subtler corruption was thus its people, the White House staff, cabinet officers, and other ranking appointees drawn from or into Washington's pervasive mercenary culture. Most simply shifted from Congress, state capitals, the ubiquitous campaign industry, or directly from special interests and their fronts. They were overwhelmingly of the system, hangers-on who made the White House merely another Washington precinct. If the presidency at the close of the century seemed increasingly without character regardless of occupant, it was largely because of its characterless retainers and their numbing conformity.

Not surprisingly, their preoccupation was image. Staged events in the Rose Garden or the East Room, briefings open and secret, discreet fund-raising and influence peddling -- all reflected on a grander scale the merchandising that 535 legislators undertook at the Capitol. Incessant touting of the president, indistinguishable from campaign to Oval Office and back again, had long since become routine. Well executed, it was a spectacle of manipulation. Washington expected fraud; it only deplored it if done ineptly. Flackery had reached new depths with the culturally appealing presence of Ronald Reagan. By surprisingly simple means, presidential image "handlers" fed and flattered the Washington media until "communications" were synonymous with co-option. Reagan aides like Michael Deaver, later charged with influence peddling and convicted of perjury, or David Gergen, one of the oilier survivors of the Watergate White House, provided cover for what was actually happening -- and thus for a good deal of the reactionary "success" of the Reagan-Bush era. As much as anyone, thought a historian of the Reagan era, touts such as Gergen and Deaver made the 1980s "a time when the national political debate was dominated by a bundle of ideas that almost without exception were contradicted by objective facts, common sense or both."

Touts were part of an ironic pathos inherent in the presidency. There was a growing isolation at this pinnacle of government as Washington politics cut the White House off not only from the rival Congress and the permanent bureaucracy but even from its own appointees in the departments. As the money tyranny divided government, captured parties and politicians, and fortified feudalism on the Hill and elsewhere, the White House was all the more alone and all the less powerful, left to play to its shifting audience without true allegiances. In a barren landscape of selfish ambition, where loyalty was an expedient, the most famous office in the world could be a theater of the abject. The postmodern presidency was always dying a little from within.

By the time of Bill Clinton's election in 1992, any real differences between administrations, like differences between the two old parties, had withered. Even the most public-spirited bills drifted down from the abdicating Congress without oversight, precision, clear enforcement language, or organized public constituencies. Defenseless, left to lobbyists and kindred clerks, unwanted laws were "anesthetized," as one account described it; the public interest, those awkward rules of equity and social responsibility, was simply put out of its misery.

On the White House itself, with its incurable courtier politics and absence of institutional memory, the fixers fastened their hold with special vengeance. Beyond the ken of tourists or most reporters, the effect was to turn the American presidency into an arena of unrelieved special pleading. But then again, intervention and unction were everywhere in Washington, from the supposedly sacred Federal Reserve to the obscure Home Loan Bank Board, which regulated the savings and loan industry, from the Food and Drug Administration to the Nuclear Regulatory Commission, from the Treasury Department to Transportation, from the Pentagon to Commerce, and on to the least-known offices.

To those who looked closely -- as few did – there was now crippling compromise before, during, and after any meaningful legislation. "A lawless swamp," one writer called Washington on the eve of Clinton's election.


Tamper-prone regulators represented only a fraction of the vast career clerkdom that was the executive. In Washington and its colonies around the country, some three million souls belonged to a federal service whose insular culture reinforced the capital's tyranny at almost every turn. For a time it was fashionable to explain that the bureaucracy was victimized by successive waves of postwar abuse -- by demagogic Republicans and cowardly Democrats in the red scare and, later, by the much-publicized hostility toward government work and workers among the Reagan reactionaries. "The federal government ... is increasingly unable to attract, retain, and motivate the kinds of people it will need to do the essential work of the Republic," warned one of the periodic studies done in the late 1980s. At hand, a blue-ribbon panel concluded, was "the worst of all possible worlds -- mediocre civil servants and mediocre subordinate political appointees as well." Yet politics accounted for only part of what the bureaucracy had become. Most of the disaster they managed by their own devices.

Their rules were implicit and immutable. From Washington to the farthest outpost, the successful bureaucrat existed to secure or enlarge the budget, to maintain the seniority that protected jobs and power, to build on the prevailing buddy system that had long since twisted civil service recruitment into a self-preserving nepotism. Like most of Washington -- and unlike more and more of the rest of America -- the bureaucrats enjoyed vastly inflated titles and pay. While middle-class families worked two jobs or more and real wages plunged for most Americans, federal paychecks rose and perquisites increased. Median family income nationally hovered at $30,000, and nearly forty million people were officially below even the anachronistically low poverty line. But federal officials with "responsibilities comparable to those of a manager of a Safeway store," as one study put it, made between $83,000 and $115,000, with full health and life insurance and generous pensions. Beyond Congress and the White House, over ten thousand bureaucrats got more than $100,000 yearly. Above all, there was job security, entrenchment as existed nowhere else, save in Congress itself. Regardless of pay or rank, a 1991 study found, the bureaucrat's chance of being fired was exactly one in forty-three hundred.

Over the dozen years of Reagan-Bush, so-called conservative Republicans entered the career bureaucracy to an extent surpassing even the Democratic influx of the New Deal. After 1988 they were organizing regular Washington seminars to instruct their own refugees from America's harsh rigged economy how to burrow into and then rise in the civil service. Conservatives had learned to love the highly paid faceless bureaucrats of their old demonology -- especially when the bureaucrats were they themselves. As a result, agencies from the Forest Service to the Foreign Service experienced unprecedented "ideological cleansing," as one account described it, with GOP appointees penetrating all the way down to desk positions. "They're trying to find openings -- or force openings -- for political appointees that they want to bury as what we call 'moles' in the department," one justice Department official explained to Barron's at the end of the 1980s. ''They bury these moles at the Department of Justice so that even the next administration can't find them." Right-wing infiltrators would be there waiting for a new president. "The Clinton entourage will decamp in the District of Columbia, pick up their government phones, and find at the other end ... the late nineteenth century," a writer said of the seizure.

More than ever before, government departments represented, or covered for, those interests they had long since ceased to police or balance. Agriculture colluded with agribusiness, Treasury with the brokerage and financial world, Commerce and Labor with corporate interests, the Pentagon with its military suppliers, Energy with the power and fuel giants, Housing with its own client real estate and construction industries, Interior with old land and resource concessionaires, justice with some of the very executive-suite outlaws it was supposed to pursue, and so on through the Federal Register.

More than ever before, career officials slid back and forth through the door marked private money. Even those in once more seemly diplomatic positions degenerated into a new species of stock-option bureaucrat. Keen to assist Chinese clients, General Alexander Haig, former secretary of state, was to remark in 1992 that human rights violations in China should not be allowed to interfere with American investment there. He and another former secretary of state, James Baker, developed as well an avid interest in oil and gas deals in Turkmenistan, enjoying lucrative consultancies for a US firm, Enron, interested in concessions to build natural-gas pipelines in the region. Trading on previous public careers as if they had been shrewd investments in pork bellies, others such as Brent Scowcroft, Nixon's and Bush's national security adviser, and Lawrence Eagleburger, a former Foreign Service officer and Bush's proxy secretary of state, parlayed their bureaucratic ranks into million-dollar-a-year consultancies, advising corporations and foreign powers eager to manipulate Washington; their firm was that of their old boss, former presidential adviser and secretary of state Henry Kissinger, whose Kissinger and Associates was seen by many as the epitome of public service prostituted to private profit.

Nowhere were the stakes and costs greater than in the national security bureaucracy, often considered the higher caste of clerkdom. Masked by congressional and media diffidence as well as by official secrecy, it easily survived the cold war as a state within a state, harboring zealots and racketeers in the guise of defense or intelligence and a stagnant guild of timeservers in the name of expertise. Bloated national security budgets held public investment and much of the economy hostage, literally at gunpoint. From US complicity in genocide and torture to collusion in gunrunning, drug smuggling, and arms trade, from obscure blunders to the enormities of war and famine, the overt and covert record in national security policy was a bipartisan calamity never fully appreciated outside the capital. Foreign press accounts, scholarly writing, occasional investigative journalism, even minimal congressional hearings all brimmed with case histories. But the capital had far fewer public-interest groups in foreign affairs than in domestic, most of its think tanks sinecures for bureaucrats and establishment figures shuffling to and from office, exchanging jobs on the narrow, arguable margins of policy. Absent front-page scandal or demonstrators blocking traffic, statecraft was left to the "experts." Washington treated amassing evidence of their abuses with cynical resignation, if not blithe acceptance.
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Re: Partners in POWER: The Clintons and Their America

Postby admin » Sat Jun 25, 2016 3:06 am

Part 2 of 2

In the Departments of State and Defense, on an overgrown National Security Council, in a warped Central Intelligence Agency, and elsewhere in what was called the community, bureaucrats looked down on pedestrian colleagues in Agriculture or Interior while living the same code of avoidance. Many were content to be fey protocol officers to Washington's mercenary regime. Others actually had a hand in policy. All came to know what ethic they served. Getting along to go along, they accumulated trackless policy disasters. Someone else's suffering they accepted in a convention of professional indifference well beyond moral abdication. Lobbies and special pleaders, they knew, perverted foreign affairs no less than they did domestic. Distinguished gentlemen of the establishment frequently turned out, on closer scrutiny, to be fools or knaves. Governance in foreign policy was often shockingly ignorant of the world and hypocritical and contemptuous of the public. But as in Congress, whistles rarely blew and few people resigned out of conscience. Washington was a capital many national security veterans found as distasteful as the seediest foreign posting -- its culture the subject of ceaseless clubby complaints, head-shaking gossip, and bitter jokes. Yet nothing so marked that self-styled elite as keeping the lurid misrule to themselves. "The Great Silence," one called it.

Everywhere, in bureaus domestic and foreign, the result was more nervous preservation of the status quo, more stifling of change. "The present system is designed to protect those within it," Charles Peters wrote on the eve of Clinton's inauguration, "not to serve those outside." Yet "outside," as Clinton's Arkansas itself would show, there was still another quasi-governmental world that led to an even deeper and more sinister corruption. If the bureaucracy and its figurehead superiors could not cleanse banal office politics, what were they to do about the national security state within the state? About CIA renegades or contractors with their criminal empire along a southern arc? About massive scandals deep within the DEA, the FBI, the Customs Service? About the gruesome mercantilism of a government whose operatives and associates free booted with official permission, if not collusion, in narcotics, guns, infants' body parts? On that dark side of the American system, too grim for press or public, critiques of right and left met in a single verdict: a bureaucracy so self-corrupted it was unfit for democracy.


Watching with interest were Washington's other notable one hundred thousand, That occupying army of the capital politely known as lobbyists. While executive-branch lobbying was conveniently exempt from the most basic accounting and while many corporate interests failed to list their agents, even registered lobbies now numbered more than eleven thousand organizations, swelling by 20 percent in the early 1990s. If special-interest money overwhelmed Washington, these were the people who embodied and dispensed it.

Their mix of old-fashioned boodle and modern tax-subsidized fees and expense accounts transfigured the largely middle-class city of the 1970s into a preserve of luxury hotels, exclusive shops and restaurants, opulent office buildings, and enormously inflated real estate. As the capital's sullen slums festered, as median family income languished at $30-35,000 in the rest of America, metropolitan Washington's household income rose by 1986 to more than $75,000, making its bureaucrat-lobbyist-lawyer-crowded bedroom counties in Maryland and Virginia the richest in the country. "The capital of democracy is seated in a city where citizens of average means cannot afford to live," wrote one journalist. When Congress voted its controversial pay raise from $89,500 to $125,000 in 1989, much of the capital thought the increase negligible. "Only in official Washington, where even young lobbyists and lawyers routinely made more than $100,000 a year," wrote a Wall Street journal reporter, "did $89,500 seem like a pittance."

Inside the real and symbolic boundary of the Beltway, lobbyists were variously known as the "enforcers," the "pimps." They were "the last of the rogue institutions," as one account put it in 1993, "another link in the great chain of favors" that was the government of the United States. By any name, they were everywhere, practicing, as Wall Street journal writer Jeffrey Birnbaum described it, "the brazen manipulation of both lawmakers and the public." Attorneys, public-relations flacks, specialists of varying education, they earned their handsome retainers and offices by a number of more or less discreet functions. Some became the valued "experts" in the intellectual wasteland of congressional staff and civil service. Unabashed "guns for hire," as Birnbaum called them, they constituted the unpaid staff on whom self-absorbed or indolent officials came to depend. They thus became the best-informed in the city on many intricate issues, albeit issues made intricate by the web of special-interest concessions they themselves had woven.

There was no question of the lobbyists' reach and importance. Many of them literally promoted politicians and staff, offering lucrative nongovernment work for the interests. In Washington's ingrown society, former aides and their employers, colleagues and rivals, husbands and wives, fathers and sons might all end up lobbying one another sooner or later. Where substance was deliberately wrung out and fresh independent ideas perceived as threatening, the labyrinth of personal relationships was all that was left and, in many cases, all anyone knew how to manage.

For all their apparent authority, lobbyists represented what Birnbaum and others called a highly paid "underclass," disdained as the prostitutes they were. In the White House, on Capitol Hill, especially in newsrooms, they were ridiculed and looked down on, albeit by many who had been or would soon became much the same. The emptiness and fraud of their work were widely known – "lots of locomotion masquerading as cerebration," as one of them admitted, and their parasitic personal economy produced little of value beyond the next fix. Forced into coalitions with other hirelings, lobbyists might be defeated in a given battle, yet they always survived to lunch and insinuate again. Win or lose, they continued to overwhelm the remnant public-interest lobbies ten to one in numbers and millions to one in financial resources.

Flacks and former officials crowded payrolls of foreign interests arrayed against both American business and labor. Congressional and executive aides-turned-lobbyists wrote ventriloquist speeches for senators and congressmen masking the criminal and drug empire of the notorious BCCI and other outrages. The infamous "iron triangle" of Pentagon weapons contracting -- lobbies, Congress, and the Defense Department bureaucracy -- regularly funneled nearly $200 billion in government money to a handful of favored contractors and locales. "Public" lobbies like the American Association of Retired Persons extracted millions in dues, stoutly resisted any change in subsidies to the affluent, then wallowed in offshoot businesses, bloated staff salaries, highly paid consultants, and luxurious offices while their largely unknowing members back home held bake sales. By the 1990s even once-avid public-interest groups like Common Cause and others had, as Washington editor and author Sam Smith noted, "become capital institutions, part of the ritualized, status-conscious, and very safe trench warfare of the city."

Through it all, Washington's omnipresent lawyers manipulated at $300 to $400 an hour on behalf of interests foreign and domestic, with a venality as casual as it was epic. Private legal "services" became the prime growth industry in the capital. The profession's prevailing ethic was legend. "The highest compliment inside Patton, Boggs that one attorney can pay to another," said one lawyer of the firm prominent in Democratic politics, "is that he or she will do anything for money."

By the time the Clintons came to the White House, lobbyists had long since replaced both the Congress and the executive as what one account called "the primary actors" of Washington, just as their provincial counterparts dominated Little Rock. It was their government that was now permanent, beyond the facade of elections and inaugurals.
At the beginning of 1993 that regime was stronger, richer, better-prepared than ever for a struggle whose rules and weaponry, facts and fictions, they already controlled. If issues of change in a Clinton presidency were to be fought on the old grounds -- were even to be addressed before the suborned system itself was fundamentally challenged and changed -- the battle was over before it began.


To such pervasive misrule in America there was to be one ultimate constitutional remedy, one final line of defense -- a free, conscientious, insightful journalism. Even the most widespread abuses of power could not withstand honest reporting of what a government did and was. That, at least, was the democratic ideal.

The relationship of journalism to power in the Washington of the 1980s and 1990s was very different. Despite an apparently free and influential press, the money tyranny flourished. American journalism managed little substantive understanding of or concern for governance and posed no genuine check to the real regime's billowing power.

"It is in the things not mentioned that the untruth lies," John Steinbeck had learned from his experience as a correspondent in World War II. The "things not mentioned" and thus the essential lies of the Washington media were many and decisive, numbering not only all the consciously and unconsciously buried stories but what the profession knew of its own corruption. Like a battlefield of brutal waste and wreckage, the political landscape was littered with the corpses of failed journalism -- reports killed, left to die, never pursued. A few hundred insiders -- among them officials, politicians, government agents, lawyers, private investigators, criminals, political contributors, the handful of writers who deserved to be called investigative journalists -- knew that quite another world existed in America. But it was almost never visible in mainstream media, much less in public discourse or education.

Why was so much missed, at such cost, by so many seemingly talented, ambitious journalists? For one thing, the media themselves had, by the 1980s, become the chattel of concentrated power. Most reporters worked out of some cubicle of a monopoly and took their subsistence and pensions by its favor. Twenty-three corporations controlled most of the nation's twenty-five thousand sizable outlets. Twenty-nine media conglomerates were among the Fortune 500. Thus General Electric owned NBC; a billionaire, CBS; another conglomerate, ABC; and behind them was a web of shareholding and interlocking ownership in which shadowy giants like Wells Fargo International Trust, Fidelity Management and Research, Bankers Trust, and Capital Research and Management were among the controlling interests in all the network parent corporations. Like the pollsters and political consultants, they would be wed to the tyranny not only by shared values but by millions in profits from political advertising.

Subsumed in an "information cartel," as one writer termed it, journalism was now far less a profession or an art than a subsidiary of an immense profit-worshiping clerkdom, carrying its innate curse of ladder-climbing bureaucrats, company conformity, implicit and explicit gags on integrity. In the most fundamental economic and institutional terms, the press and broadcasters were no longer an independent constitutional element, conscience, or antagonist of the system; they were the system. And in political coverage the first casualty would be reporting about the inner realities and outrages of that world, not to mention the political arrangements that allowed them. "A built-in, chronic tilt," wrote the eminent journalist Morton Mintz, "chills mainstream press coverage of grave, persisting, and pervasive abuses of corporate power."

In commercial television, journalists' reporting was shrunk to sound bites and reality to a hackneyed rendition read off by vacant "talent." Though some began to venture out, capital reporters still languished, too, in hoary "beat" journalism that kept them "on the reservation," as their handlers called it. In Washington they were beset by 750 press secretaries on the Hill and hundreds more in the presidency, by bureaucracies, lobbies, think tanks, embassies, and satellite organizations, most devoted to getting their attention, some to avoiding too much, all to manipulating for boss, business, career.

As in Congress, rivalry was relentless if selective -- competition, like literacy, a virtue never carried too far. Scores stood in line for reporters' and editors' jobs in Washington. Many coveted the exclusive big piece. By the 1990s editors were anxiously measuring the worth of revelation by calling up on their computers what "mainstream" peers had written. In their fear and inertia, the media resembled nothing so much as Washington's bureaucrats they scorned. "They remain trapped in a purgatory," editor Sam Smith said of his colleagues, "between the disdain of the public and ineffectualness within their own bureaucracy."

Yet none of this larger corruption and careerist inanity was necessarily decisive. With exertions not many people saw, good reporters could and did find their way around. If journalism missed the real Washington, if it seemed more aggressive and unctuous while less revealing or relevant, it was not alone a corporate curse. The answer was also in the who, what, where, when, and why of journalists themselves, in their informed adult consent to the corrupted system. As elsewhere in the culture, a few journalists stood apart. But the essence of American political journalism was how common failure and folly had become. And like government, it was a matter of substance.

On the surface the men and the token handful of women reporting Washington seemed better-educated and more discriminating than their relatively unschooled, poorly paid predecessors of the 1930s and 1940s -- men who swallowed their leaks, like their liquor, unmeasured and who left the archives of political journalism in many respects a dingy embarrassment of indolence and co-option. Now some reporters were thought quotable themselves, celebrities if not quite authorities. Performing on their own television shows, they were famous in their own right, attended and courted. "Some of the country's best mouths, not its best minds," said one of them. They came "experienced" -- the Washington assignment a stamp of superiority -- but then, too, practiced in the crippling conventions, career politics, superficiality, smugness of the culture. No less than in other corporate settings, compromise and mediocrity were often implicit in promotion. "Experience," as the New York Times book critic John Leonard wrote earlier, "often as not means upward failure."

Covering and explaining the tyranny beyond personalities and surface politics simply demanded more than many had. A tabloid intimacy with personal scandal now passed for investigative reporting, even political understanding. Nothing so epitomized the end-of-century shallowness as the treatment of politicians' philandering: there was little reflection on the underlying issues of abused wives, misuse of office in the inevitable cover-up, implicit questions of psychology and integrity, or the misogynistic victimization of numbers of women. Meanwhile, few grasped the dense, fugitive, often squalid pageant of government; and of those who did, many grew cynically indifferent or indolent, reconciled to what they did not report. Few pondered the demands on integrity and intellect posed by a capital culture that was devoted to a finely layered deception and that defined success as conformity. Those monitoring compromise were co-opted themselves. More lucrative and stylish, more sassy than ever, their full-color, cappuccino journalism of the 1990s was closer to the yellowing rewrites of their cigar-champing predecessors than most could admit.

What stunted coverage was not always so simple or crude as plain censorship. "The process is more sophisticated. . . . Self-censorship is the primary shaper," one editor observed. "The problem has three names," another said bitterly, "substance, substance, and substance." Underlying ignorance and uncertainty made most reporters, no less than politicians, crucially dependent on the culture's so-called experts. Thus the corporate wards of the interests' think tanks and lobbies appeared again and again in newsprint and on television screens, paraded as "fellows" of an "institute" or "center" whose background or whose underwriting by business or even foreign governments went unexamined. Prominent "discussion" programs like ABC's Nightline and public television's MacNeil/Lehrer NewsHour or Charlie Rose descended into journalism-by-Rolodex, confining dialogue to the safe, stagnant right of center and their guests to the same predictable officials, former officials, club members, and flacks of much-rehearsed banality.

Pressures to conform to accepted opinion were everywhere, from lunches and dinner parties with sources and colleagues to editorial meetings and the ceaseless hail of manipulative press releases and calls. Enterprising reporters were ostracized and their careers shattered throughout the 1980s, notably at the New York Times, with editor Abe Rosenthal's rancid national security orthodoxy and establishment-censored coverage of Central America. But the effect was much the same at the major news services and magazines. In the publicly unmourned and all but unnoticed ruin of their peers' careers, journalists repeatedly saw the dangers of departing the comfortable prison of the right quotation marks. "It is not smart to come up with information that conflicts with White House briefings, State Department 'white papers,' or cocktail party assurances from senior administration officials," wrote one veteran of the purge.

In other quarters there might be no reluctance to embarrass the government, to get a story that showed malfeasance or worse, but even that relative readiness was usually crippled by the reporters' or editors' underlying ignorance of how government truly worked beyond. The dark side was not a world most reporters knew or understood or even wanted to ponder. To acknowledge its revelation as authentic journalism -- rather than as "sensation" or "conspiracy theory" unbefitting "serious" reporting -- was to question the shared political myth of the system. To expose it was to pose unwanted questions of what had happened to democracy and what must be done. In that, reporters submitted not only to the government's concealment or authority but to a professionwide superficiality and ultimate cowardice.

By the mid-1990s the long list of vital censored stories of the past fifteen years would belong to history. The journalists who had turned them up continued to reside on the fringes. Dissent and dissenters were digested, domesticated, and allowed an occasional outlet if convenient, marginalized and, in effect, repressed if not. The de facto censorship left only the money tyranny's party line, "Washington's approved version of reality," as one observer called it.

It was not only an agreed-on set of facts and considerations but more essentially a habit of mind, a way of seeing and thinking about politics and people, about what journalism was expected to tell -- and, most crucially, what it might naturally, necessarily neglect and hide. It was to this bondage -- however conscious or hypocritical the individual surrender -- that most Washington journalists lent themselves. Like the social and psychological captives in Congress, many privately chafed and railed at the manifest corruptions and frustrations of their world. Yet shockingly few declared aloud their loss of confidence in the system. "At any given moment there is a sort of all-prevailing orthodoxy," George Orwell wrote, "a general tacit agreement not to discuss some large and uncomfortable fact."

Most of the industry found its coveted "center" well to the right of the old postwar political spectrum on basic questions of wealth and power, issues fundamental to all others. In the timorous senior ranks of news organizations, there were not many who could now describe themselves, as Dwight Eisenhower once had unabashedly, as a "militant liberal." News executives and reporters might deplore the primitive social prejudices of groups like the Christian Coalition or pay homage to token feminism, gay rights, artistic freedom, or civil liberties, but they could not confront the inequity of income and power that was the crux of their own status and against which even the conservative crowds flailed, though for the moment conveniently diverted by social issues.
As in the federal bureaucracy, ideological reactionaries penetrated journalistic ranks during the 1980s in unprecedented numbers. More telling than any infiltration by zealots or change of heart in formerly "liberal" institutions, however, the shift overall reflected the intellectual sterility of Washington's governing culture. The stunted media agenda, after all, was no more or less than the range of issues and depth of inquiry defined by the interest-dominated Congress, presidency, bureaucracy, and lobbies – the permissible confines of "serious" public discussion within the money tyranny. Once more, it was in "the things not mentioned" that practical censorship lay.

Reporters thus learned early to stay within the shallows of the corporate and political worlds. Within tamely accepted limits, the mythic obligation of media "objectivity" became its own Orwellian newspeak, sanctioning journalists to assemble the readily available prepaid and predigested data, the safe pedestrian quotes, but almost never to call political cause or effect by plain, unequivocal "unprofessional" names like hypocrisy, injustice, inequity, bigotry, demagoguery, crime, corruption, lie. In a distribution of power and sterilized public dialogue neither balanced nor fair, ideals of journalism turned into a mockery -- "balance" became subterfuge or contrivance, "fairness" a guarantee that any criticism of vested advantage would always be rebutted.

Coverage dwelt long and self-indulgently on personalities, rivalries, designated symbolic events, and the city's endless narrative gossip, rarely on the classic questions of politics -- who gets what, why, and how, at what cost to others. Knowingly, cynically, journalists might report the regime's worst infractions, the occasional politician, like the occasional major mobster, exposed, perhaps even tried and convicted. Otherwise, whatever they knew or said in private, they dealt professionally with institutions, policies, and politics very much at face value, as if nothing truly fundamental had happened since the 1970s, as if democracy itself had not been transformed and virtually extinguished. Their industry was witness to the coup and the ensuing decay. Like workers in an emergency room who watch a patient bleeding to death, they had chatted, taken notes, whispered to themselves, perhaps turned away now and then in boredom or distaste. But almost no one had sought the cause of the hemorrhaging, moved to stanch the flow or ease the agony or even testify later as to the actual cause of death. "Educated journalists, it turns out," wrote William Greider, one of the few exceptions, "are strong on the facts and weak on the truth."

With intellectual shallowness came, too, the sheer class pandering, cronyism, and shrunken sensibility of reporters, producers, and editors. They not only reflected, relied on, and parroted the opinions of the regime but were eager social peers as well. At the top -- where bylines and television stand-ups mattered most, after all -- they cohabited with the powerful and the interests' hirelings in numerous ways. They lived in the same neighborhoods, bought their children into the same exclusive private schools, entertained one another at intimate dinner parties, shared implicitly the inside-the-Beltway bond of Washington's sophisticated society. "When you add corporate caution to social climbing and the inoffensive product favored by much of the media," wrote one student of the industry, "a huge news hole develops in Washington." Like the comparatively wealthy and isolated government, like the six-figure lobbyists of K Street, they were far away from foreclosed farms, layoffs, lapsed health insurance. The ferocity of their own stricken Washington ghetto seeped only occasionally into their preserves. Driving through its Beirut-like slums to get to Capitol Hill, they locked doors, avoided eye contact, and worried about the potential consequences of a flat tire or an overheated engine.

To expose the regime was in many ways to expose themselves. Each revelation was a kind of acknowledgment of their own past compromise. Rumors might abound that news organizations and the prominent were corrupted by corporate power, even by the CIA or organized crime, "mobbed up," as the term had it. But conspiracies were rarely necessary. Wherever control lay -- as in most closed systems holding out money and status -- sociology and psychology took care of most potential dissent.

In the guise of "news" and "public affairs," corporate-sponsored television shows presented what one irreverent political writer, Eric Alterman, called the capital's "punditocracy," parading as journalism the views of a narrow group of the city's columnists and courtesans. Yet many reporters watched the debasement of their field in discreet silence, aspiring to be celebrities themselves. Rarely did they examine how many of their fellow Washington journalists now worked directly or indirectly for foreign interests. In the end, it was their own special treason, for if the media constituted the new intelligentsia of modern American politics, their blithe ignorance and conformity amounted to betrayal of duty. Journalists, after all, were still the self-proclaimed guardians against the very excess they had joined.

By the inauguration of Bill Clinton, there was no counting what might have been done or avoided over the past several years of plunder had the media not abdicated so completely. Corrupt money might still have overwhelmed -- and a reeling public largely ignored -- even vigilant, fearless, sophisticated, and truth-telling journalism. But exposure might also have stayed some of the worst abuses of the era and hastened the disaffection of the public. The nation would never know. As it was, reporters and their superiors would be there in 1993 and after, contemplating not their own crisis in integrity and responsibility, not what to do in fulfillment of Thomas Jefferson's democratic "first object," but rather what they would now think of the new First Couple.

"The real war will never get in the books," Walt Whitman wrote after seeing firsthand the corruption of Civil War Washington. More than a century later, his prediction remained sadly true for American politics. History and biography might discover a rogue or knave in a politician safely gone from office but tended to treat money as a slightly distasteful footnote rather than the essence of governance. Twentieth-century presidents went from disdain to favor and back again on waves of ideological fashion or literary-academic vogue, with little accounting of who owned whom and what in national power. The two old parties and many of their candidates might be well financed by shady, even criminal money, the Democrats especially benefiting from the largesse of the drug trade in the 1980s, according to law enforcement sources. But such outrage was discreetly confined to FBI wiretaps or safe-house bugs, known only by a few insiders hoarding their knowledge like doctors finding and concealing a malignancy.

Still, by the time the Clintons came to the White House in 1993, what had happened to American democracy, how long and how deeply the decay had been at work, was scarcely a state secret. Never before in American history, in fact, did the titles of an era chorus such debacle and alarm -- books with names like America: What Went Wrong?, The Best Congress Money Can Buy, Who Will Tell the People: The Betrayal of American Democracy, The Politics of Rich and Poor, Fooling America, Mink Coats Don't Trickle Down, S & L Hell, Beyond Hypocrisy, Sleepwalking through History, Honest Graft, Money Talks, Golden Rule, Dirty Politics, Boiling Point, Declining Fortunes, The Worst Years of Our Lives.

It would take others beyond power to acknowledge how embedded the culture of complicity and denial had become, how utterly bipartisan, how irreparable. "Who will tell the people?" William Greider asked of the "well-kept secrets" of misrule so widely known in Washington. "No one in authority if they can see no clear advantage to themselves." A larger society made the regime what it was, enabled it to run on a daily basis: ten thousand of them worked around the Congress, a hundred thousand in the executive, another hundred thousand as lobbyists, and thousands more in the media and nongovernmental centers and satellite organizations. Beyond Washington was a wider privileged caste of three to four million "ambitious and well-connected individuals," as Lewis Lapham described the dominant 5 percent of the population, "united in their devotion to the systems in place and the wisdom in office."

In the cruder oppressions of Eastern Europe, such people had been among those who eventually turned on the hypocrisy of the regime, finally declared openly at the risk of their lives as well as their fortunes that the fraud and exclusion were no longer endurable -- if not for them then for others. If one element of the US regime were to defect -- a president, a segment of Congress, whistle-blowing bureaucrats or lobbyists, a genuinely independent voice in the "mainstream" media -- many others would be there to cover, isolate, subvert, ultimately to nullify. The deeper mark of the institutions was that none dominated; all were hostage to the others.

The Washington Bill Clinton glimpsed along the way to the presidency -- as a high school delegate shaking John Kennedy's hand or lunching with Uncle Raymond's friend John McClellan that distant summer of 1963, as a Georgetown student and Fulbright intern in the turbulent late 1960s, as a young attorney general visiting the Carter White House in the 1970s -- no longer existed in 1993. Awaiting him was not even a Washington as it might have looked from Little Rock in the 1980s, during his ritual encounters with Congress and the White House or in "policy seminars" with some of the capital's corporate-paid courtiers as he plotted a presidential run. It was not even the caricature he ran against as an "outsider" in 1992. The Washington he entered with such ceremony and hope in January 1993 was fundamentally different.

Many thought later that Clinton had not understood what he faced during his first years in the White House. Despite the similarity between Little Rock and Washington, despite the cliche that Bill Clinton was master of his home state politics, there persisted a sense that he was somehow unprepared for the sheer force of Washington's insidious culture. Clinton himself would speak the language of an innocent's frustration and newfound cynicism. "All the old rules are still the ones that count," he said in angry self-justification at the end of 1993, as if both marking a rueful discovery and reiterating the obvious. Yet all that was belied by the president's own clouded past -- by a Bill Clinton who was neither neophyte nor defector in America's money tyranny but one of its more wanton and prodigal offspring.
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Re: Partners in POWER: The Clintons and Their America

Postby admin » Wed Jun 29, 2016 3:37 am

Part 1 of 2

18. Little Rock IV: "A Feller Could Live Off the Land"

Bill Clinton's plentiful "McDollars" of 1984, and of the years before and after, poured out of a relationship that was a classic of its kind in American politics from courthouse to White House -- a glib, buccaneering businessman cultivating the special favor and protection of government and an ambitious, eagerly patronized officeholder garnering in return his own advantage from their two-way traffic in power and money.

For a time, the benefits were nicely mutual, the personal relations warm and intimate. The businessman flaunted his considerable influence, escaping for years and through tens of millions of dollars the public accountability or even simple notoriety a less friendly government might have exacted. He could intimidate questioning officials with the threat of political retaliation by their superiors. He was known to command the ear of the governor himself when money or concessions were needed from third parties. He would even hire the governor's wife on special retainer as his company lawyer, putting the state's First Couple on the payroll, as it were, and further fending off regulatory problems in the bargain. But then, the politician got his share as well. He profited from their joint land venture. He marveled at his patron's dependable and generous campaign contributions of suitably discreet origin and handling. He and his wife realized several thousand dollars in personal income from the legal retainer they both plaintively solicited. Not least, year after year they watched the quiet repayment by others of their own recurrent and sizable debts -- money, like the campaign cash, flowing through the friendly businessman, either from him directly or from other sources they did not question.

Eventually, as such stories often go, the bonds of money and influence frayed and, with them, affection and loyalty. By the time the businessman was finally called to account and became a public embarrassment, the politician had turned away and moved on. He soon became president of the United States, living in the White House while his onetime intimate and patron, now bankrupt, lived in a trailer back in Arkansas. And though the relationship later came to haunt the president, to symbolize a larger, more generic corruption, at the time it flourished in the 1980s the politician, the businessman, their wives, and those around them took it all very much for granted. "The moral of that story was never, 'Don't do it,'" said a lawyer who knew their dealings. "It was, 'Do all you can and don't get caught.' "


Jim McDougal had drifted from venture to venture before entering the Whitewater partnership with the Clintons. He speculated in raw land with his old boss Senator Fulbright and for a while in the 1960s styled himself an "export broker," farming crabs and black mussels in order to sell their crushed shells to Japanese "pearl manufacturers." From the mid to late 1970s he ran what his resume called the Great Southern Land Company, as well as "various other small family-owned companies which dealt in land investment." None conjured the quick wealth, social status, and commensurate political power he wanted so keenly. He was still an obscure, small-time speculator and salesman when he began Whitewater in the late summer of 1978, just before his young partner's election as governor.

With Bill Clinton in the statehouse, however, Jim McDougal's fortunes began to improve markedly. Not long into the first term he joined the Clinton personal staff as the official gubernatorial liaison with the Departments of Highway and Transportation and Economic Development and with the state Securities and Bank Commissions; he also directed the Governor's Task Force on Investments and Capital Expenditures. Although he was drinking heavily, McDougal was clearly in a position of influence and prestige with powerful interests throughout Arkansas. "It was understood Jim spoke for the governor," said one official who dealt with him, "and that Bill was behind him in whatever he did in the state government or in business, that they were real, real close."

At the same moment, their joint land venture was off to an impressive start. During 1979-80 alone, the valuation of Whitewater had risen from $203,000 to $250,000. Over the first two years of the partnership -- and again under favored terms similar to those of the original loan for purchase -- the Clintons and McDougals borrowed another $47,000 for gravel roads and surveys and spent $40,000 of it carving the land into forty-four homesites. What was more, the worth of the development promised to spiral even higher than the margin of improvements or natural appreciation, thanks to a time-honored Arkansas gambit involving public money and private gain. Early in 1979 state records noted that the Game and Fish Commission had received a quiet donation of a riverfront lot near Whitewater Estates for a boat ramp. As developers and other insiders well knew, acceptance of such a "gift" meant that the commission would promptly build at public expense -- spending federal marine fuel tax money channeled through the state Highway and Transportation Department -- an asphalt access road to the ramp from the nearest major highway, at once saving the owners major expense in opening the development and adding substantially to the overall value and marketability of homesites. With Whitewater's joint owners now both wielding power at the statehouse, their development quickly became one more beneficiary of the thinly disguised subsidy. In his first term Bill Clinton soon "appointed two old-line commissioners who promptly fired the independent director of Game and Fish," as one account described it. By the fall of 1979 the donation of the riverfront parcel near Whitewater was officially "accepted" by Game and Fish, with the lucrative, tax-paid two-mile access road from Highway 101 to follow.

During the bitter 1980 campaign against Frank White there was brief publicity about Jim McDougal's continuing management of Whitewater while on the governor's staff. McDougal resigned not long afterward. Yet the story was hardly a revelation of collusion. At the time there was no expose of the fishing ramp-road building racket or even a hint of any impropriety by McDougal's profiting co-owner, the governor himself. State records would show later, in fact, that Clinton planned to promote his friend and business partner to be Arkansas representative on the crucial Ozarks Regional Commission, whose role in planning and finance offered further potential benefits for Whitewater or other development schemes. It had not been political embarrassment but rather McDougal's own business fortunes that prompted his leaving the Clinton statehouse, and the prospect seemed even more lucrative than the Ozarks Commission or other capitol favors. By the autumn of 1980, little more than two years after beginning Whitewater and only months after joining Bill Clinton's staff as liaison to powerful commissions, the once-struggling fly-by-night operator and alcoholic was about to become a banker.

Financed by a $390,000 loan from the same friendly Union National of Little Rock whose board included one of Clinton's main fundraisers -- and whose $20,000 unsecured loan to Hillary had helped provide the Clintons' Whitewater down payment – McDougal took over the small Bank of Kingston in a corner of Clinton's old Third Congressional District in northwest Arkansas. He began as one of seven investors, including spurned Clinton aide Steve Smith and former congressman Jim Guy Tucker. It would be McDougal, however, who ran the bank in what soon became his notorious style, effectively controlling and dispensing for his own purposes millions in depositors' publicly insured funds, "lending money right and left," as Smith put it later, supposedly on the theory that it was tight credit that held back poor Arkansas. "Populist banking," McDougal called it. Maybe so, but one of the small institution's first loans after its takeover was to the McDougals' and Clintons' own popular cause. The nearly 20 percent interest rates that haunted Carter and helped elect Reagan were discouraging lot purchases at Whitewater Estates, and in the wake of Clinton's 1980 defeat, the partners moved to spur sales. On December 16, McDougal's Bank of Kingston loaned Hillary Rodham personally $30,000 to erect a model home on Whitewater's Lot 13.

The loan marked the beginning of the tangled skein of deals, transfers, and co-mingling of individuals and corporations that later investigators found riddled with legal and ethical discrepancies. At the time, even a dubious public record provoked no questions. Land and tax documents showed Whitewater Estates taking in almost $300,000 between 1979 and 1983, well more than the outstanding mortgage and other indebtedness, yet with no recorded profits as income to the owners or corporation. As only one example, the twenty-eight acres overlooking the scenic bend of the White River, the parcel the Clintons had wanted themselves, turned out to be one of the first pieces they sold in 1980, for more than $1,000 an acre. Yet tax stamps listed the price of the property as only $2,000, some $30,000 less than the actual sale recorded elsewhere and later confirmed by the buyer.

Obscure, furtive, missing money seemed part of the Whitewater landscape from the beginning, and nowhere more typically than in the twisting history of Lot 13, where Hillary had borrowed to put up the model home. As investigative writer Martin Gross, Congressman Jim Leach of Iowa, and others later tracked the transactions, there were serious questions of legality or propriety at every turn. To begin with, it had been Hillary who took out the loan, because McDougal was now managing shareholder in the Kingston bank as well as in Whitewater, and to give himself the money would have been a blatant violation of banking law. On receiving the loan, however, the governor's wife had promptly deposited the $30,000 in the Whitewater account, the corporation then buying a modular home and proceeding to make payments on the principle and interest of the loan, with Hillary personally deeded both the house and land. If she was thus acting as the corporation's agent, as she obviously was, the same state banking laws made a loan to her as improper as a loan to McDougal himself. Moreover, the friendly bank in Flippin holding Whitewater's mortgage had released Lot 13 from indebtedness, and the corporation simply transferred it to Hillary personally, at no cost or consideration of any kind. But those acts, too, had been a clear violation both of proper banking practices and, ultra vires, of the corporation's legal authority under its charter.

In 1982, during the Clintons' comeback campaign, Hillary proceeded to "sell" the model home she never legally owned to a Hillman Logan for some $27,000, though again with no record of who received Logan's $3,000 down payment. The $24,000 balance was to be paid to Whitewater on an "installment contract," with Hillary retaining the deed. When Logan soon went bankrupt and died, however, she personally bought the house back from a bankruptcy court for only $8,000 and then resold it, again as a personal transaction, for $28,000, making a profit of $20,000 though later declaring only $1,640 in capital gains to the IRS.

She was not alone in tending Bill and her stake or in finding favorable financing. While over $7,000 of her debt at Kingston was eventually repaid by Whitewater, Inc. -- largely, it turned out, with unaccountable funds from a subsidiary of McDougal's newly acquired savings and loan -- it was during the period of the sale to Logan and her resale that the development corporation ceased to meet payments on the loan. To retire the remaining balance, Bill Clinton personally and without collateral borrowed $20,000 from the Security Bank of Paragould, owned by Marlin Jackson, one of the bankers involved in the initial financing of Whitewater and soon to be appointed by Clinton as state banking commissioner. Whitewater, Inc. eventually paid back much of this Clinton personal loan as well, again mainly on the strength of unexplained deposits in its corporate account from McDougal's savings and loan. All the while -- through loan, sale, resale, and loan to cover loan -- Whitewater carried Lot 13 on its books as a wholly owned asset, despite Hillary's personal ownership and profit recorded elsewhere. So it went in a thickening mix of shuffle and evasion as the Clintons regained the governorship and resumed their climb to the presidency, ceaselessly jockeying for their own share of profit and percentage in the investment that was supposed to make them hundreds of thousands of dollars.


It might have remained one more petty, slightly unsavory flier among so many in the grasping 1980s, but for the flamboyance of Jim McDougal.

His own political ambitions ever aflame, he ran in vain for Hammerschmidt's congressional seat in 1982, winning the Democratic primary but overwhelmed by the entrenched incumbent in the general. That winter, with Bill Clinton reelected, McDougal was back again briefly in the statehouse as one of the governor's liaisons with the 1983 legislature. Within weeks of the session, however, he had returned to business, dickering with Worthen Bank and other backers to buy a struggling little savings and loan in sleepy Augusta, across the White River from his own native Bradford in north-central Arkansas. By the end of 1983 the deal was done and McDougal was opening a branch in his hometown with some fanfare, talking up land deals with local investors and making extravagant plans for his new savings and loan.

McDougal lured local depositors small and large by advertising high interest rates and attracted money from Wall Street and from brokers around the country by offering "Jumbo CDs," up to the $100,000 maximum now backed by federal deposit insurance in the sweeping 1980 deregulation of savings and loans. Under the same drastically revised laws that allowed federally insured thrifts to speculate widely, McDougal would then invest depositors' money as never before in real estate and other ventures in Arkansas and elsewhere, most of them spun off in a web of Madison subsidiaries run by him or his wife, Susan. It was a dream come true for the frustrated politician and speculator, in effect his own private bank to finance his irrepressible deals.

"He wanted to see how much he could make to prove who he was," said Steve Cuffman, who later succeeded him as chairman of the savings and loan. "All that money for high-stakes speculation and spreading around was sure as hell going to make him a player," said a federal prosecutor. Soon after taking over in Augusta, McDougal planned his decisive move to the marketing and financial center of the state in Little Rock, finding an old block-long laundry plant to renovate in gentrified Quapaw. He needed only the approval of state regulators to open in the capital and begin his spree. To inspire public confidence and respectability, the new thrift was to be called Madison Guaranty.

What followed was a parody of the Arkansas system and typical of the larger savings and loan scandal. Jim McDougal's big break came in September 1983 -- six months after he left the governor's staff for a second time -- when the Clinton administration gave him permission to move Madison Guaranty to Little Rock. In the midst of the governor's mounting campaign on education as well as his rising popularity, the event drew little attention. The new branch bank, the Gazette noted in a brief booster announcement, would have the "limited purpose" of providing mortgages for what the paper called "a booming Madison Guaranty real estate venture -- Maple Creek Farms." Like Whitewater, 1,300-acre Maple Creek was one of McDougal's raw ventures, and "neither ... was booming," as Meredith Oakley caustically noted afterward. In the offing instead was an explosion of a different kind. Carrying off with characteristic flair exactly what he planned, McDougal would drive up deposits at the stylish new Little Rock branch from an initial $6 million in 1983 to over $123 million scarcely three years later -- or so Madison's books seemed to show. What had opened in Quapaw was not the Gazette's solid supplier of home mortgages but a fount of speculation, self-dealing, and insider abuse remarkable even for the time and place. And from the beginning there were several unmistakable warnings.

That same autumn Clinton's own new banking commissioner and Whitewater creditor, Marlin Jackson, prepared to order McDougal's Bank of Kingston -- now itself renamed Madison Bank and Trust -- to cease what Jackson called "imprudent loans." In little more than two years at the tiny institution, McDougal had already become notorious for "too many risky loans and too many loans to friends," as one report put it starkly. Among other infractions, the state Banking Commission cited the $30,000 model-home loan to Hillary Rodham, though only because Whitewater was outside the statutory lending area of the bank. The multiple other questionable steps in that loan, apparent infractions involving Whitewater and the Clintons directly as well as the bank, went unremarked.

By the fall of 1983 McDougal had also aroused the suspicion of examiners from the Federal Deposit Insurance Corporation, who were growing concerned that the small rogue bank in Kingston was now concealing unsound practices and a consequent weakened condition by shifting troubled loans to Madison Guaranty. That autumn, in fact, state officials already doubted Madison Guaranty's own solvency, Charles Handley, a ranking aide in the Arkansas Securities Department, would admit years later.

The following spring the Federal Home Loan Bank Board found that Madison's investments through one of its real estate subsidiaries were worse, as one summary worded it, than "double the level allowed by Arkansas law." At the same moment, in March 1984, FDIC examiners filed a formal memorandum deploring Jim McDougal's recklessness, alerting the supervisory Federal Home Loan Bank authorities in Dallas, and setting in motion a "special limited examination" of the thrift. Issued in June 1984, that first partial inquiry, while not a formal audit, was "based on an analysis of information obtained from the institution's records and from other authoritative sources," as the report indicated. It found "unsafe and unsound lending practices" and concluded plainly that "the viability of the institution is jeopardized."

McDougal had not used "prudent investment practices," the report went on, and "substantial profits ... on the sale of real estate owned have been improperly recognized." From only a preliminary review, federal examiners determined that accounting at the institution was highly suspect, and legal bookkeeping would show Madison Guaranty "in an insolvent position" even by the lenient standards of the time, a conclusion widely shared in the regulatory community. "The federal government had done an examination ... and I agreed with it," remembered state securities official Handley, "which showed that Madison had a net worth of only 1 percent of total assets [when] the benchmark was 3 percent, which wasn't very high itself." Altogether, as Lee Thalheimer, the director of the Arkansas Securities Department, advised his federal counterparts in a letter that spring of 1984, McDougal's violations were "very serious."

Dire as their 1982-84 warnings may have been, state and federal officials had only glimpsed what was going on at Madison Guaranty. Behind McDougal's bravado and brash plans, the thrift was hemorrhaging money from the beginning. Behind what were later revealed to be false appraisals, cleaned-up books, and constant check kiting of dizzying circularity between Madison and its kindred companies -- including Whitewater -- government examiners and prosecutors would eventually find that huge sums of depositors' money had been manipulated and diverted to the gain of a few insiders. By one official estimate, Madison lent some $17 million solely to its own directors, officers, and executives. Like an elaborate shell game played with other people's savings, and ultimately at taxpayers' expense, money darted from account to account, subsidiary to subsidiary, covering this overdraft with that loan, this loss with that gain or new loan, though with a ceaseless flow of "commissions," fees, salaries, and other perquisites for those inside. "It was not particularly unique in the looting of financial institutions," a federal investigator said afterward, "but real bad stuff."

The resulting extravagance was anything but secret. The ubiquitous television commercials for Madison Guaranty developments became famous in themselves, with "Hot Pants" Susan McDougal riding her white stallion over picturesque territory. "She was kind of a local sex celebrity," said one lawyer. On billboards and in newspapers, Madison speculations like Castle Grande, near Little Rock, would be a familiar part of the advertising and commercial landscape of the small capital. The McDougals themselves were "always good gossip," as one local described them, "and always seemed rich and successful in those days." Susan was known to live mostly alone in their lavish house, while her deal-making husband often stayed in an apartment to be near his aged mother, though the devotion took nothing away from his reputation for extravagance. Now called Diamond Jim, McDougal basked in the apparent wealth and prominence, of which the jaguars and Bentley were vivid symbols.

Still, for all their flashiness, the McDougals might have been one more pair of high rollers in boom-time Little Rock, save for their extraordinary connection with the state's First Couple. "In their heyday in Little Rock it seemed the Clintons and McDougals couldn't get enough of each other," the Washington Post noted a decade later. "An unbelievable relationship," Susan McDougal would call it.

Afterward, there could be no doubt how much and how currently the Clintons knew the business habits of their intimates, knew the essence of what was happening at Madison Guaranty Savings and Loan. Even apart from the social affinity and active partnership in Whitewater, Banking Commissioner Jackson had officially advised the governor of the 1983 findings of lending violations at McDougal's Kingston bank. To underscore the wanton acts at Madison Guaranty, lawyers and investigators in the state Securities Department sent the governor's office a copy of the blunt conclusions of the federal "special limited examination" of 1984 -- though its receipt was never acknowledged. "We knew it got to Betsey Wright and other folks, and finally to Bill Clinton," said one official, "but they just kept quiet and waited for it to go away."

To Jackson's formal notice of McDougal's infractions, Clinton's reaction was circumspect. "The governor's response to this," according to one account, "was to urge him to ignore politics and treat all banks alike." Jackson obviously was aware of McDougal's special ties, and both understood what "politics" meant in this case, as Jackson himself would recount. The Banking Commission's discipline of the bank at Kingston would eventually result in Hillary Clinton's own $30,000 Whitewater note being called, a sequel later claimed to show the governor's scrupulousness in dealing with Jim McDougal. But by then, of course, Bill Clinton had already covered the Kingston loan with yet another unsecured loan, from the Paragould bank owned by the same Marlin Jackson. While state banking officials curbed a few of McDougal's worse loans at Kingston, his other excesses with Madison Guaranty in Little Rock, Whitewater, and similar ventures went forward unquestioned -- and known by the governor and his wife in some detail.

For much of the period, in fact, it was literally a matter of both Clintons being unable to go to work, whether at the statehouse or law firm, without sooner or later confronting at least some unmistakable and relevant knowledge of Jim McDougal's practices. As early as the fall and winter of 1981, the Rose firm had represented his Madison Bank and Trust at Kingston in litigation with another bank. Two years later, as McDougal was taking over Madison Guaranty, he was still a Rose client, and the partners at the time, including the state's First Lady, were heatedly discussing McDougal's business troubles, an unpaid legal bill McDougal contested, and their continuing representation. "Pursuant to your discussions with Hillary Rodham Clinton," began an October 13, 1983, letter to McDougal on the disputed billing of Madison, which Hillary had persuaded her partners to reduce. "She knew McDougal was a renegade just a step ahead of the regulators, and she was still arguing for some give on the billable hours," one Rose lawyer remembered. "Hillary was the point person on everything to do with McDougal and his banks and deals from the beginning," recalled another former partner. "Most of us were aware, I guess, that she and Bill were into Whitewater with him, and she knew the McDougals and that S & L mess inside and out."

Associates and would-be adversaries soon discovered Jim McDougal had powerful friends. As he bought the savings and loan that would become Madison Guaranty in 1983, he had also started another local real estate development, named Gold Mine Springs, in partnership with Freddy Whitener, a retired Bradford construction worker. Whitener remembered vividly that, when a state geologist officially warned them that the term "Gold Mine" was false advertising and that he would complain to the Arkansas attorney general, McDougal said dismissively, "When he's sitting in the attorney general's office, I'll be sitting in the governor's office." That night the geologist was calling Whitener to "apologize," as the partner told the story, asking him to make sure he told McDougal about the concession and adding bitterly, "I've been told that if I don't apologize to you by midnight, I'll lose my job."

With the same apparent ease with which he disposed of the false-advertising complaint, McDougal would go on to secure a $1,300-a-month government lease for a state revenue office in one of Madison's buildings, the kind of small yet stinging favor that rankled commercial competitors as the blatant political influence angered officials, though both felt themselves powerless. "You may have thought McDougal was way out of bounds," said a Little Rock businessman who dealt with him more than once, "but you also knew you had no recourse to the authorities while Clinton was governor."

It would never be clear how much McDougal's political muscle was brought to bear in what followed with federal regulators, in the wake of the stark findings of Madison's "insolvency." As it was, local pressure was seldom necessary to rescue outlaw savings and loans at the time; the larger system was enough. After summoning Madison Guaranty's directors to Dallas on June 26, 1984, and despite the alarm of state as well as federal officials, Federal Home Loan Bank authorities neither closed down the bank nor seriously disciplined McDougal. Instead they entered a perfunctory "supervisory agreement," what one account called "a relatively mild form of probation" that prescribed new accounting and debt procedures but little more, allowing McDougal to go on essentially unchecked for another twenty-six months. By September 1984 the examiner who had found Madison Guaranty insolvent months before had been hired away by McDougal to be one of Madison's senior officers, and the Home Loan Board approved a "debt restructuring" that erased, on paper at least, more than half a million dollars in "improperly recognized profits."

If Jim McDougal began his wild ride as one more gambler with public money loosed by savings and loan deregulation, he now became a beneficiary as well of the partly feckless, partly deliberate federal regulatory failure that only fed the savings and loan crisis once it erupted. "They doubled the deposit insurance and took the regulatory cop off the beat," one observer would say of Washington's bipartisan collusion. As an industry hurtled toward a half-trillion-dollar toll on taxpayers, as federal regulators closed down fewer than thirty thrifts among the troubled dozens in 1984-86, as federal deposit insurance ran out while the looting spread, Madison Guaranty was hardly unique.


Throughout 1984 ties between the rogue banker and the future president grew ever closer, and ever more lucrative for Bill Clinton. A federal investigation later found evidence of at least $60,500 siphoned from Madison Guaranty to Clinton's 1984 reelection campaign, and the governor's official campaign committee would be named in justice Department criminal investigative documents as an alleged coconspirator in the diversion of depositors' funds. Even then, the suspected siphoning appeared to be only a fraction of the McDollars that campaign aides saw cascading into the 1984 race.

Late in 1984, after his reelection to the unprecedented power of a third term, Clinton interrupted his morning jog to appear unannounced at McDougal's Quapaw office. Clinton was perspiring and breathless as he came in and, much to McDougal's dismay, sprawled heedlessly on an expensive new leather chair. As his host watched nervously, the governor then launched into a familiar and forlorn complaint about his personal income and expenses, that his statehouse salary and Hillary's law partnership were not enough. "I asked him how much he needed, and Clinton said, 'about $2,000 a month,'" McDougal later told the New York Times. In response the banker promptly put Hillary on a $2,000-a-month retainer, with the unusual arrangement that it be paid to her personally rather than to or through the firm. "I hired Hillary because Bill came in whimpering they needed help," he remembered.

As it was, Clinton's sweaty lament was not the only plea for personal income. During the same period the First Lady had also paid a visit. "Hillary came in one day and was telling us about the problem. The problem was finances, her finances," Susan McDougal recalled. "She came to Jim's office. I remember Jim laughing and saying afterward, 'Well, one lawyer's as good as another, we might as well hire Hillary.'" To the McDougals and others at the savings and loan, the mercenary pleas of the governor and his wife, both already enmeshed with the McDougals and Madison, became an office joke. "She was on retainer," Susan went on. "I remember everyone sitting around laughing and saying, 'We need to hire Hillary Clinton.'"

Yet being on the Madison payroll was no mere whimsy for the First Couple. The governor was there at the Quapaw office on his morning jog regularly each month to pick up the check, and on occasion Hillary herself came for the money. "It was really at her behest, the McDougal retainer," said a Rose colleague. "She felt they needed it, and after they won in 1984 she felt it was only right they get some more money. That was her attitude about their quote sacrifice unquote," recalled another lawyer. When the tale of the governor's jog and resulting retainer inevitably made its way into White Heights gossip, there were accounts of other soliciting as well. "I realized when folks talked about this," said an older lawyer and former official, "how much Bill was constantly making calls for her on one thing or another, that here was the governor of the state, with all that implied, out drumming up business for Hillary and Rose." Most who knew about it took the grasping for granted. "All of the risks, including Whitewater," Martin Gross observed, "were part of that overriding need to become rich." "No one thought of this as something to be covered up or worried about," said an aide. "This was money they were supposed to get, as everybody saw it."

As the Clintons prepared the lavish third-term inauguration and as Jim McDougal began his more than two-year grace period from accountability, with the governor's wife on legal call, relations between the partners settled into an easy rhythm of mutual favor. That December McDougal arranged for a renewal of their old Whitewater note at Citizens Bank and Trust of Flippin, despite the absence of the Clintons' signatures on legal documents. In mid-January 1985 the newly inaugurated governor replaced the outgoing state Securities Department director and McDougal critic, Lee Thalheimer, with Beverly Bassett, an attorney with a Little Rock firm that had done work for Madison. Bassett was McDougal's preferred candidate and he had urged her appointment on Clinton. "It would be to our advantage," he said later. Then, as if on cue, within days of the Securities Department patronage, Clinton came back for his own favor. As McDougal remembered, the governor telephoned in late January and asked him to "knock out the deficit" of the 1984 campaign, meaning the $50,000 Clinton had borrowed personally from Maurice Smith's Bank of Cherry Valley for a final barrage of television ads. "Bill's in trouble, and we're going to have to get together and help him out," Madison employees remembered McDougal's telling them after Clinton's call. Some were "promised," by one account, that they would be "reimbursed" for donations, though from what source was not clear.

So it was that on a balmy Little Rock evening in April 1985 Diamond Jim McDougal hosted a select but lucrative fund-raiser for his friend Governor Bill Clinton at the Art Deco headquarters of Madison Guaranty. Between fifty and a hundred people sipped wine and made out checks in the fashionable lobby, including Madison executives and employees there on command.
Of the $35,000 McDougal now raised to retire Clinton's loan, federal auditors found some $12,000 in certified checks drawn on Madison Guaranty yet attributed to "phantom contributors" who made no donations. Investigators suspected thousands more in such "orphaned" contributions. Provoked by the bogus checks, an examination of Madison books would show similarly suspicious movements of cash -- inflated closing costs, commissions, and transfers -- coinciding with the final, free-spending weeks of the Clintons' 1984 run.

Shady money would continue to flow unremarked and unpoliced. But the April 1985 party in Quapaw became a touchstone, first for the groundbreaking journalism of Jeff Gerth in the New York Times in 1992-1993, then for the Whitewater special prosecutor. Just as the specter of Roger Clinton and drug scandal had prompted the eleventh-hour loan from Maurice Smith in the 1984 race, the imbroglio over Smith's promised spoils on the Highway Commission had led in turn to Clinton's anxiety to clear the debt and to his quick resort to one more favor-for-favor with McDougal. It all came together at the Madison Guaranty fund-raiser that spring night -- the money, the politics, the fretful yet flippant air that was now so often the Clinton style. "I guess you could say in a way that Jim McDougal paid for Roger and the coke. Kind of poetic, isn't it?" said a Clinton aide. "Whatever else it was," a legislator observed, "that little get-together at the savings place was one too many."


The sequel for the Clintons and McDougals, for Madison Guaranty and the public seemed to some a caricature.

The Clintons' choice for state Securities Department director, the ostensible public guardian against abuses like McDougal's, had numerous personal bonds to the wider system. A bright, pretty thirty-two-year-old, Beverly Bassett was the sister of Clinton's former student and aide Woody Bassett and would become the wife of Archie Schaffer, a Tyson executive and a nephew of Senator Bumpers. She had worked for Clinton in the 1974 House race and then in the attorney general's office. As a lawyer in one of Little Rock's more political firms, which included Jim Guy Tucker among its partners, she did some work on a land scheme that involved one of the Madison subsidiaries and even wrote an internal memo in 1984 noting the company's "willful" failure to comply with federal disclosure laws. Afterward, however, Bassett would claim that she had never even met the same Jim McDougal who urged her appointment "to our advantage" that winter of 1984-85, had never heard Bill Clinton speak his name. She was not aware of Whitewater or of the Clintons' conspicuous close ties to the McDougals, much less of the sub-rosa McDollars coursing into the governor's campaigns, she insisted. Bassett and other local apologists later contended that her office had neither the money nor the authority to do more than it eventually did to deal with the Madison scandal. As the pivotal official between the governor and his rogue patron, they argued, she did nothing unusual. In Arkansas terms at least, it was true. On the available record, she apparently showed Diamond Jim no exceptional favor. It was enough that the new securities director governed -- and McDougal responded -- much like the rest of the system.

Six days after taking office in January 1985, Bassett signed without qualification formal department orders, drafted the previous fall under her predecessor, approving various Madison land speculations, including the real estate deal she had dealt with in private practice months before. All were projects ostensibly devised to restore the bank's squandered solvency. McDougal was to use the twenty-six-month hiatus gained in the 1984 Federal Home Loan Bank Board "supervisory agreement" -- and given state sanction -- to float several such promotions. His prevarications only deepened and prolonged the plunder of the bank, at crucial points with the influential assistance of the Rose Law Firm and Hillary Rodham Clinton, as well as the diffident acquiescence of her husband's administration.

One episode was emblematic. That spring of 1985, just as the governor was asking McDougal to "knock out" the latest campaign debt, the speculator proposed to state regulators that Madison Guaranty be allowed to issue nonvoting preferred stock. It was an expedient suggested by federal officials and already adopted by some straining Arkansas S & Ls but also a device that would allow Diamond Jim to raise still more capital for his maneuvers without sacrificing either his control over the institution or the federal insurance coverage that made the public ultimately liable for his ruinous practices. Given McDougal's history, the stock scheme aroused immediate concern among rank-and-file regulators in the state Securities Department, who urged that Bassett refer the proposal to be reviewed formally by department lawyers.

But then came two letters to Bassett from the Rose firm, pointedly referring to Hillary Clinton as the senior lawyer on the matter and pressing for swift approval of the stock plan. Citing a favorable internal audit of Madison, Rose told the securities director categorically that McDougal "anticipates ... no deficiency ... in the near future" for the bank, and even "improvement of its financial conditions and services" -- though neither assurance was valid at the time, much less supported by the troubling record. The second Rose letter arrived across town at the Securities Department scarcely three weeks after the April 4 Clinton fundraiser. Both letters showed clearly that Hillary and her Rose associates were aware that Madison had not met federally mandated requirements for cash reserves. Still, the assurances of imminent solvency and diligence gave Clinton's new securities director the condition she needed. Promptly, on May 14, in a return letter just as pointedly addressed "Dear Hillary," Beverly Bassett ruled to approve McDougal's issue of the stock, despite continuing vocal opposition among her staff professionals, many of them expressing what one account called "strong reservations."

She had no choice but to approve McDougal's proposal, Bassett would claim long afterward, on grounds that the scheme was technically legal in Arkansas and that the Rose firm's urgings were backed up by Madison's own audit, conducted by the accounting firm of Frost and Company. Frost's chief auditor in the McDougal-commissioned examination turned out, however, to have two outstanding loans himself at Madison, and not surprisingly, the audit was eventually found to be tainted. Moreover, Bassett's pro forma approval of the preferred-stock scheme also blithely ignored the severe criticism and warnings by both state and federal officials over the preceding year. For all that, though, no conspiracy or heavy-handed gubernatorial intervention was needed for McDougal to continue to do business in Arkansas. All it took was a homegrown official willing to take highly suspect matters at face value.

As it happened -- through no fault of accommodating government regulators -- McDougal never carried out the preferred-stock plan, which might have required disclosure Madison could hardly afford and, in any case, would have only added to the mounting disaster. Yet the swift unqualified approval by the governor's securities director was part of a pattern of official tolerance, if not indulgence, during 1985-86, when the looting of the savings and loan steadily worsened, including more than $700,000 in "commissions" paid to Susan McDougal and two of her brothers. All the while, Jim McDougal continued to entice depositors and investors, drawing in another $60 million, "fattening the load ... picked up by taxpayers when the bank finally went bust," as Peter Boyle wrote in the New Yorker.

The Rose firm enjoyed its own characteristic sequel in the stock episode. When the FDIC itself eventually sued Frost and Company in 1989 over the compromised audit used to mask McDougal's excesses, Rose actively sought and won the retainer to represent the US government against Frost, discreetly neglecting to mention its previous representation of Madison, not to mention Hillary Clinton's myriad ties to the bank and its head. As if to compound the exploitation, the firm settled the $60 million suit on behalf of taxpayers for a token $1 million, far below the accounting company's insurance coverage, much less what the public interest deserved, with Rose taking a $400,000 fee in taxpayers' money. Once more the pattern was repeated: the ignoring of McDougal's ominous record, the shrouded Frost audit, the relentless pillage of Madison while the state regulator stood by in fastidious silence, Rose's deplorable practices in the later federal suit -- all with the knowledge and often direct participation of Jim McDougal's lawyer, Hillary Rodham Clinton, and all at the cost of the public. What one relationship between the Clintons and McDougals did not cover, the others seemed to provide. "I need to know everything you have pending before the Securities Commission [sic]," McDougal typically wrote an assistant in July 1985, "as I intend to get with Hillary Clinton within the next few days."
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Re: Partners in POWER: The Clintons and Their America

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Part 2 of 2

As McDougal continued to wheel and deal with impunity in 1985, the siphoning of money from Madison Guaranty not only underwrote his incessant land bubbles but also benefited Whitewater Estates and its prominent owners. A preliminary federal investigation of the surviving records in 1992 revealed more than $100,000 drained into the McDougals' and Clintons' enterprise in the mid-1980s, some $70,000 in one six-month period alone. To federal examiners and eventually to House Banking Committee investigators, what might have begun as a legitimate business initiative had obviously become by 1985 a form of white-collar bank robbery.

The pace of McDougal's maneuvering with Whitewater quickened with his twenty-six-month grace period from federal regulators and with the effective free pass from Bassett and the Clinton administration at the state level. Whitewater, Inc. -- and thus the Clintons as co-owners -- not only had the development's mortgage and other sustaining costs paid by funds manipulated at Madison but made the land venture another vessel in McDougal's dizzying financial shell game. By the mid-1980s, "tens of thousands of dollars were passing through Whitewater's account at Madison," as the Washington Post described it afterward, the flow seeming "to bear no direct connection to Whitewater's lot sales or home development activity." So egregious was the shifting and co-mingling that federal auditors would find that Whitewater had become inseparable from the larger abuse at Madison Guaranty and its subsidiaries. "Any attempt to extract Whitewater as one entity from the rest of the McDougal-controlled entities involved in the alleged check kite," a Resolution Trust senior criminal investigator would tell her superiors in 1992 after an initial inquiry, "will distort the entire picture." Investigators came to believe that by 1985 Madison Guaranty Savings and Loan amounted to a veritable slush fund for the Clintons' land business as well as an alleged kitty and countinghouse for their reelection campaigns. In some respects, federal auditors would conclude, the First Couple themselves had become parties to the sacking of the small thrift.

Yet for some, the shuttling of money from one account to another in Quapaw was no more shocking than what was happening on the banks of the White River. While a slow market prevented Whitewater Estates from becoming the boon its owners had hoped for, the development nonetheless had a sometimes brisk trade during the latter half of the 1980s. And it was in those transactions with ordinary people, as much as any intricate insider self-dealing at Madison or furtive political-legal favors in Little Rock, that the character of the operation seemed laid bare.

Advertising in publications like Mother Earth News and targeting low-income retirees and senior citizens looking for pleasant rural property to live out their years, the Clintons and McDougals always made a point of offering what seemed at first glance the most attractive terms. "Poor man's real estate financing," as a local lawyer called it, the deals appeared to be the Whitewater application of Diamond Jim's "populist banking" or Bill Clinton's own perennial claim to be a champion of consumers. Elderly couples on fixed incomes might buy lots for low or token down payments, with no credit checks or appraisals and only modest monthly installments at low interest. Many did just that. They were generally retired blue-collar workers from Texas, Missouri, or Oklahoma, as well as Arkansas, husbands and wives planning to build a small fishing cottage or a place where grandchildren could come. Commonly they used the bulk of their savings for money down and barely scraped together monthly payments. It was they who provided much of the $300,000 that Whitewater collected in lot sales between 1979 and the summer of 1990. But what began as a modest dream often ended in painful nightmare.

Behind the Whitewater advertising lure was the fine print of a harshly punitive real estate contract. If the elderly buyers defaulted on their monthly installments for more than thirty days they found that all their previous payments were classified merely as "rent" and that they had no equity in the land at all, regardless of how much they had put down or paid in. The results could be devastating. Clyde Soapes, a grain-elevator operator from Texas, put $3,000 down and faithfully made thirty-five monthly payments of $244.69 to the Clintons and McDougals, altogether just short of the $14,000 price of the lot. When he fell desperately ill in 1987, however, he could no longer make his payments and quickly lost the land and all his previous investment.

Soapes was a typical case. More than half those who bought Whitewater lots from the future president, his wife, and their extravagant partners would lose their land and all their equity payments. Partial records showed at least sixteen different buyers paying in more than $50,000 and never receiving property deeds. Meanwhile Whitewater carried on a flourishing traffic in repossessions and resales, selling some lots over and over when aged buyers faltered or when someone else simply came along and unilaterally bought out the purchasers and took the land by completing the payments. Typically, Clyde Soapes's planned fishing retreat was resold to a couple from Nevada for $16,500, then taken back again after only a few payments, and resold to yet other buyers -- all for the same middling but pitiless profit wrung from the struggling and the old. "That is clearly not a very consumer-oriented method of selling at all," an American Bar Association real estate expert would say. Others were less delicate. "They screwed people left and right," said a local businessman who watched the sales. "Taking advantage of a bunch of poor old folks on a land deal. ... The future President and First Lady. That ought to be the real Whitewater scandal."

It was all technically legal and not that uncommon in the Clintons' Arkansas and in similar settings, especially in the South, though many states around the nation had long since moved to protect consumers in such ensnaring escrow or contract sales, making repossession and loss of equity at least more difficult as the buyer's investment grew. Jim McDougal had used the same lure with the same summary penalty in other land schemes. He was a known quantity. The speculator would defend the practice as either affording lots to people who could not ordinarily qualify for bank loans or else as providing a safeguard against the "impulse buying" common at resort properties.

It was a rationalization that could embarrass even his profit-eager partners in the governor's mansion. Hillary Clinton evidently had second thoughts in her own shuffling of lucrative Lot 13. The first owner, Hillman Logan, had defaulted before he went into bankruptcy and died, and Whitewater could have automatically repossessed the lot with all his payments. On behalf of Hillary, a Rose lawyer initially wrote to the executor of Logan's will arguing that the estate should "consider abandoning" the dead man's $8,000 equity. But then the future First Lady suddenly recanted in 1988 and paid the estate the $8,000 for the land -- still going on to make a sizable profit in the resale, albeit less than she would have realized by merely seizing the model home like all the others. When the case became known after the Clintons had come to the presidency, the White House would explain simply that Mrs. Clinton paid the unnecessary $8,000 "to safeguard her interests in the property." As always, there were other versions. "Logan was from Mississippi and had a lawyer involved in his affairs, which most Whitewater owners never came close to," said an attorney familiar with the case. "This one could have gotten out of hand and been a little embarrassment, so she just paid that money to put it to sleep."

The frequent repossessions and rolling profits continued through the decade and almost to the eve of the Clintons' 1992 presidential campaign, well after Madison Guaranty had finally collapsed and ceased sluicing funds to Whitewater and other entities, well after the Clintons had taken over the records of the development and begun to shun a bankrupt and mentally ill Jim McDougal. For years, however, it had been routine -- the sales bait for the elderly buyers, the repossessions and expropriated equities, the petty profit taking, the sick men or the widows who could no longer make the payments, the broken dreams. Like McDougal's use of the savings and loan, Whitewater embodied business practices, morality, and ethics that the future president and his wife never questioned or even acknowledged openly, much less repudiated. At the end of a road so helpfully paved by taxpayers' money, the scenic lots on the White River took their place in the long chain of advantages and subsidies the First Couple came to enjoy in Little Rock. In the end, there was a sense in which no one more than Bill Clinton himself symbolized the larger irony and mockery of Whitewater's brochure assuring buyers of their private paradise. "A feller," it promised, "could live off the land."


There were final, similarly revealing sequels to be played out in the Whitewater sequence as McDougal and Madison Guaranty careened toward ruin in 1985-86.

David Hale was a familiar and ingratiating figure in Little Rock's Democratic establishment, a soft-voiced, open-faced lawyer of ordinary ability who had been drawn to politicians since his adolescence. Eager to please, he relished both his access to the powerful and his own patronage sinecure. He had been a president of the national Junior Chamber of Commerce, and in 1979 was appointed by Governor Clinton to be the first judge of Arkansas's new municipal small-claims court in Pulaski County. By 1985, in his early forties, Hale was still proudly presiding over what had become the state's largest court, where he was known for occasional displays of temper at the common citizens before him, in contrast to his fawning behavior toward the politically prominent. Meanwhile he made investments of his own and also ran Capital Management Services, Inc., a six-year-old family-owned small business investment company (SBIC), licensed and funded by the federal Small Business Administration to channel commercial loans to women and minorities in Arkansas obviously "disadvantaged" in the conventional credit and banking system. Hale's own entrepreneurial ventures -- a theme park based on Bible stories was a typical example -- were hardly successful. But the SBIC was a "gold mine," as one account called it, allowing him to control millions in federal funds with relatively little oversight. He yearned to be remembered as a good judge, David Hale told friends. Yet it was in his other, more mercenary role, dispensing government loan money, that he was destined to make history.

According to Hale's own sworn and repeated accounts, it began in the autumn of 1985 when he was asked to meet Jim Guy Tucker, who was both his lawyer and a client debtor who had borrowed heavily from Capital Management for a local cable company. From Tucker's office they drove to Castle Grande, one of Madison's developments. Waiting for them was Jim McDougal, whom Hale had met only casually years ago as a student in the Young Democrats but who now questioned Hale intently about how much the small business investment company could lend him. Soon after, the two of them met again and McDougal told him engagingly, "We're going to need your help," adding in words David Hale later readily recalled, "We need to clean up some members of the political family. How much money have you got in your SBIC?"

True to his reputation, Hale was eager to accommodate the more prepossessing and powerfully connected McDougal. He duly began to prepare a series of loans. One was for a Madison venture on rocky, fog-shrouded Campobello Island, off the coast of Maine, the site of Franklin Roosevelt's summer home, which reverential Democrat McDougal thought a natural draw; he himself had already sunk nearly $4 million into bleak, tide-stranded home lots that would prove unmarketable. Another loan was to go to former Clinton gubernatorial aide Stephen Smith, reportedly to pay back Smith's own loan from Madison that had earlier drawn the attention of federal regulators. The paperwork on the loans was to absorb Hale through the holidays and into 1986. But only days before Christmas he got impressive new evidence of the rank and importance of the "political family." Waiting for a ride at the state capitol, Hale was surprised to be approached by Bill Clinton himself, whom he knew only slightly. "Are you going to be able to help Jim and me out?" the governor asked him matter-of-factly. "We're working on it," Hale answered agreeably, and Clinton smiled broadly and moved on without saying more.

Within weeks -- by Hale's account, sometime in late February 1986 -- he was to meet Clinton again for a far more intimate and revealing exchange on the money. "Jim McDougal asked if I could meet with the governor at Castle Grande after work," the judge remembered. Hale found McDougal's trademark green Jaguar parked in front of the development's real estate office and, inside, a casually dressed Clinton and McDougal engrossed in a conversation about Frank White's running again in 1986. Eventually turning to Hale, McDougal asked him directly for a $150,000 SBIC loan -- "for Clinton's benefit," according to one account of the meeting -- to be channeled through one of the Madison subsidiaries run by Susan McDougal. "Jim said, 'We'll put it in Susan's advertising company,'" Hale recalled. "My name can't show up anywhere," Clinton had interjected. "We've already taken care of that," McDougal shot back, though he gave no more explanation and the governor did not ask. "What he meant I don't know," Hale said afterward.

When Hale asked what security should be listed on the routine federal loan documents Clinton offered that he and the McDougals owned property in Marion County, meaning Whitewater. But even the tractable Hale balked at the development as too remote and problematic to list as collateral. "That's not the end of the world, but you can see it from there," he later said of the isolated lots. At any rate, with or without creditable security, the loan would go forward. After scarcely twenty minutes Hale left, agreeing to provide the federal money. As he walked out, the two partners and old friends went back to talking avidly about money and politics, as if Hale and his promised funds had been only a brief diversion.

Once more, within only days McDougal called Hale about the requested loan for Clinton, now suddenly asking him to double the amount to $300,000. Hale agreed yet again. On April 3, 1986, ostensibly on the basis that the federal funds were going to a "disadvantaged" businesswoman and at a moment when the McDougals had a net worth of over $2 million, David Hale made out Capital Management check number 458 for $300,000, payable to "Susan H. McDougal, d/b/a [doing business as] Master Marketing." Promptly deposited without endorsement, the check would be stamped, "Guaranteed by Madison Guaranty Savings and Loan Little Rock."

What happened to the money next would be disputed. Of one fact at least there was no doubt: the government loan was never repaid. Part of nearly $800,000 overall that Hale's federally financed company would give a tottering Madison Guaranty and its related companies, the check to Susan McDougal turned out to be typical of the bustling manipulation of public money in provincial Little Rock. A later General Accounting Office study found that Hale had passed out federal funds to more than a dozen businesses that he secretly controlled. Still other records from 1985-86 showed Hale himself receiving some $825,000 in loans from the same Madison Guaranty his SBIC was propping up. They had enabled the savings and loan and the investment company to "clean up" their books, Hale later told federal investigators. Even when the parties were confronted with criminal indictments, there was a familiar Arkansas artlessness about what they had done, about what had been utterly natural and expected. "I've been involved in politics with these people since I was eighteen years old," David Hale once explained, as if it were self-evident. "They needed help and I helped them."

By the time Hale wrote his $300,000 check for the "political family," Jim McDougal's string at Madison was finally running out, and there were already predictable strains between the beleaguered speculator and his partner the governor. In the first week of March, days after the meeting at Castle Grande and hardly a month before the loan, Clinton intervened personally with the state Health Department when McDougal complained about a departmental ruling routinely requiring him to install a sewage system before building his Maple Creek housing development south of Little Rock. McDougal had planned to put cheaper septic tanks on hundreds of lots at Maple Creek. But officials refused to waive the common standards of public safety, and at the beginning of March a furious McDougal called Clinton, who immediately set up and agreed to attend himself a face-to-face meeting on March 5 between his patron and the director and deputy director of the department.

The session began with the governor gently urging the exemptions and the two summoned officials feeling unmistakable political pressure. "They went expecting to be called on the carpet Clinton-style, a nice slick shaft to do the deal," said one of their aides. "At the outset of the meeting," a summary of an official report noted, "Clinton talked as if he wanted to grant McDougal's wish." Then, as the Health Department director and his deputy repeated their misgivings, McDougal lost his temper in a wild outburst, with what one account termed "abusive behavior" toward the officials. It was the kind of cowing that had succeeded before in the Gold Mine Springs case and others, albeit more indirectly or discreetly. Now the same manner was an obvious embarrassment to Clinton, who "turned red in the face," as the summary of the official report described him, and "explod[ed] in anger" himself. The meeting broke up without a resolution, and after a still agitated McDougal had left, Clinton "apologized" to the officials, as one of them told federal investigators, "for the way his friend had talked to them." Eventually the state approved only twenty Maple Creek lots for septic tanks, McDougal never receiving the favor he had seemed about to get so routinely from Bill Clinton in the first moments of the March 5 meeting. It was the beginning of a swift series of defeats for him, though the partnership with Bill Clinton endured.

That same March -- barely nine months after Hillary Clinton and Rose assured Beverly Bassett that Madison was free of its old problems and safe for new investors and depositors -- Federal Home Loan Bank Board auditors issued a seventy-eight-page confidential audit that exposed the starkly different reality. It was a catalog of unrelieved abuse, accounting discrepancies, and missing records. "Management blatantly disregarded numerous regulations," the examiners concluded. "The problems discussed in this report (conflicts of interest, high-risk land developments, poor asset quality, rapid growth, inadequate income and net worth, low liquidity, securities speculation, excessive compensation and poor records and controls) constitute a significant threat to the continued existence of the Institution." Nowhere did this first legitimate audit of Madison specifically mention Whitewater or the Clintons, though the development and their relationship with the McDougals were typical of the way the bank had been used. If Whitewater records at Madison were among those now missing -- as many of Whitewater's own records would be later -- the recklessness and collapse charted in the federal audit was still clear enough. The point of both Madison Guaranty and Whitewater, Arkansas old-timers would say, was always in plain sight. What the Clintons and McDougals had done was not somehow secreted within the system -- it was the system.

Events now moved rapidly. In the spring of 1986, confronted with the devastating federal audit, Beverly Bassett began talks with federal officials about the need to remove McDougal from control of Madison. That June, Federal Home Loan Bank Board examiners paid a visit to the Quapaw headquarters and, according to one report, were incensed to see the McDougals' Jaguars pulled up in executive spaces in the employee parking lot. "Let's close the place down," one auditor muttered to a colleague.

Regulators from both the FHLBB and an already struggling Federal Savings and Loan Insurance Corporation soon decided to do just that. On July 11, 1986, Bassett and members of her staff flew to Dallas to see their federal counterparts for an intercession with Madison's board minus McDougal. In what Bassett herself remembered as a "long and confrontational meeting," the thrift's board and lawyers -- pointedly not including Hillary Clinton at this stage of reckoning -- "appeared stunned" at the charges of exploitation but did not oppose the cease and desist order now backed by both Arkansas and federal authorities, removing McDougal and leaving the debauched savings and loan effectively in state custody until federal tax money could be found to pay its betrayed depositors. Even with a governor he had done so much to reelect and enrich and a securities director whose appointment he helped secure, Jim McDougal was now too public a liability. In the end, like so many political patrons who become an embarrassment, he was alone.

For all that, however, there were signs that Bill Clinton shared McDougal's rage over at least some of the events of that summer, just as he shared their still entangling financial interests. At the same moment in July 1986 as officials were at last moving against Diamond Jim, David Hale was shopping at the University Plaza Mall on the booming west side of Little Rock when the governor of the state literally came running up to him. Bill Clinton's mood was obvious. "You could tell he was perturbed or upset," the judge remembered. "Have you heard what that fucking whore Susan has done?" Clinton blurted out. But before Hale could reply the agitated governor hurried away as abruptly as he came. The implication in approaching Hale with such unconcealed disgust was clearly that the matter was somehow related to the $300,000 loan funneled through Susan McDougal. But exactly what she had done -- whether crossing Clinton and McDougal on the money or some other betrayal or blunder -- was never clear to Hale.

On October 10, 1986, scarcely three months after McDougal's forced removal from Madison Guaranty, the Clintons joined him in yet another land speculation. Under the aegis of the Whitewater Development Corporation, it was known as Lorrance [Lowrance; Lawrence] Heights, some 500 acres owned by International Paper a dozen miles south of Little Rock, land largely covered by a raw softwood forest that had proven uneconomical for the timber giant to cut. With a flourish, the Whitewater partners now bought the parcel from International Paper for more than half a million dollars, paying $80,000 down with another $30,000 due in sixty days and a mortgage of $440,000 held by the corporation over a six-year term.

Afterward there would be charges that the $110,000 came from Hale's $300,000 loan to the "political family" through Susan McDougal. While Susan was now still a legal partner in the Lorrance Heights venture, the mangled records of Whitewater and Madison would not make clear how the major new purchase related to Clinton's fury at the shopping mall only weeks before. There were unanswered questions as well about the coincidence of the purchase and a special $22 million tax concession to International Paper that Governor Clinton had recently steered through the legislature, though there seemed no obvious favor in the deal, the Clintons and McDougals paying "well over the market price," as an International Paper executive later told a reporter. In any case, at the moment of the International Paper purchase the partners were said to have much the same ambitious plans they had once held out for the land on the White River, intending to develop and market lots for both year-round homes and vacation houses.

Only sixty days later, in still more fast shuffling, McDougal suddenly transferred Lorrance Heights to his old speculative entity, the Great Southern Land Company. With this shift, apparently made without the legal signatures of the Whitewater partners in the mansion, the Clintons seem to have lost their ownership of the new property at a stroke -- and along with it their own presumed $55,000 share of the down payment as well as their $220,000 liability on one-half of the mortgage note held by the timber corporation. Yet there was no question that the Clintons knew about the transaction and benefited from it. On their tax returns for 1986, as investigative reporter Martin Gross reported, the governor and his wife duly deducted $10,131 for interest paid to the Great Southern Land Company.

McDougal and Great Southern did not fare so well. This time it was the speculator who could not make the mortgage payments, and two years later, in the fall of 1988, International Paper moved to foreclose. The corporation secured a $514,000 court judgment against McDougal and later resold the Lorrance Heights property to another developer at an overall profit. "Taste of their own medicine for manhandling all those old folks in Whitewater," a Little Rock lawyer and former Clinton aide would say afterward, "except by that time Bill and Hillary were off of old Jim and on to their next best friends."


In November 1988 Hillary Clinton wrote a formal letter to the close friends she had once seen so often, asking them for Whitewater records and for power of attorney so as to sell off remaining property and "get all that behind us by the end of the year." According to Susan McDougal's later account, she sent to the governor's mansion "every sheet of paper ... every file I had, all the purchase agreements, copies of the deeds, all monthly payments by customers, all checks written by the corporation, all correspondence."

By 1989, facing a federal indictment in one of his land schemes, McDougal himself was nearly destitute and begging the governor for help. But Clinton gave his old friend no help and McDougal continued to face his ordeal without his longtime ally. At his trial in the summer of 1990 on eight counts of bank fraud and conspiracy, prosecutors concentrated on two tangled land sales by a Madison subsidiary. With McDougal's attorney invoking his frail mental state as part of the defense and contending mismanagement rather than conspiracy, the speculator was acquitted of all charges when the jury deadlocked, though one of his associates was convicted of a related crime and served a short term in prison. For the moment, it was to be the only legal or public reckoning. "His involvement with many of the state's most prominent politicians was but a footnote in the resulting stories," Meredith Oakley noted long afterward.

With his old partner running for president and with the appearance of the first national reports on Whitewater, by the New York Times's Jeff Gerth, McDougal reappeared briefly during the campaign for a tape-recorded conversation with Clinton's old Republican rival Sheffield Nelson, making dark allusions to some Clinton tax fraud and generally speaking as a man who knew far more than he had ever divulged, even in his own trial defense. In a transcript later made public by the GOP, he would tell Nelson that the Clintons never paid him interest for the Whitewater mortgage though the First Couple had deducted several thousands of dollars in such payments from their taxes. One loan repayment in particular McDougal claimed was made by the corporation and thus was "overreflected on their income taxes." At another stage in the transcript McDougal asked pointedly about the "statute of limitations for tax fraud" and insisted to Nelson that "every bit" of money the Clintons put into Whitewater was "income they didn't report." With that, however, the speculator disappeared again from public ken, going off to live in a trailer in Arkadelphia as his former partners went to the White House.

He returned in the first months of 1994, as Whitewater suddenly became the object of renewed attention. His head shaven, Diamond Jim was again a local celebrity of sorts, running once more for Congress, selling old Whitewater deeds as souvenirs to raise money, variously contradicting or muddling previous statements about his now-famous partners and their land deal, and leaving "some with the impression," observed USA Today, "that [he'd] gone slightly around the bend." At least the fresh notoriety seemed to improve his social standing in Arkansas. ''I'm treated," McDougal told the press, "with a deference and delicacy reserved for wounded Confederate officers."

If somewhat more dignified, the Clintons' own subsequent accounting of Whitewater could seem equally bedeviled. Stories multiplied about the First Couple's "losses" in the development, from the $69,000 claimed in a "report" commissioned by the presidential campaign to as much as $88,000 and as little as $46,636 in later figures. But several of the checks they counted as "losses" turned out, as McDougal had suggested to Nelson, to have been repayments of loans from Whitewater, Inc. to begin with, and the initial attempts at accounting sank into the mire of discrepancies that came of Whitewater's chaotic bookkeeping, delinquent tax returns, and convoluted, overdrawn, inexplicably revived accounts at Madison Guaranty. When House Banking Committee investigators did their own calculations of the Clintons' balance sheet on the investment -- their real-dollar gains from interest deductions, their capital gain on the model house on Lot 13 and other proceeds, their share of the known injections of capital into Whitewater from Madison, the corporate repayments of their personal loans, the McDougal retainer for Hillary and Rose, their half of the alleged diversion of the Hale loan for the Lorrance Heights purchase -- the total profit was over $150,000, and more than $100,000, even subtracting the latest White House "loss" figures. In contrast, judging only from the surviving and uncontested records, the McDougals seemed to have paid out personally some $268,000, most of it after they took over Madison Guaranty, and ended up officially "losing" nearly $100,000 in the supposedly equal partnership.

"People knew," onetime Arkansas Gazette editor Max Brantley would say about the Clintons' involvement in Whitewater. Yet only a handful had been knowledgeable about even part of the details, and no one -- least of all, it seemed, the Little Rock press -- had seen or cared to discover the larger character of what was happening at Madison and related companies like Whitewater Estates. In Arkansas and Washington after 1993, it was possible to minimize and dismiss, if not simply justify, the history. The affair was said to be less serious because Madison Guaranty was so small an institution, as if $70 million were now minor or as if the abuses might somehow have been different or have never happened at all if the available money and the ultimate public toll had been larger. The Clintons were said to have continued in their relationship with the McDougals only because it would have been a political embarrassment to leave and face the resulting questions, as if the meaning of their staying, and the implicit assumption that Whitewater would remain unexplored and thus unembarrassing as they rose higher in public trust and responsibility, were not far more telling. Whitewater was said by one editorial writer to be "not a crippling scandal" in itself, as if in its sheer banality it had not been representative of an ethic that haunted a state and a nation.

"When the ripoff artists looted our S & Ls, the president was silent," Bill Clinton would say accurately enough of George Bush in his 1991 announcement of his presidential candidacy. Few saw the bitter bipartisan irony at the moment. Beyond the standard political hypocrisy, it was more of what the New York Times came by 1994 to call "the Arkansas Defense."

"Shoulda, coulda, woulda," Hillary was to say at a 1994 White House press conference in answer to a question about why the otherwise studious Clintons had never been curious about the money paying off their Whitewater mortgage or about other unaccountable infusions of capital into their development. "If you know that your mortgages are being paid, but you aren't putting money into the venture, and you also know the venture isn't cash flowing, wouldn't you question the source of the funds being used to your benefit? Would you just assume that your partner was making those multithousand-dollar payments out of the goodness of his heart?" a federal banking investigator later bluntly asked her superiors in an internal RTC memorandum. "Wouldn't you wonder even more if you knew that your business partner's main source of income, an S & L, was in serious financial difficulty, which by 1985 was fairly common knowledge?" To those questions and more the only White House reply would be the First Lady's coy joke.

Diamond Jim and Hot Pants McDougal might have seemed caricatures of the Clinton-era boom in Little Rock. But their collapse and ostracism were hardly typical among the monied interests backing Bill Clinton. And the hundreds of thousands of dollars swirling around them in depositors' money and federal funds could seem petty compared to the flourishing traffic, legal and illegal, in other quarters of the capital and state over the same period. For all the maneuvering, Whitewater, McDougal, and Madison did not amount to much in the Clintons' overall fortunes either. The couple's effective gain from other sources, from private dealings, public perquisites, and political loans and contributions -- from a world that included the grander, more enduring patrons as well as the McDougals -- was well over a million dollars by the end of the decade.

Not even McDougal's buccaneering practices, which continued to intrigue a series of investigators and prosecutors, could approach a multibillion-dollar gunrunning and drug smuggling operation based only a few hours' drive from Madison Guaranty or the multimillions cascading out of the bond business and out of corporate expansions and exemptions crafted only blocks away in Little Rock.
However belated and costly, there had been some accountability for Jim McDougal in the end, at least a creaking framework of regulations that eventually curbed his run. In those other, far more lucrative and formidable quarters, the still larger collusions seemed to go on without limits, without rules. Whitewater and its kindred abuses would be relatively minor after all.
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Re: Partners in POWER: The Clintons and Their America

Postby admin » Wed Jun 29, 2016 4:22 am

Part 1 of 3

19. Little Rock and Mena: "A World Nearly Devoid of Rules"

In the spring of 1982 a lone small plane began its approach to an obscure airport in the secluded mountains of western Arkansas. At the controls was Adler Berriman "Barry" Seal, old Thunder Thighs, as close friends knew him, a renegade pilot and freelance intelligence agent who had become a major drug smuggler and gunrunner in the netherworld where government and crime were joined.

The scene below him was picturesque, with its own vivid history. Circled about the airport, as if standing guard against the outside world, was the dark emerald ridgeline of the Ouachita range. To the northwest rose Rich Mountain, one of Arkansas's highest peaks, often wreathed in lowering clouds and a thick gray fog. The densely forested slopes and valleys had long been a haven for renegades, a rendezvous for Civil War guerrillas and border bandits in the nineteenth century and, more recently, for dealers in moonshine and red-dirt marijuana.

Nestled against the low mountains was the small county seat of Mena, named for Queen Wilhelmina by the Dutch investors who financed the local railroad. About 160 miles west of Little Rock and 80 miles south of Fort Smith, the only sizable settlement in the remote area near the Arkansas-Oklahoma line, Mena had its political lore as well, including speeches at the old city hall by William Jennings Bryan, Carry Nation, and Huey Long in his 1932 campaign for Hattie Caraway. The region was known for its inhabitants' stony individualism. Nearby was the site of the former Commonwealth College, where adherents of the American Co-operative Movement had tried to teach more benign, collaborative methods of business and agriculture, only to be charged under Arkansas statutes with fostering "anarchy" and to see the school seized and sold by the Mena justice of the peace. By the 1980s that blighted history seemed long past. Like most of the rest of small-town Arkansas, the community of five thousand appeared settled into slightly shabby obscurity, its chief distinction the local high school team. "Home of the Bearcats," Mena announced itself on the main highway.

A few miles out the same road, however, was a very different point of interest. With its lengthy runway and cavernous hangars designed for large, continental-range aircraft, Intermountain Regional Airport was obviously no ordinary rural landing field. The facility was a state-of-the-art installation known in select circles for rapid aircraft rehabilitation and maintenance, for providing a stopover point for discreet official flights between military bases or other obscure airports, and, not least, for its cryptic government and private customers, who quietly housed and serviced their planes there and of whom Barry Seal was now the latest.

The smuggler would prove by far the most successful of the Ouachita outlaws. His well-connected and officially protected smuggling operation based at Mena accounted for billions in drugs and arms from 1982 until his murder four years later. Yet Seal belonged to the political history of the place as well. The very name of the small town would become synonymous not only with a vast criminal traffic but also with a larger dark side of American politics, with links far beyond western Arkansas to Little Rock, the nation, the world -- and with collusion and cover-up implicating three US presidents, including Bill Clinton.

Almost from the beginning of the Clinton presidency stories circulated about what had happened around Mena a decade before. Popularized on a videotape produced and widely distributed by anti-Clinton elements, the sometimes wild, unsupported charges joined an underground right-wing litany of alleged evil in the Democratic president's past, despite the fact that events at Mena also incriminated Republican presidents. At the same time, the larger media -- with the notable exceptions of the Wall Street Journal and a lone report on CBS News -- ignored or even ridiculed the subject, as if partisan exaggeration, or simply the intimidating implications of the story, absolved journalists of what could and should be known. Yet the truth behind the extremes of hyperbole and negligence was that many of the imputed crimes of Mena were all too real, documented in state police files and in federal law enforcement records from the IRS, the FBI, and other agencies, in investigative reporting by alternative and local journalists, substantiated eyewitness testimony, and not least by some two thousand personal papers of Seal himself -- from the smuggler's tax returns, sworn testimony, and tape-recorded conversations to his letters, codes, diaries, and scrawled notes. Even that mass of evidence was only the start of uncovering a hidden history. But by standards of scholarship as well as of journalism, much of what had gone on around Mena, Arkansas, in the 1980s was beyond doubt.


Barry Seal flew into western Arkansas in 1982 with a storied past. "Full of fun, full of folly," as his hometown Baton Rouge high school captioned him, he was a man of talents beneath a beguiling surface -- an astute businessman and intriguer of defiant, almost playful cunning, with a passion for beautiful women and for aircraft of any description. "He didn't fly an airplane," said one account, "he wore it like a suit of clothes." At twenty-six Seal had been one of the youngest command pilots in the history of Trans World Airlines. Seven years later, in 1972, he lost his TWA job when he was caught by US Customs trying to smuggle seven tons of plastic explosives to anti-Castro Cubans in Mexico. The case was quietly dropped on the pretext of "national security." Before TWA, he had been involved in the 1960s with the US Army Special Forces and had already established contacts with the Central Intelligence Agency, some of whose underworld hirelings were embroiled in the Cuban explosives plot.

Within four years after being fired from TWA, Seal was a successful aircraft "broker," the mask for a flourishing traffic in guns, marijuana, cocaine, and heroin. By the late 1970s he had his own cadre of pilots and mechanics, a web of criminal and corrupt official contacts from the United States to South America, and ongoing ties to the CIA and others in the intelligence bureaucracy. His personal records showed him a contract CIA operative both before and during his years of drug running in Mena in the 1980s.

It was a role he played with flair, brazenly attending the trials of fellow smugglers to take notes on technique, talking casually to relatives about covertly working for one arm of government while defying others. At home he could be the devoted family man, taking snapshots of his children frolicking in piles of cash and lavishing attention on his beautiful and devoted wife, Debbie, while on the road he was a swaggering rogue running a multibillion-dollar international business with a pager and rolls of quarters, speaking in code from random pay phones. "One must find the perfect balance between his career and personal life in order to be perfectly happy and keep his loved ones content," he noted in a diary as if he were one more harried professional. Forty-three when he shifted his base from Louisiana to Arkansas in 1982, Seal was already a legend in the cocaine trade, a figure of more than 250 pounds known to Latin cohorts as El Gordo, the Fat Man with muttonchop sideburns who devoured candy bars but did not smoke, drink, or take drugs and who moved easily between governments and the drug lords they claimed to hunt.

Much of the work Seal performed for the CIA -- and also for the Pentagon's Defense Intelligence Agency, where coded records reportedly showed him on the payroll beginning in 1982 -- would be buried in Washington secrecy. What he did while based at Mena, however, was plain from his papers and other sources, including his own videotapes. His drug runs followed an almost invariable routine. After being flown in from Latin America, duffel bags packed with cocaine were methodically lashed together -- loads averaging three hundred pounds of cocaine and worth at least tens of millions of dollars -- and parachuted with practiced precision onto specially cleared remote sites in Arkansas and elsewhere in the South, there to be picked up by helicopter or other means and carried on within a distribution system that included large trucks and railways. Seal was "only the transport" into the United States, the smuggler would remind his government handlers, pointing to the extensive network of distribution run and tended by a southern-based crime family, Latin suppliers, corrupted officials, and others in the chain who took over in Arkansas and elsewhere after his emptied planes headed home to Mena.

Though he flew duffel bags of cocaine into Intermountain Regional only occasionally, Seal spent thousands at the airport to house, maintain, and specially equip his aircraft with features like added fuel bladders and modified cargo doors for drug drops. When not there himself he was in constant contact with his Arkansas base. In one brazen act Seal brought drug cartel kingpin Jorge Ochoa to Arkansas to show off his operation. In the years that Seal's traffic was based in Mena it brought tons of cocaine and heroin to American cities, affecting an incalculable number of lives. A partial estimate, Louisiana's attorney general informed Attorney General Edwin Meese in 1986, suggested that Seal had "smuggled [drugs worth] between $3 billion and $5 billion into the US."

Only relatively small change from the traffic spilled into western Arkansas, though with resounding impact. Secretaries at Intermountain Regional later told an IRS agent that, after some Seal flights, "there would be stacks of cash to be taken to the bank and laundered." Couriers were told to buy cashier's checks, each just under $10,000 to avoid federal reporting. "The bank officer went down the teller lines," is how one witness described what happened when an airport employee brought a bag of money into a nearby bank, "handing out the stacks of $1,000 bills and got the cashier's checks."

For years Mena buzzed with stories of shoeboxes and suitcases stuffed with cash. In 1982-83, according to IRS and state police calculations, hundreds of thousands washed through local banks, a minor fraction of the profits taken from Seal's Mena runs (most of the money was laundered elsewhere). Law enforcement officials believed it was at least a portion of the Mena-related cash that showed up in later IRS monitoring of financial institutions in Arkansas, marking the otherwise impoverished state as what agents called a "magnet" for drug-money laundering, with telltale rates of savings and cash transactions far higher than levels supported by the legitimate economy. The obscure town in the Ouachitas, it turned out, was far more than the home of the Bearcats. By the sheer magnitude of the drugs and money its flights generated, tiny Mena, Arkansas, became in the 1980s one of the world centers of the narcotics trade and the base of what many believed was the single-largest cocaine-smuggling operation in US history.

But drugs were only one commodity in a bustling commerce. Especially after the spring of 1983, Seal's flights to Latin America to pick up cocaine commonly carried arms for the Contra rebels fighting to overthrow the Sandinista regime in Nicaragua. Part of what was later exposed as the Iran-Contra affair, they were one channel of the CIA and the Reagan White House's efforts to evade congressional restrictions, including the Boland amendment, that went into full effect in the autumn of 1984. Though major, the Arkansas precincts of Iran-Contra remained unexplored in the circumscribed investigations by both Congress and the independent counsel.

Along with arms pouring into the Mena airport from US arsenals and the private market, nationally and internationally, weapons bound for the Contras also came from local Arkansas sources, including a Fayetteville gunsmith named William Holmes, who had been crafting weapons for the CIA since the mid-1950s and now produced for the agency a special order of 250 automatic pistols with silencers. Under oath he later told a federal court that he was taken to Mena twice to meet Barry Seal, who paid for some special orders in cash. Though Holmes dealt with other CIA agents, too, he regarded Seal as "the ramrod of the Mena gun deal." Not long after Seal's operation began, the terrain around Mena, similar to the landscapes in Nicaragua, became a CIA training ground for Contra guerrillas and pilots. Like the money laundering, the flow of weapons and the covert maneuvers supplied Mena with still more whispered stories, of crates of arms unloaded from unmarked black trucks, of Spanish-speaking pilots who flew practice runs in and out of the airport, of state game wardens in the backwoods who came upon contingents of foreigners in camouflage and armed with automatic weapons; of caches of weapons secreted in highway culverts and mysterious nighttime road and air traffic around neighboring Nella.

Though the CIA and other intelligence agencies routinely denied responsibility for Seal and Mena, security for the operation was generally careless; cover-up from Arkansas to Washington seemed taken for granted. There was a paper trail of federal aircraft registrations and outfittings. Some of Seal's fleet, which included a Lear jet, helicopters, and former US military transports, had been previously owned by Air America, Inc., widely reported to be a CIA proprietary company. Another firm linked to Air America outfitted Seal's planes with avionics. Between March and December 1982, according to law enforcement records, Seal fitted nine of his aircraft with the latest electronic equipment, paying the $750,000 bill in cash. Senior law enforcement officials happening onto his tracks in Arkansas were quickly waved off. "Joe [name deleted] works for Seal and cannot be touched because Seal works for the CIA," a customs official noted during an investigation into Arkansas drug trafficking in the early 1980s. "Look, we're told not to touch anything that has Barry Seal's name on it," another ranking federal agent told a colleague, "just to let it go."

At the same time, customs officers and others watched the Mena contraband expand far beyond the Contras to include the export of munitions to Bolivia, Argentina, Peru, and Brazil -- a hugely lucrative black market in arms variously called the Southern Tier or Southern Arc. By any name, intelligence sources described it as a CIA operation, often under cover of bogus front companies, though occasionally with the knowledge of executives and workers in "legitimate" corporations providing spare parts. The smuggling was known to have made millions in criminal profits for CIA rogue operations, mainly from what one former air force intelligence officer called the "clockwork" transshipment of weapons and other contraband from "meticulously maintained" rural airports in Arkansas, Mississippi, Kentucky, Alabama, Louisiana, Florida, and Arizona. According to several official sources, Mena was not only the base for Seal's traffic in guns and drugs but also a hub in this clandestine network of government crime.

Like the Seal runs, Southern Tier flights came and went with utter immunity, protected or "fixed," as one law enforcement agent called them, by the collusion of US intelligence and other agencies under the guise of "national security." The most telling evidence in Seal's own thick files would be what was so starkly missing. In hundreds of documents revealing fastidious planning -- Seal's videotapes even recorded him rehearsing every step in the pinpoint drop of loads of cocaine, down to the seconds required to roll the loads to the door of the plane -- there was no evidence of concern for cross-border security or how the narcotics were brought into the country. Engaged in one of the major crimes of the century, neither he nor his accomplices showed the slightest worry about being caught. The shadow of official complicity and cover-up was unmistakable in Seal's papers. In 1996, a former Seal associate would testify to congressional investigators how the operation had been provided CIA "security" for flights in and out of the US, including a highly classified encoding device to evade air defense and surveillance measures.

Those who met Seal in Mena in the fall of 1983 found him at the zenith of his influence. He was already a businessman of note in Arkansas, with an address book listing some of the state's well-known names, and contacts in Little Rock's banks and brokerage houses, and what a fellow CIA operative called a "night depository" for bags of cash dropped from "green flights" onto the ranch of a politically and financially prominent Arkansas family. An associate, a pilot who came with Seal from Louisiana in 1982, would later testify about their first weeks in Arkansas, when they were introduced to pivotal figures in state government and business. "Barry Seal knew them all, and they knew him, the Clinton machine," he remembered. "There was no limit on cooperation by the good ole boys," a federal agent would say of Seal's Arkansas friends.

At the height of his Mena operation, Seal made daily deposits of $50,000 or more, using a Caribbean bank as well as financial institutions in Arkansas and Florida. He casually admitted to federal agents that he took in $75 million in the early 1980s, and under court questioning said he made at least $25 million in 1981 alone. A posthumous tax assessment by the IRS -- which officially noted his "C.I.A.-D.E.A. employment" and duly exempted him from taxes on some of his government "income" for the years 1984-85 -- would show Seal's estate owing $86 million in back taxes on his earnings in Mena in 1982 and 1983. Far from entertaining thoughts of paying taxes, Seal detailed in his private papers his own plans for the money, including setting up a Caribbean bank and dozens of companies, all using the name Royale -- from a television network, casino, and pharmaceuticals firm to a Royale Arabian horse farm.

By 1984, the Seal operation began to unravel. While the Mena traffic flourished, he was charged by elements of the Drug Enforcement Agency and federal prosecutors -- a group of agents and government lawyers not compromised in the Arkansas operation -- for trafficking in Quaaludes. Suddenly facing a prosecution and prison sentence his intelligence patrons either could not or would not suppress, he scrambled to make his own deal. With typical aplomb ("Barry was always smarter than most government folks he dealt with," said an associate), he flew to Washington at one point to dicker with the staff of Vice President George Bush. By the spring of 1984, Seal was DEA informant number SGI-84-0028, working as an $800,000-a-year double agent in an elaborate sting operation against the Medellin cartel in Colombia and individuals in the Nicaraguan regime who had been dipping into the drug trade themselves.

The same elements of the US government involved in Mena were now eager, for political advantage, to expose the Sandinistas in drug dealing. That summer of 1984, CIA cameras hidden in his plane, Seal made the incriminating flights to Medellin and then Managua, only to have the case against the drug lords and his own life jeopardized when the Reagan administration gleefully leaked the evidence of Sandinista involvement, including the smuggler's own film, to the Washington Times.
In a scribbled note, Barry Seal recorded with knowing cynicism the malignant juncture of politics and crime: "Government misconduct," he wrote, and then of himself, "Operate in a world nearly devoid of rules and record keeping."

In February 1985 Emile Camp, later identified as a member of a Louisiana organized crime family, one of Seal's expert pilots and the only witness to many of his more significant transactions with both drug lords and US intelligence agents, was killed -- some thought murdered -- when his elaborately equipped Mena-bound Seneca unaccountably ran out of gas on a routine approach and slammed into the Ouachita Mountains. The flight was carrying the original logs of one of Seal's other planes, a Vietnam-era C-123K Seal had christened the Fat Lady; these were missing when the wreckage was discovered. Meanwhile Seal himself was becoming a star witness for the US government against his old Colombian associates. Though still cocky, he was now becoming increasingly anxious about his own safety. As if personal publicity could offer a shield, he confessed a few crimes to local Arkansas investigators in a recorded interview and even agreed to an in-law's request that he cooperate in a documentary on his operations for a Louisiana television station. Nevertheless, he withheld the secrets of wider and higher official complicity in Arkansas. The Mena traffic remained relentless. "Every time Berri [sic] Seal flies a load of dope for the U.S. Govt.," one local law enforcement officer noted in a log on August 27, 1985, "he flies two for himself." The bargain seemed plain: "Seal was flying weapons to central and south America," an agent noted, recording what "was believed" within the DEA. "In return he is allowed to smuggle what he wants back into the United States."

By the summer of 1985 Seal's usefulness to the government had expired, and a scapegoat for the illegal operation in Mena was imperative. That same year the CIA abandoned him, refusing even to acknowledge in camera to a federal judge his role in the Sandinista sting, much less his long and seamy clandestine service. In a tangled plea bargain on the old Quaalude charges, a bitterly defiant Seal, still holding onto his Mena secrets and still contemplating a profitable return to Arkansas, found himself on a court-ordered six months' sentence to a Salvation Army halfway house in Baton Rouge. It was there that assassins found him alone in his trademark white Cadillac on a wet February night in 1986. With remarkable dispatch and no further inquiry a group of Colombians, said to be working for Medellin, were arrested and sentenced to life. That same winter President Reagan went on nationwide television to denounce the Sandinistas as drug runners, using Seal's covert film to demonstrate his outrage. The Seal family buried Barry in Baton Rouge with a Snickers bar, his telephone pager, and a roll of quarters, under the ironic epitaph he had dictated for himself -- "A rebel adventurer the likes of whom in previous days made America great."


Only hours before his gangland-style assassination, Seal had been making his habitual calls to Mena. After the killing, activities in the Ouachitas continued unabated, proving the operation went far beyond a lone smuggler. In October 1986 the Fat Lady was shot down over Nicaragua with a load of arms for the Contras. In the wreckage was the body of copilot Wallace "Buzz" Sawyer, a native of western Arkansas; detailed records on board linked Fat Lady to Seal and Area 51, a secret nuclear weapons facility and CIA base in Nevada. It would be the headline-making confession of the Fat Lady's lone survivor, Eugene Hasenfus, that would hasten a partial public airing of the Iran-Contra affair. Though the Mena operation remained largely concealed in the ensuing expose, records showed that there had been several calls around the time of the Fat Lady's ill-fated mission from one of the CIA conspirators in Iran-Contra to Vice President Bush's office in Washington and to operatives in western Arkansas.

"After the Hasenfus plane was shot down, you couldn't find a soul around Mena," remembered William Holmes, who now found that the CIA refused to pay him, reneging also on one of the last gun orders. The hiatus at Intermountain Regional was brief. By early 1987 an Arkansas state police investigator noted "new activity at the [Mena] airport," the appearance of "an Australian business [a company that would be linked with the CIA] and C-130s." At the same moment two FBI agents warned the trooper, as he later testified under oath, that the CIA "had something going on at the Mena airport involving Southern Air Transport [another concern linked to the CIA] ... and they didn't want us to screw it up."

Since the CIA is expressly prohibited by law from conducting any such operations within the US, the documented actions constituted not only criminal activity by the intelligence agency, but also suborned collusion in it by the FBI. In August 1987, eighteen months after Barry Seal's assassination, an FBI telex advised the Arkansas State Police that "a CIA or DEA operation is taking place at the Mena airport."

In the late 1980s, as intelligence sources eventually confirmed to the Wall Street Journal, a secret missile system was tested, CIA planes were repainted, and furtive military exercises were carried out in the Ouachitas. As late as the fall of 1991 an IRS investigative memorandum would record that "the CIA still has ongoing operations out of the Mena, AR airport . . . and that one of the operations at the airport is laundering money." When the story of those more recent activities leaked in 1995, the rival agencies behaved in time-honored Washington manner with the media, the CIA furtively explaining Mena as "a rogue DEA operation," the DEA and FBI offering "no comment."

Months before Seal's murder, two law enforcement officials based in western Arkansas – IRS agent Bill Duncan and state police detective Russell Welch -- had begun to compile what a local county prosecutor called a "mammoth investigative file" on the Mena operation. Welch's material became part of an eventual thirty-five-volume, 3,000-page Arkansas State Police archive dealing with the crimes. Working with a US attorney from outside Arkansas, a specialist in the laundering or "churning" of drug proceeds, who prepared a meticulous presentation of the Mena case for a grand jury, including detailed witness lists, bookkeeping records from inside the operation, numerous other documents, and an impressive chain of evidence, Duncan drafted some thirty federal indictments on money laundering and other charges. "Those indictments were a real slam dunk if there ever was one," said someone who saw the extensive evidence.

Then, in a pattern federal and state law enforcement officers saw repeated around the nation under the all-purpose fraudulent claim of "national security," the cases were effectively suppressed. For all their evidence and firsthand investigation, Duncan and Welch were not even called to testify before appropriate grand juries, state or federal. At one point a juror from Mena had happened to see hometown boy Russell Welch, a former teacher, at the courthouse and "told the others that if they wanted to know something about the Mena airport," as one account described it, "they ought to ask that guy out there in the hall." But "to know something about the Mena airport" was not what Washington or Little Rock would want. Though the Reagan-appointed US attorneys for the region at the time, Asa Hutchinson and J. Michael Fitzhugh, repeatedly denied, as Fitzhugh put it, "any pressure in any investigation," Duncan and Welch watched the Mena inquiry systematically quashed and their own careers destroyed as the IRS and state police effectively disavowed their investigations and turned on them. "Somebody outside ordered it shut down," one would say, "and the walls went up." Welch recorded his fear and disillusion in his diary on November 17, 1987: "Should a cop cross over the line and dare to investigate the rich and powerful, he might well prepare himself to become the victim of his own government. ... The cops are all afraid to tell what they know for fear that they will lose their jobs."


After 1987, some nine investigations met similar obstruction.
Typical of the quashing at the Washington level, a 1988 General Accounting Office inquiry scarcely started before it was suppressed by the Reagan White House and the National Security Council. A US Senate subcommittee report in December 1988 noted that the Mena cases had been dropped, despite evidence "sufficient for an indictment on money laundering charges," because "the prosecution might have revealed national security information, even though all the crimes which were the focus of the investigation occurred before Seal became a federal informant [in 1984]."

For its part, Arkansas looked back on the crimes it housed with a characteristic mixture of weary resignation and evasion. Mena townspeople knowingly referred to Intermountain Regional as Barry Seal Memorial Airport but nervously scoffed at the story when approached by outsiders and reporters, who seldom went beyond their denials. The airfield was also a major employer in struggling Polk County, and as so often in Arkansas, government contracts of any kind were welcome. "MENA TIRES OF RUMORS," read a 1988 Gazette headline over a story dismissing the worst allegations. Reportedly "ordered" off a Seal investigation himself, the local sheriff, A. L. Hadaway, would be typical of many who wanted to forget. "The community where it occurred did not and does not give a damn about what occurred," he wrote caustically a few years after Seal's murder. Still, the sheriff himself had taken revealing testimony about the crimes, was said to have resigned in 1986 partly over the drug running, and could also tell a reporter bitterly, "I can arrest an old hillbilly out here with a pound of marijuana and a local judge and jury would send him to the penitentiary. But a guy like Seal flies in and out with hundreds of pounds of cocaine and he stays free."

Columnist Jack Anderson; Rodney Bowers, an independent journalist in the Gazette's Fort Smith bureau; and a team at Channel 5 in Fort Smith kept the story alive for a time in 1987. Mena was in John Hammerschmidt's congressional district, but when a local deputy and eyewitness who also worked at Intermountain Regional sent Hammerschmidt a moving appeal for an investigation of the crimes, the Contra supporter and close friend of George Bush never answered. Meanwhile, vivid if obscure testimony seeped out of the Iran-Contra scandal confirming much of the Mena connection and the Southern Tier, including what fellow smuggler Michael Tolliver and others called Barry Seal's "federal umbrella." Yet neither the national nor the Arkansas press pursued the evidence, and political barriers remained impervious in both Washington and Little Rock.

By 1988 Charles Black, a deputy prosecuting attorney for Polk County, viewed the continued federal inaction with mounting dismay. In some desperation he had gone to Governor Bill Clinton to ask for "any available state-level financial aid" to probe "the rather wide array of illegal activities by Barry Seal and accomplices, in Polk County." Clinton, who was also being lobbied by Bill Alexander, a Democratic congressman, to press an investigation, had assured him, Black recalled, "that he would have someone ... check on the availability of financial aid and get word to me." But the prosecutor heard nothing more from the governor or anyone else in the administration. Years later there were reports of $25,000 in federal funds earmarked for Mena -- a sum Black thought "tantamount to trying to extinguish a raging forest fire by spitting on it." Yet even that token money was somehow mired in the state bureaucracy, and still another chance for inquiry stifled.

The Alexander and Black approaches to Clinton seemed to set off a further sequence of cover-ups. As New York Post columnist John Crudele later revealed, it was at that same moment in 1988 that "superiors" in the Arkansas State Police began the destruction of papers in the Mena file. In sworn testimony, a former staff member of the Arkansas State Police Intelligence Unit would describe a "shredding party" in which she was ordered to purge the state's Mena files of nearly a thousand documents, including those referring specifically to Iran-Contra conspirator Oliver North and Seal associate Terry Reed.

Later, in reaction to a subpoena for the Mena documents by Reed's lawyer in a federal court case in Kansas, state police officials were said to have further "dismantled" the already purged archive. From a special locked cabinet at state police headquarters in Little Rock, various reports about Mena were sent back to the originating federal, state, county, and local offices -- to all appearances a routine action, as if the case were closed, but one that effectively defied the federal subpoena. Eventually, from the testimony of those who saw both the shredding and the dispersal and of others familiar with the documents, the nature of the Arkansas State Police investigation into Mena would be clear. Never the product of a serious, coherent inquiry beyond Welch's individual work, the ostensible "file" was a vacuuming up of all the sightings, suspicions, and related evidence -- from state game wardens' reports to citizens' complaints to FBI telexes -- a mass of material held like hushed witnesses, unquestioned, largely unknown to the public or anyone of the sources.

The issue briefly came to public attention in Arkansas in 1991, almost a decade after Seal flew into Mena. Attorney General Winston Bryant had made Mena something of a campaign issue against his Republican opponent, Asa Hutchinson. In May 1990 Bryant forwarded to Iran-Contra independent counsel Lawrence Walsh a petition signed by more than a thousand Arkansans imploring Walsh to investigate Mena and specifically "why no one was prosecuted in Arkansas despite a mountain of evidence." A month later, spurred by a group at the University of Arkansas urging further inquiry, Bryant and Congressman Alexander jointly took sworn depositions from agents Duncan, Welch, and others and found anew what Bryant told the press was "credible evidence" of the crimes, with a cover-up to match. "I have never seen a whitewash job like what has been executed in this case ... a conspiracy of the grandest magnitude," Alexander said gravely to one reporter. He and Bryant then arranged to see Walsh's staff in Washington in September to turn over "two boxes of information," including some of the Duncan-Welch evidence.

Their meeting produced a flurry of publicity in Little Rock and the local media's first general attention to Mena, prompting a September 11, 1991, press conference at the capitol by the state's chief executive. At a moment when the IRS was documenting CIA flights and money laundering still "ongoing" at Mena, and barely a month before he declared his candidacy for president, it would be Bill Clinton's only public statement as governor about the crimes of Mena.

He was "pleased" the issue had been raised "again," Clinton began. The state "did all it could do," he said, to investigate the "allegations" about the Mena airport's being used to run drugs and guns. "I've always felt we never got the whole story there, and obviously if the story was that the DEA was using Barry Seal as a drug informant ... then they ought to come out and say that because he's dead," he went on without waiting for questions. In any case, the state police had conducted a "very vigorous" investigation several years ago, and the inquiry raised questions "that involved linkages to the federal government."

As governor he had authorized the state police to assure local officials that the state would help pay for a special grand jury, which he expected to be unusually costly because of the need to bring witnesses from out of state. "Nothing ever came of that," he said vaguely of the grand jury, adding that he did not know "whether federal officials pressured the local prosecutor in any way." When county attorneys took no action, the state police turned over their "file" to the US attorney, who convened a grand jury that returned no indictments. There was a state police investigator in the case, Clinton added, apparently referring to Welch, but he had been called to testify "rather late in the proceedings." Moreover, he was asked "a rather limited range of questions," Clinton said, implying that it was not the state's fault that there had been no indictments. After the grand jury failed to act, the "state" gave its "investigative file" to a subcommittee of the House Judiciary Committee.

Asked about Barry Seal's murder, Clinton told the press that he thought the smuggler received "inadequate security," and then added gratuitously that the Seal case "raised all kinds of questions about whether he had any links to the CIA and if he was involved with the Contras ... and if that backed into the Iran-Contra deal." One observer remembered the assembled television and print reporters scribbling hurriedly, as usual, to take down the governor's flowing and seemingly informed comments. But then, after the remark about the Iran-Contra deal, there was a rustling silence, "as if no one knew what to ask next," the witness remembered. With that, the press conference was over. "CLINTON: STATE DID ALL IT COULD IN MENA CASE," the Gazette announced the next day.

No national journalists knowledgeable about Seal, Mena, Iran-Contra, or the drug trade were present, and even the local media had not assigned the press conference to their most informed reporters. At any rate, almost nothing Clinton offered them about Mena was quite true. Only a handful of insiders could appreciate how disingenuous the governor had been. Not only was there never a "vigorous" state police investigation, as Welch and others well knew, but evidence had been effectively suppressed and never adequately presented to a grand jury, and much of it had been shredded or burned. There had been no real help for a state grand jury, and when a congressman and a local prosecutor did ask for help, their request had triggered a further obstruction of justice in Little Rock. And as investigators in both Arkansas and Washington were aware, the state police had never given an "investigative file," in any serious sense of that term, to either prosecutors or a House committee. No such file ever existed, and hundreds of documents had been destroyed or scattered when there seemed the risk of outside scrutiny.

What did a crime so enormous imply about the state's law enforcement, the governor's administration? If there were federal "linkages," political "pressure" on prosecutors, or misconduct in a grand jury, as Clinton seemed to imply, why hadn't he spoken out or acted? Why hadn't the state's chief law enforcement officer shown the same alarm as had his fellow Democrats Bryant and Alexander, whose current charges of crime and cover-up "of the grandest magnitude" he pointedly did not join in raising? And why hadn't Bill Clinton the presidential candidate seized on the issue by attacking the Republicans, including George Bush, for conducting a lawless gunrunning operation that flew tons of cocaine into Arkansas?

Clinton had casually and successfully avoided dates, details, and any discussion of his own role. He would leave the impression that he was knowledgeable about the Mena charges yet knew nothing with authority. Even by the most cynical political standards, it was an extraordinary deception by a future president.


Early in 1984, a twenty-nine-year-old Arkansas trooper named Larry Douglass Brown was eagerly applying for work with the Central Intelligence Agency.

Brown was no ordinary state policeman or routine CIA applicant. Known at the mansion and the capitol -- and by CIA recruiters -- as Bill Clinton's "fair-haired boy," he was the governor's conspicuous favorite among the troopers assigned as his personal bodyguards. Ten years Brown's senior, Clinton treated the avid but less polished young man from Pine Bluff with an avuncular, patronizing warmth, urging on him books from his own collection and engaging in more substantive conversation than the small talk and ingratiating vulgarity he usually reserved for his state police escorts. Yet L.D., as his friends and colleagues knew him, was far more than a protege. His wife-to-be was Chelsea Clinton's nanny, his future mother-in-law the mansion's administrator. Guard and driver for many of the governor's trips out of state as well as around Arkansas, he was one of several troopers and other aides serving as procurer or cover in Clinton's ceaseless quest for extramarital sex -- and claiming what he called "residuals" among the women the governor wasn't interested in. He was also among those who saw evidence firsthand of the far more serious and sustained affair, dating from the mid-1980s, between Hillary Clinton and Rose partner Vince Foster.

As he told his story with impressive substantiation from other accounts a decade afterward, Brown had been privy to some of the Clintons' most personal liaisons, their biting relationship with each other, their behind-the-door bigotry toward "redneck" Arkansas, and other intimacies; he and a stoic Hillary had even talked earnestly about problems in their respective marriages. At one point in the early 1980s, Brown had come in contact with Vice President Bush during an official gathering. The "rather conservative" young officer, as one friend described him, had been impressed by Bush. Afterward Clinton had twitted him about his Republican "hero," though the two remained close. Regarded as among the better state police officers, Brown received some of the most sophisticated training that national law enforcement agencies offer regional police officers, including advanced courses provided by the DEA and Customs in intelligence gathering, drug importation, and conspiracy cases. Because of Brown's extensive training, Clinton handpicked him to serve on a state committee studying the drug epidemic to help develop educational programs in Arkansas, and Brown wrote several of the panel's position papers later cited as evidence of the state government's fight against narcotics.

Brown and the Clintons eventually had a falling-out when the governor reneged on a state job offer in 1985 and later on his half of a political bargain to raise the pay of the state police, whose association Brown headed. Brown gradually went from favorite to outcast, menaced with a prejudicial "investigation" of his work and smeared as a liar and incompetent by aides who not long before had been jealous of how much Clinton trusted and respected him. Yet the deeper break had begun in the autumn of 1984, when Brown had witnessed matters far more serious than the Clintons' personal excesses.

By Brown's repeated accounts, including hundreds of pages of testimony under oath and supporting documentation, the sum of the story was stark: The governor had clearly been aware of the crimes of Mena as early as 1984. He knew the Central Intelligence Agency was responsible, knew that there was major arms and drug running out of western Arkansas, believed the smuggling involved not only Barry Seal but also a cocaine dealer who was one of Clinton's most prominent backers, and seemed to know that approval of the Mena flights reached as high as Vice President Bush. Brown remembered how Bill Clinton had encouraged him to join in the operation -- "Clinton got me into this, the governor did," he would testify -- and how Clinton had then dismissed his repugnance at the evidence that Seal was trafficking cocaine under CIA auspices. The state policeman watched in "despair," his brother recalled, while the governor did nothing about the drug smuggling. Brown would still think a decade later that Bill Clinton "was surprised only in that I had found out about it."

Clinton had urged him to answer a newspaper ad for CIA employment that ran in the New York Times on April Fool's Day, 1984. "L.D., I've always told you you'd make a good spy," Clinton remarked to him when Brown showed him the paper and asked "if this is for real?" "Well, you know that's not his name," Clinton said of a personnel officer listed in the ad, "but you need to write him a letter." Brown did just that two days later. "Governor Clinton has been an inspiration for me to further my career in government service," he wrote, "and in particular to explore the possibilities of employment with your agency."

Clinton proceeded to show an avid interest in Brown's application. He urged Brown to study Russian for an intelligence career, and Brown characteristically took the advice to heart, practicing the foreign script in a copybook and artlessly, proudly informing the CIA of his "understanding of the Cyrillic alphabet." He and Clinton talked, too, of the role of an operations officer, with Clinton explaining the CIA's diplomatic cover abroad and the recruitment of informers. "It was strange, you know. He was into the fiction aspect of it and intrigue," Brown remembered.

At one point Clinton told him he would personally call the CIA on his behalf. "He, obviously, from all our conversations, knew somebody," Brown recounted in a sworn deposition. "I don't know who he called, but he said he would. He said he did. I made a note one day that he made a phone call for me." But in a private conversation Brown would go even further with the story of the call. Clinton, he said, had not bothered to go through any officeholder's liaison or other formal CIA channel in Washington but had simply telephoned someone directly at the agency, someone whom he knew on a first-name basis and with whom he talked for some time. As usual, Brown was impressed with his boss's knowledge and contacts. Early in the process the governor had begun to greet him whenever they met with a grinning question they both understood to refer to Brown's relationship with the CIA. "You having any fun yet?" Clinton would ask.

As part of his CIA application Brown was to submit a writing sample, and together he and Clinton chose as a topic the current foreign policy controversy over the wars in Nicaragua and El Salvador. "We decided that I would write a paper on Marxism in Central America. Governor Clinton and I." Typing in the troopers' guardhouse at the mansion because he had no typewriter at home, Brown wrote what he thought "a pretty decent essay," which he gave to Clinton to read. Some eight hundred words, it was a rough, largely unpunctuated, and simplistic rendition of the Reagan administration's own views, warning of the "growing threat of spreading Marxism south of this country's borders." Clinton made some word changes and suggested what he should "expound on," but the final essay remained, with Clinton's approval, very much "about defeating Marxism in Central America and aiding the Contras in the United States and the domino theory and all that," as Brown testified later.

At odds with more informed views of his own party in Congress and even in the Democratic foreign policy establishment, Clinton's response to Brown's essay is one of the few surviving marks of his opinions on the subject. To the extent that he agreed with what he left unaltered, it was obviously a reactionary, rightist approach to the raging controversy over Central America, accepting the myth that the leftist but fiercely independent Sandinistas were tools of Soviet expansion in the Western Hemisphere, implicitly viewing social revolution in the Americas as a sinister threat to US security. Whether conviction or calculation, the tone seemed well suited for CIA recruiters. Brown himself was never sure his essay reflected the governor's thinking, whatever Clinton's urgings to "expound." They had played the bureaucratic game. "To be quite frank, I think we both thought it was something they wanted to hear more or less," Brown testified in 1995.

By the end of the summer of 1984 -- four months after taking and passing a CIA entrance examination -- Brown had met with a CIA recruiter in Dallas, someone named Magruder, an "Ivy League-looking guy" who spoke "admiringly of Clinton," and whom Brown would later recognize in photographs and identify to congressional investigators in 1996 as a onetime member of Vice President Bush's staff. This was the man who asked him if he would be interested in "paramilitary" or "narcotics" work as well as "security." Brown said he wanted to be considered for such assignments and, in the course of the interview, duly signed a secrecy agreement. Somebody, he was told, would be giving him a call.

On September 5 he received formal notification of his nomination for employment. Scarcely a month later the expected CIA call came to his unlisted number at home. As Brown testified, the caller "talked to me about everything I had been through in the meeting in Dallas, . . . made me very aware that he knew everything there was to know." He asked Brown to meet him at Cajun's Wharf in Little Rock, a popular restaurant and bar off Cantrell Road in the Arkansas River bottoms just below the white heights. His name, he said, was Barry Seal.

At their meeting, the corpulent Seal was memorable for the athletic young state trooper. "Big guy. He had on one of those shirts that comes down ... outside your pants, big-guy kind of thing." Seal was cryptic but again seemed clearly to know details Brown had provided on his CIA application. "He knew about the essay and everything I had done, so absolutely there was no question in my mind," Brown testified. Seal also spoke vaguely about working for the CIA: "He'd been flying for the agency, that's all I knew." In conversations over the next few weeks, Seal referred casually to Clinton as "the guv" and "acted like he knew the governor," Brown recalled. He invited Brown to join him in an "operation" planned to begin at Mena's Intermountain Regional before sunrise on Tuesday, October 23, 1984.

Impressed with the gravity of it all, Brown told no one about the talk with Seal, except the governor, who seemed "excited" as usual at Brown's progress with the agency. Seal was nothing like the CIA Ivy Leaguer he had met in Dallas, Brown told Clinton. "El Gordo" Barry Seal "was kind of devil-may-care." Again Clinton seemed knowing, encouragingly nonchalant. "Don't sweat it, you can handle it," he told his bodyguard. "You'll have fun."
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Re: Partners in POWER: The Clintons and Their America

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Part 2 of 2

Arranging his shifts at the mansion to make time for the flight, Brown met Seal at the Mena airport in the predawn darkness and was surprised to find them boarding not a small private craft but a "huge military plane" painted a dark charcoal with only minimum tail markings, its engines roaring with a "thunderous noise," he remembered. "Scared the shit out of me just taking off."

Seal ordered him matter-of-factly to leave behind all personal identification, including his billfold, keys, and jewelry. Along with Seal at the controls sat a copilot whose name Brown never learned, and in the back of the aircraft sat two men, "beaners" or "kickers" the trooper called them. Though he did not know it, Brown was aboard the Fat Lady, and his later account marked the flight as one of Mena's routine gun-and-drug runs.

After a refueling stop in New Orleans and the flight to Central America, the C-123K dived below radar, then climbed and dipped again for the "kickers" to roll out on casters large tarp-covered palettes, which were swiftly parachuted over what Brown could see out the open cargo door was a tropical, mountainous terrain. Later Seal told Brown the loads were M-16s for the Contras. On the return they landed in Honduras, where Seal and the "kickers" picked up four dark green canvas duffel bags with shoulder straps, which Brown did not see again.

Back at Mena Seal handed Brown a manila envelope with $2,500 in small bills, presumably as payment for his time -- "used money just like you went out and spent," Brown recalled -- and said he would call him again about another "operation." As the ambitious young trooper testified later, he was diffident about this apparent audition with his CIA employers, reluctant to ask questions, even about the cash. "This guy [Seal] obviously knew what he was doing and had the blessing and was working for the agency and knew everything about me, so I wasn't going to be too inquisitive."

At the mansion on Brown's next shift following the run to Central America, Clinton greeted him with the usual "You having any fun yet?" though now with a pat on the back. With a "big smile" Brown answered, "Yeah, but this is scary stuff," describing "a big airplane" which he thought "kind of crazy." But Bill Clinton seemed unsurprised and unquestioning, casual as always about what Brown told him about the CIA, Seal, and Mena. "Oh, you can handle it," he said again. "Don't sweat it."

Brown was startled at the governor's obvious prior knowledge of the flight. "He knew before I said anything. He knew," Brown testified. Asked later under oath if he believed the Seal flight had been sanctioned by the governor, Brown would be unequivocal. "Well, he knew what I was doing. He was the one that furthered me along and shepherded me through this thing." Did he have any doubt that Clinton approved of the flight from Mena to Central America? "No," he testified. Did he believe the Seal run "a sanctioned and approved mission on behalf of the United States?" "Absolutely. I mean, there is no doubt."

Not long afterward, in the later fall of 1984, Seal called the trooper as promised, again inquiring about Clinton: "He always asked me first thing, how is the guv?" They talked about the first flight and Seal, ruminating on his service for the CIA, confirmed that they had dropped a load of contraband M-16s for the Contras. "That's all he talked about was flying and [the] CIA and how much work he had done for them, and that's all he did. That's all we would talk about," Brown recalled. They met again, this time at a Chinese restaurant near the Capitol, and arranged for Brown to go on another trip in late December.

On Christmas Eve, 1984, once more with the governor's encouragement, Brown again flew with Seal to Central America on what he still understood to be some kind of orientation mission for his CIA employment. Seal picked up two duffel bags on the return through Honduras, and just as before, back at Mena he offered Brown $2,500 in small bills. Yet this time Seal also brought one of the duffels to Brown's Datsun hatchback in the Intermountain Regional parking lot and proceeded to take out of it what the former narcotics investigator instantly recognized as a kilo of cocaine, a "waxene-wrapped package," as he called it, "a brick."

Alarmed and incensed, Brown quickly told Seal he "wanted no part of what was happening" and left, speeding back to Little Rock in mounting agitation, not least over the role of the state's chief executive. ''I'm just going nuts in my mind with all the possibilities," he would say. ''I'm thinking, well, this is, this is an official operation. Clinton got me into this, the governor did. It can't be as sinister as I think it is.... He knew about the airplane flights. He knew about it and initiated the conversation about it the first time I came back."

Returning to the guardhouse, Brown first called his "best friend," his brother Dwayne in Pine Bluff, who remembered his being "terribly upset" and later went to the mansion to see him when the Clintons were away. According to the two men, Brown told his brother part of what he had encountered, though without mentioning the CIA involvement. "Who's pushing this. Who is behind it?" his brother asked at one point. In reply, as each recalled clearly, Brown "nodded over towards the governor's mansion."

Brown decided to approach Clinton directly about what he had seen. When they were together soon after the second flight, a smiling Clinton seemed about to ask the usual question. But Brown was angry. He asked Clinton if he knew Barry Seal was smuggling narcotics. "Do you know what they're bringing back on that airplane?" he said to Clinton in fury. "Wait, whoa, whoa, what's going on?" the governor responded, and Brown answered, "Well, essentially they're bringing back coke." More than a decade later, Brown would testify to his dismay at Clinton's response: "And it wasn't like it was a surprise to him. It wasn't like -- he didn't try to say, what? ... He was surprised that I was mad because he thought we were going to have a cordial conversation, but he didn't try to deny it. He didn't try to deny that it wasn't coming back, that I wasn't telling the truth or that he didn't know anything about it."

In waving off Brown's questions about Mena, Clinton had made another remark as well, added as what seemed both justification and warning. "And your hero Bush knows about it," he told Brown. "And your buddy Bush knows about it."

Brown was chilled. ''I'm not going to have anything else to do with it ... I'm out of it," he told Clinton. "Stick a fork in me, I'm done," he added, an adolescent phrase from their shared Arkansas boyhood. The governor had tried to calm him: "Settle down. That's no problem." But Brown turned away, hurried to his car, and drove off, leaving behind his once-promising career. "I got out of there, and from then it was, you know, not good."

The trooper immediately called the CIA to withdraw his application, albeit discreetly. “Just changed my mind," he recalled telling them. But he saw no recourse, no appeal to some higher level of government in a crime in which both the governor of the state and Washington were knowledgeable and thus complicit. "I mean if the governor knows about it ... and I work for the governor," he remembered thinking, "exactly who would 1 have gone to and told? I mean, the federal government knows that this guy is doing this ... I don't know what authority I would have gone to." More than a year later, as they were having drinks in Jonesboro, Brown would tell the commandant of the state police, Colonel Tommy Goodwin, but even then he acted out of a desire to confess his unwitting involvement rather than out of any expectation that Arkansas would move on the crimes. All the while, he was bothered by the role of his onetime hero at the mansion. "Number one," he would testify later of Bill Clinton, "he didn't deny it. I wanted him to tell me, oh, good gosh, that's terrible. We've got to report this. And I wanted him to deny knowing anything about it or to explain it away to me . . . they've got a big sting planned, and they're trying, you know, to make a case on such and such, but no. It was no surprise to him. He was surprised, I think -- this is what I think -- that Seal showed it to me. That's what I think to this day."

At the time, the bodyguard had been inconsolable. From the moment of the second flight on Christmas Eve, 1984, until L.D. left the governor's security detail in June 1985, his brother thought him at "a high level of despair." What the eager and patriotic young trooper had discovered about government, Dwayne Brown worried, had left him almost suicidal.

But perhaps what had most disturbed L. D. Brown was a direct reference by Clinton to a member of the governor's own inner circle. Clinton "throws up his hands" when Brown mentions the cocaine, as if a crucial, somehow rationalizing distinction should be made between the gunrunning and the drug trafficking.

"Oh, no," Clinton said, denying that the cocaine was related to the CIA Brown was hoping to join. "That's Lasater's deal."


The name Clinton threw out so effortlessly was no stranger to L. D. Brown or any of the other troopers assigned to security at the mansion. The governor was talking about millionaire bond broker Dan Lasater. The Arkansas public may have only known the name Lasater -- if they knew it at all -- from the Little Rock social pages as a donor of toys to poor or sick children and a supporter of Clinton campaigns. They might also have known him to be an occasional social friend of the governor and First Lady, to whom he generously loaned his private plane for Hillary's trips on behalf of charity.

But Brown and other insiders knew another Dan Lasater as the big contributor who was as intimate as any of Bill Clinton's associates or aides, coming and going at the mansion like family, "through Miss Liza's kitchen," seeing Clinton for closed-door meetings at his brokerage office several times a month whenever the governor was "in the neighborhood," hosting him at his notorious parties with silver platters of cocaine, flying the Clintons to the Kentucky Derby at a time he was handing $300,000 to another ambitious governor by way of a major drug dealer. Still largely unknown was that US attorneys in Arkansas and Nevada as well as the Kentucky State Police suspected Lasater had ties to organized crime; that he dealt cocaine in Arkansas and would be probed by federal undercover agents for major drug trafficking in New Mexico; that his bond brokerage had been disciplined repeatedly for shady dealings with subsequent suspicions of money laundering and was nonetheless the beneficiary of millions in state commissions under the Clinton regime.

In the winter of 1984-1985, however, not even the troopers at the mansion, who waved him through the back gate so often, yet knew that the FBI, the DEA, and others would have a thick criminal investigative file on "Lasater," if not his "deal" at Mena.

"Oh, absolutely. Dan Lasater," Brown would testify years later. "I had met him a lot, you know, through the governor."

Yet if Clinton's incriminating remark about Lasater was not entirely surprising, the invoking of George Bush is less readily explained. "Why would Clinton, when given evidence of criminal activities in his own state, have sought at once to make a bipartisan matter of it?" wondered one who heard Brown's story. Why would an ambitious Democrat, who was already contemplating a presidential run for 1988, have silently condoned the unlawful actions of a Republican administration? It was at a juncture where the corruptions of national security met the comparatively petty yet sometimes kindred corruptions of Arkansas, where in a sense "your hero Bush" and "Lasater's deal" were joined, and where the embroilments for Bill Clinton, because of his very ambition and own abuses of power, became largely inseparable.

To begin with, as Clinton's encouragement of the Brown CIA essay and other evidence would show, there had been no little sympathy and much accommodation in the governor's mansion in Little Rock for the primitive anti-Communism and interventionism that were Washington's ideological rationale for the Contra weapons flown out of Mena. For some, the pretext embraced even the return traffic in cocaine, ostensibly intended to provide money for still more illegal arms.

When other Democratic governors protested the use of their state reserve units for "training" in Central America in the mid-1980s -- missions that might be used to evade congressional restraints on backing the Contras -- Bill Clinton allowed the Arkansas National Guard to be sent to Honduras for annual maneuvers. The Reagan White House later pointed to Clinton's "patriotic" cooperation as it attacked other Democrats, including Governor Michael Dukakis of Massachusetts, the 1988 presidential nominee, for their "shameful refusal." As it happened, sources later revealed, some of the opponents' worst suspicions were justified: in a Pentagon subterfuge, the Arkansas Guard's arms were declared "excess," and -- with Clinton's knowledge and tacit approval -- units in Honduras were reportedly instructed to leave behind on the ground weapons to be passed illicitly to the Contras.

As if to underscore those events, in 1988, well after the Iran-Contra scandal had broken, Governor Clinton pointedly issued "Arkansas Traveler" honorifics to Adolpho and Mario Calero and to General John Singlaub, "three of the most notorious figures," as one journalist described them, "in the contra nexus."
That, too, was no coincidence. "Are you kidding?" exclaimed a former statehouse aide. "Traveler certificates may be cheap handouts, but they were always checked to avoid any political embarrassment to Clinton, like crooks or kooks, and those Contra ones got reviewed like any other and got express approval, like an order."

Clinton's readiness to support the Contras and a covert criminal operation in that guise was consistent with his acceptance of other controversial policies cloaked in "national security." He would welcome and even encourage in Arkansas -- notably at Pine Bluff and Pea Ridge -- military arsenals and storage of dangerous materials that other governors of both parties spurned. "These were dumping grounds nobody else wanted," said a former military officer, "and Bill Clinton could be counted on to take 'em." With the same alacrity he would welcome to the state companies like the Wackenhut Corporation -- well known for its links to right-wing elements from the 1950s and to the CIA -- to provide security guards for local industries, who would eventually be involved in violent clashes with striking workers in the mid-1980s.

Clinton supporters, some themselves perplexed by the ties, would explain them as a combination of conviction, boosterism, and politics. But some thought his undifferentiated zeal for many of the same forces he had apparently deplored in the Vietnam War was a compensation, a kind of political atonement, for his antiwar stance. "I think he was always trying to be the tough guy to live down any doubts about the draft or being a McGovernite, both in himself and the gallery he was always playing to," said an old friend.

Yet a few saw still darker compulsions as well. There was always the shadow of Leckford Road at Oxford, and Clinton's own alleged early ties to the CIA, and the history of friends like Strobe Talbott. How much had that connection -- young Bill Clinton the cooperative patriot to some, the treacherous informer to others -- been continued, either willingly or as subtle coercion?

What Clinton's national security patrons came to know about his personal excesses and abuses of power long before he became president would be interred in official secrecy. In any case, there were knowledgeable observers in both Little Rock and Washington who believed him substantially compromised by the mid-1980s, whatever his views on Marxism in Central America. "Let's just say this," said one intelligence officer. "Clinton was in no position to say no or blow the whistle on any op[eration] in his backyard."

In a civil trial in the mid-1990s growing out of the Mena cover-up, investigators found eyewitnesses who swore they recalled ranking CIA and other national security figures discreetly visiting Governor Clinton at the mansion during the height of the Mena operation. By the same account, in September 1991, on the eve of Clinton's announcement of his presidential candidacy, Hillary was said to have ordered that entry logs no longer be kept at the mansion. Then there was a similar action -- the origin of this order was not as clear -- to remove archival state logs recording visitors to the mansion by name and times of entry and exit during the Clintons' first term, 1979-80, and since their return to power in 1983, altogether more than a decade of state records.
Troopers and others familiar with them believed the logs contained evidence bearing on a number of indiscretions, and the motive for spiriting them away might have been avoidance of personal scandal. "I think she was worried about the girls mainly," said one who believed Hillary was behind the removal -- though there were also reports indicating that the logs would have shown frequent visits to the mansion by Hillary's own intimate, Vince Foster, during the governor's absences. In any event, against the larger backdrop of Mena and "national security," seizure of the logs would have the effect of ridding the candidate of potential questions far beyond adultery.

Hillary Rodham Clinton had also, as always, brought her own views and history to the concerns of Mena. Some remembered her as what one called "a closet Contra supporter" in the early to mid-1980s. She generally muted her opinions for the sake of their relations with congressional Democrats and others who opposed the interventions in Central America and who would be important financially or politically to their eventual presidential bid. "It wouldn't have been smart for him to take a high profile on that issue at sixes and sevens with most of his own party, and certainly not for her," said one woman familiar with the often bitter foreign policy politics of the time. Nonetheless, the First Lady quietly let what was described as her "self-conscious tough-mindedness" be known in Little Rock, where her allegiance discreetly aided Contra fund-raising and where, as elsewhere in the state, there was an ardent clutch of Contra backers.

Outside the state, on national boards and in other capacities, Hillary was circumspect as well, though noted in those settings, too, for quiet lobbying against people or programs in Central America or Washington inimical to the Contras or to the Reagan-CIA policies in general.
As late as 1987-88, amid some of the worst of the Iran-Contra revelations, colleagues heard her still opposing church groups and others devoted to social reform in Nicaragua and El Salvador but labeled leftist by the Republican White House. Like her husband's, of course, her more reactionary foreign policy views did not necessarily imply support for the covert and illegal CIA weapons shipments, much less for the drug trafficking or wider black market of the Southern Tier. But their furtive bias or expedient -- hers typically stronger than his -- obviously made it easier to accept the figment of "national security" used to dress the crimes.

There were business linkages as well that would prove questionable if later scrutinized by outsiders. At Rose, Hillary would join partner Webb Hubbell in representing a company called POM, Inc., Park On Meter, of which Hubbell's in-laws, the Wards, were owners. In the relentless incest of Little Rock, Hubbell's father-in-law, Seth Ward, was tied as well to Jim McDougal, Madison Guaranty, and the Castle Grande development, later found by federal investigators to be a "sham" in which Ward was a "straw buyer" -- and for which Hillary Clinton billed some sixty-eight hours of legal work, including more than a dozen telephone conversations with Seth Ward. Hubbell's own lawyering for his wife's family was thought later to have been part of a massive billing embezzlement he perpetrated on Rose as well as on the government -- a fraction of which Hubbell would plead guilty to in 1994. Yet Seth Ward was not simply a controversial client implicated in an alleged banking fraud; nor was POM merely a parking meter manufacturer linked to the Clintons and their associates.

Located in Russellville, not far from Mena, the corporation was the recipient of some of the most select classified Pentagon contracts, including, reportedly, for reentry nose cones for nuclear warheads and parts for rocket engines. A prosperous beneficiary of the military budget, POM was also one of the first local businesses to receive a loan from the Arkansas Development Finance Authority, the Clinton-initiated program of state-guaranteed bond capital ostensibly designed for struggling fledgling enterprises. At the close of 1985 the authority loaned the flourishing Ward company $2.75 million, with the documents signed by Hubbell as corporate counsel. Later published accounts would cite two separate sources inside the Seal-CIA network who would implicate POM in the Mena operation as a supplier or at least an eager would-be provider of equipment and Contra weaponry. The Wards would indignantly deny the allegations. In a memoir entitled Compromised, written with investigative reporter John Cummings, former Seal associate Terry Reed would further allege that he had understood from Seal that a Ward farm and ranch was one of the drop sites for cash from the Mena "green flights."
Still later, sworn testimony in a Reed civil suit growing out of the scandal would link Seth Ward to men alleged to be involved in a cover-up of Mena and the collusion of Arkansas officials.

How much the future First Lady knew about her client and friend Seth Ward, how much she knew of the company she and Hubbell represented, what she heard or discussed with her husband or others regarding Mena would never be clear.

For three years of their presidency, none of the official inquiries enveloping the Clintons would seem to look seriously at the far more ominous scandal in western Arkansas. Yet the surviving evidence of their links to the CIA drug smuggling was much the same as the evidence linking them to Whitewater and Madison. There was no single incident, remark, or tie but many, no startling circumstance or coincidence but a numbing accumulation. The Clintons' lines of direct or indirect knowledge and association had laced unmistakably through and around the crimes of Mena.


Danny Ray Lasater would signify their most telling relationship of all -- the man Bill Clinton mentioned on impulse when he assured his security guard, "That's Lasater's deal."

Three years older than Clinton, Lasater was born in remote White County, Arkansas, not far from Jim McDougal's hometown and only miles from Whitewater. As a boy he had moved to Kokomo, Indiana, and after high school worked as assistant manager and manager of a local McDonald's. He was not yet twenty, he later told the FBI, when he became partners with his father-in-law, a former sheriff, and with a Kokomo car dealer in a fast-food restaurant. In a meteoric rise that others would later find remarkable, he and his partners would open their own chain of Ponderosa steakhouses, branching out into various states with a succession of investors. With someone else's ample capital, he would at twenty-three become part owner of a chain, and at twenty-nine a multimillionaire. Neither Lasater nor Ponderosa was ever charged with wrongdoing. But his quick fortune -- made in a largely cash industry that federal and state law enforcement saw increasingly exploited by organized crime and characterized by what one US attorney called the "skim and scam" of the cash profits by managers -- attracted the attention of investigators in several states.

Early in the 1970s Lasater took his company public, sold his shares, and invested his millions in thoroughbreds -- another industry rife with allegations of penetration by organized crime, drug-money laundering, and other corruption. With farms in Kentucky and Florida, Lasater would attract the top breeders, and his horses would be among the leading money winners. Along the way he developed a close relationship with Kentucky's Democratic governor, John Y. Brown, and other related figures, including Brown's old friend and partner Jimmy Lambert, whose links to the mob and conviction on drug charges in the mid-1980s would shake Kentucky and help shatter Brown's own presidential plans. The Lambert ties placed Lasater himself under investigation by the Kentucky State Police for his own relationship to organized crime. It was also "Jimmy," as Lasater told the FBI after Lambert's indictment, who gave him his "first" cocaine around 1978 at Lambert's Cincinnati and Lexington nightclubs. But by then Dan Lasater had moved back to Arkansas, first trying a new restaurant, then a more profitable Little Rock bond brokerage -- and, not least, acquiring a close relationship with another ambitious governor.

In Little Rock he became part of the drug scene, sniffing cocaine with the Clintons' friend Barrett Hamilton, Jr., and others in the white heights and holding raucous parties at his impressive home or his Quapaw Towers apartment, which happened to be ten floors above that of a local television reporter named Gennifer Flowers. In partnership with a state legislator, Lasater's "bond daddy" brokerage made a million dollars in profits by 1982 but was already infamous in local investment circles for its flow of cocaine as well as its shady financial practices. Lasater himself commonly snorted the drug at the office. "Cocaine was so pervasive in the investment banking community," a Lasater broker was reported to have confessed to a local judge, "that he feared it would be hard to stay away from the drug if he remained."

Like Red Bone's commodity brokerage in Springdale, Lasater's company received professional censure after censure -- in 1982 from the National Association of Securities Dealers for excessive markups and unlicensed sales, in 1983 for buying and selling bonds for a savings and loan without authority of the thrift's board, in 1984 for making more unauthorized trades, and over a period of time for violating multiple securities rules and regulations. The state securities commissioner under Frank White's governorship sanctioned the firm for "cheating customers" in 1982.

By 1983 Lasater had personally given thousands and had held fundraisers producing tens of thousands more for Clinton's gubernatorial campaigns, most crucially the 1982 comeback. As those most familiar with the governor's routine well knew, however, Danny Ray Lasater was never merely another big donor to be paid special deference but rather an extraordinary intimate whom Clinton visited regularly at his brokerage and who came to the mansion whenever he pleased, entering by the back gate and walking through the kitchen.

Entering through the domain of the mansion's commanding black cook, Elizabeth Ashley, was a privilege reserved only for family and the most senior staff. In the mid-1980s Lasater enjoyed it as no one else outside that circle. It was no wonder, as Clinton's closest aides knew, that the governor had turned to Lasater to give Roger Clinton a job or that the millionaire had loaned the governor's addicted half brother money to pay off a drug debt during Roger's 1983-84 crisis.

Lasater was given to "drop-ins," as trooper bodyguard Barry Spivey put it, "just kind of off-the-cuff. Day and night, weekends, all day, he just came when he wanted to." Spivey, who served at the mansion from 1979 to 1984, remembered that throughout his tour, "Dan never was shown in through the front door." Another trooper recalled that, "there is [sic] not many people that just drive through the back gate and their driver pulls them up and they go in the back door. . . . He was a fixture." Among the many ironies of the troopers' waving him through the back gate was that Lasater's chauffeur was not simply a "driver" but a convicted murderer who carried a gun and was widely known to deal drugs on the side.

The governor and the bond dealer saw each other frequently, and with the same familiarity, at Lasater's brokerage, where Clinton would stop for unscheduled visits, telling his state trooper escort to take him to Lasater's office if they happened to be in the vicinity. "A lot of times he would just be in the area and he would say run by Dan's or run by Lassiter's [sic] for a minute," Spivey testified. "We very seldom were in the area when he had any time on his hands that he didn't run in." Clinton's state police drivers would circle the block or simply sit and let the limousine idle while the governor and Lasater "would be upstairs and behind closed doors or something," as one remembered.

When Bill Clinton told L.D. Brown that the Seal cocaine smuggling was "Lasater's deal," he was not talking about someone he met from time to time or knew only in a limited context, but rather about the most intimate of friends and associates.

Beyond frequent private meetings at the mansion and Lasater and Company, there were extensive social contacts as well. Other troopers remembered accompanying Clinton to Lasater's large homes or his downtown apartment, to his private box at Hot Springs's Oaklawn track, where Lasater courted the governor's mother as well, or aboard his Lear jet. Some escorts, like Brown, were concerned about the cocaine spread so lavishly at Lasater's parties, extraordinary even amid what Brown called Little Rock's "real robust party atmosphere." At Lasater's apartment, one witness told the FBI in a handwritten statement, cocaine was given to high school girls in a special "graduation party," and on another occasion Lasater threw a party for a woman friend and impressed everyone with his extravagance by writing "Happy Birthday" in cocaine on the glass coffee table. At one typical gathering Brown tried to usher the governor out to avoid a scandal, though it was clear that Clinton knew about the rampant drugs. "There was a silver platter of what I thought was cocaine and I got the governor out of there. I said we need to go. Let's get out of here," the state trooper remembered. "He had to have seen it. There were a lot of people there, a lot of girls there. He had to have seen it. I mean, it was obvious. . . . He said something to Lasater and I got him out of there."

The millionaire would lend his plane to Clinton for campaign trips and, in 1985, for flying celebrities to a charity function organized by Hillary. In May 1983, less than five months after Clinton's triumphal return to the statehouse, trooper Barry Spivey would accompany Lasater and the Clintons on a flight to attend the Kentucky Derby, where they met the host governor, John Y. Brown, who was a friend of Clinton as well as Lasater but whose longtime positioning for the presidency was already beginning to be clouded by questionable associations. With Roger Clinton "running bets for Dan and Bill," as Spivey recalled, all of them made money on the winner, Sunny's Halo. But behind the gathering of smiling political notables was another reality as well.

Law enforcement agents would remember that 1983 Derby as one of the most heavily surveilled sporting events in history. State and federal plainclothes agents rubbed elbows with the celebrities and the crowd at Churchill Downs as part of a still incipient but widening probe of organized crime, money laundering, and other corruption in Kentucky and surrounding states. Lasater was among those being watched, though the FBI and other agents would not learn until later that Lasater had given a paper bag containing $300,000 in cash to Governor Brown by way of Jimmy Lambert. The Kentucky governor had asked Lasater for a million dollars, a Lasater partner told the FBI, but the broker had decided to give "only" $300,000. "I just took care of John Y's money problems," an associate recalled Lasater's telling him afterward.

Questioned years later under oath about the cash, trooper Spivey could not remember any "money in a paper bag" aboard Lasater's jet as they flew the Clintons to the Derby. But FBI documents would show that the passing of the cash had happened very near the time of that flight, if not on the trip itself. In any case, it was not long afterward, Arkansas troopers remembered, that Hillary began to hector her husband about his contact with Lasater. The First Lady habitually called the state police security unit to keep tabs on her chronically wayward husband, and troopers soon learned to put her off not only when the governor was occupied with a woman but when he was with Danny Ray Lasater as well.

But whatever her concern with appearances, Lasater enjoyed an impressive and ever-growing share of state business. Listed to underwrite state housing bonds in 1983, soon after Clinton was sworn in and only a year after the brokerage was formally established, Lasater and Company began to rake in management fees and still more in sales commissions. Despite being "the new boy," as a US attorney called him, Lasater suddenly ranked fifth in the established and competitive field of state housing bond underwriters, ahead of major concerns and longtime Clinton supporters such as Goldman, Sachs and Merrill Lynch. When, at Clinton's initiative, the Arkansas Development Finance Authority took over most of the lucrative state bond offerings in 1985 -- under legislation drafted in part by Webb Hubbell and with the governor and his political appointees to the ADFA board personally approving each issue -- Lasater and Company would continue to be a major beneficiary of the ubiquitous fees and commissions spread among Little Rock investment and law firms. In the brief period prior to the fall of 1986, ADFA would award it fourteen issues worth more than $600 million, and brokerage fees to Dan Lasater of $1.6 million.

At the same time, almost every Lasater public appearance in the mid-1980s would have its dark shadow. In Little Rock society the broker was a showy philanthropist for children's causes, but in private he was a relentless purveyor of cocaine.

Already, people associated with the case were beginning to die in what amounted to a reign of terror among young people in Alexander, Arkansas.

Keith Coney, who told his mother he knew too much about the railway deaths and feared for his life, died in a motorcycle accident after a high-speed chase. Coney had been with the two boys a few hours before their deaths. Linda Ives now believes that they met up again at the tracks. "I'm sure now that there were three of them out there, at least, and he was one who got away," she said. [18]

Boonie Bearden, a friend of the boys, disappeared. His body was never found.

Jeff Rhodes, another friend, was killed with a gunshot to the head in April 1989.

And on it went. The killing fields.

There had always been rumors that the railway tracks were a drop-zone for drugs. It was assumed the deliveries were coming by train. But in June 1990 the undercover officers of Jean Duffey's Seventh Judicial District task force stumbled on evidence of a much bigger trafficking operation involving aerial drops. [19]

Aircraft with no lights were observed flying very low over the tracks at night. One informant staked out the area and observed a twin engine plane coming in at approximately 3:00 AM at least once a week. "It would fly in extremely low over the field, reduce speed, before throttling up again. By the field is a children's colony [20] that is lit up each night like a 'Christmas Tree.' That was the 'beacon.'" [21]

-- The Secret Life of Bill Clinton: The Unreported Stories, by Ambrose Evans-Pritchard


[Baby Born Addicted to Crack] DA-DA!
[Da-Da] CIA

[Both Hillary and Bill Clinton are fond of noting Hillary’s work with Marian Wright Edelman for the Children’s Defense Fund. Bill Clinton mentioned her as he challenged the protesters. However, Edelman thought the welfare reform legislation was a “moment of shame,” and her husband, Peter Edelman, resigned from the Clinton administration in protest against the bill.

As Peter Edelman described in an essay for The Atlantic in 1997, there was an effort to make cuts to balance the budget, but “the only deep, multi-year budget cuts” enacted were cuts affecting low-income Americans. A Department of Health and Human Services study found 2.6 million people, including 1.1 million children, would move into poverty. Eleven million families would lose income.

-- Bill Clinton Says Black Lives Matter Protesters Defend Gang Leaders, Crack Dealers, by Kevin Gosztola

In 1984 he purchased the fashionable Angel Fire ski resort in northern New Mexico for nearly $20 million and was given free rein to use Bill Clinton's name commercially to help promote the isolated development in the mountains east of Taos. Undercover law enforcement agents later found the resort a center for drug running, what a US Customs investigative report called "a large controlled-substance smuggling operation and large-scale money-laundering activity." While Lasater held "Arkansas Week" at the resort with Governor Clinton's endorsement and entertained politicians from Santa Fe as well as Little Rock, local New Mexico sheriffs and district attorneys were hearing reports from Angel Fire reminiscent of Mena -- strange nighttime traffic, sightings of parachute drops, even hikers' accounts of a "big black military-type cargo plane" seeming to come out of nowhere and swooping low and almost silently over a deserted mountain meadow near the remote ski area.

Over the same period, witnesses told investigators, Lasater was bragging about fixing horse races, "putting one in the boot," as he described it to an employee. He was also said to pay frequent visits to Las Vegas, where he allegedly laundered cash in the time-honored manner of the old mob-dominated casinos, losing money, according to an associate, and then winning it back, plus some.
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