Wednesday, 16 December 2015 12:07


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Allan C. Brownfeld

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby (Council for Inter-American Security). He has been a staff aide to a U.S. vice president, members of Congress, and the U.S. Senate Internal Security Subcommittee. He is associate editor of The Lincoln Review, and a contributing editor to Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

What Dennis Hastert's Case Tells Us about Washington's Institutional Corruption

We now know that J. Dennis Hastert, who served for eight years as speaker of the House of Representatives, was paying a former student hundreds of thousands of dollars to not say publicly that Hastert had sexually abused him decades ago. According to The New York Times this information became public from "two people briefed on the evidence in an F.B.I. Investigation."

Federal prosecutors announced the indictment of Hastert late in May on allegations that he made cash withdrawals totaling $1.7 million, to evade detection by banks. The federal authorities also charged him with lying to them about the purpose of the withdrawals.

This is a personal tragedy for Hastert and his family. But it also paints a vivid picture of institutional corruption in Washington, how men and women of modest means are elected to public office and, before long, become very wealthy, using their public positions to do so.

How, we may ask, did a former high school teacher who held elective office from 1981 to 2007 leave Congress with a fortune estimated at $4 million to $17 million? When Hastert entered Congress in 1987 his net worth was reported to be at most $270,000. The record shows that he was the beneficiary of lucrative land deals while in Congress and since leaving office he has earned more than $2 million a year as a lobbyist - influencing his former colleagues.

Writing in National Review, John Fund recalls that:

Denny Hastert used to visit The Wall Street Journal where I worked when he was speaker. He was a bland, utterly conventional supporter of the status quo; his idea of reform was to squelch anyone who disturbed Congress' usual way of doing business. I saw him become passionate only once, when he defended earmarks - the special projects such as Alaska's "Bridge to Nowhere" - that members dropped at the last minute into conference reports, deliberately giving no time to debate or amend them. Earmarks reached the staggering level of 15,000 in 2005, and their stench helped cost the GOP control of Congress next year. But Hastert was unbowed. "Who knows best where to put a bridge or a highway or a red light in his district?" I recall him bellowing. I responded that the Illinois Department of Transportation came to mind, and then we agreed to disagree.

The Sunlight Foundation found that Hastert had used a secret trust to join others and invest in farmland near the proposed route of a new road called the Prairie Parkway. He then helped secure a $207 million earmark for the road. The land, approximately 138 acres, was bought for about $2.1 million in 2004 and later sold for almost $5 million, a profit of 140 percent. Local land records and Congressional disclosure forms never identified Hastert as the co-owner of any of the land in the trust. Hastert turned a $1.3 million investment (his portion of the land holdings) into a $1.8 million profit in less than two years.

Once he left Congress, Hastert joined the professional services firm of Dickstein Shapiro, working all sides of various issues and glad-handing his former colleagues in Congress often for controversial clients. From 2011 to 2014, Lorillard Tobacco paid Dickstein Shapiro nearly $8 million to lobby for the benefit of candy-flavored tobacco and electronic cigarettes, and Hastert was the most prominent member of the lobbying team.

Hastert also pressed lawmakers on climate change for Peabody Energy, the largest private sector coal company in the world, in 2013 and 2014 - then switched sides this year and pushed for requiring renewable fuel production for Fuels America. Lawmakers and fellow lobbyists compared Hastert's qualities as a lobbyist to those he displayed as speaker: affable and low-key, but attractive to clients. In the post-earmark world, notes Rep. Tom Cole (R-OK), a senior member of the House Appropriations Committee, Hastert pressed for policy "riders" in appropriations bills and programmatic changes that helped his client's interests.

"As you'd expect, he was very effective," said Cole, "Number one, he knew the process extremely well, and he knew all the players. When the former speaker calls no member rejects it." Former Rep. Jack Kingston, a Republican who led the Appropriations Committee, says, "Yeah, it's possible, he could amass in a 10-year period a nest egg of $5 to $10 million. I'm not saying it's easy, but it's not that hard."

Sadly, Dennis Hastert's use of public office as a path to wealth is hardly unique. National Review reports that:

In 2004, Sen. Harry Reid (D-NV) made $700,000 off a land deal that was, to say the least, unorthodox. It started in 1998 when he bought a parcel of land with attorney Jay Brown, a close friend whose name has surfaced multiple times in organized crime investigations. Reid transferred his portion of the property to Patrick Lane Industrial Center L.L.C., a holding company Brown controlled. But Reid kept putting the property on his financial disclosures and when the company sold it in 2009, he profited from the deal - a deal on land he didn't technically own and that nearly tripled in value in three years.

In addition, according to Judicial Watch, Reid, the Democratic leader of the Senate, sponsored at least $47 million in earmarks that directly benefited organizations with close ties to his son Key Reid.

In 2009, then-House Speaker Nancy Pelosi and her husband, Paul, made the first of three purchases of Visa stock - Visa was holding an initial public offering, among the most lucrative ever. The Pelosis were granted early access to the IPO as "special customers" who received their shares at the opening price, $44. They turned a 50 percent profit in just two days. Starting March 18, the speaker and her husband made the first of three Visa stock buys, totaling between $1 million and $5 million. Peter Schweitzer, a scholar at the Hoover Institution, notes that, "Mere mortals would have to wait until March 19, when the stock would be publicly traded to get their shares." He points out that the Pelosis got their stocks just two weeks after legislation was introduced in the House that would have allowed merchants to negotiate lower interchange fees with credit card companies. Visa's general counsel described it as a "bad bill." The speaker squelched it and kept further action bottled up for more than two years. During the time period, the value of her Visa stock jumped more than 200 percent while the stock market as a whole dropped 15 percent.

Another former House speaker, Newt Gingrich, served as a paid consultant for the drug industry's lobby group, and, according to conservative columnist Timothy Carney:

Gingrich worked hard to persuade Republican congressmen to vote for the Medicare drug subsidy that the industry favored. . . . Newt Gingrich spent the last decade being paid by big business to convince conservatives to support big government policies that would profit his clients.

The role of former members of Congress reaping financial gain by lobbying their former colleagues, as Dennis Hastert did, is increasingly widespread. Former Rep. Billy Tauzin of Louisiana, originally elected as a Democrat but later switching to the Republican Party, left his post as chairman of the powerful House Energy and Commerce Committee to become a lobbyist for the drug industry. In 2009, he reportedly earned $4.48 million as the head of the Pharma drug industry lobby, a huge increase from his congressional salary.

The idea of politicians enriching themselves as a result of their holding political office is something new. Bill and Hillary Clinton have amassed millions from various special interest groups - and foreign interests - hoping to influence a future president. Bill Clinton reported being paid more than $104 million from 2001 through 2012 just for speeches. As recently as the presidencies of Harry Truman and Dwight Eisenhower it was considered unthinkable to trade upon having held high office to enrich oneself. Until 1958, former presidents did not even receive a pension. Congress finally awarded Harry Truman and Herbert Hoover pensions and funds for staff. Washington, Jefferson, Adams, Madison, Monroe and other early leaders lost a great deal of money while serving in office. George Washington, it is reported, had to borrow money to make the trip from Mt. Vernon to New York for his own inauguration. Now, public office has, for many, become a path to riches.

A recent Rasmussen Reports poll finds that 82 percent of the American people now believe that we have a professional political class that is more focused on preserving its power and privilege than on conducting the people's business. Dennis Hastert has become the new face of this phenomenon, along with the Clintons, Nancy Pelosi, Newt Gingrich and a host of others. Whether public dismay with our current politics can be transformed into an effective effort to alter this behavior remains to be seen. Too many in Washington have a vested interest in today's corrupt system as it exists. How to change the incentive structure for those in political life is our real challenge.

Remembering the Real Heroism of Robert E. Lee at Appomattox

The surrender of Confederate Gen. Robert E. Lee to Union Lt. Gen. Ulysses S. Grant 150 years ago effectively ended the Civil War. What few remember today is the real heroism of Robert E. Lee. By surrendering, he was violating the orders given by Jefferson Davis, the elected leader of the Confederacy.

The story of April 1865 is not just one of decisions made, but also of decisions rejected. Lee's rejection of continuing the war as a guerrilla battle, the preference of Jefferson Davis, and Grant's choice to be magnanimous at Appomattox, cannot be overestimated in importance.

With the fall of Richmond, Jefferson Davis and the Confederate government were on the run. Davis, writes Professor Jay Winik of the University of Maryland in his important book April 1865: The Month That Saved America:

. . . was thinking about such things as a war of extermination . . . a national war that ruins the enemy. In short, guerrilla resistance. . . . The day after Richmond fell, Davis had called on the Confederacy to shift from a conventional war to a dynamic guerrilla war of attrition, designed to wear down the North and force it to conclude that keeping the South in the Union would not be worth the interminable pain and ongoing sacrifice.

Davis declared that:

We have now entered upon a new phase of a struggle the memory of which is to endure for the ages. Relieved from the necessity of guarding cities and particular points, important but not vital to our defense, with an army free to move from point to point and strike in detail detachments and garrisons of the enemy, operating on the interior of our own country, where supplies are more accessible, and where the foe will be far removed from his own base and cut off from all succor in case of reverse, nothing is now needed to render our triumph certain but the exhibition of our own unquenchable resolve. Let us but will it, and we are free.

But Robert E. Lee knew the war was over. Grant was magnanimous in victory and, Winik points out:

. . . was acutely aware that on this day, what had occurred was the surrender of one army to another - not of one government to another. The war was very much on. There were a number of potentially troubling rebel commanders in the field. And there were still some 175,000 other Confederates under arms elsewhere; one-half in scattered garrisons and the rest in three remaining rebel armies. What mattered now was laying the groundwork for persuading Lee's fellow armies to join in his surrender - and also for reunion, the urgent matter of making the nation whole again. Thus, it should be no great surprise that there was a curious restraint in Grant's tepid victory message passed on to Washington.

Appomattox was not preordained. "If anything," notes Winik:

. . . retribution had been the larger and longer precedent. So, if these moments teemed with hope - and they did - it was largely due to two men who rose to the occasion, to Grant's and Lee's respective actions: one general, magnanimous in victory, the other gracious and equally dignified in defeat, the two of them, for their own reasons and in their own ways, fervently interested in beginning the process to bind up the wounds of the last four years. . . . Above all, this surrender defied millenniums of tradition in which rebellions typically ended in yet greater shedding of blood. . . . One need only recall the harsh suppression of the peasants' revolt in Germany in the 16th century, or the ravages of Alva during the Dutch rebellion, or the terrible punishments inflicted on the Irish by Cromwell and then on the Scots after Culloden, or the bloodstained vengeance executed during the Napoleonic restoration, or the horrible retaliation imposed during the futile Chinese rebellion in the mid-19th century.

Lee was not alone in rejecting the idea of guerrilla war. General Joe Johnston, offered generous terms of surrender by Union General William Tecumseh Sherman, cabled the Confederate government for instructions. He was ordered to fight on. Johnston was told to take as many of his men as possible and fall back to Georgia. Johnston refused and decided to surrender. Later, he acknowledged that he directly "disobeyed" his instructions. But Johnston, who wired back to Davis that such a plan of retreat was "impracticable," saw no other way. In his view, it would be "the greatest of crimes for us to attempt to continue the war." To fight further, he declared, would only "spread ruin all over the south." By brazenly violating the chain of command, he helped to save many lives and to heal the country.

In early May, when the Mississippi governor and the former governor of Tennessee rode out and urged General Nathan Bedford Forrest to retreat with his cavalry to continue a guerrilla war, Forrest responded: "Any man who is in favor of further prosecution of this war is a fit subject for a lunatic asylum." The attempt to establish a "separate and independent confederacy had failed," Forrest noted, and they should meet their responsibilities "like men." He added: "Reason dictates and humanity demands that no more blood be shed."

In words that echo the sentiments of Robert E. Lee before him, in places almost word for word, Forrest added:

I have never on the field of battle sent you where I was unwilling to go myself, nor would I advise you to a course which I felt myself unwilling to pursue. You have been good soldiers, you can be good citizens. Obey the laws, preserve your honor, and the government to which you have surrendered can afford to be and will be magnanimous.

"April 1865," writes Professor Winik:

. . . was incontestably one of America's finest hours: for it was not the deranged spirit of an assassin that defined the country at war's end, but the conciliatory spirit of leaders who led as much in peace as in war, warriors and politicians who, by their example, their exhortation, their deeds, overcame their personal rancor, their heartache, and spoke as citizens of not two lands, but one, thereby bringing the country together. True, much hard work remained. But much, too, had already been accomplished.

If it were not for Robert E. Lee's decision not to blindly follow irrational instructions to keep fighting a guerrilla war indefinitely, the surrender at Appomattox never would have taken place and our nation's history might have been far different. Fortunately, our American tradition has never embraced the notion of blindly following orders, particularly if they involved illegal or immoral acts. No American could ever escape responsibility for such acts by saying, "I was simply following orders."

The Civil War era poet James Russell Lowell makes this point:

"Taint your eppyletts an' feathers,
Make the thing a grain more right;
"Taint afollerin' your bell-wethers
Will excuse ye in His sight;
Ef you take a sword an' dror it,
An' go stick a feller thru,
Guv'ment aint to answer for it,
God'll send the bill to you.

Without Robert E. Lee's decision to surrender - against his instructions - we would not be celebrating the 150th anniversary of Appomattox at the present time. This heroic act has not been widely recognized. It deserves to be.

The Proposal to Remove Alexander Hamilton from the $10 Bill Is an Assault on American History

Secretary of the Treasury Jack Lew announced in mid-June that the Treasury Department's 2020 redesign of the $10 bill will feature a female portrait. While including women on our currency is long overdue, and a welcome step, removing Alexander Hamilton makes no sense. In fact, it is an assault upon American history itself.

Alexander Hamilton is a towering figure. His story is an inspiring one. The illegitimate son of a British officer who emigrated from the West Indies, Hamilton rose by the sheer force of intellect to shape our entire nation. He died at the age of 50 in 1804. In those short fifty years, his achievements were extraordinary.

Three years before he died he founded The New York Evening Post, which is still being published. George Washington promoted him from an artillery captain to a colonel on his staff during the Revolutionary War. In 1785, Hamilton helped found the New York Manumission Society to work for an end to slavery in that state. Emancipation was not achieved in New York until 1827, long after Hamilton's death.

In 1787, Hamilton, along with collaborators John Jay and James Madison, produced a series of 85 opinion pieces to support the ratification of the Constitution, what we now know as The Federalist Papers. Hamilton wrote 51 of the 85 essays himself, using the pseudonym Publius. When we speak of an American political philosophy, the starting point is The Federalist Papers.

That government should be clearly limited and that power is a corrupting force was the essential perception of the framers of the Constitution. The Founding Fathers were not utopians. They understood man's nature. They attempted to form a government that was consistent with, not contrary to, that nature. Hamilton pointed out that:

Here we have seen enough of the fallacy and extravagance of those idle theories which have amused us with promises of an exemption from the imperfections, weaknesses, and evils incident to society in every shape. Is it not time to awake from the deceitful dream of a golden age, and to adopt as a practical maxim for the direction of our political conduct that we, as well as the other inhabitants of the globe, are yet remote from the happy empire of perfect wisdom and perfect virtue?

As our first Treasury Secretary under George Washington, Hamilton set the nation on a path of financial stability. He had the new federal government assume the debts of the states along with its own. He also declared that all holders of U.S. debt would be paid in a non-discriminating manner. Many were opposed to Hamilton's plans, arguing the assumption of state debts rewarded those states which had been lax in meeting their responsibilities and that a policy of non-discrimination in paying holders of U.S. debt rewarded speculators. In the end, Hamilton prevailed.

Hamilton also established a central bank - the Bank of the United States. This, again, was highly controversial. It would also be a private bank, selling stock and making loans. His collaborator on The Federalist Papers, James Madison, thought the bank was illegal, since there was no mention of a bank in the Constitution. Hamilton responded that a bank was necessary to fulfill a function the Constitution did mention, borrowing money on the credit of the United States. This was, Hamilton argued, an implied power. George Washington and the Congress agreed.

The response to the idea of removing Hamilton from the $10 bill has been uniformly negative from observers of all points of view. Former Federal Reserve Chairman Ben Bernanke said he was "appalled" by the idea of Hamilton's removal. He said:

Replace Andrew Jackson, a man of many unattractive qualities, and a poor president, on the $20 bill. Given his views on central banking, Jackson would probably be fine with having his image dropped from a Federal Reserve note. Another, less attractive possibility, is to circulate two versions of the $10 bill, one of which continues to feature Hamilton. . . . The importance of his achievement can be judged by the problems that the combination of uncoordinated national fiscal policies and a single currency has caused the Eurozone in recent years.

Ron Chernow, the author of a highly regarded biography, Alexander Hamilton (2004), laments that:

There is something sad and shockingly misguided in the spectacle of Treasury Secretary Jack Lew acting to belittle the significance of the foremost Treasury Secretary in U.S. history. . . . Hamilton was undeniably the most influential person in our history who never attained the presidency. . . . Drawing on a blank slate, Hamilton arose as the visionary architect of the executive branch, forming from scratch the first fiscal, monetary, tax and accounting systems. He assembled the Coast Guard, the customs service, and the Bank of the United States. . . . He took a country bankrupted by Revolutionary War debt and restored American credit.

Chernow declares:

Yes, by all means let us have a debate about the political figures on our currency, and, yes, let us now praise famous women. But why on earth should we start the debate by singling out and punishing Alexander Hamilton, who did so much to invent our country.

Alexander Hamilton believed that genuine freedom could only be found in a society which guaranteed economic freedom. In his Second Treatise John Locke, the philosopher who most significantly influenced the thinking of Hamilton and the other Founding Fathers, stated that:

The great and chief end . . . of man's uniting into commonwealths and putting themselves under government is the preservation of their property. . . . Every man has a property in his own person. This nobody has any right to but himself. The labor of his body and the work of his hands, we may say, are properly his. Whatsoever, then, he removed out of the state that nature hath provided and left it in, he hath mixed his labor with it, and joined to it something that is his own, and thereby makes it his property.

Those who advocate an "equal" distribution of property claim that, in doing so, they are simply applying the philosophy of the Founding Fathers to matters of economic concern. Nothing could be further from the truth.

In The Federalist Papers, it is written that:

The diversity in the faculties of men, from which all rights of property originate, is not less an insuperable obstacle to a uniformity of interest. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results.

Writing in The New York Times, Steven Rattner notes that:

The various women who've been put forward for this pioneering role - including Susan B. Anthony (a second try after her dollar coin flopped twice), Harriet Tubman and Eleanor Roosevelt - are all outstanding individuals worthy of recognition. Just don't push Alexander Hamilton aside to make room.

Writing in The Washington Post, Steven Mufson charges that, "By pushing aside Alexander Hamilton . . . the Obama administration has committed a grave historical injustice."

Jack Lew's assault on U.S. history has almost no defenders or supporters. Removing Alexander Hamilton from the $10 bill is clearly a bad idea. What, we must wonder, was Mr. Lew thinking when he came up with this proposal? *

Read 4372 times Last modified on Wednesday, 16 December 2015 18:07
Allan C. Brownfeld

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby(Council for Inter-American Security). He has been a staff aide to a U.S. vice president, members of Congress, and the U.S. Senate Internal Security Subcommittee. He is associate editor of The Lincoln Review, and a contributing editor to Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

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