Loan Officer for the Corporate Welfare State
News: Will the tobacco giants bail out Newt, so Newt can return the favor?
April 3, 1997
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"We now have the chief lobbyists for Big Tobacco financing the payoff of the Speaker's fine for lying to the Congress."-- Rep. George Miller (D-Calif.) on the floor of the House of Representatives, April 17, 1997
"It does have a certain aroma to it. It might be cigarette smoke you're smelling, but it might be something more putrid."-- Richard Kluger, Pulitzer Prize-winning author of Ashes to Ashes: America's Hundred-Year Cigarette War, the Public Heath, and the Unabashed Triumph of Philip Morris
Newt Gingrich claims he took the moral high ground in accepting Bob Dole's $300,000 bailout -- but is the generous loan really a bribe from Big Tobacco?
For starters, there are troubling connections between the loan offer and Dole's new employer, the heavy-hitting law firm Verner, Liipfert, Bernhard, McPherson & Hand. The firm announced April 9 that it had hired Dole as "special counsel"; Congress Daily reports that the firm also extended to the former Senate majority leader a signing bonus close to $300,000. Six days later, Dole proposed the loan on the speaker's Capitol balcony.
Verner, Liipfert lobbies for numerous industries that have business before Gingrich's Congress, including 90 companies in the Fortune 500. It posted a 1996 lobbying income of $6.8 million, and the firm's fees may be even heftier this year: In February, five tobacco industry giants -- Philip Morris, RJR Nabisco, Brown & Williamson, U.S. Tobacco, and Loews Corp. -- announced they had retained the Washington law firm.
A traditionally Democratic firm, Verner, Liipfert employs former Senate Majority Leader George Mitchell, former Texas Gov. Ann Richards, former Treasury Secretary Lloyd Bentsen, and other powerful Dems with clout in the Clinton administration; Mitchell has already negotiated with the states on behalf of tobacco.
The firm's hiring of Bob Dole, a longtime defender of tobacco interests, suggests the obvious: Big Tobacco needs to buy clout in the Republican Congress as well.
Why? At the same time Verner, Liipfert hired Dole, its tobacco clients entered into unprecedented legal negotiations with their opponents: Currently, 23 state attorneys general are suing the tobacco companies for reimbursement for Medicaid programs that have spent billions treating smoking-related illnesses. That's not to mention the numerous class-action suits brought by smokers, and individual suits on behalf of injured family members. Tobacco's once-impermeable defense began to crumble last month when the Liggett Group, the smallest major U.S. tobacco firm, admitted that cigarettes are addictive, cause cancer, and are being marketed to children.
Big Tobacco is now discussing sweeping concessions: the regulation of nicotine as a drug by the Food and Drug Administration; the banning of some tobacco ads, all billboards, and trademark characters like Joe Camel and the Marlboro Man; and the payment of more than $250 billion over the next 25 years to compensate states and individuals for the costs of tobacco-related illnesses.
In return, the industry wants blanket immunity from future lawsuits.
That's where Bob Dole and Newt Gingrich come in: Congress must pass special legislation to grant the tobacco companies the immunity they seek. To that end, Big Tobacco hired Verner, Liipfert, which in turn bought the former Senate majority leader, who in turn made the sweetheart loan to the speaker of the House. It is a thankful Newt who could finally push tobacco's agenda through his Congress.
After all, whatever closed-door settlement is reached, Capitol Hill is where the final tobacco deal will play out. "To expect Congress to take legislation written by someone else and not expect them to change a comma," says Stanton Glantz, author of The Cigarette Papers, "is to violate human nature."
Aside from the tobacco taint, the loan raises other questions of impropriety. In a letter released yesterday by the Congressional Accountability Project, its director Gary Ruskin argues that the loan violates House rules (see "Not in This House") because of its generous terms. After all, Newt doesn't have to pay one cent to Dole until 2005, three years after he must retire as speaker. Once he leaves the House, he's free to nab money from wherever he wants, including leftover campaign and legal defense funds -- the politically unpopular pots he's keeping his hands out of now. Dole may even be allowed to forgive the loan at that point.
"The loan shouldn't be allowed to stand," says Ruskin. "Period."
The chairman of the House Ethics Committee, James Hansen (R-Utah), has to approve Newt's loan, and he may well deny Newt a special exemption. Hansen, who represents a largely Mormon constituency, might find it politically -- and ethically -- sound to avoid any whiff of tobacco money, and refuse the proposed arrangement.
In the end, Hansen must decide the question that so many are asking: Is Newt really being punished by paying his fine with the suspicious loan from Dole? "If the purpose of the punishment is to make Gingrich suffer for his deeds," wonders Ruskin, "what kind of punishment is it if it causes him no pain at all?"
