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THE HOUSTON FOUR joined early in the lobbying frenzy. They didn't need to stop the Bermuda loophole from being closed; it was to their advantage to know that it would be shut—eventually. They simply needed to make sure the cutoff date was changed so that their tax gains would be grandfathered in. For that they needed to get the ear of the House leadership—particularly Majority Leader DeLay and Chairman Thomas.
The four had the advantage of being longtime contributors to Republican campaign chests, with Cooper Industries leading the pack with nearly $200,000 in contributions to House Republicans in the 2004 campaign cycle. To push their agenda, the firms signed up a former congressman and more than a half-dozen high-profile former Republican staffers. Noble Corporation and Weatherford International joined forces to retain Bill Archer, the retired representative from Houston who had run Ways and Means until 2001, when Thomas took over. They also bought the services of Archer's former chief of staff, Don Carlson. Cooper and Nabors teamed up to hire an all-star cast that included the former director of the Joint Committee on Taxation, as well as both a former chief of staff and a special counsel to that tax committee. In all, the four companies spent more than $2 million on lobbyists for the single issue.
They got what they paid for. In March 2003, DeLay himself intervened on their behalf. At the time, the House was considering an unrelated bill freighted down with tax proposals—including a measure to close the Bermuda loophole—that would eventually find their way into the American Jobs Creation Act. At 8:30 p.m. on March 5—the night before the House was scheduled to vote on this bill—GOP leaders called an "emergency meeting" of the Rules Committee. There, according to the Houston Chronicle, DeLay introduced a new proposal that would postpone closing the Bermuda loophole by exactly one year.
While Republican infighting doomed the bill—it never came up for a vote—DeLay's backroom maneuver permanently altered the House debate over the Bermuda loophole. When the final versions of the American Jobs Creation Act passed in the House and Senate, the Senate stuck to Grassley's original Bermuda deadline. The House favored DeLay's—which, in turn, favored the Houston Four.
The task of reconciling the two bills fell to Chairman Thomas. Although he had previously stood shoulder to shoulder with Grassley, he did not cross DeLay. The later cutoff date prevailed.
All that was left was grandstanding. Grassley made one final protest. "There were many companies," he complained, "that defied our warnings." He then addressed Thomas directly: "The problem I have with your [bill], Mr. Chairman, is that these companies get off scot-free."
Rep. Sandy Levin, a Democrat from Michigan, asked a congressional accountant to read the names of all the companies that would benefit from delaying the loophole closure by one year. There were exactly four: Noble. Weatherford. Cooper. Nabors.
Three weeks later, somewhere in the airspace over Ohio, the tax break for the Houston Four—along with hundreds of other corporate considerations crafted by lawyers and tax accountants—became law when President Bush signed the $137 billion bill. Or, more accurately, when he stuck you with it.
Michael Scherer is Mother Jones' Washington correspondent.
Illustration: Michael Llewellyn
