by Ira Shapiro
To be sure, the White House had taken some losses. The Senate Republicans had won a significant victory by blocking legislation expanding the rights of unions to picket at construction sites. The several-year effort to create a consumer protection agency went down in flames, adopted in neither house. The Senate Republicans had also successfully filibustered Carter’s legislation for public financing of elections, after Howard Baker had made an extraordinary plea for party unity against a “lousy bill” aimed at helping Democrats win elections. Still, the overall record was positive, and the trend was encouraging. Tip O’Neill, who had complained early on that “Carter thought Congress was like the red necks in the Georgia legislature,” was now more optimistic. “He may not be able to balance the budget,” O’Neill said, “but he will have a stable government.”
The Speaker had spoken too soon. Ironically, and painfully, the Senate committee that most respected and admired Jimmy Carter would play a central role in an enormous setback for the Carter presidency.
THE GOVERNMENT OPERATIONS COMMITTEE had a long history of high-profile investigations. These dated back to the 1950’s when Senator John McClellan, an Arkansas Democrat, and his chief counsel, young Robert Kennedy, had investigated Jimmy Hoffa and racketeering in labor unions. However, Byrd and Baker’s committee reorganization had given “gov ops” new jurisdiction over postal and civil service issues, and a new name—“Governmental Affairs.” Along with its mandate to investigate and provide oversight, Governmental Affairs now had broad legislative jurisdiction over the operations of the federal government: its organization and reorganization, management and mismanagement, ethics and lack of ethics—all issues that Jimmy Carter cared about deeply.
The committee’s leaders—Abe Ribicoff, the chairman, and Charles Percy of Illinois, the ranking Republican—worked in close harmony. Percy, the handsome former CEO of Bell and Howell, had been elected to the Senate in 1966, riding a strong white backlash against civil rights in Chicago’s ethnic neighborhoods and suburbs to defeat the liberal lion Paul Douglas. But despite the political currents that helped carry him to victory, once in the Senate, Percy proved to be quite independent and moderately liberal—pro-business, an internationalist, supportive of civil rights and most domestic legislation. He was very much a Rockefeller Republican, and therefore destined to be estranged from the Republican right that had recently succeeded in forcing Gerald Ford to drop Nelson Rockefeller as his running mate. Naturally comfortable with the Senate tradition of working across party lines, Percy was an ideal partner for Ribicoff.
In 1977, Ribicoff was in his fifteenth year in the Senate. He was one of a handful of people in U.S. history who had been a governor and served in the House, the Senate, and the cabinet as well. He had been one of John Kennedy’s earliest supporters when Kennedy ran for president and was a close enough friend that after Kennedy won, he asked Ribicoff to be his attorney general. Ribicoff declined, telling the president-elect that he did not need a Jewish attorney general when civil rights legislation was going to be a pressing national concern. Kennedy then asked Ribicoff to become secretary of Health, Education and Welfare, a cabinet post that seemed ideal for a man so deeply committed to each of those major issues.
It was a heady time in Washington, especially for members of Kennedy’s New Frontier, but Abe Ribicoff, like many ambitious politicians before him and since, wanted to be a senator. He had reached for the Senate unsuccessfully in 1952, losing to Republican Prescott Bush (the father of one president and the grandfather of another). But ten years later, a Senate seat opened up again, and Ribicoff, at the peak of his popularity in Connecticut, won handily.
The Senate suited Ribicoff. He had wide-ranging interests in domestic and foreign issues, and he worked very well with other senators of diverse viewpoints. When Howard Baker made his first foreign trip as a senator, he criticized President Johnson’s foreign policy. Ribicoff, on the same trip, told Baker quietly that U.S. senators did not criticize the president—any president—while on foreign soil. Baker understood his error, and appreciated the way Ribicoff had offered the advice. They went on to form one of the closest friendships in the Senate.
Ribicoff ’s greatest moment of fame occurred at the tumultuous Democratic convention in Chicago in 1968. There was violence in the streets of Chicago, as the police moved against the antiwar protestors. There was bedlam on the floor of the convention, as the delegates favoring Eugene McCarthy or George McGovern tried to get a plank in the Democratic platform expressing opposition to the Vietnam War. And with the bedlam reaching a peak, the convention floor in near chaos, Ribicoff took the podium to place McGovern’s name in nomination. Glaring down at Chicago Mayor Richard Daley less than twenty feet away, Ribicoff said that “with George McGovern, we wouldn’t have Gestapo tactics in the streets of Chicago.” The national television cameras captured the moment when Daley cursed out Ribicoff with a derogatory reference to his religion. “How hard it is to accept the truth,” Ribicoff responded. He acquired an admiring national following.
In 1977, Ribicoff was sixty-seven years old and in good health. He dressed impeccably, usually in well-tailored gray suits, blue shirts with white banker’s collars, and an expensive watch that he would check frequently during committee meetings. “Ribicoff and his people exuded class,” recalled Tom Daffron, chief of staff for Senator William Cohen and later Fred Thompson. Younger senators, such as Gary Hart and John Danforth, admired Ribicoff as a mentor. Through and through, he was a Senate man and a pillar of the establishment. Ribicoff and his elegant wife, Casey, were popular figures on Washington’s social scene.
But Ribicoff’s deep concern about the condition and direction of his country was unmistakable. In 1972, he had written a small book entitled America Can Make It!, which included some of the most sweeping proposals for legislative change ever suggested by a sitting senator. Ribicoff ’s basic assertion was that “our new domestic priorities must focus on the problems that divide this nation and threaten the fabric that holds our society together: the problems of black and white, rich and poor, the working class and the health of our economy.” Ribicoff talked straight about some of the toughest social issues facing the country, offering far-reaching solutions, including legislating metropolitan school desegregation over a twelve-year period, a guaranteed annual income for the poor, national health insurance, and a housing policy designed to match people with jobs and “head off fleeing suburbanites at the pass.”
In 1971, Ribicoff offered an amendment that would have required schools in northern metropolitan areas to end their de facto segregation within ten years by mixing suburban and inner-city pupils. Jacob Javits opposed Ribicoff’s amendment, arguing that de jure desegregation practiced in the South could be distinguished from the de facto desegregation that was created by white flight to the suburbs in the north. Ribicoff, always a gentleman on the Senate floor, lashed out at Javits, accusing him of “hypocrisy” for being “unwilling to accept desegregation for [New York] though . . . willing to shove it down the throats of the senators from Mississippi.” If that was not clear enough, Ribicoff declared: “I don’t think you have the guts to face your liberal constituents who have moved to the suburbs to avoid sending their children to school with blacks.” Ribicoff edited his remarks so they did not appear in the Congressional Record, but they left an indelible impression on the senators and reporters who had heard them.
Ribicoff was delighted to have a Democrat in the White House again. He had no ambitions for higher office, and he was eager to help make the Carter presidency successful. But Ribicoff was no rubber stamp for anyone. Respected as he was, he had the capacity to be a formidable opponent, as Carter would soon find out.
DURING THE TRANSITION, THE Governmental Affairs Committee’s energetic and activist staff worked happily and closely with Carter’s White House team. Their collaboration produced one of Carter’s earliest victories: expanded authority to reorganize executive agencies. Midway through Carter’s first year, the committee
staff, led by Richard Wegman, a nine-year Senate staff veteran, was working overtime on legislation to form the Department of Energy, reform the civil service reform, promote government-wide ethics reform, and a host of other “good government” initiatives. They saw the opportunity for major legislative accomplishments and wanted to seize the moment. However, there was one cloud in the committee’s otherwise blue sky: lingering concern about the Senate’s confirmation on January 20 of Bert Lance to be the director of the Office of Management and Budget (OMB).
Bert Lance, president of the National Bank of Georgia (NBG), was Carter’s first cabinet appointment. Carter’s decision to nominate his best friend for OMB Director initially won praise from Republicans and some conservative Democrats, who wanted a businessman at Carter’s side to temper his supposed liberal instincts.
Even during the Governmental Affairs Committee’s very brief investigation, it quickly discovered some disquieting facts about Lance. The U.S. Attorney’s office in Atlanta had closed an investigation of Lance’s banking practices one day before Carter announced the nomination. The investigators also found that Lance’s bank had allowed family members to overdraw their accounts to the tune of several hundred thousand dollars, and that Lance’s gubernatorial campaign still had an unpaid overdraft of $250,000 with his bank.
Though the Senate had the constitutional responsibility of confirming cabinet appointments, presidents had traditionally been given broad latitude to choose their team. Indeed, the Senate had never previously rejected a cabinet nominee proposed by a new president. Ribicoff and Percy raised their concerns in questions at Lance’s confirmation hearings. Lance assured them that the Atlanta investigators had closed their probe of overdrafts properly and that all the overdrafts had been repaid. Both claims were supported by the acting comptroller of the currency, Robert Bloom, who called Lance “well-qualified” to be OMB Director and stated that Lance “enjoys a very good reputation in the banking community.” Ribicoff, Percy, and the staff remained uneasy but concluded that the committee could not justify delaying Lance’s confirmation. The Senate confirmed Lance on January 20, Inauguration Day, along with Carter’s other major nominees.
Consistent with Carter’s pledge to bring about a new ethical standard in government, Lance had pledged to divest his bank stock by December 31. Unfortunately, the bank stock was sinking in value, and Lance faced the possibility of an enormous loss. Moreover, it soon became clear that the highflying banker was already deeply in debt because of loans taken to buy the controlling shares in the National Bank of Georgia when he bought it.
After conferring with Lance, Carter asked the committee to release Lance from his pledge to divest by year’s end. At a July 15 hearing, the committee agreed to do so, after Lance pledged to steer clear of banking policy issues. But Lance’s unusual request opened Pandora’s box with respect to his banking practices, and a series of damaging stories quickly followed.
It soon became clear that Lance had engaged in a range of improper banking practices, including receiving favorable treatment from various banks that was based on his friendship with the Democratic nominee for president. William Safire, a New York Times columnist and a former Nixon White House staffer intent on holding the new administration to high standards, wrote a damning column entitled “Carter’s Broken Lance,” charging that “the man in charge of the nation’s books” was “deeply, dangerously in hock,” and deeply involved with the controversial Teamsters’ pension fund “just as Mr. Carter’s star began to rise.” Other bombshells quickly followed, as the investigative reporters competed to unearth stories in what was becoming the first post-Watergate scandal. The new comptroller of the currency, Robert Heinemann, pledged a full investigation that would be “neither a witch hunt nor a whitewash.”
Ribicoff convened another hearing on July 25 to allow Lance to defend himself. Either operating on faith or doubling down on the committee’s original gamble, Ribicoff told Lance: “There isn’t a thing that has been uncovered that impugns your integrity. . . . You have been smeared from one end of the country to the other, in my opinion, unjustly.”
A month later, Ribicoff spent a good part of his vacation reading the 394-page first installment of the report by the comptroller of the currency. The report cleared Lance of any criminal wrongdoing, but severely criticized many of his actions as “unsound” and “unsafe” banking practices. The report found most troubling the fact that Lance had established a correspondent relationship for his bank with another bank at the time he was receiving a personal loan from the other bank, a clear violation of federal banking law.
Wading through the evidence, Ribicoff regretted his earlier rush to judgment. He concluded that Lance could no longer serve credibly. If he remained in office, it would do untold damage to the Carter White House. After returning to Washington, Ribicoff conferred with his staff and Percy, then requested an appointment with President Carter, which was set for Labor Day.
That day, Ribicoff and Percy entered the White House to meet President Carter. There was only one issue on the agenda. Ribicoff was certain that Carter would understand their message that Lance had to go, for the good of Carter’s presidency. But Carter’s response stunned the senators.
Carter expressed the view that Lance had been victimized by a press eager to show that the president and his “Georgia mafia” were not equipped to run the country. He insisted that Lance had done nothing wrong and made it clear that he thought the senators had rushed to judgment. Lance had vowed that he would not resign without having his “day in court,” and Carter agreed. He asked the senators to hold another hearing so Lance could respond to the comptroller’s report.
Ribicoff emerged from the Oval Office tight-lipped and somber, Wegman recalled. The White House staff directed Ribicoff and Percy away from the back of the White House where their cars were waiting to the front lawn where the press was already assembled, an ill-advised and amateurish decision by the White House staff after a presumably private meeting. “I think it would be wise for Bert Lance to resign,” Ribicoff told the press. “I don’t think [Lance] can be an effective OMB Director pending the outcome of these hearings and investigations.”
Ribicoff’s statement sparked a public firestorm. No experienced Washington hand could recall a situation where an executive branch official had stayed the course when the Senate committee chairman and ranking member were both calling for his resignation. As long as Lance lacked Ribicoff’s support, Senator Clifford Case of New Jersey noted: “This guy is going to go, no question.”
Lance’s situation had already proved an embarrassment for Carter. Ribicoff had tried to limit the damage by setting their confrontation for Labor Day to keep it a summer storm, burying the news as best he could. However, Carter’s decision to stand by Lance compounded the damage in a crippling way. For two long weeks, the Lance fiasco was front page news as the Governmental Affairs Committee held a remarkable series of hearings, with the most media coverage of any hearings since Watergate.
Lance offered a full-throated defense, attacking Ribicoff and Percy for “bringing in a verdict of guilty before I have been given the opportunity to present my side of the case.” Clark Clifford, the legendary lawyer and an original Washington “wise man,” served as Lance’s counsel, ensuring that Lance would get excellent advice—though his very presence in the hearings signaled for anyone who doubted it that he was in very serious trouble. Officials from the U.S. attorney’s office and the comptroller of the currency’s office left no doubt in their testimony that they had gone easy on Lance for their own personal reasons, because his best friend was going to be president, or simply to keep their jobs and their pensions. The committee’s usual bipartisan and collegial atmosphere broke down. Lance had several Democratic defenders on the committee—Lawton Chiles of Florida, Sam Nunn of Georgia, Jim Sasser of Tennessee, and Tom Eagleton—and they went at other senators, particularly Percy, quite heatedly. They also insisted that Ribicoff call an unprecedented hearing so t
hat they could interrogate the staff members who had interviewed Lance. “It was like the committee eating its young,” Wegman recalled ruefully.
The Carter administration seemed unable to stay quiet on the matter, further damaging its case. At one point, the Chicago Sun Times reported that White House Press Secretary Jody Powell leaked a false story charging that Senator Percy had flown on a corporate jet without making the necessary payment and used campaign funds illegally. Powell first denied leaking the story, and then admitted it, describing the leak as “inappropriate, regrettable, and dumb.”
Ultimately, Jimmy Carter faced an unavoidable and excruciating choice: cutting his friend loose, or allowing continuing damage that could erode his standing with the country and undermine his entire agenda. Percy could be discounted as a Republican with his own presidential aspirations, but Carter knew that Ribicoff was a stalwart Democrat who fervently wanted his presidency to succeed. He sought Byrd’s advice, more than once. Byrd predicted intense partisanship if Carter hung tough. He also reminded Carter that he had campaigned on ethics in government, and people expected higher standards from him than from previous presidents. His bottom line: Lance had acquitted himself as much as he could, to no avail, and now it was time for him to give up.
Jimmy Carter finally bowed to the inevitable. On September 21, Bert Lance resigned. The president made no effort to hide his pain. No one could “replace Bert Lance” who would be “as competent as strong, and decent, and as close to me as a friend and adviser.”
Most senators praised Lance and Carter for doing the right thing for the country. Lance’s defenders praised him as well, but expressed unease at the powerful machinery unleashed during the investigation. Sam Nunn warned that the presumption of innocence had been eroded by the ceaseless investigations of “five government agencies,” “hundreds of bureaucrats stumbling over themselves to see and possibly leak information,” and “scores of investigative reporters nipping at [Lance’s] heels.”
