2003 Weapons of mass destruction. The George W. Bush administration claims that Saddam Hussein’s regime has weapons of mass destruction, as the reason for invading Iraq. No such weapons are ever found.
2005 Jack Abramoff scandal. Political lobbyists Abramoff and Michael Scanlon overbill Native American tribes seeking to develop casino gambling on their reservations, and give gifts and campaign donations to members of Congress in return for votes. Representative Bob Ney and two aides to Tom DeLay are directly implicated.
2007 Goldman Sachs conflict of interest. While promoting risky mortgage-related securities to its clients, Goldman Sachs places large bets against those same securities.
2008 Bear Stearns goes belly-up. The bank’s offshore hedge funds specializing in mortgage-related securities collapse. Credit-rating agencies suddenly downgrade hundreds of subprime mortgage-backed securities. Banks, securities firms, hedge funds, mutual funds, and other investors are left holding suddenly unmarketable mortgage-backed securities, whose value plummets.
2008 Lehman Brothers collapses. The bank’s fall triggers a U.S. government announcement of a bailout of major Wall Street banks.
2008 Bernie Madoff’s Ponzi scheme. Madoff is arrested for operating a Ponzi scheme, the largest financial fraud in U.S. history, estimated to be $64.8 billion.
2008–10 The Wall Street financial crisis. Over nine million homeowners lose their homes to foreclosure. Almost nine million Americans lose their jobs. Yet not a single major bank executive goes to jail or is even indicted. CEOs of the largest Wall Street banks award themselves huge bonuses.
2009–17 Travis Kalanick. In a quest to build Uber into the world’s dominant ride-hailing entity, founder and CEO Kalanick flouts transportation and safety regulations; capitalizes on legal loopholes and gray areas to gain a business advantage over competitors; and promotes and protects top performers even when they verbally and sometimes sexually abuse employees; poaches self-driving-car technology from Google; uses software to evade law enforcement; violates the privacy of riders; and uses predatory tactics on competitors. Kalanick is finally fired by the company’s board.
2010 Deepwater Horizon oil spill. BP’s rig explodes and spills oil into the Gulf of Mexico, the worst oil spill in history.
2012 Samson scandal. United Airlines reinstates a money-losing air route between Newark Liberty International Airport and Columbia, South Carolina, at the behest of David Samson, chairman of the Port Authority of New York and New Jersey, who has sway over the Newark airport and has a vacation home near Columbia. United’s CEO Jeffery A. Smisek is subsequently fired over the scandal, but receives a severance package totaling $28.6 million.
2013 Government shutdown. The federal government is shut down again, for lack of agreement on funding it.
2013 SAC Capital scandal. The giant hedge fund pleads guilty to insider trading, paying $1.8 billion in fines, but the fund’s founder, Steven A. Cohen, walks away unscathed.
2013 Bridgegate. New Jersey officials with ties to Governor Chris Christie close lanes leading to the George Washington Bridge, causing traffic jams apparently designed as political payback against Fort Lee’s mayor, Mark Sokolich, who did not support Christie for governor.
2013 Doping scandal. After more than a decade of denials, famed cyclist Lance Armstrong confesses to doping.
2013 Soccer scandal. As part of a wide-ranging federal investigation into soccer-related improprieties, Chuck Blazer, who had been executive vice president of the United States Soccer Federation, pleads guilty to ten counts of corruption, including racketeering, wire fraud, and money laundering.
2014 General Motors ignition scandal. The company recalls nearly thirty million cars worldwide due to faulty ignition switches. The problem was known to GM for at least a decade prior to the recall, but GM had done nothing to remedy it. At least 124 deaths and 275 injuries result.
2015 Hyperpartisanship soars. After Republicans gain control of both houses of Congress, Mitch McConnell, the GOP’s highest-ranking member of Congress, says his “number one aim” is to unseat Democratic president Barack Obama.
2015 Martin Shkreli. The Turing Pharmaceuticals CEO raises the price of a single pill of Daraprim, which treats a parasitic infection that can be deadly when it afflicts unborn babies and people with HIV and AIDS, from $13.50 to $750.
2016 Chicago police scandal. The Justice Department finds that the Chicago Police Department has used excessive force against African American residents. The report comes two years after the killing of Laquan McDonald by Chicago police officer Jason Van Dyke.
2016 Price-gouging by Mylan Pharmaceuticals. The firm ratchets up the price of its EpiPen emergency injection kit, containing only about $1 worth of the drug epinephrine, to $609 a box. Mylan has an effective monopoly on the lifesaving product. The company’s revenue skyrockets to $11 billion. In 2016, Robert Coury, Mylan’s chairman, receives compensation of $98 million (including vesting of prior stock options, $160 million).
2016 KPMG scandal. Partners at KPMG, one of the big four accounting firms, including the head of its auditing practice, fail to report leaked information they have received about inspections planned by its regulator, the Public Company Accounting Oversight Board, which was established after the accounting scandals at Enron. The information has enabled partners to know in advance which audits will be inspected so they can make sure any targeted audits are clean.
2016 Greg Gianforte scandal. On the eve of his election to the House of Representatives, Greg Gianforte beats up a reporter who asks him a question he dislikes.
2017 Baltimore police scandal. The Justice Department finds that the Baltimore Police Department has systematically abused its power with regard to African American residents. The report comes more than a year after the local police apparently caused the death of Freddie Gray.
2017 Wells Fargo scandal. Top executives at Wells Fargo Bank are found to have pushed bank employees to create multiple new accounts for customers who didn’t request or want them, and sell them auto insurance they didn’t need.
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This list is not intended to be a scientific sample. Not every breach on the list is as serious as every other. Some were blatantly illegal, some were abuses of power, others were exploitations of ambiguities in laws, the rest were considered by many to be unethical. All made the list because they shocked many people into saying something like “I didn’t know anyone could do that” or “That’s just wrong.” All were the result of people seeking personal gains in wealth or power at the expense of the common good. All contributed to accumulating cynicism and distrust.
The list doesn’t prove that such violations have been on the upswing over the past decades, and it’s not as if America was free from wrongdoing before the 1970s. Consider Warren G. Harding’s dizzyingly corrupt administration, or the baseball scandal of 1919, when eight members of the Chicago White Sox were accused of intentionally losing the World Series in exchange for money from gamblers. There has been corruption and racism in police departments extending back to the nineteenth century. In the 1950s and 1960s, CEOs reassured the public that DDT, asbestos, tobacco, toxic waste dumps like Love Canal, and automobiles without seat belts were all safe.
What’s new is the escalation of it all. No one who has lived through the past five decades can have failed to notice the breakdown. The effect, in the words of the late senator and professor Daniel Patrick Moynihan, has been to “define deviancy down.” Conduct previously considered wrong has come to be seen as normal. Trust in every major institution of America has declined. Cynicism prevails.
* With thanks to Hugh Heclo, who includes some of these scandals in On Thinking Institutionally.
CHAPTER 5
Three Structural Breakdowns
SOME OF THE SCANDALS and events I’ve listed changed the rules of the game
significantly, from concern for the common good to whatever it takes to win. Three chain reactions in particular bear highlighting. In all three, initial exploitations of trust were rationalized by the exploiters as being necessary and legitimate. Those exploitations were then replicated by others who felt they had no choice but to do the same, or else be at a disadvantage. Over time, each of these practices grew to be so commonplace they became part of the system itself. They made it acceptable to gain wealth or power at the expense of the integrity of the system as a whole.
1 Nixon’s Watergate, Robert Bork’s hearing, and whatever-it-takes-to-win politics
The scandal that came to be known as “Watergate” and led to Richard Nixon’s resignation from the presidency was a shock to the American political system. Afterward, analogous to putting locks on the doors, Congress enacted many reforms, but they were eventually watered down or found by the Supreme Court to be unconstitutional. The Watergate scandal began an era of whatever-it-takes-to-win politics.
In 1974, in his last remarks about Watergate as a senator, seventy-seven-year-old Sam Ervin—who as chairman of the Senate Watergate Committee became widely revered for his fairness and deep respect for the Constitution—asked, “What was Watergate?” Ervin explained that President Nixon and his aides had “a lust for political power” that “blinded them to ethical considerations and legal requirements; to Aristotle’s aphorism that the good of man must be the end of politics.” What was particularly chilling about Nixon’s behavior was his disdain for the common good and total obsession with himself. On the tapes of his White House meetings, Nixon can be heard talking incessantly about himself—his needs, his place in history, and his animosities—but he never once mentions the nation’s needs. For Richard M. Nixon, there was no common good. The only good was Richard Nixon.
The details of what occurred still shock. In 1970, Nixon authorized break-ins or “black bag jobs” of people considered domestic security threats. One early goal was to destroy the reputation of Daniel Ellsberg, who had leaked to the news media the Pentagon Papers, showing that the Johnson administration had lied to the American people about the Vietnam War. Nixon’s burglars broke into the office of Ellsberg’s psychiatrist, seeking information that might smear Ellsberg and undermine his credibility in the antiwar movement. “You can’t drop it, Bob,” Nixon told his assistant H. R. Haldeman in June 1971, referring to Ellsberg. “You can’t let the Jew steal that stuff and get away with it. You understand?”
In early 1972, Nixon launched a plan for spying on and sabotaging Democrats in the upcoming presidential campaign, including wiretaps and burglaries. His henchmen paid the chauffeur of Senator Ed Muskie, whom Nixon considered his most likely Democratic opponent, to photograph Muskie’s internal memos and strategy documents, and paid others to dig up dirt on the sex life of Senator Ted Kennedy, a potential opponent in 1976. “I’d really like to get Kennedy taped,” Nixon told Haldeman. They inserted a retired Secret Service agent into the team protecting Kennedy who, Haldeman assured Nixon, would “do anything that I tell him.” Nixon replied, “We just might get lucky and catch this son of a bitch and ruin him for ’76,” adding, “That’s going to be fun.” Nixon ordered another assistant, John Ehrlichman, to direct the Internal Revenue Service to investigate the tax returns of all likely Democratic presidential candidates, including Kennedy. “Are we going after their tax returns?” Nixon asked. “You know what I mean? There’s a lot of gold in them thar hills.”
In the early morning of June 17, 1972, a team of burglars wearing business suits and rubber gloves broke into the headquarters of the Democratic National Committee in the Watergate office building in Washington. The burglars were discovered and arrested, and the FBI immediately began an investigation. Six days later, Attorney General John Mitchell proposed to Nixon that he order the CIA to claim national security secrets would be compromised if the FBI didn’t halt its investigation. Nixon agreed. “Play it tough,” he directed. “That’s the way they play it, and that’s the way we are going to play it.”
Six weeks after the burglars’ arrest, Nixon and Haldeman discussed paying them off to keep them from talking to federal investigators. “They have to be paid,” Nixon said. “That’s all there is to that.” On March 21, 1973, Nixon counsel John W. Dean reported that the burglars were still demanding money. Nixon asked, “How much money do you need?” Dean estimated a million dollars over the following two years. Nixon responded, “You could get it in cash, and I know where it could be gotten.” They discussed using a secret stash hidden in the White House, laundering the money through bookmakers, and empaneling a grand jury so the burglars could plead the Fifth Amendment or claim memory failure. Nixon praised Dean’s efforts. “You handled it just right. You contained it. Now after the election, we’ve got to have another plan.” Four days after the tapes revealing much of this malfeasance were released, on August 9, 1974, Nixon was forced to resign.
I relate these details to remind you just how far Nixon went in violating the norms of the modern presidency in order to retain power. Even though his actions led to his resignation and to many reforms, Americans’ trust in politics was deeply shaken. Public outrage continued when Nixon’s successor, Gerald Ford, granted him a full pardon. Ford believed the nation had to be shielded from the pain and disruption of a president put on criminal trial and possibly imprisoned. Yet to many Americans, the fact that Nixon would not be held accountable felt like another assault on the common good. To make matters worse, Nixon continued to insist he had not participated in any crimes. In his 1977 television interviews with British journalist David Frost, he conceded he had “let the American people down” but refused to admit to any illegality. “I didn’t think of it as a cover-up. I didn’t intend a cover-up. Let me say, if I intended the cover-up, believe me, I would have done it.” Nixon added, “If the president does it, that means it is not illegal.”
The ripples from Nixon’s disregard of the common good can still be felt today.
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To my mind, the next major incident of whatever-it-takes-to-win politics occurred in 1987, with the Senate hearing on Ronald Reagan’s nominee for the Supreme Court, Robert Bork. I had worked for Bork in the late 1970s when he was solicitor general under President Gerald Ford. I disagreed with him on many matters but always found him to be a man of keen intelligence and integrity. When Reagan nominated him, I worried about Bork’s conservative leanings but I had no doubt he would be a thoughtful jurist who would carefully consider the common good.
I was surprised when liberal groups fought Bork’s nomination in ways that previously had been thought unacceptable: mass mailings and advertisements that disparaged him; unfounded claims that Bork’s wife, a former Roman Catholic nun, would influence his decisions on abortion; leaks to the press of lists of videos Bork had rented from a local video store (ultimately revealing nothing of interest); charges that with Bork on the Court “women would be forced into back-alley abortions, blacks would sit at segregated lunch counters, rogue police could break down citizens’ doors in midnight raids.” It was scorched-earth ideological warfare so personal and mean-spirited that it generated a new verb: “to Bork,” meaning to systematically defame and vilify someone in public life. No holds were barred. The process we previously had come to expect for considering Supreme Court nominees—respectful deliberation, respect for the institutional integrity of the Senate, preservation of comity among senators—was subverted to the goal of winning.
Bork’s liberal opponents won the fight, but they opened the way to whatever-it-takes tactics in battles over subsequent Supreme Court nominees, such as the bitter fight over Clarence Thomas’s nomination in 1991, which Thomas’s backers won. The tactics used on the Bork nomination also legitimized, at least in the minds of Republicans, Senate majority leader Mitch McConnell’s refusal in 2016 to hold hearings on Barack Obama’s Supreme Court nominee, Merrick Garland, e
ven though Obama had almost ten months left of his presidency. I’m sure the liberals who opposed Bork thought they were acting for the common good. But their tactics were another broken window, inviting more whatever-it-takes tactics in American politics. From then on, there was little to restrain partisanship.
When Newt Gingrich took over the House at the start of 1995, he brought whatever-it-takes politics to a new extreme. I was secretary of labor then, and I remember the sharp change in barometric pressure when Gingrich took the helm, as if a hurricane had blown in. Before that time, when I’d testified on the Hill, I had come in for tough questioning from Republican senators and representatives, which was their job. After January 1995, I was verbally assaulted. Almost overnight, the Labor Department was deluged with demands from new Republican House chairmen for documents and information about all sorts of mundane things. I knew they were fishing expeditions intended to find any small error or omission that might be used to catch me, and then fry me. Washington was transformed from a place where legislators sought common ground into a war zone. Compromise was replaced by brinkmanship, bargaining by obstruction, normal legislative maneuvering by threats to close down government—which occurred at the end of 1995, a prelude to another shutdown in 2013 over raising the debt ceiling. Two years later, Gingrich and his stop-at-nothing colleagues voted to impeach Bill Clinton. According to Norman Ornstein and Thomas Mann, two respected and nonpartisan political observers, “The forces Mr. Gingrich unleashed destroyed whatever comity existed across party lines.”
The Common Good Page 5
