Burning Down the House

by Julian E. Zelizer

  Oldaker’s opening remarks unintentionally framed the fact-finding stage of the ethics process as more definitive than it really was. The committee’s official standard in the preliminary investigation, per the legislation that established it, was low, with the task being to merely determine if there was “reason to believe” that a legislator might have committed ethical improprieties. Deciding whether there was “clear and convincing” evidence of ethics violations would only come in the second stage despite what Oldaker stated. Then the standards of proof would be much closer to those used in a courtroom.

  The committee members were seeking a full-throated, emotional defense of the Speaker and his integrity. The low-voltage, passionless Oldaker did not deliver; rather, he gave the impression of a person who just wanted this nonsense over with. He lectured the committee as if they were children who needed to get the facts straight. Crucially, he warned that Phelan, whom Oldaker called an overzealous prosecutor with grandiose political ambitions, was seeking to criminalize normal legislative behavior. If the committee found Wright guilty, every member of Congress would be vulnerable in the future. Where Phelan was supposed to provide the committee with facts, Oldaker argued, he had instead written a speculative, highly opinionated report that implied that the Speaker was guilty. He blamed Phelan for relying on unsubstantiated news articles as the basis of his case. “Regardie’s and other folks started writing these articles and they made a lot of noise and they stirred up a lot of dust, and a lot of other people threw up a lot of dust, and people said then if there is enough dust in the air, maybe there is smoke, and then maybe there is fire, and let’s keep throwing up dust more, and boy have they.”4 None of the accusations, he continued, would stand up as the process continued.

  There were a huge number of allegations in which, Oldaker explained to the committee, Phelan had manipulated or misconstrued the truth. Phelan, for example, said Mallightco’s payments to Betty were a gift. This claim was hogwash, according to Oldaker, who insisted that Betty had earned her salary by conducting most of the research into potential investments. She was also a co-owner of the company. He provided documentation and statements to support this claim. Nor was there a shred of evidence that Mallick ever benefited economically from federal government funds. Another example of Phelan’s taking liberty with the truth, Oldaker continued, had come when he argued that the House ethics rules should be influenced by the Senate floor debate when it created its own stringent ethics code, a perspective that would make Wright’s book publication more problematic. In this case, Oldaker insisted that there was no basis for Phelan’s assertion. Indeed, the Senate had written its rules after the House. And everyone in Washington knew that the two chambers never had much interest in abiding by the rules of the other. All of these were persuasive arguments, but none were a match against Phelan’s dramatic oratory.5

  Before the committee, the sandy-haired Phelan walked up to the lectern with his customary swagger. If Oldaker’s demeanor was all business, Phelan acted like a fired-up football coach exhorting his team to go out and win the Super Bowl. His frenetic cadence and the way in which he raised his booming voice while methodically pounding the lectern as if to keep the beat enthralled the committee. Phelan, immaculate in his suave double-breasted suit, reviewed the key points in his report while Oldaker sat on the side of the room watching furiously as he saw how intently the committee members were listening. At the heart of the diatribe was Mallightco, the real estate and energy investment company founded in 1979, which Phelan characterized as an elaborate con designed to funnel money to the Speaker so that George Mallick could gain influence on Capitol Hill.6 Whereas Oldaker gave the committee members sawdust to chew, Phelan offered them steak and sizzle. He was relentless. Even Betty Wright was tainted, charged Phelan; she had done nothing for the company, yet received an annual salary of $18,000, a free condominium in Fort Worth, and the use of a company Cadillac (including when she was in Washington, where Mallightco didn’t do any business). Responding to Oldaker’s argument that she worked for the company, Phelan proclaimed that almost all of the evidence was fabricated. “I believe that someone providing a place to live and a salary and a car and a corporation that has 20 transactions is an absolute blatant gift from a person who had direct interest in legislation,” Phelan told the committee.7 Phelan claimed that when “she worked for Mallick Properties, and believe me, we looked at it closely, contrary to others, we concluded that for the first two years there was some, some evidence that she performed some services at some time for Mallick Properties. Again, there was no work product. No one could point to how many days she worked nor could they point to exactly what she did. All they said was that she showed up a couple of times in Austin.”8

  Reflections of a Public Man was another front in Phelan’s version of the story. Published by a political hack and a former convict, the book was no more than a means for Wright to circumvent the 1977 ethics rules that strictly limited honoraria.9 The rules stated that legislators could earn no more than an amount equal to 15 percent of their congressional salary ($72,600 in 1984) through speaking fees, but they placed no limits on book royalties. Phelan had shifted much of his attention away from Moore’s role as the book’s publisher and allegations that a congressional staffer had worked on the book toward the issue of bulk sales to interest groups and associations. He argued that Wright had intentionally skirted the limits on honoraria by requiring groups to purchase large numbers of books before he spoke to them. Phelan claimed that there was even a “smoking gun” that he had discovered in a series of exchanges written in October 1984. After having reached his earnings limit for honoraria, Jim Wright and his chief of staff, Marshall Lyman, returned a $3,000 honorarium to the Lyndon Baines Johnson Institute at the Southwest Texas State University in San Marcos for a guest lecture he was giving. Wright then recouped the lost money when the president of the university offered to purchase copies of his book to distribute to students, ensuring Wright substantial royalties. The university endorsed the $3,000 check back over to Moore’s publishing company. Phelan highlighted specific bulk sales of Reflections of a Public Man to organizations with political interests in Washington, such as $2,000 in books to the National Association of Realtors and $1,000 to the Mid-Continent Oil and Gas Association.10 The fact that the House rules did not cover book royalties had no bearing on how he viewed the earnings or presented these facts. Acting like a hardened Chicago courtroom prosecutor, Phelan would leave it to the defendant’s attorneys to knock down his charges.

  And then there was the matter of Wright’s relationship to the savings and loan industry and whether he had intimidated the chairman of the Federal Home Loan Bank Board, Edwin Gray, into backing away from closing down Texas banks. This was the most disturbing charge of all. Although Phelan made numerous factual errors in his allegations—he alleged, for instance, that Wright had not reported certain income from his gifts when it was shown that he had—the special counsel’s claims remained in the record and part of the conversation.11

  Although the committee conducted these hearings in total secrecy, Gingrich tensely monitored the situation through leaks and whatever information he could obtain. Meanwhile, his staffer Karen Van Brocklin proactively fueled the publication of stories about Wright to keep up the momentum. In late March, for instance, she relayed to The Wall Street Journal’s Brooks Jackson a memo from her contact in Fort Worth detailing new allegations about other suspicious investments.12

  Gingrich predicted that the ethics report would be “devastating.”13 He and Common Cause both applied pressure on Chairman Dixon, who was striving to be fair and judicious, to release Phelan’s entire report to the public on the grounds that reporters and citizens should be able to review the findings for themselves. Gingrich threatened to propose a House resolution that would force the Ethics Committee to release all of the information unless the panel did so voluntarily.14 Republicans circulated a memo that listed over a hundred Democrats who
were actively fighting to suppress the unredacted report.15 Gingrich argued that in this post-Watergate era keeping the report from the public would smack of a cover-up, and he promised that “the radio talk shows will go berserk, the citizen activists will be enraged, [and] the newspaper editorials will pour out.”16 Dixon, however, was reluctant to share the lurid content, given that much of the material was unsubstantiated and went far beyond the scope of the inquiry. He understood that once Phelan’s report reached the public, the stories, sound or not, would quickly circulate and it would become more difficult for the House to judge the case in an unbiased manner. Yet Dixon’s options were few. The pressure from Gingrich and Common Cause to shine light on the case was difficult to resist. Determined to improve the reputation of his committee, the last thing he wanted to do was to give the impression that it was hiding information to protect the Speaker.

  Sensing that the committee’s next decision might not go his way, Wright convened an impromptu advisory meeting with Oldaker and a group of high-profile Washington insiders in the first week of April to strategize. The roundtable team consisted of Jack Valenti, the former LBJ adviser and president of the Motion Picture Association of America; Wright’s friend Robert Moss, an understated lawyer-lobbyist who had worked for the Democratic National Committee, the House Education and Labor Committee, and the House Administration Committee in the 1970s and now represented the Coastal Corporation, a major oil company, and served as a fund-raiser for political candidates; and John White, the former chairman of the Democratic National Committee, now also employed with Coastal as a consultant. Together they mapped out a game plan for the next stage of the investigatory process.17 All of them agreed that the best response would be to attack the process rather than litigating the intricate details of the case. Wright would turn the tables and argue that the entire scandal originated with Newt Gingrich, one of the most polarizing figures on Capitol Hill. Wright would also argue that Richard Phelan had exhibited “prosecutorial zeal” by bringing up charges that were not even contained in the original committee report.18 Both Gingrich and Phelan were using the investigation to further their own ambitions.

  Wright’s friends knew he had to come out hard and fast. This investigation was neither a joke nor a distraction that would go away. As they packed away their briefing materials to leave, the team’s mood was grim. The Speaker had his work cut out for him. After huddling with the Speaker and his staff, Valenti met with reporters to say, “This terrorizing attack on the Speaker is very painful.”19

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  After almost ten months, the House Ethics Committee completed the preliminary investigation. The time had finally come to take a vote. Along with their staff, the members had sat in their basement bunker poring over Phelan’s lengthy report and reviewing the testimony from their hours and hours of deliberations. What they had seen troubled them enough to move forward to the next stage of the process. The stories might not add up to high crimes and misdemeanors, or even violations of the ethics rules, but they certainly didn’t look good for Wright or for the Democrats as a party. Wright’s actions had created enough smoke to leave many colleagues, as well as reporters, suspicious of his activities. Even the Speaker’s most loyal supporters could see that. Dixon instructed the committee members that they needed to get this case right and with a strong bipartisan imprimatur—either some Republicans would have to vote against further investigation or some Democrats vote in favor of more—so that the decision would be seen as legitimate in the eyes of the public. The Ethics Committee had taken a beating over the years, and now the panel had a chance to demonstrate that Congress could be trusted to clean its own house. Because there was to be a second and more vigorous stage of the investigation, committee Democrats could use the first vote to show constituents—and Washington correspondents—that they were taking the concerns seriously, with the full knowledge that Congress would have an opportunity to exonerate the Speaker within a few weeks.

  Speaker Wright’s legal team could see political trouble on the horizon. The information coming to Oldaker suggested that the committee was going to vote in favor of proceeding to the next stage of the investigation. The headline of a blockbuster front-page story in the April 5 edition of The New York Times read, ETHICS COMMITTEE EXPECTED TO FIND VIOLATIONS BY WRIGHT ON FINANCES.20 Seeking to head off the damage of an unfavorable vote, Oldaker handed out a forty-two-page briefing book about the case to over fifty key House Democrats and then followed up by meeting with them in small groups to rebut each one of Phelan’s charges.21 The briefing book made a strong and detailed case that Wright had not violated any ethics rules. While he might have acted in ways that the committee thought to be untoward, he always operated within the boundaries of the House rules. Gingrich, who read about these meetings when the Los Angeles Times published a story based on a leaked copy of the briefing book, blasted the attorney for violating the trust of the House after the committee had allowed Oldaker to sit in on the closed sessions where Phelan was laying out his case, an unusually generous gesture but one justified by Dixon in order for the committee to be able to hear how the Speaker’s team was thinking about the charges. “My reaction is sort of beyond rage, into amazement,” Gingrich said.22 Dixon summarily rejected Gingrich’s demand that the committee investigate Oldaker, explaining that the lawyer could defend his client however he saw fit as long as he did not share confidential information, which he had not done. “What do they expect!” demanded John White, who had just advised the Speaker’s team to be tougher. “Gingrich has been throwing grenades for 10 months and the Speaker is supposed to sit there and take it? That’s nuts.”

  In the secrecy of the musty basement room in the Rayburn Building on April 12, Dixon looked around the conference table and called for a vote. The results were an endorsement for having undertaken the investigation (though not for a conviction). A majority of the committee concluded that there was reason to believe that several of the charges warranted further investigation. They cited Wright for having potentially violated the rules of conduct sixty-nine times. Voting on the first group of potential violations, the committee concluded that George Mallick might have had a “direct interest” in federal legislation and might have improperly given gifts, packaged as employment compensation, to Wright and his wife. In the second major area of possible violations, the sale of Reflections of a Public Man, the committee dropped the original charge that the Speaker used campaign funds to pay for his staffer to work on the book or that he had received inflated compensation due to lack of sufficient evidence. But they replaced those charges with another one just as politically damning. Though the allegation had not appeared in the original report, the sales of the book became the basis of a new conclusion, namely that Wright, as a way to circumvent the honoraria rules, had sold bulk orders to interest groups and organizations.23 In the committee’s view, “the sales demonstrated an overall scheme to evade the outside earned income limitations of House Rule XLVII by re-characterizing such income as royalties.”

  In the final days of their ten months of deliberations, the committee had decided to drop, for lack of evidence, a number of the biggest charges that Phelan leveled against the Speaker. These concerned the allegations about Wright’s unethical relationship with Texas oil companies, which allegedly provided him with favorable treatment on risky investments in exchange for his political support. Nor did a majority of committee members feel that Wright had acted in an unethical manner when discussing with federal regulators the problems that faced Texas savings and loan institutions.24

  Dismissal of these charges did not lessen the severity of what was to come. All of the committee Republicans voted in favor of the charges. Most of them believed that Wright came from an older world of politics and had failed, or refused, to change with the times. Any sympathy they might have felt for old-school ways receded before the benefits that would accrue to the Republicans from this verdict. But it was also clear
to the GOP that Wright had skirted the rules and that he was indeed trying to avoid ethics restrictions. Skeptical that their Democratic colleagues saw this truth, they sensed that the only reason the investigation had moved this far was that Wright’s obvious guilt—prodded by the media scrutiny—prevented him from using his power to quash the investigation.25 Republican members could feel both righteous and pleased.

  Many of the committee Democrats, on the other hand, disagreed with most of Phelan’s conclusions. They believed that a significant number of the charges were trumped up and that Gingrich had invented the wrongdoing based on made-up and skewed information. The Republicans were weaponizing the inevitable messiness of congressional politics, messiness any working member knew was baked into the job, and had manipulated idealistic journalists to use them as a cudgel to bring down a Speaker who was causing their party problems. Gingrich had a keen sense of how to take elements of legislative life that most politicians saw as benign and to speak about them in ways that created a media frenzy and tainted the reputation of the person he targeted. Just as bad, in their estimation, was the overzealous prosecutor who was interested in running for elected office and determined to win this “case” in the court of public opinion, irrespective of the truth. Speaker Wright might have made some bad choices in his career and associated with the wrong kinds of people, enough to give them concern about a few of the charges that had arisen as a result of the investigation, but nothing in the record yet suggested to them that he should not retain his job as Speaker. Gingrich, now with Phelan’s assistance, had turned small piles of petty issues, they said, into a huge mountain of scandal.