The report was forwarded to the Treasury’s Carswell, who sent it to White House Counsel Lipshutz, who had been a real estate lawyer in Atlanta with no expertise in banking regulation. He then sent it to Carter at Camp David with a cover note that completely misread its import, largely absolving Bert and emphasizing that because Heimann found no evidence of outright illegality, it was up to the Justice Department to determine if Bert should be indicted for fraud.21 When the report reached Carter at Camp David, he read only Lipshutz’s cover note and the executive summary.
Carter could hardly be faulted for skipping a detailed regulatory report, though it was an exception to his penchant for reading detailed documents. But he paid dearly for not appointing a Washington veteran as his counsel to give him a full analysis of the report’s dire implications in the nation’s capital, where appearances matter more than reality, and for not having established a staff structure to prevent him from following his instincts. He marched straight off the helicopter from Camp David into the White House to make himself Bert’s prime defender to the world. Jody had drafted a statement saying Lance should be given a chance to defend himself. But in an overabundance of exuberance, the president burst out with an impromptu endorsement that would become the epitaph of the Lance affair: “Bert, I’m proud of you.”22 When Heimann heard this, “I almost died. I couldn’t believe it. I called up [Carswell at] Treasury and went bananas, and was sick, sick to my stomach.” He blamed Lipshutz, “who clearly misread it and didn’t recognize the obvious.”23 Worse was to come.
A FRIENDSHIP TESTED
By Labor Day weekend, before official Washington started to return from the summer break, Carter still could not separate his deep friendship with Lance from the need to protect his presidency. He had a long conversation with Kirbo, his closest outside confidant, and stayed up late agonizing in the hope that Bert could somehow salvage his position by taking a leave of absence to prepare for and survive congressional hearings. That was proving increasingly difficult: More details surfaced about his jaunts to football games aboard the National Bank of Georgia’s private plane. The allegations were peeling away like the layers of an onion, each bringing its own tears. The Securities and Exchange Commission (SEC) launched a fresh investigation about whether there had been significant omissions in the stock offering of the National Bank of Georgia.24 And a bill was introduced in the House of Representatives to create a Watergate-style special prosecutor. The noose around Bert’s neck was tightening, and the administration would not escape the indignity of a public hanging.
For me, Labor Day weekend of 1977 was traumatic. Time quoted me as saying that I could not see how Lance could survive. It was true that after I had seen Heimann’s report, I told Ham that I did feel he could not survive, and that more of the president’s popularity drained away each day. But I certainly did not say this to the press, and in any event Carter would have viewed making such a statement as an act of disloyalty.
Ham flew to Bert’s vacation home in Sea Island, Georgia, to make it clear that he was in serious trouble. Shortly afterward Bert hired the legendary presidential adviser and Washington superlawyer Clark Clifford to help shape his defense. Ribicoff and Percy met with Carter, who flatly refused to let Bert resign before the hearings because “I want him to have his day in court.… I prefer an expeditious hearing to let all the facts come out.”25
Dismayed, Ribicoff felt that Carter was making a serious mistake by not cutting his losses, even though he knew the president “would be losing his good right arm.”26 Ribicoff had no choice but to hold a hearing quickly, as Carter demanded. Ribicoff feared for the president’s campaign agenda of post-Watergate government reforms, which would be coming before his committee: new rules for ethics in government, civil service reform, and the creation of new departments of energy and education. In fact those proposals became law. But to undercut the administration, Republicans tried to trap Heimann into accusing Lance of criminal behavior. Heimann was so upset by the tension that while dining with his wife at a restaurant the evening after his testimony, he walked out and vomited in the street.27
Early in the morning of September 15, the day that Bert was to testify, an extraordinary event occurred that illuminated the extent to which Christian faith pervaded the lives of the president and his friend. Lance came to the Oval Office at 6:30 a.m. for brief prayers, having selected four Bible passages. One was Joshua 1:6, “Be strong and of good courage.…” Then the great vision of life’s change and challenges from Ecclesiastes 3:1–8, “To every thing there is a season.…” And from the New Testament’s 1 Peter 2:17, “Honor all people. Love the brotherhood. Fear God. Honor the king,” and finally from 1 Peter 2:25, “For ye were as sheep gone astray; but have now returned unto the Shepherd and Bishop of your souls.”28 Brzezinski arrived a few minutes later to give the president his daily national security briefing, to find the two men on their knees in the small study off the Oval Office. He found the scene “touching, really.”29
Whether it was thanks to the power of prayer, Clifford’s superb preparation, or Bert’s own persuasive charm, Bert’s hearing turned out to be a public success—at least as measured by the calls that flooded into the White House, and the fairly favorable newspaper stories. His basic defense was that his banking transactions were typical of a small-town family-run bank; that under his leadership the deposits and assets of both the Calhoun Bank and National Bank of Georgia had increased dramatically; and that no depositor “had ever lost a cent while I was with the banks.” This may have resonated with ordinary folks watching the televised hearings, but it did not prevent congressional inquisitors of his own party from pressing him on the overdrafts approved by his banks to his own family and himself for his failed campaign for governor. Ribicoff cited the bank examiners’ reports describing the payments as “abusive” and “appalling.”
Emboldened by Bert’s good showing, Carter was in a fighting mood. He took the highly unusual step of walking across the hall from the Oval Office and interrupting our regular morning staff meeting to demand that everyone show full support for Bert. No one must call for his resignation, the president warned, and said: “I will fire anyone who I know does this.” (I felt particularly uncomfortable because of the Time story that I had denied.) Later that day he repeated to his cabinet members that he was “proud of Bert.” He accused the press of dredging up stories and charges that had not undermined his confidence in Lance, and he looked forward to “Bert explaining his side of the story.” He assured the cabinet that Bert’s troubles in no way impeded the effectiveness of the OMB—the budget process was moving along under Bert’s deputy, James McIntyre.30 No cabinet member said anything.
As Carter focused on the overdrafts, he realized it was time for Bert to resign. The whole affair was sucking the oxygen out of everything else. After an agonizing weekend and a consultation with Robert C. Byrd, the Senate majority leader, Carter confronted Lance at 6:15 a.m. on the following Monday in the Oval Office, where the president had already been at work for an hour. He told Bert that he had had his chance to defend himself and done well, and now he had a few days to decide on his future before the investigation into his personal finances resumed and possibly spread even more uncomfortably to other government agencies. That night Kirbo, Jordan, Powell, and the rest of the president’s Georgia entourage belatedly urged Lance to resign. The next day Carter and Lance played a round of tennis, and Bert agreed that he was ready to go but first had to talk to LaBelle—his fiercely loyal, deeply religious wife. She objected strenuously, giving Carter what he described as “probably one of the worst days I’ve ever spent.”31
On Wednesday, Lance arrived in the Oval Office uncharacteristically late by almost an hour. In a positively Shakespearean scene of conflict between political and personal loyalties, Bert begged the president to help him with LaBelle. Because the Oval Office was far too formal for such a painful discussion among three old friends, he then ushered Bert and LaBelle through the adjoining priv
ate presidential study next door, where he generally worked when not receiving formal delegations or holding our senior White House staff meetings. It was a small, intimate room, with photos of Rosalynn and their children. Here LaBelle made her last stand. She said she realized that her husband and the president had already made their decision, but disagreed strongly.
In passionate terms LaBelle argued the case for keeping Bert. The president listened carefully but countered that Bert’s problems had preoccupied him and diverted the attention of the press just when he was trying to rally public support for the Panama Canal Treaty. He told her that he and Bert had sat for forty-five minutes after a tennis match on a bench by the White House court discussing his prospective resignation, and he had told Bert he would defend whatever decision he made. But LaBelle was still not done. As the president was going to the press conference with Bert’s sorrowful letter of resignation in hand, he recalled in his diary that she bitterly accused him of betraying his friend and destroying her husband.32 Lance’s recollection of LaBelle’s last words to the president was even worse: “I want to tell you one thing—you can go with the rest of the jackals, and I hope you’re happy.”33
Jody had prepared a statement for the president, but once again he overrode his press secretary and spoke impromptu, defending his friend to the last with evident passion: “He’s a good man.… I think he’s made the right decision, because it would be difficult for him to devote full time to his responsibilities in the future.” He added that nothing “has shaken my belief in Bert’s ability or integrity,” and that as president he felt partly responsible because he wanted Bert to sell all his bank stock and sever his relationship with the financial industry.
At the first cabinet meeting after Bert’s resignation, as McIntyre began to talk, Carter tried to sound as if Bert’s departure would make no difference in the upcoming fiscal year, interrupting the acting budget director with what seemed were hollow words: “Jim McIntyre speaks with the same voice Bert had and has the same authority to speak for me.”34 However, no one believed Jim would ever command the same authority as Bert, try as he might. The president concluded by complimenting the agencies for proposing their budgets earlier than ever before. The scene had a surreal quality.
As so often happens in the Washington hothouse, once the attackers have accomplished their task, they regroup as designated mourners. Safire sent Bert a copy of his next book, in which he reprinted several of his damaging columns about Lance, and autographed it, “For Bert Lance, with hopes for a strong comeback.” Chief Justice Warren Burger phoned Carter to declare himself “overwhelmed with emotion and gratitude that the Bert Lance thing had been handled in such a way as to point out the extreme dangers from the press in subverting justice.”35 When Bert held a farewell reception at the OMB’s offices, well-wishers poured in—headed by Jimmy and Rosalynn Carter, members of the cabinet, Burger from the Court, Democratic and Republican congressional leaders, and even the White House police officers. Hundreds of people waited up to two hours to tell Bert how much they regretted his departure. I came early to hug Bert and express my profoundest sorrow at the outcome.
During the balance of the Carter administration and even up to the last months of his life, Bert frequently called me to ask how Fran and our boys and I were doing, despite his own troubles. Lance endured a four-month trial in Atlanta federal court on twelve counts of banking irregularities, including false statements and sweetheart loans. He was acquitted of nine, and the jury was hung on the other three. The government spent $7 million on the case, and Lance’s own legal fees totaled $1.5 million.36 Even the conservative American Spectator exonerated Lance, noting that eight federal agencies conducted investigations and found nothing.37
But the harm to the Carter administration was as damaging as it was to Bert himself. Although some political and press enemies compared the Lance affair to Watergate, this was unfair. No one ever criticized him for his behavior in office, nor was he identified with any political dirty tricks. Whatever poor political judgment the president exhibited by not cutting loose his friend earlier, Bert had not left behind a whiff of impropriety or illegality in Washington itself. But his banking behavior back home went to the heart of Carter’s ethical campaign, when he repeatedly cited Watergate as undermining confidence in our government. As candidate and president, Carter held himself and implicitly his top officials to a higher standard, which Lance’s behavior turned into a double-edged sword against his closest friend, who had promised he would never lie to the American people.
* * *
For all its majesty, the presidency has few constitutional powers beyond that of commander in chief of the armed forces. The power of the office comes from his ability to influence others to follow his lead—Congress, friends and foes foreign and domestic, and above all the American public. This, in turn, requires any president to constantly cultivate his popularity and personal authority and avoid dissipating a limited stock of influence on politically hopeless ventures, such as prolonging a vain effort to save Lance. Carter needed a tough enforcer as chief of staff to save him from his understandable feelings. The task of getting rid of a political liability was complicated by the fact that many of the people who followed Carter to the White House were close to Bert during Carter’s years as governor. To most of them, something like pledging the same block of stock as collateral for two separate loans was just Bert being Bert. But frankly, none of us close to Carter, myself included, had the fortitude to tell the president early enough that the banking irregularities of his best friend and most trusted adviser were so serious that he was a political liability and had to go. Jody later reflected, “It would have been better for the president if we had brought that to an end sooner. It threw us off stride. It made it harder for us to talk about other things, and sort of played into questions about whether we could lead and run the country.”38 Carter’s Gallup poll approval ratings dropped some 20 percent from their post-Lance high of over 70 percent.39
This points to a broader problem that bedevils all presidencies: reluctance to bring bad news to a president. There is such an aura about any president—“clothed in all this power” as Lincoln once said—and such deference to the office itself, that a particular level of fortitude and confidence is essential to tell the occupant in person when he is going in the wrong direction. Once the president takes the oath of office with the legitimacy of national election he (or eventually, she) becomes something more than a mere mortal. Ironically, Bert Lance had the stature and personal ties to the president to speak truth to power, but not about himself. He did his friend a disservice by accepting the job without privately disclosing his financial situation in full. Carter was never quite the same afterward. As he said, Bert “was compatible with everybody and his leaving really hurt.”40 His poll ratings dropped significantly, but I believe he became a better president. His administration was never again tainted by scandal, and he became steeled to the rough political realities of Washington.
PART II
ENERGY
6
THE MORAL EQUIVALENT OF WAR
Just as he would handle foreign policy by tackling the Middle East head-on, Jimmy Carter jumped into the most contentious, divisive domestic issue, energy, and made it his top domestic priority after the economy, calling for a comprehensive plan to revolutionize every aspect of its price and use. If ever there was an ill-considered decision, and one that took a long-lasting toll on Carter’s popularity, it was the one he made as president-elect. Only a month after the November election, at an organizational meeting on energy, for the first time I heard him say, “I am hoping to have a comprehensive energy policy within ninety days.” I was floored. He made this announcement without consulting Congress, his incoming White House staff, or his incoming cabinet. Continuing with evident relish, he declared he had to make a “box-load of key decisions” on energy.1 It was a ninety-day program worthy of Franklin Roosevelt’s first hundred days, with the difference that Roosevelt t
ook office with a mandate to confront a national economic crisis.
True to his word, less than three months after his inauguration, the new president gave his first major national address on what he saw as a looming crisis in which the United States was increasingly dependent upon imported foreign oil from the most volatile region of the world, the Middle East. By burning fossil fuels as if America had an unlimited supply, we were mortgaging our foreign policy to OPEC suppliers; swelling the deficit in our balance of payments; and cheapening the U.S. dollar. He put his presidential prestige behind meeting a politically unpopular challenge, appealing to Americans to join him in an urgent effort to reverse the nation’s profligate habits of consuming energy in gas-guzzling cars, and overheated, poorly insulated offices, factories, and homes. Four years later, after passage of three major energy packages, he had set the nation on an irreversible course toward regaining its lost energy security, by granting major incentives for greater conservation; market-based pricing of crude oil and natural gas to encourage greater domestic production; beginning the solar, wind, and alternative energy revolution; and bringing competition for the benefit of consumers to the delivery of electricity. But in the process he paid a frightful political price, some self-inflicted.
President Carter Page 17