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August 25, 2006
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Transcript - August 25, 2006

BRANCACCIO: Welcome to NOW...

The mid-term elections are a little less than three months away, and from now until then we'll be scrutinizing at some of the key issues that you'll be hearing about as you go to the polls this fall... issues like clean government.

Several high-profile congressmen have already resigned or dropped their bids for reelection in the wake of the Washington lobbying scandals...

So will the mid-term elections turn into a referendum on congressional ethics and the influence of special interests? Senior correspondent Maria Hinojosa and producer Bryan Myers have our report.

HINOJOSA: Welcome to the weekly meeting of the local Democratic Party in San Bernardino, California. You'd think the mood here would be upbeat—after all, the incumbent Congressman , Republican Jerry Lewis, is under federal investigation. Instead, this meeting feels more like a wake. Patrick Kahler is a local Democratic Party official.

KAHLER: I expected the national party to come in and give us a lot of support and money to get the campaign on the ground, and uh...

HINOJOSA: Has it happened?

KAHLER: It hasn't quite happened. We're still waiting for it to happen.

HINOJOSA: Kahler says their candidate for congress hasn't raised a single penny. But meanwhile, incumbent Jerry Lewis has amassed a war chest of nearly one and a half million dollars. Lewis is expected to cruise to victory. So much so, he hasn't even been out campaigning.

Running against an incumbent is never easy, but in this case, it's even harder. Lewis is one of the most powerful men in Washington.

LEWIS: "Mr. Secretary, the budget proposes spending 8.3 billion dollars on..."

HINOJOSA: As chairman of the house appropriations committee, Lewis oversees nearly a trillion dollars in federal spending. He's got the power to hand out a lot of the taxpayers' money. Now he's accused of handing out money in exchange for campaign contributions.

KAHLER: All I see is a bunch of apathy with the voters and no outrage coming to the fact that ya' know, where is a guy who could be in trouble just like Delay or Cunningham, and uh nobody seems to care.

HINOJOSA: This fall's mid-term elections are seen by many as a referendum on the influence of special interests on elected officials. And Lewis is not the only member of congress facing allegations of corruption. Over a dozen congressmen, Republicans and Democrats alike, have been swept up in the recent Washington scandals. The question is, will the voters care?

In the midst of his re-election campaign, Congressman Lewis has become the target of a justice department investigation. Investigators are looking into his relationship with this man—Bill Lowery. Lowery is a lobbyist, and himself a former Congressman. Lowery's firm is well known for its ability to get so-called "earmarks" from Congressman Lewis.

An earmark is a special provision inserted into legislation which directs money to a particular person or group. An earmark itself isn't illegal, but what is illegal is giving one in exchange for a campaign donation.

With Lewis, there's alleged to be a pattern. Companies hire Bill Lowery. Then, Lowery suggests they make a campaign donation to Lewis. Earmarks, supported by Lewis, follow. In fact, over the last six years, Lowery's firm and its clients have donated nearly half a million dollars to Lewis.

Meet Tom Casey. Casey once owned a large southern California computer company. He developed a new way to transfer technical drawings to computer. In 1993, he thought the Pentagon might want to buy his technology, so he pushed for an earmark to jumpstart the process. A business associate introduced him to Congressman Jerry Lewis.

CASEY: I'd go to Washington, and we'd meet in his office, or we'd go out to dinner, and they were basically face to face conversations.

HINOJOSA: It was in those conversations that Casey says Lewis solicited campaign contributions, even though Casey didn't even live in Lewis' congressional district.

CASEY: I mean, I certainly would have no problem, and had no problem, putting out my campaign contribution to get my fifteen minutes to talk about my project to someone who is not my representative, and that was okay.

But I understood the way the process worked, and I certainly participated in it.

HINOJOSA: Casey says Lewis went even further, allowing him to write the legislation authorizing that earmark. And all along, Casey says, the Congressman kept asking for something else—that he hire a close friend who had just become a lobbyist, Bill Lowery.

CASEY: Congressman Lewis had a term, "the Lewis family," and that people who were friends of his were all looking out for each other respectively. And that he was looking out for Bill's best interest.

I think there was definitely the implication that good things would come of it.

HINOJOSA: Casey says Lowery also suggested he donate money to Lewis. Eventually, Lewis supported two earmarks for the pentagon project, worth some 34 million dollars. Casey says when he recently read comments by Lewis and Lowery downplaying their relationship, he couldn't believe it.

CASEY: It is very well known when you approach the hill who you should work with to be able to gain access to a particular person, so what surprises me is that people aren't willing to admit it because it is symbiotic in a lot of ways. So to say it is not, is the where the truth falls short. That is the way it works.

HINOJOSA: It's not just businessmen like Casey who've figured out how it works. Dozens of cities and government agencies in Lewis's home district have also turned to Lowery to get earmarks and other help.

Daniel Cozad is the general manager of the local water authority, responsible for delivering clean drinking water to nearly 6 million residents in southern California.

HINOJOSA: At what point do you decide, we need more money coming in, so we think we're going to go with a lobbyist?

COZAD: Usually, when you are looking at these projects, they are hugely expensive projects.

HINOJOSA: Recently, the federal government wanted to do some renovation work on a local dam, threatening a nearby pipeline that's used to remove contamination from drinking water. Relocating that pipeline would have cost Cozad's agency 100 million dollars.

HINOJOSA: So, enter the lobbyists. Cozad says local officials repeatedly suggested he hire Lowery's firm.

HINOJOSA: Did it seem strange to hire a lobbyist in Washington to lobby the federal government?

COZAD: For me as a general manager, to fly back and forth to Washington to participate in a ya' know 2 hour meeting just doesn't pay so to have somebody who is there who can participate in a meeting, knows what's going on in Washington, knows the things to do and people to call, that is just the most efficient way to get the job done.

HINOJOSA: And it paid off.

COZAD: Yes, it worked.

HINOJOSA: Lowery's firm, with the help of Lewis, got Cozad's agency off the hook for that 100 million dollars.

Federal investigators now want to know why local governments were hiring Lowery. Earlier this year, the FBI issued subpoenas to several cities in southern California, demanding documents related to lobbyist Lowery and Congressman Lewis.

Cozad says his agency didn't get one of those subpoenas, and, he says, Lowery's lobbying firm never asked them for campaign donations. All he knows, he says, is that the team of Lowery and Lewis delivers.

HINOJOSA: So when you heard about the fact that the Congressman is being investigated you said?

COZAD: It goes against all the experience one has. If you've actually personally ever worked with the Congressman or his staff, or the lobbyists and their staff, they work really hard and try to do what is best for the constituents and the state and country.

HINOJOSA: In a statement, Lowery's firm told NOW that their work is, quote, "no different than the work done by thousands of...lobbyists," and that their work is, "based on merit, not on campaign contributions." Congressman Lewis declined to comment for this story.

In San Bernardino County, evidence of Lewis and his earmarks is everywhere...there's the municipal pool....and a local community center. Lewis also got his district 60 million dollars to convert a local air force base into a commercial airport, although when we visited, there wasn't a passenger in sight. And the biggest winner? Nearby Loma Linda University.

Over the years, Lewis has earmarked nearly 160 million dollars for Loma Linda. Locals have even nicknamed it "Loma Lewis University." All of that has won the Congressman lots of fans.

Pat Morris is a democrat and the mayor of San Bernardino.

MAYOR: As I've watched Congressman Lewis uh earmark funds that benefit California, I have seen remarkably good things happen. Great Congressman.

HINOJOSA: So Jerry Lewis delivers and whatever is happening in Washington or possible issues of ethical improprieties take a back seat?

MORRIS: That's not what I said. I'm not about to prejudge this public servant. Not a chance. I know him. Up close and personal. And I know him uh as an honorable man and a remarkable and effective and devoted public servant.

HINOJOSA: At this point, you may be asking yourself, so what's the problem? Isn't a Congressman supposed to bring home the bacon? But here's the issue—earmarks are often inserted secretly into legislation. And they often happen because of the efforts of lobbyists.

It's big business. Over last several years, the use of earmarks has exploded. Last year, Congress issued some 13,000 of them, totaling over 67 billion dollars. Perhaps not coincidently, the number of registered lobbyists in Washington has also skyrocketed in recent years, now numbering some 35,000.

HINOJOSA: Keith Ashdown works for the watchdog group "taxpayers for common sense." He says this abuse of earmarks is like a kid in a candy store.

ASHDOWN: I mean, I have a five-year old daughter. If one day, I gave her a bag of m&m's and I said, "you can have five m&m's," I'd came back 20 minutes later and she's eaten the whole bag. I mean, defense contractors are like my daughter. Nobody is watching, nobody is lookin' at what they're getting from congress. They're gonna put their hands in that proverbial cookie jar a few too many times.

HINOJOSA: In some parts of the country, there are early signs of a backlash against the influence of special interests.

PRESSER: "Tonight, my candidacy for lieutenant governor comes to an end..."

HINOJOSA: in Georgia, Christian conservative Ralph Reed lost his bid for lieutenant governor after his links to disgraced lobbyist Jack Abramoff were revealed.

And in Ohio, another powerful Republican Congressman, Bob Ney, is in hot water because of his links to Abramoff. Ney is being investigated for favors he may have granted Abramoff in exchange for trips and campaign donations.

Ney's district is quintessential small town America, and has long been a Republican stronghold. What happens here is considered a bellwether of what may happen in elections across the country this fall.

NEY: "I wanna' work to provide you with a Congressman you can be proud of..."

HINOJOSA: Democratic candidate Zack Space has been preaching a message about money and politics that is winning over not just members of his own party, but some Republicans too.

SPACE: That corruption is the manifestation of a larger problem. What kind of system produces a Bob Ney? A system dominated by special interests. We have oil companies determining energy policy. We have Pharmaceutical companies our healthcare delivery system. There is a cost to that system. There is a cost to that corruption.

HINOJOSA: Just recently, Bob Ney dropped out of the race, citing what he calls his "ordeal." And Space's notion—that Congress can't serve special interests and the public at the same time—is echoed by republican Congressman Chris Shays.

SHAYS: People who basically are corrupt are as good as traitors.

HINOJOSA: On Capitol Hill, Shays is considered the godfather of ethics reform. In 2002, he co-authored the historic legislation outlawing soft-money contributions to political campaigns. But Shays says special interests still have tremendous influence on Capitol Hill.

SHAYS: Some say, "you know, you're giving Congress a bad name when you say that we have problems." And I say, the people who are doing these bad things are giving Congress a bad name. And the people who aren't willing to deal with it, to confront it, are giving Congress a bad name.

HINOJOSA: Shays points out, both parties are to blame. On the Democratic side of the aisle, Congressman Alan Mollohan, once a member of the House Ethics Committee is now embroiled in controversy over earmarks he gave benefiting friends and supporters.

JEFFERSON: "I will not plead guilty to something that I didn't do..."

And who hasn't heard about democratic Congressman William Jefferson, and the $90,000 FBI agents found in his freezer? Nonetheless, Shays acknowledges that because Republicans control Congress, they're more likely to feel the voters' wrath.

HINOJOSA: How did we get to a point when in the year 2006, ethics has yet again become a central issue?

SHAYS: I think people think money trumps uh bad press. When you go to either the Democratic or Republican conference, you'll hear leaders say, "well, the public really doesn't care about that." Tell that to Ralph Reed.

HINOJOSA: But back in San Bernardino, the voters don't seem too riled up. Even local Democratic officials concede, their efforts to unseat Lewis are pretty much on life support.

KAHLER: Well talking to my neighbors they don't see it as a problem and it doesn't affect their lives, so why should they care? And I think that's what Congressman Lewis is realizing is what's happenin' and hopes he can get away with it.

Unless he's actually in a courtroom or behind bars, I guess nobody is going to stand up and notice.

HINOJOSA: Earlier this year, when the Abramoff scandal was still making headlines, Republican leaders promised tough legislation cracking down on earmarks and outlawing lavish junkets.

HASTERT: "I feel we must ban privately sponsored travel in the House of Representatives..."

HINOJOSA: But the bill that's emerged is much weaker. Even so, it faces an uncertain future when congress returns from summer recess.

HINOJOSA: You've actually called it a "total sham," the ethics reform that has been passed. Why?

SHAYS: 'Cause it simply doesn't rise to the level. It's not significant enough, in my judgment. It would give people a pass without dealing with the inherent problems that exist.

HINOJOSA: In the meantime, Congressman Chris Shays has put forward his own, tougher bill, warning of the consequences if congress doesn't clean up its act.

SHAYS: You want us to be ethical. You don't think you have to tell us to be ethical. Now, when you are out voting, and your learn that that Congressman or woman, or whomever, isn't ethical, you say, "you know what? I don't want 'em representing me."

BRANCACCIO: You can find a lot more on this over on our website at pbs.org... and while some Congressmen may be in trouble for the sweetheart deals they've made to finance their re-election campaigns, they still haven't figured out how to pay for the fortune the U.S. government is busy spending.

Here's just one line item: the Congressional Research Service recently estimated that the bill so far for the war in Iraq, Afghanistan, and other anti-terror ops around the world equals 437 billion dollars...that's pretty close to half a trillion dollars, and much of it borrowed.

But here's the real news: the government's finances may be much, much worse than acknowledged by the White House, the pundits, or the media. There is a new book out that reveals the dangerous state of federal deficits and overall debt. Congressman Jim Cooper of Tennessee was a contributor.

BRANCACCIO: Well Congressman Cooper, thanks for you joining us.

COOPER: Thank you, David. Glad to be here.

BRANCACCIO: You know, you look at the New York Times Bestseller List and you see things like The Alphabet of Manliness on there. You're not here to talk about that. You're here to talk about something called The Financial Report of the United States. Give me one good reason not to change the channel right now.

COOPER: I wish it had a sexier title. But it's really important because it's the roadmap for our future. If we want a better life, five, ten, 20 years from now, we've got to have a way to get there.

BRANCACCIO: Now, this is some truth telling you'd say?

COOPER: This is shocking news to a lot of folks. Because the real deficit in America is at least twice as large as any politician will tell you. And it may be ten times larger. So, I think people need to know this. And this isn't a partisan viewpoint. This is what the U.S. Treasury Department under the Bush Administration has said in a near secret document.

BRANCACCIO: This is about in part which types of accounting rules you use to calculate it?

COOPER: Well, it's really about whether you're measuring it fairly and accurately or not or whether you're using an old technique that the government insists on. I think we should use modern accounting to tell us the truth.

BRANCACCIO: I don't know. If you use the old— if you use the old method it makes the problem not quite look as scary. And maybe it will just go away.

COOPER: Well, make believe is a lot of fun. But we live in the real world. And we're the only superpower on the planet. So, I think it's time to get real with our numbers.

BRANCACCIO: How big is the problem really then?

COOPER: Well, the deficit for 2005 was at least $760 billion, not the 319 that's reported. And if you care about Social Security and Medicare, it wasn't $760 billion. It was more like $3.3 trillion or ten times larger than is commonly reported.

And I care about Social Security and Medicare. I want those benefits to be there for our people. My mother's 87. We need to make sure that these folks are taken care of. But by lying about the situation we're in, that won't help my mother or anybody else's parents.

It's an outrage. And again, this isn't a partisan statement. This is the truth as reported by the U.S. Treasury Department under the Bush Administration.

BRANCACCIO: You are a Democrat. You're a fiscal conservative. Are you really talking code for we have to cut government spending, leave taxes where they are?

COOPER: Nobody in Washington will have the credibility to do anything on the tax side until a lot of programs are not only scrutinized but reduced. Because there is a lot of— duplication, waste and mismanagement. And the average taxpayer that I talk to is really upset about that. And they want to know that we don't just put fertilizer on government that we prune and trim when needed.

BRANCACCIO: It is such a challenge. Because you're asking people to not just reckon with the budget problem that you say is way worse than we really recognize but also to make tough tradeoffs. I mean, not all these government programs are bridges to nowhere. Sometimes they're people's livelihood.

COOPER: Absolutely. But remember that Congress is basically an organized appetite. We need an outside adult force to discipline us occasionally. We should have the executive branch weigh in more heavily on spending issues.

But they have done more to promote big spending, big domestic spending, not counting defense or homeland security, than any President since LBJ. And yet they think they're a conservative administration? Give me a break. The conservative think tanks like The Heritage Foundation and the Cato Institute have called their bluff on this. All of America needs to call their bluff on this. Because this has not been a conservative administration in terms of spending.

BRANCACCIO: There are a number of efforts to shine some daylight on what we're really spending and how the government uses its money. And I don't know if you saw but some of your colleagues over in the Senate have this idea of taking the whole federal budget and sticking it online in an interactive way so that every grant, every government contract, every little piece of pork you can click on it, find out more. Do you support that kind of effort?

COOPER: Absolutely. I think we need maximum transparency for government. There should be no secrets unless it involves certain parts of national security. Every earmark, every grant, every contract should be online so that the public can get access to it. But the key principle is this: sunshine is the best disinfectant. And we need a lot of disinfectant in Washington today.

BRANCACCIO: Don't you ever worry though that the American public, what we really want is we like to have all the goodies, and we hope somebody else pays for them someday. That if we could really see the extent of the hole that we've dug ourselves we'd much rather maybe close our eyes to it.

COOPER: I think the people have a reservoir of common sense that we need to tap into. People know around the kitchen table their family budget has to be reasonably balanced. Sure, credit cards are a terrible temptation. Other things tempt us. But one day we've got to pay our bills.

BRANCACCIO: So— but your hope that let's say— the book that you've written the forward for with the fascinating title, A Financial Report of the U.S. gets people to actually look at what we're spending and then cry out?

COOPER: I think America's ripe for a financial revolution, for the average person to get more involved in their government and to care about the destiny of our nation. Because these things might sound a little boring on the surface. But they have everything to do about whether our kids and our grandkids are going to live a better life or not. And right now that's in danger.

We've got to make sure that we can live up to our commitments to the next generation. And this is the only way to do that, to get the numbers right.

BRANCACCIO: Congressman Jim Cooper, Tennessee, thank you.

COOPER: Thank you, David, appreciate it.

BRANCACCIO: And that's it for NOW. From New York, I'm David Brancaccio. We'll see you next week.



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