Q: My sense is that Watergate changed things. That after that event rules
went into place.
Phillips: I think what we saw after Watergate was a desire to really tighten the net on
both their financial behavior and their personal behavior. And it hasn't
entirely changed. I shouldn't say it's even changed very much, their personal or
financial behavior. But it forced them to be more devious about it, to issue
pious denials that they are doing any of these things and they do go ahead and do
them, on both counts, too, so that it's made it more hypocritical, and more
regulated and more painful.
Q: What are the rules? Let's suppose you're the politician, and I'm the
giver. What are the rules for me?
Phillips: Well, if you're the giver, you don't
want to ask the politician that question. You want to say, 'Charlie, I know that
there are the usual pockets in your suit that people have put money in, and it's
really not possible to do that very well any more, because I can only slip a
couple of bills in there, and it has to be reported. So let's talk about the
pockets that are really there that come from the loopholes.' Now, they can have
personal foundations. They can have traveling funds in certain circumstances.
In the last Congress, seven senators had legal defense funds. They had legal
Q: You mean, they're accusing me of stealing, they're accusing me of
chasing ladies around the table?
Phillips: Yes. Exactly. And because they had these legal defense funds,
you could make a larger contribution to the legal defense funds than you can make
to their political action committee.
Q: Wait a second. Isn't it embarrassing to have a legal defense fund?
It means that you're in trouble, or at least there's a sense that you've done
something wrong, or worse.
Phillips: Well, but lobbyists know what you're in trouble for is what's
been done in Washington all the time, and you just happened to get caught. So
the lobbyists aren't embarrassed. And it's not the ordinary housewife who's
contributing to Bob Packwood's legal defense fund anyway. It's some sleazeball
friend of his who wants a favor on a tax bill.
Q: But a sleazeball friend would give money to a sexual harassment legal
fund without worry that somebody in his office would say, what are you giving
money to that thing for?
Phillips: Because everybody knows why they're giving it to that thing.
He's the chairman of the Senate Finance Committee. There's no doubt in
Q: No, no, no. If I were manufacturing toothpaste, and I'm the Washington
guy for the toothpaste company, and I put 20,000 bucks in the legal defense fund
for some guy who's been accused of a heinous behavior, won't my toothpaste
chairman say, you're putting my toothpaste money in an embarrassing place. Stop
Phillips: Well, I suppose so, if the only people who bought the
toothpaste were members of Common Cause. But if we assume that they have broader
market, I don't think there's any problem. And the CEO would ask the government
relations vice president, check it out. And he'd say, well, the reason we did
this is, remember, he helped us on the A and B and the C, and he's probably going
to beat this one, even though he didn't in that case. That's Washington.
Q: So, 'I need a lawyer' funds are now an easy and prominent place for
you to park political money?
Phillips: Well, only if the politician in question has legal problems.
But that's a large enough category in recent years that it's at least worthy of
note. And when you're thinking about all these ways you can give the money, it's
important to cover all these things, because they just keep opening up. And
that's one of them.
Q: But it's so embarrassing to go before the public and say, 'You all
know I'm running for office, and I need money, so give to my lawyer defense fund
for the time that I chased the lady around a desk.'
Phillips: Well, we have right now sitting in the White House a President
who has a legal defense fund, not because he chased a woman around a desk, but
because of certain other accusations. The point is, you can't expect senators to
be paragons when we have a fellow sitting in the White House who has the first
Presidential legal defense fund for comparable things.
Q: And you sense no embarrassment on the part of the politicians or the
lobbyists who give to these funds? None whatsoever?
Phillips: I think the lobbyists who give to these things know that money
given to a political action committee is just a contribution. Money given to a
legal defense fund is, you're there with your guy in his hour of need. That's
better psychological bucks, if he survives.
Q: On the question of just simply what the rules are...Right now, if I am a
donor, what are the rules? What are my limits?
Phillips: Well, you can only give as an individual donor, $1000 in the
primary and $1000 in the general election.
Q: Just for me. How about my wife?
Phillips: Well, that too.
Q: How about my kids?
Phillips: The children. Absolutely.
Q: So if I have 16 children, I can give $16,000, plus the two for me and
my wife. Is there any limit on the amount of money I can give to the
Republicans in general or the Democrats in general?
Phillips: In terms of campaign and strict party contributions, yes. But
in terms of soft dollars, this is a loophole which exists--
Q: What do you mean soft dollars?
Phillips: Soft dollars are, well, they're soft legally, because they're
not really legal, but they are. They're given for purposes which are really
party- building activities, and mostly at the state level.
Q: Wait a second, there's no $1000 limit here? So I can give to the
Republican Party National Campaign For Making Us More Noticeable-- 'The Make
Republicans Noticeable' campaign? I can give them $100,000?
Phillips: Well, if they had a specific campaign that did not go with the
language of the soft money loophole, you could not give to it. If there's no
other reason that you couldn't do it as an individual, and that there was nothing
wrong with that account, I don't see any reason why you couldn't. You don't even
have to give it to an awareness fund. You just simply have to give it to an
established soft dollar qualifying mechanism.
Q: What does that mean?
Phillips: Well, just that you're giving it to the Republican National
Committee for this broad purpose, which I would guess that some lawyer in
Washington has got a whole bunch of these forms, and they can fill them
Q: Can I give like 500,000? Or a million dollars? My money, my own
Phillips: Well, I would think you could. I don't think there's any
reason that you'd be prohibited?
Q: Can I give 10 million?
Phillips: Nobody does. It would bring too much attention. Clearly, the
$100 to 200,000 donations are common enough that while you may get singled out in
a Common Cause expose along with 156 others, you're not going to be out of the
Q: But why would I give half a million or $200,000 to a sort of bunch of
people? I mean, isn't the whole point of this to really give it to Tommy, or to
Jeff, or really give it to the President ?
it's really to give it to Tommy, and sometimes it may really be to give it to the
President. But sometimes it's just seed money.
Q: But, I mean, if I'm
giving it to the Republican campaign, then I'm not really giving it to the
President or to a particular senator. It doesn't seem very effective.
Phillips: But they give money to a lot of campaigns. Let me give you an
example of where this seed money would be most effective. Giving it to the
Republicans in order to get it into their congressional campaign committees and
their soft dollar payments to the states to get out the vote, which are designed
to register more Republicans for congressional races, doing this would be part of
a large scale blueprint for changing the structure, let's say of the House of
Q: Suppose I've got $200,000, and I want to give my 200 grand to
Presidential politics, how do I do that? Because I want to catch the attention
of a President. But this fund says it's for all Republicans. But I'm interested
in Bob Dole. How would he know that I counted in here?
Phillips: Well, what you'd want to do then would be to give it a Dole
campaign fund. And you can't with $200,000. But what you would do would be, if
Dole were already the Republican Presidential nominee, then you could safely give
it to the national party, and it would tell Dole's campaign chairman, this
obviously, it shows how committed I am to the Senator and so forth. Now, since I
don't want to suggest any one individual does this more than any other
individual, let's jump out of the specific framework. Somebody interested in
being an ambassador would say to the party's national finance chairman, you know,
this money that I'm giving to the party, Harry, you know, I really want
Luxembourg. I really want Norway. My wife wants New Zealand, so it's going to
be one of those three, and we'll decide. And the fellow, he can't give this to
you in writing, but he says, I understand what you're talking about. And I could
name you ten in this administration, and ten in the previous that have these
positions because they gave money.
Q: And they would give it, sums much greater than $1000?
Phillips: $1000 isn't going to get you to be vice consul in
Q: But the law says that I'm only allowed to give $1000 to so and so's
presidential campaign. So how do I give $200,000?
Phillips: To the national parties, through one of the loopholes.
Q: So I can give to the group of them, and the President will know that I
gave the 200 g's?
Phillips: Well, there's also another way you could do it, if you wanted
to be ambitious, and the President's campaign was well linked with a
congressional campaign. You could bundle maximum contributions to 100 different
congressional candidates, and your wife could do it, too. And your 16-year-old
kid, maybe. I'm not certain whether that's legal. But you'd get a lot of money
in that way.
Q: Bundle means I give to the one running in New Jersey, the other one
running in New Jersey. The one running in New York, the other one running in New
York. The one running in Connecticut, the other one running in Connecticut. The
one running in New Hampshire, the other one running New Hampshire, and so on and
so on and so on. And I give 1000 bucks to 60 people.
Phillips: Yes, in a nutshell. People who do bundling generally sort of
work both sides of the streets. They're in touch with the campaigns and the big
donors. And basically they will say, 'Harry, we know you want to help us in the
congressional races, and here's the 38 guys that we need the most this week, and
how about it?' And we come up with checks.
Q: And this is legal?
Phillips: Well, if it were done, saying whether these things are legal
depends on how it was done. In other words, if you gave somebody a memo spelling
all of this out. But as long as it appears to be spontaneity, there's nothing
that stops somebody--
Q: So I can spontaneously come up with the name of 38 congressional
candidates in 24 different states, just boom, and no district attorney will go,
Phillips: Well, you don't know 38 different candidates, I assume. I
don't, either. But there are people who are very interested in party politics
who follow these things carefully, might genuinely keep up enough to know them.
But the real point is that it's coordinated for the most part, and that as long
as you observe the logical limitations on this stuff and don't make it obvious,
you can do it. And it would be an inhibition of your right to donate to 38
campaigns to say you couldn't do it.
Q: When I give this money, the usual assumption by most people watching is
that I'm trying to get something for it. Is this tidal wave of money flowing to
the political class, is it asking for something? And what is it asking
Phillips: Oh, I think it's asking for about four or five different
things. In the congressional sense, the Republicans wanted to take over
Congress. Let me suggest what I think it represented. In some cases, it was
people that really liked Newt Gingrich, had been supporting Newt and wanted him
to be Speaker. In other cases it was people who really wanted a Republican
Congress, and they did it partly for broad ideological reasons. In most cases,
it was people who really wanted a Republican Congress because it would be
pro-business and pro-finance and would change the control of key committees that
pass on regulatory laws, tax laws and many other things. A small group would
have tangible ideas of specific legislation or amendments they wanted. And if
you take all of those categories, you probably cover the bulk of the people
involved. But to say they're all thinking about A as opposed to 20% thinking
about C would be a mistake.
Q: By that reckoning, is this so terrible? If people who have money and
are in business want to have a Republican Congress, or like Newt Gingrich, or
like Bill Clinton, that's their privilege. This is a country where if you like
somebody you're allowed to vote both with your, by pushing a lever or by money,
and so, remember, your category had only 1/4 of the list there was, I want, you
know, a bill, and I want my pension fixed or something. So, maybe this isn't so
Phillips: Well, the problem is that when this system was set up, a system
of representative democracy as opposed to direct democracy, you had to presume
that the representatives were representatives representing the people. Now, in
the system that we've evolved, with campaign finance being so central and the
demands for money being so high and the money sloshing in being so great, what we
really have is a system in which democracy in this country represents
increasingly dollars rather than voters. And that is a fundamental rebuttal of
what this system has been all about. And when it seemed to be going in the same
direction 100 years ago with those legislatures in Wisconsin and Montana, they
passed a constitutional amendment to give that power to the people. And the
whole role of money in this system today is taking power away from the ordinary
voter who doesn't have money and concentrating it in the hands of people who
don't so much cast ballots as they write checks.
Q: But what if we could say that the people who are writing checks are
writing their own personal philosophies. They're not asking for favors. They
just like a pro-business environment, or they don't like abortions. Or they just
like equality for women or something. So they give money based on a broad
attitude, not-- 'I give you this money, and you give me US Code 117-ABC, which
means that I can give some money to my grandson and not pay taxes.' It seems to
me a lot of it is in the first category.
Phillips: Well, even if it is in the first category, and I would
stipulate that I think a fair amount of it is, what they want ideologically is a
politics that responds to their economic interests, which is, as you say, that's
legitimate. However, the drawback is, if you basically allow the decision making
in this country to be weighted by the dollars, the resources of the voters, you
almost wind up creating a plural vote in which the person with no money has one
vote, and the person who has a lot of money and can make a lot of contributions
has 57 votes.
Q: Are you sure? There's a sign on the Daily News, which says, 'God must
have liked working people because he made so many of them.' Are you sure that the
rich, rich class has more power than the working class when you consider that the
working class has so many people each giving--- you're laughing at me.
Phillips: In the last 20 years, the average non-supervisory wage in the
United States, as you know, has declined in real terms. The salaries and wage
packages of CEO's have climbed to a level that we never imagined before. The
stock market has set new highs. Investors have made more money. There's massive
change in the relative well-being of rich investors and corporate executives
relative to workers.
Q: The wealthier may be richer, but that does not mean that they're all
writing checks to politicians, and they're all leveraging their power. It may
mean that ten of them are, and that the working class, the working Americans are
still basically casting the real votes in this society.
Phillips: Well, I would suggest that, and nobody's done this, so here's a
pioneering piece of investigative reporting for you to do, take the people in the
Forbes 400 listing of richest Americans, and check out their political
contributions for the last ten years. See how many have not made any political
contribution. And if 300 of the 400 have not made any, then I would say you're
partly right. If in fact these people have flooded the American political system
with contributions, then I would say that what we really have here is a plural
vote, where multimillionaires are casting hundreds of votes for every vote cast
by the average citizen.