Countdown

The Buying of the President 2000

John McCain

The planners at Del Webb Corporation, the nation’s seventh largest builder of single family homes, leave little to chance. In subdivisions with names like Copper Cove and Sienna Canyon, the company offers buyers homes with three-car garages, wall-to-wall carpeting, and landscaped yards. Retirees at Sunflower, a Del Webb “active adult” community in Tucson, Arizona, can sun by the pool, soak in a Jacuzzi, or hit the tennis court.

Del Webb communities dot seven states, including Arizona, where the company is headquartered. But to make way for its sprawling real estate developments, Del Webb has arranged several controversial land swaps with the federal government.

In 1994, for example, Del Webb Corporation proposed exchanging some of its land for a 4,000-acre tract near the Red Rock National Conservation Area, a scenic stretch of desert featuring seasonal springs and clusters of Joshua trees 15 miles west of Las Vegas. But the plan hit a brick wall when the U.S. House approved legislation to expand the Red Rock National Conservation Area to include the acreage the company wanted.

One of the company’s lobbyists, Donald Moon, a burly former prosecutor with ties to Interior Secretary Bruce Babbitt, tried to get the bill’s sponsors to exclude the land that Del Webb wanted from Red Rock, but nothing came of his efforts. He then turned to Republican Senator John McCain of Arizona. He knew McCain would help, for over the years, Del Webb had helped McCain. The company’s executives and employees, in fact, have given McCain at least $56,535 in campaign contributions, making Del Webb his No. 7 career patron.

And help McCain did. He placed a “hold” on the legislation (through a letter of notification to Senate Majority Leader Robert Dole), thus stalling it indefinitely.

Having bought some time, Moon then arranged a meeting with Robert Armstrong, the assistant Interior secretary in charge of the Bureau of Land Management, which controlled the land Del Webb wanted. Moon reckoned that if he could get Armstrong to write a letter in support of an alternative swap, he could use it to force quick government approval of a new deal. But Armstrong refused.

Moon had better luck with members of Nevada’s congressional delegation, all of whom signed a letter of support for Del Webb’s new proposal to exchange 4,700 acres of federal land in Las Vegas Valley, south of the city.

Once Moon had the letter in hand, McCain lifted his hold. The legislation to expand the Red Rock National Conservation Area passed the Senate intact, and Moon used the Nevada delegation’s letter to pressure the Bureau of Land Management into approving the Las Vegas Valley swap. When it came time to pay up, Del Webb offered the federal government $9,000 per acre for the land, based on an appraisal it had paid for. An appraisal commissioned by opponents of the deal, however, valued the land at $36,000 per acre. A March 1998 report by the Interior Department’s Inspector General faulted BLM for relying on Del Webb’s appraisal and concluded that taxpayers would have lost at least $9 million if the government had accepted Del Webb’s $9,000-an-acre offer. But the report came too late: In 1997, the BLM accepted Del Webb’s second offer of $10,900 per acre.

At stop after stop, traveling on a campaign bus that he’s nicknamed the “Straight Talk Express,” McCain tells his audiences that, as president, he would “take our politics and our government back from the special interests.”

But as his actions on behalf of Del Webb Corporation demonstrate, it’s sometimes hard to tell on which side of “the special interests” McCain actually stands. Through his 18 years in the Senate, he’s been an effective advocate for telephone carriers, railroads, real estate developers, and mining companies, among other well-heeled interests. The portrait McCain likes is the one of the plain-talking crusader who’s bucking the system; the one many others see is that of a politician who rarely breaks ranks with the special interests that finance his campaigns.

McCain’s mouth has always gotten him in trouble. As a student at Episcopal High School, a private boarding school in Alexandria, Virginia, his indifference to rules and regulations earned him the nicknames “Punk” and “McNasty.”

When he entered the U.S. Naval Academy in 1954, McCain didn’t quietly abide the hazing routinely dished out by upper-classmen. In fact, the entire hierarchy of the Academy rankled him. “It was bullshit,” he once said. “I resented the hell out of it.”

For McCain, however, being something of a hothead was in keeping with family tradition. His grandfather, John Sidney “Slew” McCain, was an admiral during World War II whose acid-tongued assaults on his enemies can still make his grandson wince. McCain’s father, John McCain, Jr., was a submarine skipper during World War II whose wild onshore antics and penchant for cursing earned him the nickname “Good Goddamn McCain.”

McCain’s stubborn feistiness cost him at Annapolis: He graduated close to the bottom of his class. But the same qualities, years later, would see him through a gauntlet of harrowing experiences in Vietnam.

First there was the fire aboard USS Forrestal. On July 29, 1967, McCain, by then a Navy pilot, was getting ready for takeoff when a rocket from another plane on the deck of the carrier accidentally went off, hitting his plane as he sat in the cockpit. He miraculously managed to escape alive, but the ensuing explosions and fires took 134 lives. It was the worst non-combat-related disaster in U.S. Navy history.

Then there was his capture by the North Vietnamese. In the fall of 1967, McCain transferred to USS Oriskany, only to be shot down on a bombing run over central Hanoi. McCain ejected and landed in a lake, breaking both arms and one leg in the process. An angry mob fished him out and beat him with rifle butts before carting him off to Hoa Lo prison, which its captives sarcastically named the “Hanoi Hilton.”

While McCain was imprisoned, his father became the commander in chief of all military forces in the Pacific. When his captors discovered who his father was, they offered to release him ahead of other prisoners who had been captured before him in an attempt to score propaganda points and crush the morale of the Americans left behind. McCain refused. After enduring repeated torture and two years in solitary confinement, he and the other U.S. POWs were finally released in 1973.

McCain’s courage in the face of incredible adversity earned him a hero’s welcome on his return, and, later, a springboard for a career in politics.

In 1976, McCain toyed with the idea of running for a seat in the U.S. House of Representatives in Florida, where he was stationed at the time. He ended up deciding not to run, but within a year he was on Capitol Hill as the Navy’s liaison to the Senate. From his digs on the first floor of the Hart Senate Office Building, McCain handled everything from the day-to-day troubles of sailors who were facing courts-martial to the Navy’s successful two-year lobbying push for a new nuclear carrier.

As his days in the liaison office were winding down, McCain grew impatient to run for office, but he lacked a base from which to launch his political career. As a Navy brat, he’d never lived anyplace long enough to call home. His marriage to Carol Shepp, whom he had wed in 1965, fell apart shortly after he returned from Vietnam. So, in 1981, a year after remarrying, he headed for Arizona, the home state of his second wife, Cindy Hensley.

Cindy Hensley is heir to a considerable family fortune. Her father, James Hensley, started a beer distributorship in 1955, just as Arizona’s economy was entering a long boom period. Today, Hensley & Company, based in Phoenix, is the biggest Anheuser-Busch distributor in the state and one of the largest beer distributors in the nation.

From the moment McCain landed in Phoenix, the Hensleys were key sponsors of his political career. Being elected to Congress was “the ultimate goal,” McCain recalled years later. “I just didn’t know how long it would take.”

In the early 1980s, Arizona was in the midst of reapportioning its congressional seats. It was clear that the state, owing to its significant population growth, would get an additional congressional district — the only question was where. While McCain waited for a chance to run, James Hensley gave him a public relations job at Hensley & Company so that he could travel around the state and build up contacts. McCain received an annual salary of $25,000 and an annual bonus of $25,000. His wife often acted as a one-woman advance team.

When all the lines were drawn, the new congressional district was in Tucson, far from McCain’s new home in Phoenix. But McCain soon learned that Representative John Rhodes, then the House minority leader, was about to retire after 15 terms. The only problem was that the McCains had settled just outside of Rhodes’ district. The couple fixed that by quickly buying a house inside Rhodes’ district (so quickly, in fact, that it was arranged within hours of his official retirement announcement).

Campaigning for the first time, McCain silenced critics who branded him a carpetbagger with the reply: “The place I lived longest in my life was Hanoi.” And in sharp contrast to the maverick image he cultivates today, McCain sold himself in television ads as someone who “knows how Washington works,” complete with photographs of him with President and Mrs. Reagan and Senator John Tower of Texas.

His war record and Washington experience put him over the top. In the spring of 1982, McCain came from behind to win a four-way Republican primary with 32 percent of the vote. He coasted to victory in the fall.

Once in Congress, McCain was the exact opposite of the hotheaded rebel he was at Annapolis. He was elected president of the incoming Republican class. He became a voice of tolerance within his party, championing the rights of Native Americans. When he disagreed with President Reagan, it was to oppose sending troops into Lebanon.

In 1986, after just two terms in the House, McCain moved on to the Senate and deeper into the arms of the GOP establishment.

In 1988, Vice President George Bush sent McCain across the country to attack his Democratic rival for the White House, Governor Michael Dukakis of Massachusetts. McCain even made the short list of contenders to be Bush’s vice president. Eager to climb the party ranks, he also sought the chairmanship of the Republican Senatorial Campaign Committee — a job that, ironically, would later go to Mitch McConnell of Kentucky, his future nemesis in the fight over campaign finance reform.

The Hensleys helped a lot throughout these years. So did an Arizona real estate developer named Charles H. Keating, Jr. For years, McCain accepted Keating’s assorted forms of largesse — campaign contributions, all-expenses-paid vacations, free rides on his corporate jet — without realizing, apparently, that there might be strings attached.

The two men met at a Navy League dinner in 1981. Like McCain, Keating was a former Navy pilot and newcomer to Arizona. He’d moved to Phoenix in 1976 and started American Continental Corporation, a real estate development company. When McCain announced that he was running for office, he sought out Keating, who arranged a fundraiser for him. Over the course of his House and early Senate career, McCain would collect $112,000 in campaign contributions from Keating, his relatives, and his employees.

But there was a kicker. When he was asked, years later at a press conference, whether his contributions to politicians bought him influence, Keating replied, “I want to say in the most forceful way I can: I certainly hope so.”

McCain got more than just campaign money from Keating. McCain, his family, and their babysitter flew on Keating-owned or -chartered jets nine times, including three trips to Cat Cay, Keating’s vacation estate in the Bahamas. And in 1986, Keating cut Cindy McCain and her father into Fountain Square Shopping Center, a strip mall that American Continental Corporation built and managed, for a $359,000 investment.

It was just a matter of time before Keating called in his chits. When he did, it was over Lincoln Savings and Loan, a thrift in Irvine, California, that he’d bought in 1984. It turned out that Keating was raiding the assets of Lincoln’s depositors to finance posh real estate projects such as The Phoenician, a $300 million, 654-room hotel and spa in Scottsdale, Arizona, and his own lavish lifestyle. By 1986, Edwin Gray, the chairman of the Federal Home Loan Bank Board, grew worried that Lincoln had strayed too far from its core mortgage business, and began to clamp down. Keating turned to his friends in Washington for help.

On March 19, 1987, Keating appealed to McCain in person to meet with federal regulators on his behalf. At first McCain balked, but then, on April 2, he joined Senators Alan Cranston of California, John Glenn of Ohio, and Dennis DeConcini of Arizona in DeConcini’s office to meet with Gray. On April 9 the four senators, joined by Don Riegle of Michigan, sat down in San Francisco with four more regulators from the Federal Home Loan Bank Board. Following the meetings, the board delayed its seizure of Lincoln Savings and Loan for two more years.

When the federal government finally took over Lincoln in 1989, the bailout cost taxpayers $2.6 billion, making it the most expensive S&L bailout in U.S. history. About 17,000 small investors also lost a total of $190 million.

In November 1989, outrage over the bailout and the intervention of powerful lawmakers sparked an investigation by the Senate Ethics Committee. From then on, McCain and the other four senators, who together accepted $1.3 million in contributions from Keating, were known as the Keating Five.

Caught neck-deep in Keating’s pocket, McCain scrambled to extricate himself. He quickly paid Keating $13,433 for the flights he and his family had taken on Keating’s jet years earlier. But it was too late to make up for the fact that, as a member of the House, he’d never disclosed the flights, as required under House rules. He refused to return Keating’s contributions; instead he filed a complaint with the Federal Election Commission in which he charged that Keating had illegally made his campaign contributions through American Continental employees. (The FEC dropped the case a few years later.)

McCain readily admitted that he’d made a mistake by going to the meetings, but insisted, “I in no way abused my office.” He crisscrossed Arizona, laying out his version of events before newspaper editorial boards and at town meetings. He even telephoned some reporters so many times to tell his side of the story that they stopped returning his calls. “It’s like a campaign,” he said at the time. “A campaign for credibility.”

Transcripts of the meetings supported his claim that he’d been the most reticent of the bunch. At one point during the meeting, McCain told Gray that while American Continental was a large employer in his state, “I wouldn’t want any special favors for them.”

In February 1991 the Senate Ethics Committee cleared McCain, saying he had “exercised poor judgment” but that his actions had not been “improper nor attended with gross negligence.”

“Clearly, ‘no improper conduct’ is what is important here,” McCain said on hearing the committee’s decision. “I view that as full exoneration.”

In a postscript to the scandal, McCain finally contributed $112,000 — the amount of money he’d gotten from Keating-related interests — to the U.S. Treasury. (Keating would otherwise rank as his No. 1 career patron.) McCain’s wife and father-in-law, however, held on to their stake in the Fountain Square Shopping Center. In fact, they held on to it long after American Continental Corporation went bankrupt. Cindy McCain, her father, and the remaining owners sold the mall two years ago for $15 million, reaping a profit that McCain has reported as between $100,000 and $1 million.

McCain’s career survived the Keating Five scandal. In 1992 he won reelection with 56 percent of the vote. Then he emerged as one of Congress’s leading advocates of political reform. In 1995 he helped to pass a $50 limit on the gifts that senators and members of their staffs can accept from outside interests, as well as a lobbying disclosure law that forces special interests to disclose how much they pay and whom they hire to lobby on particular issues. That year, McCain and Democratic Senator Russell Feingold of Wisconsin began pushing their proposal to overhaul the nation’s campaign finance system.

A year later, McCain was the only Republican in the Senate to vote against the 1996 Telecommunications Act. Proponents of the law insisted that massive deregulation of the telecommunications industry would bring more Americans into the information age at lower prices. But as McCain tells it, the legislation was “written by every interest in the world except consumers.”

So far, McCain has been right. Cable rates are up 6.8 percent nationwide, and rates for telephone service have gone up as much as 20 percent in some states. Instead of stiffer competition, there’s been speedier consolidation, with one merger after another: NYNEX and Bell Atlantic; SBC Communications, Inc., and Pacific Telesis Group; AT&T and TCI Communications, Inc.

In 1997, McCain found himself in a position to do something about the telecommunications mess. He succeeded the law’s chief sponsor, Larry Pressler of South Dakota, as the chairman of the Commerce Committee, which has jurisdiction over the telecommunications, aviation, and high-tech industries, among others.

While McCain may have come to the job with a well-documented distaste for unregulated monopolies, his equally strong dislike of regulation has led him time and again to side with companies or industries he believes will make a market more competitive. The result: McCain pushes their agenda, and they finance his campaigns.

Corporate interests with business before the Commerce Committee have showered money on McCain — enough money to help him raise $4.4 million for his 1998 Senate race, more than 10 times as much as his opponent, Ed Ranger, a political novice.

Today, McCain’s presidential campaign is no different.

One day last March, he collected more than $120,000 at a Washington fundraiser hosted by Kenneth Duberstein, a lobbyist for Time Warner, Inc., CSX Corporation, and many other corporate interests with business before the Commerce Committee; John Timmons, a former McCain aide who’s now a lobbyist for America West Airlines, Inc.; and Vin Weber, a former Republican congressman from Minnesota who now lobbies for Boeing and AT&T.

Special interests are putting money into McCain’s presidential campaign “under the theory,” as J. Steven Hart, a lobbyist for Continental Airlines, put it to a reporter for The Washington Post, “that no matter what happens, he’s still chairman of the Commerce Committee.”

McCain betrays his own coziness with Washington’s influence peddlers when he describes his lobbyist fundraisers as “people I’ve done business with for the past 17 years.”

Take the case of U S West, Inc., based in Englewood, Colorado, which holds a virtual monopoly over local telephone service in 14 states, including Arizona. In North Dakota, U S West’s basic phone rates are set to go up more than 20 percent by July 2000. Last year, 15,000 U S West customers in Omaha, Nebraska, signed a petition opposing a rate increase in their state, arguing that they were already paying more than their counterparts in 10 other states served by U S West.

U S West is McCain’s No. 1 career patron.

In May 1999, McCain introduced the “Internet Regulatory Freedom Act,” which would boost the company’s efforts to offer high-speed Internet service over long distance phone lines. U S West has been especially eager to break into the long distance phone market since June 1998, when long distance provider AT&T bought cable giant TCI. The merger allows AT&T to offer high-speed Internet service over cable lines, on top of cable television service and local and long distance telephone service. But under rules set up by the government when it broke up Ma Bell, the regional Bell operating companies — U S West among them — can provide service only within local calling boundaries known as local access and transport areas, or LATAs. McCain’s bill would let U S West and the other “baby Bells” provide services beyond their LATAs.

U S West would stand to profit in a big way from McCain’s bill. “If the Internet is deregulated in the manner Senator McCain is suggesting,” Solomon Trujillo, the company’s chairman, said the day McCain introduced his bill, “U S West will be able to provide high-speed Internet service to an additional 2 million households and businesses throughout our region during the first year alone.”

News Corporation, Ltd., which owns Fox Broadcasting, the nation’s fourth-largest television network, has also found a friend in McCain. (Employees of Fox-related companies gave McCain $14,050 in contributions on a single day in 1998.)

Last year McCain pushed a measure that would have increased the number of local TV stations that major networks can own. The proposal would directly benefit Fox Broadcasting, the only network to have reached the ownership ceiling. At the same time McCain was taking his idea around Capitol Hill, his chief aide on telecommunications issues, Lauren “Pete” Belvin, was running an antiques business with Maureen O’Connell, a lobbyist for Fox who was working to raise the cap. Last summer, after Mother Jones broke the news of their personal business ties, Belvin and O’Connell dissolved their partnership.

In 1997, Congress awarded spectrum valued at $70 billion to the nation’s broadcasters, Fox included, with the proviso that they switch from analog to digital television signals by 2006. McCain criticized it as corporate welfare. But he softened his stance after Fox’s chairman, Rupert Murdoch [In the interests of full disclosure, Murdoch also owned the company that published this book.], flew him out to Los Angeles in February 1998 for a private demonstration of standard-definition digital television technology, a cheaper, lower-definition alternative that’s being pushed by Fox and Microsoft Corporation. Andrew Butcher, a spokesman for Fox, told the Center for Public Integrity that, after the demonstration, McCain met behind closed doors with Fox executives. “I thought they made a pretty good case that the picture clarity at the lower level was pretty good,” McCain said afterward. He promised hearings before his committee, and they were held in July.

Hensley & Company, the family business that McCain’s wife serves as vice president and director, is the senator’s No. 2 career patron. Since 1982, McCain has received at least $161,000 in campaign contributions from beer-related interests. That figure doesn’t include the thousands of dollars in speaking fees from beer-related interests that McCain has donated to charity, nor does it include free travel provided to McCain by Anheuser-Busch, with whom McCain’s father-in-law has had an exclusive business arrangement since he founded his company in 1955. Most of the personal wealth of the Hensleys and of McCain’s children is in Anheuser-Busch stock.

McCain has publicly acknowledged the enormous potential for conflicts of interest by pledging to recuse himself from voting on legislation that affects the beer industry. To some extent, however, it is a half-empty gesture: He can’t really avoid such legislation. In 1998 the National Beer Wholesalers Association listed 26 legislative priorities on its website, many of which were under the jurisdiction of the Commerce Committee. In the 18 years he has been in Congress, McCain has rarely taken a stand against the beer industry’s interests.

Despite his support for regulating tobacco advertising and violence on television, McCain conveniently sidestepped a controversy over television commercials for hard liquor. In June 1996 the liquor industry announced it would break its 48-year voluntary ban on television advertising, prompting President Clinton to call on the Federal Communications Commission to study whether such advertising harms children.

A Commerce subcommittee scheduled hearings on alcohol advertising for February 1997, then postponed them. The beer industry, fearing that any restrictions placed on hard liquor would be imposed on beer as well, lobbied feverishly to have beer advertising cut from the hearing agenda. In the end, the industry got its wish: The hearings never took place.

In 1999, McCain pushed legislation that would have authorized another round of military-base closings beginning in 2001. While the move appeared to be classic pork-busting, it had the support of top military and civilian defense officials, as well as aerospace companies that had already secured large contracts to build military aircraft and missiles.

Among the big supporters of McCain’s bill was Seattle-based Boeing Company. Boeing, which in 1997 bought its rival, McDonnell Douglas Corporation, manufactures commercial and military aircraft, missiles and space exploration equipment, defense electronic systems, and large-scale communications and information networks. Boeing is McCain’s No. 5 career patron.

Boeing maintained that closing more military bases would save billions of dollars, providing the extra money needed for new equipment and initiatives to improve national defense efforts. Defense Secretary William Cohen lobbied all year for the measure, arguing that without the savings, the Pentagon wouldn’t have the money needed in 2005 for major systems entering the production phase of development. The systems included the Army’s RAH-66 Comanche helicopter, made by Sikorsky Aircraft Corporation (a subsidiary of United Technologies Corporation) and Boeing; the Navy’s V-22 Tiltrotor, built by Bell Helicopter Textron and Boeing; and the F/A-18E/F Super Hornet, produced by Boeing.

But the idea of additional base closings proved to be too politically unpalatable, and on May 26, 1999, the Senate defeated McCain’s legislation, 40-60.

McCain did better for Boeing within the Commerce Committee, where in April 1999 he introduced legislation to extend federal risk insurance to commercial satellite launchers for another 10 years. Boeing has a satellite launch unit based in Huntington Beach, California.

Under the 1984 Commercial Space Launch Act, companies insure their launches for up to $500 million in damages, while the federal government pays for any damages from $500 million to $1.5 billion. Senator Ernest Hollings, a Democrat from South Carolina, has called federal risk insurance for satellite launchers nothing more than “a subsidy to the richest industry there is.”

Boeing felt otherwise. “The legislation is critical to level the playing field with our international competition in the space launch arena,” R. Gale Schluter, a vice president of Boeing’s Expendable Launch Vehicles division, told a hearing of McCain’s committee on May 20, 1999.

Boeing executives dropped $4,000 into McCain’s campaign in the days following the hearing. On June 23, 1999, his proposal passed the Commerce Committee, but it failed to pass the Senate.

On April 29, 1997, at 9:30 a.m., Raymond Stanley, the chairman of the San Carlos Apache Tribe of Arizona, was due at an oversight hearing on his tribe’s water rights before the Senate Indian Affairs Committee. But instead of getting into a taxicab or taking his seat in the hearing room, he was in his hotel room across town, waiting for the other shoe to drop.

A messenger had just delivered a letter from the tribe to McCain, who was to preside over the hearing. In the letter, Stanley explained that neither he nor the tribe’s vice chairman, Marvin Mull, would be appearing at the hearing.

The Apaches’ absence miffed McCain as well as J. Steven Whisler and Timothy Snider of Phelps Dodge Corporation, a copper mining and manufacturing company. (Phelps Dodge is McCain’s No. 10 career patron.) McCain’s office had invited the Phelps Dodge executives and the San Carlos Apache leaders to Washington to renegotiate a water rights agreement that would let Phelps Dodge continue to use water from Apache lands for its mine in Morenci, Arizona.

A third of all the copper in the United States comes from the Morenci mine, making Phelps Dodge the largest copper producer in North America. In 1990 the San Carlos Apaches signed an agreement with Phelps Dodge to let the company use its water. In recent years, however, the tribe has complained that Phelps Dodge was using more water and extracting more copper than intended under the 1990 agreement.

“Like its forefathers,” the tribe said in a statement, “the San Carlos Apache Tribe continues to defend its tribal homeland and water rights against outsiders who would destroy or deplete them.”

By boycotting the hearing, the Apaches hoped to force McCain and Phelps Dodge to take their concerns seriously. Water is vital to one of the tribe’s main sources of income: cattle ranching. The only other major provider of jobs on the San Carlos Apache reservation, which has an unemployment rate of 30 percent, is the federal government.

But McCain offered them little sympathy, calling their boycott “nonsensical.”

In May the tribe reluctantly returned to the bargaining table. The resulting compromise, which required congressional approval, ensured that Phelps Dodge could continue to use the tribe’s water in return for an undisclosed fee. “We were very successful,” a spokesman for Phelps Dodge told the Center.

The agreement faced one last hurdle. On May 7, 1997, McCain and John Kyl, his colleague in the Senate from Arizona, cast tie-breaking votes to approve the San Carlos Apache Tribe Water Rights Settlement. A week later Douglas Yearley, the chairman of Phelps Dodge, gave McCain a token of his appreciation: two checks for $1,000 to McCain’s 1998 Senate campaign.

In March 1999, McCain made an appearance in Alexandria, Virginia, at the home of Mary McAuliffe, a lobbyist for Union Pacific Corporation. Also there to greet him were John Angus, a lobbyist for CSX Transportation, Inc.; Pamela Garvie, a lobbyist for Burlington Northern Santa Fe Corporation; and Wayne Valis, a lobbyist for Norfolk Southern Corporation. The guests had at least two things in common: All work for companies that operate railroads, and all gave at least $500 to McCain’s presidential campaign. Over the years, railroad interests have been kind to McCain, collectively providing him with more than $140,000 in campaign funds.

And vice versa: In the months after the Alexandria fundraiser, McCain protected the industry from new regulations.

After Congress effectively deregulated the nation’s railroad industry in 1980, shipping rates fell, as did the number of rail accidents. But as railroad companies have merged, businesses that rely on rail transport have complained that they are increasingly at the mercy of regional monopolies. In 1980 there were 60 major rail carriers; today there are nine, and just four of them account for 90 percent of the industry’s freight revenue. Union Pacific Railroad Company’s acquisition of Southern Pacific Transportation Company in 1997, which made Union Pacific the nation’s largest rail earner, brought with it renewed calls for legislation to force competition on the industry.

In June 1999 several members of the Senate Commerce Committee, including John D. “Jay” Rockefeller IV of West Virginia and Kay Bailey Hutchison of Texas, introduced legislation that would force railroad companies to let competitors use their tracks, thus giving shippers a choice of carriers. Lobbyists for the shipping and railroad industries tried to work out a compromise, but the railroad companies refused to budge. They didn’t have to: They had an ace in the hole.

Two months after he clinked glasses with railroad industry lobbyists in Alexandria, McCain introduced legislation to reauthorize the Surface Transportation Board, the federal agency that oversees the railroad and trucking industries. His bill completely ignored the shippers’ concerns. It was going to be that, McCain let it be known, or, as a lobbyist for the shippers later recalled, “nothing at all.”

In February 1999, McCain took a testing-the-waters trip for a presidential bid. But he didn’t trek through the snowy fields of Iowa or the meeting houses of New Hampshire. Instead he headed straight for Las Vegas.

Within days of his visit, Terrence Lanni, the chairman of MGM Grand, Inc., and Steve Wynn, the chairman of Mirage Resorts, Inc., each wrote out $1,000 checks, as did their wives, to McCain’s presidential campaign.

It wasn’t the first time the gambling industry has put money on McCain. McCain has collected more than $100,000 in contributions from gambling interests since 1993, and he’s returned the financial favors in ways big and small. In June 1998, McCain voted for legislation to overhaul the Internal Revenue Service that included a tax exemption for the casino industry for free meals it gives to workers. The exemption is projected to cost the U.S. Treasury $316 million from 1998 to 2007. In 1995, McCain supported legislation that paved the way for gambling “cruises to nowhere.” Even during his battle to pass tobacco legislation, McCain found a way to help the gambling industry: At the urging of the American Gaming Association, he agreed to exempt gambling establishments from his bill’s ban on indoor smoking.

In the summer of 1999, as legislation vital to gambling interests made its way through Congress, McCain tapped into Nevada and Native American gambling interests for contributions to his presidential campaign. On June 10, for example, he returned to Las Vegas for a fundraiser organized by Lanni, where he rubbed elbows with Peter Boynton, the chairman of Caesar’s World/Inc.; Sheldon Adelson, the chairman of Las Vegas Sands, Inc.; and David J. Thompson, the chairman of Mikohn Gaming Corporation, a Las Vegas company that makes slot machines and other gambling equipment. The event netted McCain $51,150.

A few weeks later, on June 30, McCain headed for the woods of Ledyard, Connecticut, to collect another $14,650 at a fundraiser hosted by the Mashantucket Pequot Indian Nation. The 155-member tribe runs Foxwoods Resort, the world’s largest casino.

McCain has opposed legislation that would halt the further expansion of gambling on Indian reservations. Under the 1988 Indian Gaming Regulatory Act, Native American tribes have to reach an agreement with states about how to regulate their gaming operations. Today, 183 tribes run 263 gambling operations in 28 states, most under tribal-state compacts. But one upshot of the 1988 law is that states that want to keep Indian tribes from opening gambling operations can simply refuse to negotiate. Tribes used to take uncooperative states to court; then, however, the Supreme Court ruled that states are immune from such lawsuits. Interior Secretary Bruce Babbitt tried to give tribes relief by proposing that his office settle tribal-state disputes over gambling compacts. Congress didn’t like Babbitt’s idea and imposed a one-year moratorium on any new Indian gambling operations outside of state compacts.

Nevada gambling operators, who see the tribes as competition, prefer leaving the states in charge. In September 1998, at the industry’s behest, Senators Harry Reid of Nevada and Mike Enzi of Wyoming introduced a measure to stop Secretary Babbitt from stepping into tribal-state disputes.

The prospect of letting states keep their veto power over Indian gambling sent some tribes running straight for their checkbooks. From September 22 to October 6, 1998, the Mashantucket Pequots gave McCain $9,500. McCain opposed Reid and Enzi’s effort, calling it “unwarranted” and “ill-advised.”

On February 11, 1999, members of the Senate Commerce Committee marked up a bill to loosen restrictions on flights to and from Ronald Reagan Washington National Airport, just outside the nation’s capital. “If we do not pass this legislation, it will be another clear victory for the major airlines and the special interests in Washington, which will not surprise me,” the bill’s sponsor, committee chairman John McCain, told his colleagues. “Nor will it be the first time or the last time. I intend to try to look out for the American consumer.”

Experts disagree on whether adding flights at the National Airport would result in lower airfares, but one thing is certain: If passed, the measure would boost the fortunes of America West Airlines, which is based in Phoenix. McCain has angrily denied he is shilling for America West, but for more than a decade his efforts to increase the number of flights at National Airport have gone hand in hand with those of the airline, which employs about 9,000 Arizona residents. Over the years, the airline’s executives and other employees have given McCain at least $17,150 in political contributions.

One of the few airlines to get off the ground after Congress deregulated the industry in 1978, America West grew to become the nation’s ninth-largest commercial carrier in part by aggressively acquiring landing and takeoff rights, commonly known as “slots,” at the nation’s four busiest airports: La Guardia and John F. Kennedy International in New York City, O’Hare International Airport in Chicago, and National. Since the 1960s, a “high density rule” has limited the number of flights the four airports can handle, and a “perimeter rule” has limited nonstop flights to and from National to 1,250 miles. The purpose of the rules is to control congestion and noise levels.

The rules, however, prevented America West from expanding service to the East Coast. And so, in 1987, the airline petitioned the Federal Aviation Administration to force airlines to give up slots that they barely used.

McCain has been advancing America West’s agenda on Capitol Hill ever since. In 1988 he pushed through legislation that required the FAA to redo its slot regulations. The FAA complied, and by the end of 1993, thanks to a combination of the new rule, exemptions granted by the FAA, and slots wrested from other airlines, America West had secured takeoff and landing rights at the four busiest airports.

But the additional slots didn’t solve all of America West’s problems. After posting poor earnings in 1996, the airline launched a two-year campaign to expand its service. But the perimeter rule still prevented America West from offering nonstop service from Phoenix to Washington, a lucrative route that attracts high-paying business customers.

On May 21, 1998, William Franke, the chairman of America West Holdings Corporation (the holding company for the airline), told a reporter for The Arizona Republic, “Washington National would be really significant. We’ve been working hard at trying to get the perimeter rule amended.”

A few weeks later McCain pulled out all the stops to get a bill through the Senate to change the perimeter rule at National. He squashed opposition from the Metropolitan Washington Airports Authority by threatening to hold up the Senate’s approval of three appointees to the panel. When his bill faced opposition in the House, McCain took funds for airport construction hostage. He refused to relinquish the funds even after the House version of his proposal died.

McCain’s hardball tactics paid off in October 1999, when the Senate approved his proposal to open up 24 new slots at National Airport and to lift perimeter restrictions for half of those flights.

Through it all, McCain, who’s made something of a name for himself as a “pork-buster,” has insisted that his only goal is to improve competition in the airline industry. But even executives of America West acknowledge that few other carriers would benefit from McCain’s bill.

“Other than America West and what we’re doing, there aren’t that many that qualify,” Michael Conway, a co-founder of America West who recently started National Airline out of Las Vegas, told a reporter in March 1999.

Under McCain’s proposal, America West could also keep exemptions to airport restrictions it already has — exemptions McCain won at the behest of John Timmons, America West’s chief lobbyist. “It’s hard for me to understand why McCain should get any more of a bum rap than Jim Moran or Connie Morella [two Washington-area lawmakers] should get,” Timmons later told a reporter, “because they’re shilling for their people as much as McCain’s shilling for his people.”

Timmons should know. Before he became a lobbyist in 1994, he worked for 11 years as McCain’s legislative director.

Top Ten Career Patrons

1.  U S West, Denver
$107,520

2.  Hensley & Company, Phoenix, Arizona
$80,300

3.  AT&T Corporation and affiliated companies, New York
$72,250

4.  Viacom, Inc., and affiliated companies, New York
$61,750

5.  The Boeing Company and affiliated companies, Seattle
$61,400

6.  BellSouth Corporation, Atlanta
$60,000

7.  Del Webb Corporation, Phoenix, Arizona
$56,535

8.  Bank of America and affiliated companies, Charlotte, North Carolina
$55,218

9.  Motorola, Inc., Schaumburg, Illinois
$49,045

10.  Phelps Dodge Corporation, Phoenix, Arizona
$47,100

This list is based on individual and PAC contributions to McCain’s House cam¬paigns from 1981-1986, contributions to the McCain PAC from 1985-1988; individual and PAC contributions to McCain’s Senate campaigns from 1985 through June 30, 1999, and individual and PAC contributions to McCain’s presidential campaign through June 30, 1999.
Sources: Federal Election Commission; Center for Responsive Politics
1. Includes contributions from employees of U S West and its predecessor, Mountain Bell.
3. Includes contributions from employees of AT&T and its subsidiaries, including TCI; Liberty Media; Vanguard Cellular, and TelePort Communications.
4. Includes contributions from employees of Viacom and its subsidiaries, including Paramount Pictures (formerly Paramount Communications); Paramount Parks; Showtime Networks; MTV Networks; Nickelodeon; Spelling Entertainment; and World Vision Enterprises.
5. Includes contributions from employees of Boeing; McDonnell Douglas; and Rockwell International. Boeing acquired the defense and aerospace units of Rockwell in 1996, and it acquired McDonnell Douglas in 1997.
6. Includes contributions from employees of BellSouth; employees of its predecessor, Southern Bell; and employees of L.M. Berry & Company, which BellSouth acquired in 1986.
7. Includes contributions from employees of Del Webb, and from employees of Coventry Homes and Sun City Grand, both of which are owned by Del Webb.
8. Includes contributions from employees of Bank of America and the compa¬nies that have contributed to its creation, including NationsBank; Security Pacific Corporation; Arizona Bank; Barnett Banks; and Boatmen’s Bancshares.
NOTE: Individuals associated with Charles Keating-led companies, including American Continental Corp., Lincoln S&L, Continental American Securities, and Continental Homes, have given $112,000 to McCain, enough to place first on his career patron list. However, after the Keating Five scandal, McCain returned these contributions to the U.S. Treasury.