Countdown

There is some disagreement as to what effect such a cut would have on the economy. Congress’ Joint Committee on Taxation has estimated that 70 percent of the benefits received from the cut would go to those earning more than $100,000 a year. Middle-class income earners would see an average of $180 - $297 in savings, while those earning more than $200,000 would see an average of $8,478. In his State of the Union address, Bush claimed that “60 percent of the people who benefit from lower capital gains have incomes under $50,000.” The committee said that only 41.4 percent of those who benefit earn less than $50,000, and then only receive 10 percent of the total benefits.

The result of these temporary tax cuts would be a $19 billion increase in the 1992 federal deficit, to $400 billion. In addition to the cuts, Bush, in an about-face from last year’s bitter battle against extending unemployment benefits, called for a $4.4 billion extension of those benefits.

Trade

Over the long term, Bush hopes to “level the playing field” in trade. How he’ll do that is unknown. In 1991, the total U.S. merchandise trade deficit through November stood at $64.7 billion for merchandise. Japan accounted for more than $42.5 billion. In comparison, the U.S. registered a $17 billion surplus with the European Community. In terms of employment and economic hardship, that translates to over 1 million jobs in the U.S. industrial sector which were lost to the Japanese last year.

Bush’s trade mission to Japan in January led to several minor concessions on the part of the Japanese. But the Japanese recently have been increasingly outspoken in their criticism of American workers and American management. Whether true or not, the statements have fueled a new wave of anti-Japanese sentiment that which may lead to a closing of markets, something Bush has long rejected.

Last year, Bush asked for “fast track” authority to negotiate a free trade agreement with Mexico, which with Canada would be similar to Europe’s single market due to be completed at the end of 1992. Should negotiations come to fruition and a treaty signed, the result would be a single market of 360 million consumers and a $6 trillion economy.

“Fast track” authority would grant the president power to call for a simple “yea” or “nay” vote and prohibit Congress from amending the agreement.

Much of the opposition to a free-trade agreement with Mexico comes from labor unions which contend that the lowering of barriers would cause companies to move from the United States to Mexico where labor costs are cheaper. In addition, critics point to Mexico’s substandard environmental policies, health policies, and child labor laws, as arguments mitigating against such an agreement.

FOREIGN POLICY

“For the world trusts us with power — and the world is right,” Bush said in his 1992 State of the Union address. “They trust us to be fair, and restrained; they trust us to be on the side of decency. They trust us to do what is right.”

Bush’s foreign policy, his greatest source of strength among the electorate, has been riddled with seeming inconsistencies. The invasion of Panama was billed as a necessary military action to oust dictator and drug smuggler Manuel Noriega. But after his rise to power in 1983 until his toppling in 1990, Noriega also had been counted on by officials of the Drug Enforcement Administration (DBA) to counter drug smuggling operations in Latin America.

In August 1990, Iraqi forces invaded Kuwait. In the name of democracy, Bush sent 200,000 soldiers and massive amounts of equipment to the Gulf in an attempt to prevent possible further encroachments on the Saudi oil fields. When it became apparent that neither the coalition nor the economic sanctions imposed by the United Nations was working, another 250,000 troops were ordered to the Gulf. In the meantime, there were disclosures that the U.S. ambassador to Iraq, April Glaspie, had sent mixed signals to Saddam Hussein as late as July 1990 regarding the conflict with Kuwait. Additionally, the public was reminded that the U.S. had provided intelligence and military technology to Iraq during its war with Iran in the 1980s. Today, Saddam Hussein remains in power and as belligerent as ever. He continues to shun United Nations (U.N.) sanctions and requirements that teams of U.N. inspectors visit nuclear facilities — to the point of detaining the inspectors.

U.S. relations with China have also been inconsistent with Bush’s belief in freedom and democracy as the dominant features of his “New World Order.” Days after the Tiananmen Square massacre in June 1989, Bush said that the U.S. must be restrained in its actions against China. Despite Bush’s ban on high-level talks, National Security Adviser Brent Scowcroft undertook a secret mission to China in July 1989, a month after the massacre.

Bush also has lobbied steadily for China to maintain its Most Favored Nation trade status, saying the only way to get China to change its position is to maintain open lines of communication. During a U.N. meeting at the end of January 1992, however, Chinese Prime Minister Li Peng told President Bush that the issue of human rights did not apply in the same way to China as it did the rest of the world and that it was an internal matter in which the U.S. should not be interfering.

Defense

The Bush administration, acting on suggestions from Dick Cheney, the secretary of defense, and Colin Powell, the chairman of the Joint Chiefs of Staff, has said that it will reduce the U.S. defense budget by no more than 30 percent over the next five years to maintain a suitable level of defense. The reduction will result in the already proposed base closings, both here and abroad, cuts in the number of new weapons systems, and the halting of systems modernizations.

Bush announced the latest round of arms control agreements, unilateral and informal, in his State of the Union address. Production on the B-2 Stealth bomber will be halted at 20, 16 have been completed, and four are in the pipeline and had received congressional approval. The Midget Man missile program and the Seawolf attack submarine program both have been shelved in response to changing worldwide conditions.

Bush is seeking $5.3 billion in annual funding for the SDI, to protect against the threat of nuclear proliferation. The administration fears that by the end of the decade, several countries will have the ballistic capabilities with which to launch these weapons. On advice from Cheney, Bush has proposed reducing the number of strategic nuclear warheads to 4,500. Russian President Boris Yeltsin proposed lowering the number to 2,500 for the two sides.

In a speech last November to leaders of the North Atlantic Treaty Organization, Bush reiterated his belief that the U.S. should not and could not “abandon its responsibilities, its interests, and its place in Europe.” He seeks a stronger, more cohesive European involvement in NATO. According to the Conventional Forces in Europe agreement signed last summer, the limit on U.S. forces in the area is 225,000.

HEALTH CARE

More than $800 billion will be spent on health care in the United States this year. Estimates for the end of the decade, according to Bush, exceed $1.6 trillion. Bush’s health care proposal, which was unveiled on February 6, contains several provisions the president claims will give at least basic coverage to most of the 37 million uninsured Americans. The plan includes tax credits of up to $3,750 and vouchers to enable the poor to better afford basic health coverage. The tax credits would decrease with those families earning more than $80,000 a year would receive no credit.

The Bush administration also proposes that insurance companies provide coverage to anyone regardless of preexisting medical conditions and encourages network coverage for small businesses. This program would tie several small businesses under one policy, lowering the cost through group coverage and spreading the risk. Malpractice and antitrust laws would also be changed in an attempt to hold down medical costs.

According to Health and Human Services Secretary Louis Sullivan, the administra¬tion aims to build on the system’s strengths, namely: choice, quality, and security. Sullivan added that 25 percent of the medical tests done today are unnecessary, many of them performed out of fear of malpractice suits.

The Bush Administration has been quick to criticize the Democrats’ health care reform proposals. Labor Secretary Lynn Martin, for example, has said that “Play or Pay” plans — which would force employers to either provide at least basic coverage or pay into a government-run insurance fund — would reduce choice, become managed by politicians, and force small businesses to close. As for a national health care system comparable to Canada’s, the administration believes the system will not work in the United States because of the difference in size and long waiting periods for those wishing or needing surgery.

Questions remain, however, about how Bush’s proposal would be financed. When asked how the plan would be funded so as not to bust the budget, Bush said, “We’ll figure that out.”

Another problem, according to The New York Times, is that while the proposal makes allowances for inflation, medical costs have been rising at three times the rate of inflation over the past decade. The value of the credits would then be eroded over time.

ANOMALIES

Power Lobbyists and George Bush

George Bush continues to battle for free trade, whether it is in terms of the GATT negotiations, the Mexican Free Trade Agreement, or in talking tough about getting Japan to open its markets to American business. In terms of the last issue, two advisers have had a vested interest in Japanese trade advantages.

James Lake was offered a position in the Bush White House as communications director but turned the job down, citing legal complications in leaving his public relations/lobbying firm, Robinson, Lake, Lerer & Montgomery. For one thing, Lake would have had to take a huge pay cut. The longtime Washington lobbyist and quadrennial presidential campaign aide and his firm have represented several Japanese companies, including the Japan Auto Parts Industry Association (JAPIA), Mitsubishi, Suzuki, Minolta, and others. As an informal adviser to the president, it is possible for Lake to maintain his clients.

Lake’s representation of JAPIA was particularly ironic during the president’s recent trip to Japan with executives from the Big Three automakers in tow. With the president in Tokyo urging more open markets for American-made auto parts, back in Washington one of his campaign advisers has been for years lobbying the administration on behalf of the powerful Japanese auto parts industry.

In a telephone interview, Lake told the Center that he is advising the Bush campaign on handling the press. He said that he does not lobby on behalf of his clients; he merely “advises” his clients, which, he said, therefore does not constitute a conflict of interest.

According to Justice Department records, however, the Robinson, Lake firm “explains to the news media and government officials . . . the nature of the principal’s interests.” Some people would call that lobbying.

Charles Black, a senior adviser to the Bush campaign, is a partner in the public relations firm Black, Manafort, Stone and Kelly, and like Lake, he too caused the Bush presidential campaign some embarrassment in January 1992. Again juxtaposed against the president’s plaintive mission in Japan on trade matters, back home Black was representing a strongly Japanese sector of the Alaska fish processing industry. According to The Washington Post (1/9/92), Black was retained by the Pacific Seafood Processors Association, whose membership reportedly includes several Japanese-owned fish processing companies. They stand to make hundreds of millions of dollars if the secretary of Commerce approves a certain regulation. A lobbyist for the American Factory Trawler Association told the Post that Black’s representation on behalf of Japanese companies while Bush was in Japan talking tough on trade was “beyond irony.” Black said the issue is more complicated than merely a U.S. versus Japan economic struggle.

Black has represented several other overseas interests, including: UNTTA, the Government of Nigeria, the Kenyan government, and the government of the Philippines. The firm also has been representing the American Society of Plastic and Reconstructive Surgeons, Inc., for an annual fee of $500,000. Black said in an interview that he advises the president on issues of campaign strategies and judgment. He has also helped raise funds for the Bush campaign.

Craig Fuller, a senior adviser to the Bush campaign, served in the White House under Reagan in the first term, and then as Bush’s chief of staff in his last term as vice president. Until January 1992, he was president of Hill and Knowlton where, among other things, he handled the “Citizens for a Free Kuwait” account. He resigned within days of revelations that the Kuwaiti ambassador’s daughter was the girl who had testified before Congress so emotionally about Kuwaiti babies being taken from their incubators during the Iraqi invasion.

During his stint at Hill and Knowlton, Fuller was a foreign agent, registered at the Department of Justice. His clients were Short Brothers PLC; Embassy of the People’s Republic of China; Sacilda; and the Canadian Macedonian Society.

Hill and Knowlton has represented several Japanese corporations including: Toyota, Electronic Industry of Japan, Hitachi, Mazda, and the Ministry of Foreign Affairs for Japan. The public relations and lobbying firm also has represented Turkey, the Ministry of Commerce of Thailand, Finland Promotion Board, Ferruzzi Finanziaria S.p.A., the Government of Indonesia, Petroleosde Venezuela, S.A. Some of the firm’s domestic clients have included Chemical Waste Management, Exxon, ITT, the Tobacco Institute, Upjohn, and FMC.

Since leaving Hill and Knowlton, Fuller has become the senior vice president for corporate affairs at Philip Morris.

Health Care Reform

In 1989, Health and Human Services Secretary Louis Sullivan named Deborah Steelman to chair the Advisory Council on Social Security. Steelman, a Washington lawyer, had been domestic policy adviser to George Bush in the 1988 presidential campaign. Previous to that, she had served in the Office of Management and Budget in the Reagan administration. Today, she is the principal adviser to the Bush campaign on health-related issues.

The Advisory Council was established to examine health care and Social Security policy. It issued reports totaling 3,000 pages, including recommendations for reforming the health care system and insurance policy. According to Legal Times (1/20/92), the panel recommended, among other things, instituting a $3 billion program to improve access to health care, using such ideas as school-based clinics to provide access for children, and $3 billion in funding to a series of state-run experimental programs.

Deborah Steelman, Advisory Council chairwoman, had access to and reportedly personally briefed the highest officials in the Bush administration, including HHS Secretary Sullivan, Office of Management and Budget Director Richard Darman, and White House Chief of Staff Samuel Skinner.

Deborah Steelman, registered lobbyist, was simultaneously representing several insurance companies including Aetna, Blue Cross/Blue Shield of Missouri, as well as drug companies such as Johnson and Johnson, Pfizer Pharmaceuticals, and the Pharmaceutical Manufacturers Association. Aetna is just one of several large insurance companies opposed to major national health reform measures. In November 1991, Steelman took on the American Society for Plastic and Reconstructive Surgery, for whom she was lobbying regarding regulatory issues relating to breast implants and general issues relating to the Food and Drug Administration.

The panel Steelman chaired was made up, in part, of industry executives, doctors, and union leaders.

In a telephone interview, Steelman told the Center that she did not consider her position chairing the administration’s Advisory Council while also simultaneously repre¬senting drug and insurance companies, to be a conflict of interest. She said that she felt her position on the Council was a matter of public service.

BCCI

Established in 1972, the Bank of Credit and Commerce International (BCCI) had 300 branches in 70 countries and in 1991 controlled assets of nearly $24 billion.

Sheik Zayed Sultan Nahayan, president of the United Arab Emirates and leader of the Abu Dhabi Investment Authority (ADIA) provided a substantial initial investment. By the end of the 1980s, ADIA controlled nearly one-third of the bank. When BCCI began having financial difficulties again in 1990, Sheik Zayed came to the rescue again, providing funds that gave him a majority share of 77 percent in BCCI.

Problems with BCCI, however, appeared as early as 1986. Reagan administration officials were alerted by the CIA that First American Bankshares, headed by Robert Altman and Clark Clifford, was secretly owned by BCCI. The Federal Reserve had earlier denied BCCI the right to invest in First American. The CIA report was ignored.

In January 1988, BCCI Overseas Ltd. and BCCI, S.A. were convicted in taking part in laundering the proceeds from cocaine trafficking. The officials arranged for a plea bargain. In exchange for testimony against deposed dictator Manuel Noriega, who was reportedly working for the DBA on drug smuggling operations and a BCCI client, the Justice Department dropped all charges against the BCCI parent company and the two subsidiaries were fined $15 million (Wall Street Journal, 8/1/91). According to the U.S. Attorney’s office in Tampa, five BCCI officials and a lieutenant in the “Don Chepe” cocaine trafficking organization were convicted of defrauding the government and money laundering in July 1990. Additionally, according to the Justice Department, 17 defendants in four states were convicted of money laundering and drug trafficking in connection with BCCI operations.

However, former Customs Chief William von Raab said in a 1991 Senate hearing that Treasury officials had halted his investigation years earlier into the allegations. “It was a real triumph by the Washington power brokering establishment,” von Raab said.

In subsequent Senate hearings headed by Senator John Kerry, Democrat from Massachusetts, BCCI has been linked to the laundering of drug money and had depositors ranging from the CIA which funneled money to the Afghan rebels and Nicaraguan Contras, Manuel Noriega, Ferdinand Marcos, and Saddam Hussein.

Indeed, Assistant U.S. Attorney General Robert Mueller said in a February 23, 1992, interview on NBC’s Sunday Today program that there are currently seven federal grand jury investigations underway in connection with BCCI. Mueller said the Justice Department is “pursuing the investigations aggressively” and “there will be further indictments.”

A spokesman for Manhattan District Attorney Robert Morganthau said they also were continuing to investigate the BCCI affair, but would not comment as to the content of those investigations.

Robinson, Lake, Lerer, and Montgomery currently represents Abu Dhabi Invest¬ment Authority, the majority shareholder of BCCI, whose owner is close to the Palestine Liberation Organization (PLO).

Sheik Zayed, according to Regardie’s magazine (May 1990), has tunneled millions of dollars to the PLO and has called the United States “our number-two enemy” (after Israel). As evidence of Zayed’s contempt for the U.S., Abu Dhabi was the first Arab nation to declare an oil embargo against the U.S. in 1973 in reaction to support in the Yom Kippur War. He has also been a partner with Moammar Khadaffi in the Arab Banking Corporation.

As the owner of the Abu Dhabi Investment Authority and the president of the United Arab Emirates, the precise role of Zayed in the BCCI affair remains unclear. However, the BCCI auditor, Price Waterhouse, recently revealed to British authorities that the detection of the multibillion-dollar fraud had been delayed because representatives of the Government of Abu Dhabi “participated in the fraud and withheld information.” Abu Dhabi representatives have steadfastly denied any impropriety. (The New York Times, 2/6/92)

Nonetheless, with a legal and regulatory cloud hanging over what is now generally acknowledged to be the most corrupt bank in history, it is intriguing that the majority BCCI shareholder, Abu Dhabi Investment Authority, has retained the well-connected public relations and lobbying firm, Robinson, Lake, Lerer, and Montgomery.

How did the Robinson, Lake firm explain its activities to the Justice Department? “Various federal agencies could possibly take action on matters related to the Abu Dhabi Investment Authority’s interests. Consequently, our activities would explain Abu Dhabi Investment Authority’s attitude toward any such activities and further explain the possible impact any such government decisions might have on the Abu Dhabi Investment Authority.”

On September 7, 1991, Lake and a colleague from his firm flew to Abu Dhabi “to meet with clients regarding strategy and developments.” Lake returned to Abu Dhabi on October 16, and spent a week there with the client.

A big part of the Lake firm’s efforts on behalf of the majority shareholder of BCCI has been to “explain to the news media and government officials, if necessary, through written and oral communications, the nature of the principal’s interests.”

Lake’s lieutenants at the firm set up meetings — “background briefings” — with several national journalists. Between September 15 and November 19, Lake aides Cynthia Rapp, John Buckley, and Gary Walker called or met with Steve Lohr of The New York Times, Mark Potts of The Washington Post, John Penycate of BBC, Donna Smith of Reuters, and Marci Gordon of The Associated Press.

According to Justice Department records, from September through November 1991, Robinson, Lake earned $201,375 from this account in fees alone — plus expenses.

When contacted by the Center, Lake said that representing the majority shareholder of BCCI and simultaneously serving as senior communications adviser to the Bush campaign, does not represent a conflict of interest.

Lake is the second Bush aide in six months to land large contracts with BCCI-related clients.

Ed Rogers was on former White House Chief of Staff John Sununu’s staff until August 1991. Less than a month after leaving the White House, Rogers and law partner Haley Barbour, now an informal campaign adviser to Bush, took on Sheik Kamal Adham as a client. Adham was later implicated in the BCCI scandal and its buy-out of First American Bank. Rogers terminated the two year contract valued at $600,000 in October 1991 for fear of embarrassing the administration. Rogers has reportedly had no contact with White House staff since leaving, as prescribed by law.

OTHER ADVISERS

Thomas “Lud” Ashley, president of the Association of Bank Holding Companies, representing many of the nation’s largest banks, opposed banking legislation in Congress last year that would have repealed restrictions on mergers between investment banks and commercial banks and imposed tighter restrictions on banks’ ability to enter the insurance business. He advises Bush on banking policy.

Haley Barbour, who worked voluntarily in Bush’s 1988 campaign in Illinois and led the floor rules committee during the convention, told the Center he has not been officially asked to work on this year’s campaign. Barbour did acknowledge that he accompanied Bush to Camp David in August with about 25 others to discuss, in general terms, the shape the campaign should take. He said that in neither the ‘88 campaign nor at the president’s retreat did he discuss specific policy issues.

Richard Nixon has advised Bush on China and Kuwait and advises him on foreign policy in general.

Peter Teeley, former Bush spokesman and current head of Teeley and Associates, said that while he maintains regular contact with the president, they do not discuss political matters. Teeley’s clients include Motion Picture Association of America and California Steel Industries, Inc.

Richard Williamson, a former Reagan aide, works for Mayer, Brown and Plan. His clients include the Santa Fe Pacific Corp. and Continental Illinois National Bank and Trust Co.

Ken Duberstein was Ronald Reagan’s last White House chief of staff. Now he is the head of the Duberstein Group, whose clients include GM, Federal National Mortgage Association, and United Airlines.

Jan Baran is a fundraiser for Bush. He is a lawyer for the D.C. firm Wiley, Rein & Fielding. Baran represents, according to Roll Call, the Republican National Committee, while his firm represents, among others, BMW of North America and CBS, Inc.

Campaign Staff

Campaign Chairman: Robert Teeter
Campaign Manager: Fred Malek
General Counsel: Bobby Burchfleld
Press Secretary: Torrie Clark
Deputy Campaign Manager for Communications: William Feltus
Senior Legal Adviser: Fred Fielding
Deputy Communications Director: Leslie Goodman
Treasurer: Stan Huckaby
Senior Communications Adviser: James Lake
Deputy Campaign Manager for Political Operations: Mary Matalin
Counselor: James P. Pinkerton