GEORGE BUSH: THE UNAUTHORIZED BIOGRAPHY - PART 8 of 8
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CHAPTER 20 THE LEVERAGED BUYOUT MOB During the entire decade of the 1980s, the policies of the Reagan-Bush and Bush administrations encouraged one of the greatest paroxysms of speculation and usury that the world has ever seen. Starting especially in the summer of 1982, a malignant and cancerous mass of speculative paper spread through all the vital organs of the banking, credit, and financial system. Capital had long since ceased to be used for the creation of new productive plant and equipment, new productive manufacturing jobs, investment in transportation, power systems and education; health services and other infrastructure declined well below the breakeven level. Wall Street investors came more and more to resemble vampires who ranged over a ghoulish landscape in search of living prey whose blood they could suck to perpetuate their own lively form of death. For the vast majority of the U.S. population (to say nothing of the brutal immiseration in the developing countries) it was an epoch of austerity, sacrifice, and decline, of the entropy of a society in which most people have no purpose and feel themselves becoming redundant. But for a paper-thin stratum of plutocrats and parasites, the 1980s was a time of unlimited opportunity. These were the practitioners of the disastrous financial swindles that marked the decade, the protagonists of the hostile takeovers, mergers and acquisitions, leveraged buyouts, greenmail, and stock plays that occupied the admiration of Wall Street. These were corporate raiders like J. Hugh Liedtke, Baine Kerr, T. Boone Pickens, and Frank Lorenzo; Wall Street financiers like Henry Kravis and Nicholas Brady. And these men, surely not by coincidence, belonged to the intimate circle of personal friends and close political supporters of George Herbert Walker Bush. The Pennzoil Wars: A Case Study One of the landmark corporate battles of the first Reagan administration was the battle over control of Getty Oil, a battle fought between Texaco -- at that time the third largest oil company in the United States and the fourth largest industrial corporation -- and J. Hugh Liedtke's Pennzoil. George Bush's old partner and constant crony, J. Hugh Liedtke, was still obsessed with his dream of building Pennzoil into a major oil company, one that could become the seventh of the traditional Seven Si sters after Chevron and Gulf merged. Liedtke was the chairman of the Pennzoil board, and the Pennzoil president was now Baine Kerr, a former lawyer from Baker & Botts in Houston. Baine Kerr was also an old friend of George Bush. Back in 1970, when George was running against Lloyd Bentsen, Kerr had advised Bush on a proposed business deal involving a loan request from Victor A. Flaherty, who needed money to buy Fidelity Printing Company. Baine Kerr was a hard bargainer: He recommended that Bush make the loan, but that he also demand some stock in Fidelity Printing as part of the deal. Three years later, when Fidelity Printing was sold, Bush cashed in his stock for $99,600 in profit, a gain of 1,900 percent on his original investment. That was the kind of return that George Bush liked, the kind that honest activities can so rarely produce. / Note #1 Chairman Mao Liedtke and his sidekick Baine Kerr constantly scanned their radar screens for an oil company to acquire. They studied Superior Oil, which was in play, but Superior Oil did too much of its business in Canada, where there had been no equivalent of George Bush's Task Force on Regulatory Relief, and where the oil companies were thus still subject to some restraints. Chairman Mao ruled that one out. Then there was Gulf Oil, where T. Boone Pickens was attempting a takeover, but Liedtke reluctantly decided that Gulf was beyond his means. Then, Chairman Mao began to hear reports of conflicts on the board of Getty Oil. Getty Oil, with 20,000 employees, was a $12 billion corporation, about six times larger than Pennzoil. But Chairman Mao had already managed to gobble up United Gas when that company was about six times larger than his own Pennzoil. Getty Oil had about a billion barrels of oil in the ground. Now Chairman Mao was very interested. In early 1984, Gordon Getty and his Sarah Getty Trust, plus the Getty Museum represented by the New York mergers and acquisitions lawyer Marty Lipton, combined to oblige the board of Getty Oil to give preliminary acceptance to a tender offer for Getty Oil stock at a price of about $112.50 per share. Arthur Liman thought he had a deal that would enable Chairman Mao to seize control of Getty Oil and its billion barrel reserves, but no contract or any other document was ever signed, and key provisions of the transaction remained to be negotiated. When the news of these negotiations began to leak out, major oil companies who also wanted Getty and its reserves began to move in: Chevron showed signs of making a move, but it was Texaco, represented by Bruce Wasserstein of First Boston and the notorious Skadden, Arps, Slate, Meagher & Flom law firm, that got the attention of the Getty Museum and Gordon Getty with a bid (of $125 a share) that was sweeter than the tight-fisted Chairman Mao Liedtke had been willing to put forward. Gordon Getty and the Getty Museum accordingly signed a contract with Texaco. This was nominally the largest acquisition in human history up to that time, and the check received by Gordon Getty was for $4,071,051,264, the second largest check ever written in the history of the United States, second only to one that had been used to roll over a part of the post-World War II national debt. But Chairman Mao Liedtke thought he had been cheated. "They've made off with a million dollars of my oil!" he bellowed. "We're going to sue everybody in sight!" But Chairman Mao Liedtke's attempts to stop the deal in court were fruitless; he then concentrated his attention on a civil suit for damages on a claim that Texaco had been guilty of "tortious interference" with Pennzoil's alleged oral contract with Getty Oil. The charge was that Texaco had known that there already had been a contract, and had set out deliberately to breach it. After extensive forum shopping, Chairman Mao concluded that Houston, Texas was the right venue for a suit of this type. Liedtke and Pennzoil demanded $7 billion in actual damages and $7 billion in punitive damages for a total of at least $14 billion, a sum bigger than the entire public debt of the United States on December 7, 1941. Liedtke hired Houston lawyer Joe "King of Torts" Jamail, and backed up Jamail with Baker & Botts. Interestingly, the judge who presided over the trial until the final phase, when the die had already been cast, was none other than Anthony J.P. "Tough Tony" Farris. Back in February 1963, the newly elected Republican county chairman for Harris County, George H.W. Bush, had named Tough Tony Farris as his first assistant county chairman. / Note #2 During the Nixon administration, Farris became the U.S. Attorney in Houston. Given what we know of the relations between Nixon and George Bush, we must conclude that a patronage appointment of this type could hardly have been made without George Bush's involvement. Tough Tony Farris was decidedly an asset of the Bush networks. Now Tough Tony Farris was a state district judge, whose remaining ambition in life was an appointment to the federal bench. Farris did not recuse himself because his patron, George Bush, was a former business partner and constant crony of J. Hugh Liedtke. Farris rather began issuing a string of rulings favorable to Pennzoil: He ruled that Pennzoil had a right to quick discovery from Texaco. Farris was an old friend of Pennzoil's lead trial lawyer, Joe Jamail, and Jamail had just given Tough Tony Farris a $10,000 contribution for his next election campaign. Jamail, in fact, was a member of Tough Tony's campaign committee. Texaco attempted to recuse Farris, but they failed. Farris claimed that he would have recused himself if Texaco's lawyers had come to him privately, but that their public attempt to get him pitched out of the case made him decide to fight to stay on. Just at that point, the district courts of Harris County changed their rules in such a way as to allow Bush's man Tough Tony Farris, who had presided over the pretrial hearings, to actually try the case. And try the case he did, for 15 weeks, during which the deck was stacked for Pennzoil's ultimate victory. With a few weeks left in the trial, Farris was diagnosed as suffering from terminal cancer, and he was forced to request a replacement district judge. The last-minute substitute was Judge Solomon Casseb, who finished up the case along the lines already clearly established by Farris. In late November 1985, the jury awarded Pennzoil damages of $10.53 billion. Casseb not only upheld this monstrous result, but increased it to a total of $11,120,976,110.83. Before the trial, back in January 1985, Chairman Mao Liedtke had met with John K. McKinley, the chairman of Texaco, at the Hay-Adams Hotel across Lafayette Park from the White House in Washington, D.C. Liedtke told McKinley that he thought what Texaco had done was highly illegal, but McKinley responded that his lawyers had assured him that his legal position was "very sound." McKinley offered suggestions for an out-of-court settlement, but these were rejected by Chairman Mao, who made his own counter-offer: He wanted three-sevenths of Getty Oil, and was now willing to hike his price to $125 a share. According to one account of this meeting, Liedtke seemed to go out of his way to mention his friendship with George Bush, according to Bill Weitzel of Texaco. "Mr. Liedtke was quite outspoken with regard to the influence that he felt he had -- and would and could expect in Washington -- in connection with antitrust matters and legislative matters," McKinley would say in deposition. "The idea was that Pennzoil was not without political influence that could adversely affect the efforts of Texaco in completing its merger." / Note #3 Liedtke denied all this: "The political-influence thing isn't true. I don't have any and McKinley knows it!" Did Liedtke keep a straight face? In any case, the Reagan-Bush regime made no secret of its support for Pennzoil. In the spring of 1987, after prolonged litigation, the U.S. Supreme Court required Texaco to post a bond of $11 billion. On April 13, 1987, the press announced that Texaco had filed for Chapter 11 bankruptcy protection. The Justice Department created two committees to represent the interests of Texaco's unsecured creditors, and Pennzoil was made the chairman of one of these committees. Texaco operations were subjected to severe disruptions. During the closing weeks of 1987, Texaco was haggling with Chairman Mao about the sum of money that the bankrupt firm would pay to Pennzoil. At this point, Bushman Lawrence Gibbs was the commissioner of the Internal Revenue Service. He slammed bankrupt and wounded Texaco with a demand for $6.5 billion in back taxes. This move was in the works behind the scenes during the Texaco-Pennzoil talks, and it certainly made clear to Texaco which side the government was on. The implication was that Texaco had better settle with Chairman Mao in a hurry, or face the prospect of being broken up by the various Wall Street sharks, who had begun to circle the wounded company. In case Texaco had not gotten the message, the Department of Energy also launched an attack on Texaco, alleging that the bankrupt firm had overcharged its customers by $1.25 billion during the time before 1981 when oil price controls had been in effect. The entire affair represented a monstrous miscarriage of justice, a declaration that the entire U.S. legal system was bankrupt. At the heart of the matter was the pervasive influence of the Bush networks, which gave Liedtke the support he needed to fight all the way to the final settlement. Kohlberg, Kravis, Roberts But even the enormities of Chairman Mao Liedtke were destined to be eclipsed in the political and regulatory climate of savage greed created with the help of the Reagan-Bush administration and George Bush's Task Force on Regulatory Relief. Even Liedtke's colossal grasping was about to be out-topped by a small Wall Street firm, which, primarily during the second Reagan-Bush term, assembled a financial empire greater than that of J.P. Morgan at the height of Jupiter's power. This firm was Kohlberg, Kravis, Roberts (KKR) which had been founded in 1976 by a partner and some former employees of the Bear Stearns brokerage firm of lower Manhattan, and which by late 1990 had bought a total of 36 companies using some $58 billion lent to KKR by insurance companies, commercial banks, state pension funds, and junk bond king Michael Milken. The dominant personality of KKR was Henry Kravis. Henry Kravis's epic achievements in speculation and usury perhaps had something to do with the fact that he was a close family friend of George Bush. As we have seen, when Prescott Bush was arranging a job for young George Herbert Walker Bush in 1948, he contacted Ray Kravis of Tulsa, Oklahoma, whose business included helping Brown Brothers Harriman to evaluate the oil reserves of companies. Ray Kravis over the years had kept in close touch with Senator Prescott Bush and George Bush, and young Henry Kravis, his son, had been introduced to George and had hob-nobbed with him at various Republican Party fundraising events. Henry Kravis by the early 1980s was a member of the Republican Party's elite inner circle. Bush and Henry Kravis became even more closely associated during the time that Bush, ever mindful of campaign financing, was preparing his bid for the presidency. Among political contributors, Henry Kravis was a very high roller. In 1987-88, Kravis gave over $80,000 to various senators, congressmen, Republican political action committees, and the Republican National Committee. During 1988, Kravis gave $100,000 to the GOP Team 100, which meant a "soft money" contribution to the Bush campaign. Kravis's partner, George Roberts, also anted up $100,000 for the Republican Team 100. In 1989, the first year in which it was owned by KKR, RJR Nabisco also gave $100,000 to Team 100. During that year, Kravis and Roberts gave $25,000 each to the GOP. During the 1988 primary season, Kravis was the co-chair of a lavish Bush fundraiser at the Vista Hotel in lower Manhattan, at which Henry's fellow Wall Street dealmakers and financier fat cats coughed up a total of $550,000 for Bush. Part of Kravis's symbolic recompense was the prestigious title of co-chairman of Bush's Inaugural Dinner in January 1989. One year later, in January 1990, Kravis was the national chairman of Bush's Inaugural Anniversary Dinner. / Note #4 According to Kravis, Bush "writes me handwritten notes all the time and he calls me and stuff, and we talk." The talk concerned what the U.S. government should do in areas of immediate interest to Kravis: "We talked on corporate debt -- this was going back a few years -- and what that meant to the private sector," said Kravis. Henry Kravis certainly knows all about debt. The 1980s witnessed the triumph of debt over equity, with a tenfold increase in total corporate debt during the decade, while production, productive capacity, and employment stagnated and declined. One of the principal ways in which this debt was loaded onto a shrinking productive base was through the technique of the hostile, junk bond-assisted leveraged buyout, of which Henry Kravis and his firm were the leading practitioners. Small-scale leveraged buyouts were pioneered by KKR during the late 1970s. In its final form, the technique looked something like this: Corporate raiders looked around for companies that might be worth more than their current stock price if they were broken up and sold off. Using money borrowed from a number of sources, the raider would make a tender offer, or otherwise secure a majority of the shares. Often all outstanding shares in the company would be bought up, taking the company private, with ownership residing in a small group of financiers. The company would end up saddled with an immense amount of new debt, often in the form of high-yield, high-risk subordinated debt certificates called junk bonds. The risk on these was high, since, if the company were to go bankrupt and be auctioned off, the holders of the junk bonds would be the last to get any compensation. Often, the first move of the raider after seizing control of the company and forcing out its existing management, would be to sell off the parts of the firm that produced the least cash flow, since enhanced cash flow was imperative to start paying the new debt. Proceeds from these sales could also be used to pay down some of the initial debt, but this process inevitably meant jobs destroyed and production diminished. These raiding operations were justified by a fascistoid-populist demagogy that accused the existing management of incompetence, indolence, and greed. The LBO pirates professed to have the interests of the shareholders at heart, and made much of the fact that their operations increased the value of the stock and, in the case of tender offers, gave the stockholders a better price than they would have gotten otherwise. The litany of the corporate raider was built around his commitment to "maximize shareholder value"; workers, bondholders, the public, the firms themselves were all expendable in the short run. An important enticement to transform stocks and equity into bonded and other debt was provided by the insanity of the U.S. tax code, which taxed profits distributed to shareholders, but not the debt paid on junk bonds. The ascendancy of the leveraged buyout, therefore, was accompanied by the demolition of the U.S. corporate tax base, contributing in no small way to the growth of federal deficits. Ultimately, the big profits were expected when the acquired companies, after having been downsized to "lean and mean" dimensions, had their stock sold back to the public. KKR reserved itself 20 percent of the profits on these final transactions. In the meantime, Kravis and his associates collected investment banking fees, retainer fees, directors' fees, management fees, monitoring fees, and a plethora of other charges for their services. The leverage was accomplished by the smaller amount of equity left outstanding in comparison with the vastly increased debt. This meant that if, after deducting the debt service, profits went up, the return to the investors could become very high. Naturally, if losses began to appear, reverse leverage would come into play, producing astronom ical amounts of red ink. Most fundamental was that companies were being loaded with debt during the years of what the Reagan-Bush regime insisted on calling a boom. It was evident to any sober observer that as the depression asserted its existence, many of the companies that had succumbed to leveraged buyouts and related usury would very rapidly become insolvent. All in all, during the years between 1982 and 1988, more than 10,000 merger and acquisition deals were completed within the borders of the United States, for a total capitalization of $1 trillion. There were, in addition, 3,500 international mergers and acquisitions for another $500 billion. / Note #5 The enforcement of antitrust laws atrophied into nothing: As one observer said of the late 1980s, "such concentrations had not been allowed since the early days of antitrust at the beginning of the century." George Bush's friend Henry Kravis raised money for his leveraged buyouts from a number of sources. Money came first of all from insurance companies such as the Metropolitan Life Insurance Company of New York, which cultivated a close relation with KKR over a number of years. Met was joined by Prudential, Aetna, and Northwestern Mutual. Then there were banks like Manufacturers Hanover Trust and Bankers Trust. All these institutions were attracted by astronomical rates of return on KKR investments, estimated at 32.2 percent in 1980, 41.8 percent in 1982, 28 percent in 1984, and 29.6 percent in 1986. By 1987, the KKR prospectus boasted that they had carried out the first large LBO of a publicly held company, the first billion-dollar LBO, the first large LBO of a public company via tender offer, and the largest LBO in history until then, Beatrice Foods. Then came the state pension funds, which were also anxious to share in these very large returns. The first to begin investing with KKR was Oregon, which shoveled money to KKR like there was no tomorrow. Other states that joined in were Washington, Utah, Minnesota, Michigan, New York, Wisconsin, Illinois, Iowa, Massachusetts and Montana. KKR had one other very important source of capital for its deals: This was the now-defunct Wall Street investment firm of Drexel, Burnham, Lambert and its California-based junk bond king, Michael Milken. Drexel and Milken were the most important single customers KKR had. (Drexel had its own Harrimanli nk: It had merged with Harriman Ripley & Co. of New York in 1966.) During the period of close working alliance between KKR and Drexel, Milken's junk-bond operation raised an estimated $20 billion of funds for KKR. The Beatrice Foods LBO illustrates how necessary Milken's role was to the overall strategy of Bush backer Kravis. With a price tag of $8.2 billion, Beatrice was the biggest LBO up to the time it was completed in January-February 1986. As part of this deal, Kravis gave Milken warrants for 5 million shares of stock in the new Beatrice corporation. These warrants could be used in the future to buy Beatrice shares at a small fraction of the market price. One result of this would be a dilution of the equity of the other investors. Milken kept the warrants for his own account, rather than offer them to his junk bond buyers, in order to get a better price for the Beatrice junk bonds. Later in the same year, KKR bought out Safeway grocery stores for $4.1 billion, of which a large part came from Milken. After 1986, Henry Kravis and George Roberts were gripped by financial megalomania. Between 1987 and 1989, they acquired eight additional companies with an aggregate price tag of $43.9 billion. These new victims included Owens-Illinois Glass, Duracell, Stop and Shop food markets, and, in the landmark transaction of the 1980s, RJR Nabisco. RJR Nabisco was the product of a number of earlier mergers: National Biscuit Company had merged with Standard Brands to form Nabisco Brands, and this in turn merged with R.J. Reynolds Tobacco to create RJR Nabisco. It is important to recall that R.J. Reynolds was the concern traditionally controlled by the family of Bush's personal White House lawyer, C. Boyden "Boy" Gray. Control of RJR Nabisco was sought by opposing gangs: A first group included RJR Nabisco chairman Ross Johnson, Peter Cohen of Shearson Lehman Hutton and the notorious John Gutfreund of Salomon Brothers. KKR was a second contender, and a third offer for RJR came from First Boston. The Johnson offer and the KKR were about the same, but a cover story in the Henry Luce-Skull and Bones "Time" magazine in early December 1988 targeted Johnson as the greedy party. The attraction of RJR Nabisco, one of the 20 largest U.S. corporations, was an immense cash flow supplied especially by its cigarette sales, where profit margins were enormous. The crucial phases of the fight corresponded with the presidential election of 1988: Bush won the White House, and Kravis won RJR with a bid of about $109 per share compared to a stock price of about $55 per share before the company was put into play, giving the pre-buyout shareholders a capital gain of more than $13.3 billion. The RJR Nabisco swindle generated senior bank debt of about $15 billion. Then came $5 billion of subordinated debt, with the largest offering of junk bonds ever made. Then came an echelon of even more junior debt with payment-in-kind securities: junk bonds that paid interest not in cash, but in other junk bonds. But even with all the wizardry of KKR, there could have been no deal without Milken and his junk bonds. The banks could not muster the cash required to complete the financing; KKR required bridge loans. Merrill Lynch and Drexel were in the running to provide an extra $5 billion of bridge financing. Drexel got Milken's monsters and many others to buy short-term junk notes with an interest rate that would increase the longer the owner refrained from cashing in the note. Drexel's "increasing rate notes" easily brought in the entire $5 billion required. In November of 1986, Ivan Boesky pled guilty to one felony count of manipulating securities, and his testimony led to the indictment of Milken in March 1989, some months after the RJR Nabisco deal had been sewn up. In order to protect more important financial players, Milken was allowed to plead guilty in April 1990 to five counts of insider trading, for which he agreed to pay a fine of $600 million. On February 13, 1990, Drexel Burnham Lambert had declared itself bankrupt and gone into liquidation, much to the distress of junk bond holders everywhere, who saw the firm as a junk bond buyer of last resort. By this time, many of the great LBOs had begun to collapse. Robert Campeau's retail sales empire of Allied and Federated Stores blew up in the fall of 1989, bringing down almost $10 billion of LBO debt. Revco, Fruehauf, Southland (Seven-Eleven stores), Resorts International, and many other LBOs went into Chapter 11 proceedings. As for KKR's deals, they also began to implode: SCI-TV, a spin-off of Storer Broadcasting, announced that it could not service its $1.3 billion of debt, and forced the holders of $500 million in junk bonds to settle for new stocks and bonds worth between 20 and 70 cents on the dollar. Hillsborough Holdings, a subsidiary of Jim Walker, went bankrupt, and Seamans Furniture put through a forced restructuring of its debt. It was clear at the time of the RJR Nabisco LBO that the totality of the company's large cash flow would be necessary to maintain payments of $25 billion of debt. Within a short time after the LBO, RJR Nabisco proved unable to maintain payments. KKR was forced to inject several billion dollars of new equity, take out new bank loans, and dun its clients for an extra $1.7 billion. RJR Nabisco by the early autumn of 1991 was a time bomb ticking away near the center of a ruined U.S. economy. In September 1987, very late in the day, Senator William Proxmire submitted a bill which aimed at restricting takeovers. Two weeks later, Rep. Dan Rostenkowski of Illinois offered a bill to limit the tax deductibility of the interest on takeover debt. The LBO gang in Wall Street was horrified, even though it was clear that the Reagan-Bush team would opp ose such legislation using every trick in the book. Later, LBO ideologues blamed the Congress for causing the crash of October 1987. Bush's 'Free Enterprise' During the 1988 campaign, Bush presented his views on hostile takeovers, using the forum provided by his old friend T. Boone Pickens' "U.S.A. Advocate", a monthly newsletter published by the United Shareholders Association, which Pickens runs. In the October 1988 issue of this publication, Bush made clear that he was not worried about leveraged buyouts. Rather, what concerned Bush was the need to prevent corporations from adopting defenses to deter such attempted hostile takeovers. Bush also railed against "golden parachutes," which provide lucrative settlements for top executives who are ousted as the result of a takeover. / Note #6 Bush was clearly hostile to any federal restrictions on hostile takeovers. If anything, he was closer to those who demanded that the federal government stop the states from passing laws that interfere with LBO activity. For that notorious corporate raider and disciple of Chairman Mao Liedtke, T. Boone Pickens, the message was clear: "I know that Vice President Bush is a free enterpriser." / Note #7 The expectations of Pickens and his ilk were not disappointed by the Bush cabinet that took office in January 1989. The new secretary of the treasury, Bush crony Nicholas Brady, was not only a supporter of leveraged buyouts; he had been one of the leading practitioners of the mergers and acquisitions game during his days in Wall Street as partner of the Harriman-allied investment bank of Dillon Read. The family of Nicholas Brady has been allied for most of this century with the Bush-Walker clan. During his Wall Street career at Dillon Read, Brady, like Bush, cultivated the self-image of the patrician banker, becoming a member of the New York Jockey Club and racing his own thoroughbred horses at the New York tracks once presided over by George Herbert Walker and Prescott Bush. Brady, like Bush, is a member of the Bohemian Club of San Francisco and attends the Bohemian Grove every summer. Inside the Bohemian Grove oligarchic pantheon, Brady enjoys the special distinction of presiding over the prestigious Mandalay Camp (or cabin complex), the one to which Henry Kissinger habitually retires, and sometimes frequented by Gerald Ford. Nick Brady got the job he presently occupies by heading up a study of the October 1987 stock market crash, the results of which Brady announced on a cold Friday afternoon in January 1988, just after the New York stock market had taken another 150-point dive. The study of the October 1987 "market break" was produced by a group of Wall Street and Treasury insiders billed as the "Presidential Task Force on Market Mechanisms." At the center of the report's attention was the relation between the New York Stock Exchange, American Stock Exchange, and NASDAC over-the-counter stock trading, on the one hand, and the future, options, and index trading carried on at the Chicago Board of Trade, Chicago Board Options Exchange, and Chicago Mercantile Exchange. The Brady group examined the impact of program trading, index arbitrage, and portfolio insurance strategies on the behavior of the markets that led to the crash. The Brady report recommended the centralization of all market oversight in a single federal agency, the unification of clearing systems, consistent margins, and the installation of circuit-breaker mechanisms. That, at least, was the public content of the report. The real purpose of the Brady report was to create a series of drugged and manipulated markets. The Brady group realized that if the Chicago futures price of a stock or stock index could be artificially inflated, this would be of great assistance in propping up the value of the underlying stock in New York. The Brady group focused on the Major Market Index of 20 stock futures traded on the Chicago Board of Trade, which roughly corresponded to the principal stocks of the Dow Jones Industrial Average. As long as the MMI was trading at a higher price than the DJIA, the program traders and index arbitrageurs would tend to sell the MMI and buy the underlying stock in New York in order to lock in their parasitical profits. The great advantage of this system was first of all that some tens of millions of dollars in Chicago, where turnover was less intense than in New York, could generate hundreds of millions of dollars of demand in New York. In addition, the margin requirements for borrowing money to buy futures in Chicago were much less stringent than the requirements for margin-buying of stocks in New York. Liquidity for this operation could be drawn from banks and other institutions loyal to the Bush-Baker-Brady power cartel, with full backup and assistance from the district banks of the Federal Reserve. The Brady "drugged market" mechanisms, with the refinements they have acquired since 1988, are a key factor behind the Dow Jones Industrial's seeming defiance of the law of gravity in attaining a new all-time high, well above the 3,000 mark during 1991. In 1988, Bush boasted of his achievements in the field of deregulation. One important case study of the impact of Bush's Task Force on Regulatory Relief is the meatpacking industry. In February 1981, when Reagan gave Bush "line" authority for deregulation, he promulgated Executive Order 12291, which established the principle that federal regulations "be based upon adequate evidence that their potential benefits to society are greater than their potential costs to society." In practice, that meant that Bush threw health and safety standards out the window in order to ingratiate himself with gouging entrepreneurs. In March 1981, Bush wrote to businessmen and invited them to enumerate the ten areas they wanted to see deregulated, with specific recommendations on what they wanted done. By the end of the year, Bush's office issued a self-congratulatory report boasting of a "significant reduction in the cost of federal regulation." In the meatpacking industry, this translated into production line speedup as jobs were eliminated, with a cavalier attitude toward safety precautions. At the same time, the Occupational Safety and Health Administration sharply reduced inspections, often arriving only after disabling or lethal accidents had already occurred. In 1980, there were 280 OSHA inspections in meatpacking plants, but in 1988 there were only 176. This is in an industry in which the rate of personal injury is 173 persons per working day, three times the average of all remaining U.S. industry. / Note #8 Bush used his Task Force on Regulatory Relief as a way to curry favor with various business groups whose support he wanted for his future plans to assume the presidency in his own right. According to one study made midway through the Reagan years, Bush converted his own office "into a convenient back door for corporate lobbyists" and "a hidden court of last resort for special interest groups that have lost their arguments in Congress, in the federal courts, or in the regulatory process.... Case by case, the vice president's office got involved in some mean and petty issues that directly affect people's health and lives, from the dumping of toxic pollutants to government warnings concerning potentially harmful drugs." / Note #9 There were also reports of serious abuses by Bush, especially in the area of conflicts of interest. In one case, Bush intervened in March 1981 in favor of Eli Lilly & Co., of which he had been a director in 1977-79. Bush had owned $145,000 of stock in Eli Lilly until January 1981, after which it was placed in a blind trust, meaning that Bush ostensibly had no way of knowing whether his trust still owned shares in the firm or not. The Treasury Department had wanted to make the terms of a tax break for U.S. pharmaceutical firms operating in Puerto Rico more stringent, but Vice President Bush had contacted the Treasury to urge that "technical" changes be made in the planned restriction of the tax break. By April 14, Bush was feeling some heat, and he wrote a second letter to Treasury Secretary Don Regan asking that his first request be withdrawn, because Bush was now "uncomfortable about the appearance of my active personal involvement in the details of a tax matter directly affecting a company with which I once had a close association." / Note #1 / Note #0 Bush's continuing interest in Eli Lilly is underlined by the fact that the Pulliam family of Indiana, the family clan of Bush's 1988 running mate, Dan Quayle, owned a large portion of the Eli Lilly shares. Bush's choice of Quayle was but a reaffirmation of a pre-existing financial and political alliance with the Pulliam interests, which also include a newspaper chain. Ripping Up the Airline Industry Bush's ideal of labor-management practices and corporate leadership in general appears to have been embodied by Frank Lorenzo, the most celebrated and hated "banquerotteur" of U.S. air transport. Before his downfall in early 1990, Lorenzo combined Texas Air, Continental Airlines, New York Air, People's Express and Eastern Airlines into one holding, and then presided over its bankruptcy. Now Eastern has been liquidated, and the other components are likely to follow suit. Along the way to this debacle, Lorenzo won the sympathy of the Reagan-Bush crowd through his union-busting tactics: He had thrown Continental Airlines into bankruptcy court and used the bankruptcy statutes to break all union contracts, and to break the unions themselves. George Bush has been on record as a dedicated union-buster going back to 1963-64, and he has always been very friendly with Lorenzo. When Bush became President, this went beyond the personal sphere and became a revolving door between the Texas Air group and the Bush administration. During 1989, the Airline Pilots Association issued a list of some 30 cases in which Texas Air officials had transferred to jobs in the Bush regime and vice versa. By the end of 1989, Bush's top congressional lobbyist was Frederick D. McClure, who had been a vice president and chief lobbyist for Texas Air. McClure had traded jobs with Rebecca Range, who had worked as a public liaison for Reagan until she moved over to the post of lead congressional lobbyist for Texas Air. John Robson, Bush's deputy secretary of the Treasury, was a former member of the Continental Airlines board of directors. Elliott Seiden, a top antitrust lawyer for the Justice Department, switched to being an attorney for Texas Air. When questionedby columnist Jack Anderson, McClure and Robson claimed that they recused themselves from any matters involving Texas Air. But McClure signed a letter to Congress announcing Bush's opposition to any government investigation of the circumstances surrounding the Eastern Airlines strike in early 1989. This was a move in support of Lorenzo. Bush himself has always stonewalled in favor of Lorenzo. During the early months of that same Eastern Airlines strike, in which pilots, flight attendants and machinists all walked out to block Lorenzo's plan to asset strip the airline and bust the unions, the Congress attempted to set up a panel to investigate the dispute, but Bush was adamant in favor of Lorenzo and vetoed any government probes. / Note #1 / Note #1 Lorenzo's activities were decisive in the wrecking of U.S. airline transportation during the Reagan-Bush era. When Carl Icahn was in the process of taking over TWA, he was able to argue that the need to compete in many of the same markets in which Lorenzo's airlines were active made it mandatory that the TWA workforce accept similar sacrifices and wage cuts. The cost-cutting criteria pioneered with such ruthless aggressivity by Lorenzo have had the long-term effect of reducing safety margins and increasing the risk the traveling public must confront in any decision to board an airliner operating under U.S. jurisdiction. Eastern, Midway, and Pan Am have disappeared, and Continental has been joined in bankruptcy by America West and TWA. Northwest, having been taken through the wringer of an LBO by Albert Cecchi, is now busy extorting subsidies from the state of Minnesota and other sources as a way to stay afloat. It is widely believed that when the dust settles, only Delta, American, and perhaps United will remain among the large nationwide carriers. And how, the reader may ask, was George Bush doing financially while surrounded by so many billions in junk bonds? Bush had always pontificated that he had led the fight for full public disclosure of personal financial interests by elected officials. He never tired of repeating that "in 1967, as a freshman member of the House of Representatives, I led the fight for full financial disclosure." But after he was elected to the vice presidency, Bush stopped disclosing his investments in detail. He stated his net worth, which had risen to $2.1 million by the time of the 1984 election, representing an increase of some $300,000 over the previous five years. Bush justified his refusal to disclose his investments in detail by saying that he didn't know himself just what securities he held, since his portfolio was now in the blind trust mentioned above. The blind trust was administered by W.S. Farish & Co. of Houston, owned by Bush's close crony William Stamps Farish III of Beeville, Texas, the grandson and heir of the Standard Oil executive who had backed Heinrich Himmler and the Waffen SS. / Note #1 / Note #2 Notes for Chapter XX 1. Walter Pincus and Bob Woodward, "Doing Well with Help from Family, Friends," "Washington Post," Aug. 11, 1988. 2. "Houston Chronicle," Feb. 21, 1963. See clippings available in Texas Historical Society, Houston. 3. Thomas Petzinger, "Oil and Honor" (New York: Putnam, 1987), pp. 244-45. 4. For the relation between George Bush and Henry Kravis, see Sarah Bartlett, "The Money Machine: How KKR Manufactured Power & Profits" (New York: 1991), pp. 258-59 and 267-70. 5. Roy C. Smith, "The Money Wars" (New York: Dutton, 1990), p. 106. 6. "Washington Post," Sept. 29, 1988. 7. "Ibid." 8. Judy Mann, "Bush's Top Achievement," "Washington Post," Nov. 2, 1988. 9. William Greider, "Rolling Stone," April 12, 1984. 10. "Bush Denies Influencing Drug Firm Tax Proposal," "Washington Post," May 20, 1981. 11. Jack Anderson and Dale Van Atta, "The Bush-Lorenzo Connections," "Washington Post," Dec. 21, 1989. 12. James Ridgway, "The Tax Records of Reagan and Bush," "Texas Observer," Sept. 28, 1984. CHAPTER 21 THE PHONY WAR ON DRUGS An indispensable component of the mythical media profile which George Bush has built up over the years to buttress his electoral aspirations has been his role as an antidrug fighter. His first formally scheduled prime time presidential television address to the nation, in September 1989, was devoted to announcing his plans for measures to combat the illegal narcotics that continued to inundate the streets of the United States. During his 1988 election campaign, Bush had pointed with astounding complacency to his record as President Reagan's designated point man in the administration's war on drugs. In his acceptance speech to the Republican National Convention in 1988, Bush stated: "I want a drug-free America. Tonight, I challenge the young people of our country to shut down the drug dealers around the world.... My administration will be telling the dealers, 'Whatever we have to do, we'll do, but your day is over. You're history.'|" Indeed, Bush has an impressive resume of bureaucratic titles to back up his claim to be America's top antidrug fighter. On January 28, 1982, Reagan created the South Florida Task Force under Bush's high-profile leadership, to coordinate the efforts of the various federal agencies to stem the tide of narcotics into Bush's old family bailiwick. On March 23, 1983, Bush was placed in charge of the National Narcotics Border Interdiction System, which was supposed to staunch the drug flow over all U.S. borders. In August 1986, U.S. officials presented to their Mexican counterparts a scheme called Operation Alliance, a new border enforcement initiative that was allegedly to do for the U.S.-Mexican border area what the South Florida Task Force had allegedly already done for the southeastern states. George Bush was appointed chief of Operation Alliance, which involved 20 federal agencies, 500 additional federal officers, and a budget of $266 million. The drug plague is an area in which the national interest requires results. Illegal narcotics are one of the most important causes of the dissolution of American society at the present time. To interdict the drug flows and to prosecute the drug money launderers at the top of the banking community would have represented a real public service. But Bush had no intention of seriously pursuing such goals. For him, the war on drugs was, and is, a cruel hoax, a cynical exercise in demagogic self-promotion, designed in large part to camouflage activities by himself and his networks that promoted drug trafficking. A further shocking episode that has come to light in this regard involves Bush's 14-year friendship with a member of Meyer Lansky's Miami circles who sold Bush his prized trophy, the Cigarette boat "Fidelity". Bush's war on drugs was a rhetorical and public relations success for a time. On February 16, 1982, in a speech on his own turf in Miami, Florida, Bush promised to use sophisticated military aircraft to track the airplanes used by smugglers. Several days later, Bush ordered the U.S. Navy to send in its E-2C surveillance aircraft for this purpose. If these were not available in sufficient numbers, said Bush, he was determined to bring in the larger and more sophisticated AWACS early warning aircraft to do the job. But Bush's skills as an interagency expediter left something to be desired: By May, two of the four E-2C aircraft that originally had been in Florida were transferred out of the state. By June, airborne surveillance time was running a mere 40 hours per month, not the 360 hours promised by Bush, prompting Rep. Glenn English (D-Ok.) to call hearings on this topic. By October 1982, the General Accounting Office issued an opinion in which it found "it is doubtful whether the [south Florida] task force can have any substantial long-term impact on drug availability." But the headlines were grabbed by Bush, who stated in 1984 that the efforts of his task force had eliminated the marijuana trade in south Florida. That was an absurd claim, but it sounded very good. When Francis Mullen, Jr., the administrator of the Drug Enforcement Administration (DEA), criticized Bush for making this wildly inaccurate statement, he was soon ousted from his post at the DEA. In 1988, Democratic Congressman Glenn English concluded that Bush's "war on drugs" had been fought with "little more than lip service and press releases." English wrote: "There has been very little substance behind the rhetoric, and some of the major interdiction problems have yet to be resolved. The President assigned ... Bush to coordinate and direct federal antidrug-abuse programs among the various law enforcement agencies. However, eight years later it is apparent that the task has not been accomplished." / Note #1 Bush and Organized Crime But the whole truth is much uglier. We have indicated how the Iran-Contra drug-running and gun-running operations run out of Bush's own office played their role in increasing the cocaine and marijuana brought into this country. We have reviewed Bush's relations with his close supporters in the Wall Street LBO gang, much of whose liquidity is derived from narcotics payments which the banking system is eager to recycle and launder. We recall Bush's 1990 meeting with Syrian President Hafez al Assad, who is personally one of the most prolific drug pushers on the planet, and whom Bush embraced as an ally during the Gulf war. But there is an even more flagrant aspect of Bush's conduct which can be said to demolish once and for all the myth of the "war on drugs" and replace it with a reality so sinister that it goes beyond the imagination of most citizens. Those who follow Bush's frenetic sports activities on television are doubtless familiar with Bush's speedboat, in which he is accustomed to cavort in the waters off his estate at Walker's Point in Kennebunkport, Maine. / Note #2 The craft in question is the "Fidelity," a powerboat capable of operating on the high seas. "Fidelity" is a class of boat marketed under the brand name of "Cigarette," a high-priced speedboat dubbed "the Ferrari of the high seas." This detail should awaken our interest, since Bush's profile as an Anglo-Saxon aristocrat would normally include a genteel predilection for sailing, rather than a preference for a vulgar hot-rod like "Fidelity," which evokes the ethos of rum-runners and smugglers. The Cigarette boat "Fidelity" was purchased by George Bush from a certain Don Aronow. Bush reportedly met Aronow at a boat show in 1974, and decided to buy one of the Cigarette boats Aronow manufactured. Aronow was one of the most celebrated and successful powerboat racers of the 1960s, and had then turned his hand to designing and building these boats. But, according to at least one published account, there is compelling evidence to conclude that Aronow was a drug smuggler and suspected drug-money launderer, linked to the Genovese family of New York and New Jersey within the more general framework of the Meyer Lansky organized crime syndicate. Aronow's role in marijuana smuggling was reportedly confirmed by Bill Norris, head of the Major Narcotics Unit at the Miami U.S. Attorney's office, and thus the top federal drug prosecution official in south Florida. / Note #3 Aronow numbered among his friends and acquaintances not just Bush, but many international public figures and celebrities, many of whom had purchased the boats he built. In May of 1986, Aronow received a letter from Nicolas Iliopoulos, the royal boat captain to King Hussein of Jordan, expressing on behalf of the King the latter's satisfaction with a powerboat purchased from Aronow, and conveying the compliments of King Juan Carlos of Spain and President Hosni Mubarak of Egypt, who had recently been the Jordanian sovereign's guests on board. Aronow sent a copy of this letter to Bush, from whom he received a reply dated June 6, 1986, in which Bush thanked him "with warm regards" for forwarding the royal note and added: "I can repeat that my old Cigarette, the 'Fidelity' is running well too. I've had her out a couple of weekends and the engines have been humming. I hope our paths cross soon, my friend." / Note #4 Aronow was reportedly a close friend of George Bush. Over the years, Bush had apparently consulted with Aronow concerning the servicing and upkeep of his Cigarette boat. During 1983, Bush began to seek out Aronow's company for fishing trips. The original engines on Bush's Cigarette boat needed replacement, and this was the ostensible occasion for renewing contact with Aronow. Aronow told Bush of a new model of boat that he had designed, supposedly a high-performance catamaran. Bush planned to come to Florida during the New Year's holiday for a short vacation during which he would go bonefishing with his crony Nick Brady. During this time he would also arrange to deliver an antidrug pep-talk. On January 4, 1984, George Bush rendezvoused with Don Aronow at Islamorada in the Florida Keys. Earlier in the day, Bush had delivered one of his "war on drugs" speeches at the Omni International Hotel in Miami. Bush and Brady then proceeded by motorcade to Islamorada, where Aronow was waiting with his catamaran. Accompanied by a flotilla of Secret Service and Customs agents in Cigarette boats that had been seized from drug smugglers, Bush, Brady, Aronow and one of the latter's retainers proceeded aboard the catamaran through moderate swells to Miami, with White House photographers eternalizing the photo opportunity at every moment. Bush, who had donned designer racing goggles for the occasion, was allowed to take the wheel of the catamaran and seemed very thrilled and very happy. Nick Brady, sporting his own wraparound shades, found the seas too rough for his taste. After the trip was over, Bush personally typed the following letter to Don Aronow on his vice-presidential stationery, which he sent accompanied by some photographs of Bush, Aronow, Brady, and the others on board the catamaran: "January 14, 1984 "Dear Don, "... Again Don this day was one of the greatest of my life. I love boats, always have. But ever since knowing you that private side of my life has become ever more exciting and fulfilling. Incidentally, I didn't get to tell you but my reliable 28 footer Cigarette that is still doing just fine ... no trouble at all and the new last year engines. "All the best to you and all your exciting ventures. May all your boats bee [sic] number one and may the hosres [sic] be not far behind." At the end of this message, before his signature, Bush wrote in by hand, "My typing stinks." / Note #5 As a result of this outing, Bush is said to have used his influence to see to it that Aronow received a lucrative contract to build the "Blue Thunder" catamarans at $150,000 apiece for the U.S. Customs Service. This contract was announced with great fanfare in Miami on February 4, 1985, and was celebrated a week later in a public ceremony in which Florida Senator Paula Hawkins and U.S. Customs Commissioner William von Raab mugged for photographers together with Aronow. The government purchase was hyped as the first time that Customs would receive boats especially designed and built to intercept drug-runners on the high seas, a big step forward in the war on drugs. This was the same George Bush who in March 1988 had stated: "I will never bargain with drug dealers on U.S. or foreign soil." As one local resident recalled of that time, "everyone in Miami knew that if you needed a favor from Bush, you spoke to Aronow." / Note #6 It was proverbial among Florida pols and powerbrokers that Aronow had the vice president's ear. The Customs Service soon found that the Blue Thunder catamarans were highly unseaworthy and highly unsuitable for the task of chasing down other speedboats, including, above all, Aronow's earlier model Cigarette boats, which were now produced by a company not controlled by Aronow. Blue Thunder was a relatively slow class, capable of a top speed of only 56 miles per hour, despite the presence of twin 440-horsepower marine engines. The design of the catamaran hulls lacked any hydrodynamic advantages, and the boats were too heavy to attain sufficient lift. The stern drives were too weak for the powerful engines, leading to the problem of "grenading." This meant that the boats had to be kept well below their maximum speed. Most Blue Thunders spent more time undergoing repairs than chasing drug-runners in the coastal waters of Florida. Documents found by Thomas Burdick in the Dade County land records office show that U.S.A. Racing, the company operated by Aronow which built the Blue Thunder catamarans for the Customs Service, was not owned by Aronow, but rather by a one Jack J. Kramer in his capacity as president of Super Chief South Corporation. Jack Kramer had married a niece of Meyer Lansky. Jack Kramer's son, Ben Kramer, was thus the great-nephew and one of the putative heirs of the top boss of the U.S. crime syndicate, Meyer Lansky. Ben Kramer was also a notorious organized crime figure in his own right. On March 28, 1990 Jack Kramer and Ben Kramer were found guilty of 23 and 28 counts (respectively) of federal money laundering charges. In the previous year, Ben Kramer had also been sentenced to life imprisonment without parole for having imported half a million pounds of marijuana. Bush had thus given a prime contract in waging the war on drugs to one of the leading drug-smuggling and money-laundering crime families in the U.S. Aronow Is Murdered Don Aronow was murdered by Mafia-style professional killers on February 3, 1987. During the last days of his life, Aronow is reported to have made numerous personal telephone calls to Bush. Aronow had been aware that his life was in danger, and he had left a list of instructions to tell his wife what to do if anything should happen to him. The first point on the list was "#1. CALL GEORGE BUSH." / Note #7 Lillian Aronow did call Bush, who reportedly responded by placing a personal call to the Metro-Dade Police Department homicide division to express his concern and to request an expeditious handling of the case. Bush did not attend Aronow's funeral, but a month later he sent a letter to Aronow's son Gavin in which he called the late Don Aronow "a hero." When Lillian Aronow suspected that her telephone was being tapped, she called Bush, who urged her to be calm and promised to order an investigation of the matter. Shortly after that, the suspicious noises in Mrs. Aronow's telephone ceased. When Lillian Aronow received reports that her husband might have been murdered by rogue CIA operatives or other wayward federal agents, and that she herself and her children were still in danger, she shared her fears in a telephone call to Bush. Bush reportedly later called Mrs. Aronow and, as she recalled, "He said to me, 'Lillian, you're fine.' He said that 'ex-CIA people are really off.' That's the truth." / Note #8 In the summer of 1987, Bush snubbed Mrs. Aronow by pointedly avoiding her at a Miami dinner party. But during this same period, Bush frequently went fishing with former Aronow employee Willie Meyers. According to Thomas Burdick's sources, Willie Meyers was also a friend of Secretary of State George Shultz, and often expressed concern about damaging publicity for Bush and Shultz that might derive from the Aronow case. According to Thomas Burdick, Meyers says that Bush talked to him about how the vice president's staff was monitoring the Aronow story. Bush lamented that he did not have grounds to get federal agencies involved. "I just wish," said Bush to Meyers, "that there was some federal aspect to the murder. If the killers crossed state lines, then I could get the FBI involved." / Note #9 The form of the argument is reminiscent of the views expressed by Bush and Tony Lapham during the Orlando Letelier case. In May or June of 1987, several months after Aronow had been killed, Mike Brittain, who owned a company called Aluminum Marine Products, located on "Thunderboat Alley" in the northern part of Miami (the same street where Aronow had worked), was approached by two FBI special agents, Joseph Usher and John Donovan, both of the Miami FBI field office. They were accompanied by a third FBI man, whom they presented as a member of George Bush's staff at the National Drug Task Force in Washington, D.C. The third agent, reportedly named William Temple, had, according to the other two,come to Miami on a special mission ordered by the vice president of the United States. As Brittain told his story to Burdick, Special Agent Temple "didn't ask about the murder or anything like that. All he wanted to know about was the merger." / Note #1 / Note #0 The merger in question was the assumption of control over Aronow's company, U.S.A. Racing, by the Kramers' Super Chief South, which meant that a key contract in the Bush "war on drugs" had been awarded to a company controlled by persons who would later be convicted for marijuana smuggling and money laundering. Many of the FBI questions focused on this connection between Aronow and Kramer. Later, after Bush's victory in the 1988 presidential election, the FBI again questioned Brittain, and again the central issue was the Aronow-Kramer connection, plus additional questions of whether Brittain had divulged any of his knowledge of these matters to other persons. A possible conclusion was that a damage control operation in favor of Bush was in progress. Tommy Teagle, an ex-convict interviewed by Burdick, said he feared that George Bush would have him killed because information in his possession would implicate Jeb Bush in cocaine smuggling. Teagle's story was that Aronow and Jeb Bush had been partners in cocaine trafficking and were $2.5 million in debt to their Colombian suppliers. Dr. Robert Magoon, a friend of Aronow, is quoted in the same location as having heard a similar report. But Teagle rapidly changed his story. / Note #1 / Note #1 Ultimately, an imprisoned convict was indicted for the murder of Aronow. But the circumstances of the murder remain highly sus pect. Starting in 1985, and with special intensity during 1987-88, more than two dozen persons involved in various aspects of the Iran-Contra gun-running and drug-running operation met their deaths. Above and beyond the details of each particular case, the overall pattern of these deaths strongly suggests that they are coherent with a damage control operation by the networks involved, that has concentrated on liquidating those individuals whose testimony might prove to be most damning to the leading personalities of these networks. The death of Don Aronow occurred within the time frame of this general process of amputation and cauterization of the Iran-Contra and related networks. Many aspects of Aronow's life suggest that his assassination may have been a product of the same "damage control" logic. CHAPTER 22 (untitled) On the morning of June 29, 1989, pandemonium erupted in the corridors of power in the nation's capital. "Homosexual Prostitution Probe Ensnares Official of Bush, Reagan," screamed the front-page headline of the "Washington Times" with the kicker "Call Boys Took Midnight Tour of White House." The "Times" reported, "A homosexual prostitution ring is under investigation by federal and District authorities and includes among its clients key officials of the Reagan and Bush administrations, military officers, congressional aides and U.S. and foreign businessmen with close ties to Washington's political elite." The expose centered on the role of one Craig Spence, a Republican powerbroker known for his lavish "power cocktail" parties. Spence was well connected. He celebrated Independence Day 1988 by conducting a midnight tour of the White House in the company of two teenage male prostitutes among others in his party. Rumors circulated that a list existed of some 200 Washington prominents who had used the call boy service. The Number Two in charge of personnel affairs at the White House, who was responsible for filling all the top civil service posts in the federal bureaucracy, and Secretary of Labor Elizabeth Dole's chief of staff, were two individuals publicly identified as patrons of the call boy ring. Two of the ring's call boys were allegedly KGB operatives, according to a retired general from the Defense Intelligence Agency interviewed by the press. But the evidence seemed to point to a CIA sexual blackmail operation, instead. Spence's entire mansion was covered with hidden microphones, two-way mirrors and video cameras, ever ready to capture the indiscretions of Washington's high, mighty and perverse. The political criteria for proper sexual comportment had long been established in Washington: Any kinkiness goes, so long as you don't get caught. The popular proverb was that the only way a politician could hurt his career was if he were "caught with a dead woman or a live boy" in his bed. Months after the scandal had died down, and a few weeks before he allegedly committed suicide, Spence was asked who had given him the "key" to the White House. The "Washington Times" reported that "Mr. Spence hinted the tours were arranged by 'top level' persons, including Donald Gregg, national security advisor to Vice President Bush" / Note #1 and later U.S. ambassador to South Korea. We have already had occasion to examine Don Gregg's role in Iran-Contra, and have observed his curious performance when testifying under oath before congressional committees. Gregg indignantly denied any connection to Spence, yet it is public record that Spence had sponsored a dinner in Gregg's honor in the spring of 1989 at Washington's posh Four Seasons Hotel in Georgetown. George Bush was less than pleased with the media coverage of the prostitution charges and kept abreast of the scandal as it mushroomed. The "Washington Times" reported in an article titled "White House Mute on Call Boy Scandal," that "White House sources confirmed that President Bush has followed the story of the late night visit and Mr. Spence's links to a homosexual prostitution ring under investigation by federal authorities since they were disclosed June 29 in the "Washington Times". But top officials will not discuss the story's substance, reportedly even among themselves. "Press officers have rebuffed repeated requests to obtain Mr. Bush's reaction and decline to discuss investigations or fall out from the disclosures." / Note #2 By midsummer, the scandal had been buried. The President had managed to avoid giving a single press conference where he would surely have been asked to comment. Scandal in Nebraska As the call boy ring affair dominated the cocktail gossip circuit in Washington, another scandal, halfway across the country in the state of Nebraska, peaked. Again this scandal knocked on the President's door. A black Republican who had been a leader in organizing minority support for the President's 1988 campaign and who proudly displayed a photo of himself and the President, arm in arm, in his Omaha home, was at the center of a sex and money scandal that continues to rock the Cornhusker state. The scandal originated with the collapse of the minority-oriented Franklin Community Credit Union in Omaha, directed by Lawrence E. King, Jr., a nationally influential black Republican who sang the national anthem at both the 1984 and 1988 Republican conventions. King became the subject of the Nebraska Senate's investigation conducted by the specially created "Franklin Committee" to probe charges of embezzlement. In November 1988, King's offices were raided by the FBI and $40 million was discovered missing. Within weeks, the Nebraska Senate, which initially opened the inquiry to find out where the money had gone, instead found itself questioning young adults and teenagers who said that they had been child prostitutes. Social workers and state child-care administrators accused King of running a child prostitution ring. The charges grew, with the former police chief of Omaha, the publisher of the state's largest daily newspaper, and several other political associates of King, finding themselves accused of patronizing the child prostitution ring. King is now serving a 15-year federal prison sentence for defrauding the Omaha-based credit union. But the magazines "Avvenimenti" of Italy and "Pronto" of Spain, among others, have charged that King's crimes were more serious: that he ran a national child prostitution ring that serviced the political and business elite of both Republican and Democratic parties. Child victims of King's operations charged him with participation in at least one satanic ritual murder of a child several years ago. The "Washington Post", "New York Times", "Village Voice" and "National Law Journal" covered the full range of accusations after the story broke in November of 1988. King's money machinations were also linked to the Iran-Contra affair, and some say that King provided the CIA with information garnered from his alleged activities as a "pimp" for the high and mighty. "Pronto", the Barcelona-based, largest circulation weekly in Spain with 4.5 million readers, reported that the Lawrence E. King child prostitution scandal "appears to directly implicate politicos of the state of Nebraska and Washington, D.C. who are very close to the White House and George Bush himself." The weekly stated that Roy Stephens, a private investigator who has worked on the case and heads the Missing Youth Foundation, "says there is reason to believe that the CIA is directly implicated," and that the "FBI refuses to help in the investigation and has sabotaged any efforts" to get to the bottom of the story. Stephens says that "Paul Bonacci directly accused President Bush of being implicated" in the affair when he testified before the Franklin Committee. / Note #3 Bonacci, who had been one of the child prostitutes, is identified by leading child-abuse experts as a well-informed, credible witness. Lawrence King was no stranger to President Bush. And Lawrence King was no stranger to Craig Spence. Several of the Omaha child prostitutes testified that they had traveled to Washington, D.C. with King in private planes to attend political events whic h were followed by sex parties. King and Spence had much in common. Not only were they both Republican Party activists but they had gone into business together procuring prostitutes for Washington's elite. Bush's name had repeatedly surfaced in the Nebraska scandal. But his name was first put into print in July 1989, a little less than a month after the Washington call boy affair had first made headlines. Omaha's leading daily newspaper reported, "One child, who has been under psychiatric care, is said to believe she saw George Bush at one of King's parties." / Note #4 A full three years after the scandal had first made headlines, Bush's name again appeared in print. "Gentleman's Quarterly (GQ)" carried a lengthy article, viewed by many political observers in Nebraska as an attempt to refute the charges, which would not die, despite the termination of all official inquiries. The "GQ" piece disputed the allegations as a conspiracy theory that went out of control and resonated because of some mystical sociological phenomena allegedly unique to Nebraskan rural folk who will believe anything and burn "with the mistrust of city life that once inflamed the prairie with populist passion." Numerous polls over the last few years have recorded over 90% saying they believe there has been a "cover up" of the truth. "GQ" reported that yes, there was theft, corruption and homosexuality in this story, "but no children were ever involved in this case." In fact, "the only child even mentioned was a 9-year-old boy, whom the least reliable of [Senate Committee investigator Gary] Caradori's witnesses claimed to have seen in the company of George Bush at one of Larry King's Washington parties." Gary Caradori was a retired state police investigator who had been hired by the Nebraska Senate to investigate the case, and who had died mysteriously during the course of his investigations. / Note #5 Sound crazy? Not to Steve Bowman, an Omaha businessman who is compiling a book about the Franklin money and sex scandal. "We do have some credible witnesses who say that 'Yes, George Bush does have a problem.'... Child abuse has become one of the epidemics of the 1990s," Bowman told "GQ". Allegedly, one of Bowman's sources is a retired psychiatrist who worked for the CIA. He added that cocaine trafficking and political corruption were the other principal themes of his book. / Note #6 It didn't sound crazy to Peter Sawyer either. An Australian conservative activist who publishes a controversial newsletter, "Inside News", with a circulation of 200,000, dedicated his November 1991 issue entirely to the Nebraska scandal, focusing on President Bush's links to the affair. In a section captioned, "The Original Allegations: Bush First Named in 1985," Sawyer writes, "Stories about child sex and pornography first became public knowledge in 1989, following the collapse of the Franklin Credit Union. That is not when the allegations started, however. Indeed, given the political flavor of the subsequent investigations, it would be easy to dismiss claims that George Bush had been involved. He was by then a very public figure.... "If the first allegations about a massive child exploitation ring, centered around Larry King and leading all the way to the White House, had been made in 1989, and had all come from the same source, some shenanigans and mischievous collusion could be suspected. However, the allegations arising out of the Franklin Credit Union collapse were not the first. "Way back in 1985, a young girl, Eulice (Lisa) Washington, was the center of an investigation by Andrea L. Carener, of the Nebraska Department of Social Services. The investigation was instigated because Lisa and her sister Tracey continually ran away from their foster parents, Jarrett and Barbara Webb. Initially reluctant to disclose information for fear of being further punished, the two girls eventually recounted a remarkable story, later backed up by other children who had been fostered out to the Webb's [sic]. "These debriefings were conducted by Mrs. Julie Walters, another welfare officer, who worked for Boys Town at the time, and who had been called in because of the constant reference by the Webb children and others, to that institution. "Lisa, supported by her sister, detailed a massive child sex, homosexual, and pornography industry, run in Nebraska by Larry King. She described how she was regularly taken to Washington by plane, with other youths, to attend parties hosted by King and involving many prominent people, including businessmen and politicians. Lisa specifically named George Bush as being in attendance on at least two separate occasions. "Remember, this was in 1985," emphasized the Australian newsletter. The newsletter reproduces several documents on Lisa's case, including a Nebraska State Police report, a State of Nebraska Foster Care Review Board letter to the Attorney General, an investigative report prepared for the Franklin Committee of the Nebraska Senate, and a portion of the handwritten debriefing by Mrs. Julie Walters. Peter Sawyer says that he obtained the documents from sympathetic Australian law enforcement officers who had helped Australian Channel Ten produce an expose of a national child prostitution ring, Down Under. The Australian cops seem to have been in communication with American law enforcement officers who apparently agreed that there had been a coverup on the Nebraska scandal. Subsequent investigations by the authors established that all four documents were authentic. Mrs. Julie Walters, now a housewife in the Midwest, confirmed that in 1986 she had interviewed the alleged child prostitute, Lisa, who told her about Mr. Bush. Lisa and her sister Tracey were temporarily living at the time in the home of Kathleen Sorenson, another foster parent. Mrs. Walters explained that at first she was very surprised. But Lisa, who came from a very underprivileged background with no knowledge of political affairs, gave minute details of her attendance at political meetings around the country. From Julie Walters' 50-page handwritten report: "3/25/86. Met with Kathleen [Sorenson] and Lisa for about 2 hours in Blair [Neb.] questioning Lisa for more details about sexual abuse.... Lisa admitted to being used as a prostitute by Larry King when she was on trips with his family. She started going on trips when she was in 10th grade. Besides herself and Larry there was also Mrs. King, their son, Prince, and 2-3 other couples. They traveled in Larry's private plane, Lisasaid that at these trip parties, which Larry hosted, she sat naked 'looking pretty and innocent' and guests could engage in any sexual activity they wanted (but penetration was not allowed) with her.... Lisa said she first met V.P. George Bush at the Republican Convention (that Larry King sang the national anthem at) and saw him again at a Washington, D.C. party that Larry hosted. At that party, Lisa saw no women ('make-up was perfect -- you had to check their legs to make sure they weren't a woman'). "The polygraph test which Lisa took only centered around sexual abuse committed by Jarrett Webb. At that time, she had said only general things about Larry's trips (i.e. where they went, etc.). She only began talking about her involvement in prostitution during those trips on 3/25/86.... "Lisa also accompanied Mr. and Mrs. King and Prince on trips to Chicago, N.Y. and Washington, D.C. beginning when she was 15 years old. She missed twenty-two days of school almost totally due to these trips. Lisa was taken along on the pretense of being Prince's babysitter. Last year she met V.P. George Bush and saw him again at one of the parties Larry gave while on a Washington, D.C. trip. At some of the parties there are just men (as was the case at the party George Bush attended) -- older men and younger men in their early twenties. Lisa said she has seen sodomy committed at those parties.... "At these parties, Lisa said every guest had a bodyguard and she saw some of the men wearing guns. All guests had to produce a card which was run through a machine to verify who the guest was, in fact, who they said t hey were. And then each guest was frisked down before entering the party." / Note #7 The details of the accusations against Mr. Bush are known to be in the hands of the FBI. A Franklin Committee report stated: "Apparently she [Lisa] was contacted on December 19  and voluntarily came to the FBI offices on December 30, 1988. She was interviewed by Brady, Tucker and Phillips. "She indicates that in September or October 1984, when [Lisa] Washington was fourteen or fifteen years of age, she went on a trip to Chicago with Larry King and fifteen to twenty boys from Omaha. She flew to Chicago on a private plane. "The plane was large and had rows of two seats apiece on either side of the interior middle aisle. "She indicates that King got the boys from Boys Town and the boys worked for him. She stated that Rod Evans and two other boys with the last name of Evans were on the plane. Could not recall the names of the other boys. "The boys who flew to Chicago with Washington and King were between the ages of fifteen and eighteen. Most of the boys were black but some were white. She was shown a color photograph of a boy and identified that boy as being one of the boys on the plane. She could not recall his name. "She indicates that she was coerced to going on the trip by Barbara Webb. "She indicates that she attended a party in Chicago with King and the male youths. She indicated George Bush was present. "She indicates that she set [sic] at a table at the party while wearing nothing but a negligee. She stated that George Bush saw her on the table. She stated she saw George Bush pay King money, and that Bush left the party with a nineteen year old black boy named Brent." Lisa said the party George Bush attended was in Chicago in September or October 1984. According to the "Chicago Tribune" of October 31, 1984, Bush was in Illinois campaigning for congressional candidates at the end of October. Lisa added more details on the Chicago trip, and told why she was sure it was George Bush she had seen. According to a May 8, 1989 report by investigator Jerry Lowe, "Eulice [Lisa] indicated that she recognized George Bush as coming to the party and that Bush had two large white males with him. Eulice indicated Bush came to the party approximately 45 minutes after it started and that he was greeted by Larry King. Eulice indicated that she knew George Bush due to the fact that he had been in political campaigns and also she had observed a picture of Bush with Larry King at Larry King's house in Omaha." There is no question that Lisa and Tracey Webb were abused in the way they claimed. But, in keeping with the alleged pattern of coverup, a Washington County, Nebraska judge in December 1990 dismissed all charges against their abusers, Jarrett and Barbara Webb. The judge ignored presented testimony of the 1986 report by Boys Town official Julie Walters. The report stated: "Lisa was given four polygraph tests administered by a state trooper at the State Patrol office on Center Street in Omaha. The state trooper, after Lisa's testing was completed, told [another foster parent] he tried to 'break Lisa down,' but he was convinced she was telling the truth." / Note #8 Furthermore, numbers of foster care officials and youth workers debriefed the sisters. All of them fully believed not only their general story of abuse, but specifically their account of Bush's involvement. The March 1986 report on Bush was incorporated into the Foster Care Review Board's official report presented to the Senate Franklin Committee and to law enforcement. As Kathleen Sorenson wrote in a report dated May 1, 1989, "This was long before he [Bush] was President. It seems like there were more exciting people to 'lie' about if that's what they were doing." / Note #9 Notes for Chapter XXI 1. For Bush's "war on drugs," see Jack Anderson and Dale Van Atta, "How Bush Commanded the War on Drugs," "Washington Post," June 20, 1988; Lawrence Lifschultz, "Bush, Drugs and Pakistan: Inside the Kingdom of Heroin," "The Nation," Nov. 14, 1988; "Drug Czars We Have Known," "The Nation," Feb. 27, 1989; and Robert A. Pastor and Jorge Castaneda, "Limits to Friendship: The United States and Mexico" (New York: Knopf, dist. by Random House), p. 271. 14, 1988. 2. See the cover of "Newsweek," Oct. 19, 1987, "Fighting the 'Wimp Factor,'|" which portrays Bush at the controls of "Fidelity." A similar photo appears facing p. 223 in George Bush and Victor Gold, "Looking Forward" (New York: Doubleday, 1987). 3. See Thomas Burdick and Charlene Mitchell, "Blue Thunder" (New York: Simon and Schuster, 1990), p. 229. The following account of the relations between Bush and Aronow relies upon this remarkable study. 4. "Ibid.," p. 182. 5. "Ibid.," p. 18. 6. "Ibid.," p. 34. 7. "Ibid.," p. 71. 8. "Ibid.," p. 95. 9. "Ibid.," p. 103. 10. "Ibid.," pp. 326-27. 11. "Ibid.," pp. 351, 357. Notes for Chapter XXII 1. "Washington Times," Aug. 9, 1989. 2. "Washington Times," July 7, 1989. 3. "Pronto" (Barcelona, Spain), Aug. 3, 1991 and Aug. 10, 1991. 4. "Omaha World-Herald," July 23, 1989. 5. On July 11, 1990, during the course of his investigations, Gary Caradori, 41, died in the crash of his small plane, together with his 8-year-old son, after a mid-air explosion whose cause has not yet been discovered. A skilled and cautious pilot, Caradori told friends repeatedly in the weeks before his death that he feared his plane would be sabotaged. 6. "Gentleman's Quarterly," December 1991. 7. Report, written on March 25, 1986 by Julie Walters and authenticated by her in an interview in 1990. 8. Report, early 1989, compiled by Jerry Lowe, the first investigator for the Franklin Committee of the Nebraska State Senate. 9. A book recently published on the Nebraska affair by a former Republican state senator and decorated Vietnam veteran, John W. De Camp, "The Franklin Cover-Up: Child Abuse, Satanism and Murder in Nebraska" (Lincoln, Nebraska: AWT, Inc., 1992) tells the whole story. CHAPTER 23 BUSH TAKES THE PRESIDENCY George Bush's quest for the summit of American political power was so sustained and so unrelenting that it is impossible to assign the beginning of his campaign for President to any specific date. It is more accurate to report that his entire tenure as Vice President was consumed by the renovation and expansion of his personal and family network for the purpose of seizing the presidency at some point in the future. During this phase, Bush was far more concerned with organizational and machine-building matters thanwith ideology or public relations. For most of the 1980s, it was convenient for Bush to cultivate the public profile of a faithful and even obsequious deputy to Reagan, while using the office of the vice president to build a national and international overt/covert power cartel. Bush had no regional constituency in any of the half-dozen places he tried to call home; his "favorite son" appeal was diluted all over the map. He had no base among labor, blacks, or in the cities, like the Kennedy apparat. Blue-blooded financiers gravitated instinctively to Bush; and his lifeline to the post-Meyer Lansky mob was robust indeed; and these were important factors, although not enough by themselves to win an election. Bush's networks could always tilt the media in his favor, but the Reagan experience had provided a painful lesson of how inadequate this could be against a clever populist rival. Otherwise, Bush's base was in the government, where eight years of patient work had packed the executive branch, the Congress and its staffs, and the judiciary with Bushmen. Nor was it only that Bush lacked a loyal base of support. He also had very high negatives, meaning that there were a lot of people who disliked him intensely. Such animosity was especially strong among the ideological Reaganite conservatives, whom Bush had been purging from the Reagan administration from early on. There would prove to be very little that Bush could do to lower his negative response rate, so the only answer would be to raise the negatives of all rival candidates on both sides of the partisan divide. This brutal i mperative for the Bush machine has contributed significantly to the last half decade's increase in derogation and vilification in American life. Bush's discrediting campaigns would be subsumed within the "anything goes" approach advocated by the late Lee Atwater, the organizer of Reagan's 1984 campaign, who had signed on with Bush well in advance of 1988. The "Washington Post" went after Bush as "the Cliff Barnes of American politics," a reference to a character in the TV soap opera "Dallas," whom the "Post" found "blustering, opportunistic, craven, and hopelessly ineffective all at once." Others, foreshadowing the thyroid revelations of 1991, talked about Bush's "hyperkinesis." Even the unsavory George Will commented that "the optimistic statement 'George Bush is not as silly as he frequently seems' now seems comparable to Mark Twain's statement that Wagner's music is better than it sounds." / Note #1 More than anything, Bush wanted an early endorsement from Reagan, in order to suppress or at least undercut challenges to his presumptive front-runner status from GOP rivals in the primaries; it was already clear that Senator Bob Dole might be the most formidable of these. Bush feared Dole's challenge, and desperately wanted to be anointed as Reagan's heir-apparent as soon as possible before 1988. But Reagan had apparently not gotten over the antipathy to Bush he had conceived during the "Nashua Telegraph" debate of 1980. According to a high-level Reagan administration source speaking in the summer of 1986, "more than once the President [told Bush], 'Obviously, I'm going to stay neutral until after the convention, and then I'm going to work for whichever candidate comes out on top.'|" / Note #2 Despite Bush's "slavish devotion," Reagan wanted to keep the door open to his good friend, Senator Paul Laxalt of Nevada, whom Reagan apparently thought was getting ready to run for President. One can imagine Bush's rage and chagrin. Reagan stubbornly refused to come out for Bush until the endorsement could no longer help him in the Republican primaries. Reagan chose to wait until Super Tuesday was over and the rest of the Republican field had been mathematically eliminated. Reagan actually waited until Bob Dole, the last of Bush's rivals, had dropped out. Then Reagan ignored the demands of Bush's media handlers and perception-mongers and gave his endorsement in the evening, too late for the main network news programs. The scene was a partisan event, a very large GOP congressional fundraising dinner. Reagan waited to the end of the speech, explained that he was now breaking his silence on the presidential contest, and in a perfunctory way said he would support Bush. "I'm going to work as hard as I can to make Vice President George Bush the next President of the United States," said old Ron. There were no accolades for Bush's real or imagined achievements, no stirring kudos. Seasoned observers found Reagan's statement "halfhearted ... almost grudging." / Note #3 The Wimp Factor Reagan's endless reticence meant that Bush had to work especially hard to pander to the right wing, to those people whom he despised but nevertheless needed to use. Here Bush stooped to boundless public degradation. In December 1985, Bush went to Canossa by accepting an invitation to a dinner in Manchester, New Hampshire held in honor of the late William Loeb, the former publisher of the Manchester "Union Leader". We have already documented that old man Loeb hated Bush and worked doggedly for his defeat in 1980. Still, Bush was the "soul of humility," and he was willing to do anything to be able to take power in his own name. Bush gave a speech full of what the "Washington Post" chose to call "self-deprecating humor," but what others might have seen as groveling. Bush regaled 500 Republicans and rightists with a fairy tale about having tried in 1980 to woo Loeb by offering rewards of colored watchbands, LaCoste shirts, and Topsider shoes to anyone who could win over Bill Loeb. The items named were preppy paraphernalia which Loeb and many others found repugnant. Some of the assembled right-wingers repeated the line from the Doonesbury comic strip according to which Bush "had placed his manhood in a blind trust." Loeb's widow, Nackey Scripps Loeb, was noncommittal. "We have decided on a candidate for 1988 -- whoever best fights for the Reagan agenda," she announced. "Whether that person is here tonight remains to be seen," she added. / Note #4 Lawfully, Bush had earned only the contempt of these New Hampshire conservatives. In October 1987, when the New Hampshire primary season was again at hand, Mrs. Loeb rewarded Bush for his groveling with a blistering attack that featured reprints of Bill Loeb's 1980 barbs: "a preppy wimp, part of the self-appointed elite," and so forth. Mrs. Loeb wrote, "George Bush has been Bush for 63 years. He has been Ronald Reagan's errand boy for just the last seven. Without Ronald Reagan he will surely revert to the original George Bush." Mrs. Loeb repeated her late husband's 1980 advice: "Republicans should flee the presidential candidacy of George Bush as if it were the black plague itself." / Note #5 All of this culminated in the devastating "Newsweek" cover story of October 19, 1987, "Fighting the 'Wimp Factor.'|" The article was more analytical than hostile, but did describe the "crippling handicap" of being seen as a "wimp." Bush had been a "vassal to Kissinger" at the United Nations and in Beijing, the article found, and now even Bush's second-term chief of staff said of Bush, "He's emasculated by the office of vice president." To avoid appearing as a television wimp, Bush had "tried for the past 10 years to master the medium, studying it as if it were a foreign language. He has consulted voice and television coaches. He tried changing his glasses and even wearing contact lenses.... Bush's tight, twangy voice is a common problem. Under stress, experts explain, the vocal cords tighten and the voice is higher than normal and lacks power." According to "Newsweek", 51 percent of Americans found that "wimp" was a "serious problem" for Bush. The "Newsweek" "wimp" cover soon had Bush chewing the carpet at the Naval Observatory. Bush's knuckle-dragging son, George W. Bush, called the story "a cheap shot" and added menacingly: "... I'd like to take the guy who wrote that headline out on that boat," i.e., the Aronow-built "Fidelity" in which Bush was depicted on the "Newsweek" cover -- which sounded very much like a threat. George W. Bush also called "Newsweek" Washington bureau chief Evan Thomas to inform him that the Bush campaign had officially cut off all contact with "Newsweek" and its reporters. The decision to put "Newsweek" out of business was made by candidate Bush personally, and aborted a plan by "Newsweek" to publish a book on the 1988 campaign. The press got the message: Portray Bush in a favorable light or face vindictive and discriminatory countermeasures. Big Bucks for Bush Bush campaigns have always advanced on a cushion of money, and the 1988 effort was to push this characteristic to unheard-of extremes. In keeping with a tradition that had stretched over almost three decades, the Bush campaign finance chairman was Robert Mosbacher, whose Mosbacher Energy Corporation is one of the largest privately held independent oil companies in Texas. Mosbacher's net personal worth is estimated at $200 million. During the 1988 campaign, Mosbacher raised $60 million for the Bush campaign and $25 million for the Republican National Committee. Bush's big money campaigning was especially dependent upon Texas oilmen, whose largesse he required to stoke his political machine. Bush was running a political action committee called the Fund for America's Future, which raised $3.9 million in off-year 1985, a hefty sum. Of that take, about a fifth was raised from 505 Texas donors, with Texans giving more than the residents of any other state. Some $135,095 of Bush's money harvest came from persons who could be clearly identified as oil industry figures, and the rakeoff here was probably much greater. The Primary Campaign James Baker w as the titular head of the Bush campaign, but the person responsible for the overall concepts and specific tactics of the Bush campaign was Lee Atwater, a political protege of Senator Strom Thurmond of South Carolina. Thurmond had been a Democrat, then a Dixiecrat in 1948, then a Democrat again, and finally a Republican. The exigencies of getting elected in South Carolina on the GOP ticket had taught Thurmond to reach deeply into that demagogue's bag of tricks called the wedge issues. Under Thurmond's tutelage, Atwater had become well versed in the essentials of the Southern Strategy, the key to that emergent Republican majority in presidential elections which Kevin Phillips had written about in 1968. Atwater had also imbibed political doctrine from the first practitioner of the Southern Strategy, the dark-jowled Richard M. Nixon himself. In January 1983, for example, Lee Atwater, at that time deputy director of the White House office of political affairs (and a creature of the Bush-Baker connection), met with Nixon for three and a half hours in Columbia, South Carolina. Nixon held forth on three points: the decisive political importance of the Sun Belt, the numerical relations within the Electoral College, and the vast benefits of having no primary competition when seeking reelection. In 1988 as well, Nixon was brought in to be the "spiritus rector" of the Bush campaign. During March of 1988, when it was clear that Bush was going to win the nomination, Nixon "slipped into town" to join George Bush, Bar, and Lee Atwater for dinner at the Naval Observatory. This time it was Bush who received a one-hour lecture from Nixon on the need to cater to the Republican right wing, the imperative of a tough line on crime in the streets, and the Soviets (again to propitiate the rightists), to construct an independent identity only after the convention, and to urge Reagan to campaign actively. And of course, where Nixon shows up, Kissinger cannot be far away. / Note #6 1988 saw another large-scale mobilization of the intelligence community in support of Bush's presidential ambitions. The late Miles Copeland, a high-level former CIA official who operated out of London during the 1980s, contributed a piece frankly titled "Old Spooks for Bush" to the March 18, 1988 issue of "National Review". Bush and Atwater feared all their competition. They feared former Governor Pierre DuPont of Delaware because of his appeal to liberal and blue-blooded Republicans who might otherwise automatically gravitateto Bush. They feared New York Congressman Jack Kemp because of his appeal to the GOP right wing and to blue-collar Reagan Democrats, and because of what they viewed as his disturbing habit of talking about the Strategic Defense Initiative and similar issues. They feared that Senator Bob Dole of Kansas, with his "root canal economics" and right-wing populism, and his solid backing from the international grain cartel, might appear more credible to the Wall Street bankers than Bush as an enforcer of austerity and sacrifices. But at the same time, they knew that Bush had more money to spend and incomparably more state-by-state organization than any of his GOP rivals, to say nothing of the fabled Brown Brothers Harriman media edge. Bush also ruled the Republican National Committee with Stalin-like ferocity, denying these assets to all of his rivals. This allowed Bush to wheel toward the right in 1986-87 to placate some of his critics there, and then move back toward the center by the time of the primaries. But all the money and the organization could not mask the fact that Bush was fundamentally a weak candidate. This began to become obvious to Atwater and his team of perception mongers as the Iowa caucuses began to shape up. These were the caucuses that Bush had so niftily won in 1980. By 1988, Bush's Iowa effort had become complicated by reality, in the form of a farm crisis that was driving thousands of farmers into bankruptcy every week. Farm voters were now enraged against the avuncular thespian Ronald Reagan and were looking for a way to send a message to the pointy-headed set in Washington, D.C. Bush's Iowa campaign was dripping with lucre, but this now brought forth resentment among the grim and grey-faced rural voters. In mid-October 1987, five of the six declared Republican candidates attended a traditional Iowa GOP rally in Ames, just north of Des Moines, on the campus of Iowa State University. Televangelist Pat Robertson surprised all the others by mobilizing 1,300 enthusiastic supporters for the Saturday event. The culmination of this rally was a presidential straw poll, which Robertson won with 1,293 votes to 958 for Dole. Bush trailed badly with 864. This was the occasion for Bush's incredible explanation of what had happened: "A lot of people that support me, they were off at the air show, they were at their daughters' coming out parties, or teeing up at the golf course for that all-important last round." / Note #7 Many Iowans, including Republicans, had to ask what a debutante cotillion was, and began to meditate on the fact that they were not socially acceptable. But most concluded that George Bush was the imperial candidate from another planet, bereft of the foggiest notion of their lives and their everyday problems. During the buildup to the Iowa caucus, Bush continued to dodge questions on Iran-Contra. The famous "tension city" encounter with Dan Rather took place during this time. Lee Atwater considered that performance Bush's defining event for the campaign, a display which made him look like John Wayne, Clint Eastwood, and Gary Cooper, especially in the South, where people like a pol who "can kick somebody's ass" and where that would make a big difference on Super Tuesday. But Bush's handlers were nevertheless shocked when Dole won the Iowa caucuses with 37 percent of the vote, followed by Pat Robertson with 25 percent. Bush managed only a poor show, with 19 percent, a massive collapse in comparison with 1980, when he had been far less known to the public. Bush had known that defeat was looming in Iowa, and he had scuttled out of the state and gone to New Hampshire before the results were known. Bush was nevertheless stunned by his ignominious third-place finish, and he consulted with Nick Brady, Lee Atwater, chief of staff Craig Fuller, and pollster Bob Teeter. Atwater had boasted that he had built a "fire wall" in the southern Super Tuesday states that would prevent any rival from seizing the nomination out of Bush's grasp, but the Bush image-mongers were well awarethat a loss in New Hampshire might well prove a fatal blow to their entire effort, the advantages of money, networks, and organization notwithstanding. Atwater accordingly ordered a huge media buy of 1,800 gross rating points, enough to ensure that the theoretical New Hampshire television viewer would be exposed to a Bush attack ad 18 times over the final three days before the election. The ad singled out Bob Dole, judged by the Bushmen as their most daunting New Hampshire challenger, and savaged him for "straddling" the question of whether or not new taxes ought to be imposed. The ad proclaimed that Bush "won't raise taxes," period. It was during this desperate week in New Hampshire that Bush became indissolubly wedded to his lying and demagogic "no new taxes" pledge, which he repudiated with considerable fanfare during the spring of 1990. When Bush had arrived in Manchester the night of the disastrous Iowa result, New Hampshire Governor John Sununu, his principal supporter in the state, had promised a nine-point victory for Bush in his state. Oddly enough, that turned out to be exactly right. The final result was 38 percent for Bush, 29 percent for Dole, 13 percent for Kemp, 10 percent for DuPont, and 9 percent for Robertson. In the South Carolina primary, the Bushmen were concerned about a possible threat from television evangelist Pat Robertson, who had mounted his major effort in the Palmetto state. Robertson was widely known through his appearances on his Christian Broadcasting Network. Shortly before the South Carolina vote, a scandal became publi c which involved another television evangelist, Jimmy Swaggart, a close friend of Robertson and an active supporter of Robertson's presidential campaign. Swaggart admitted to consorting with a prostitute, and this caused a severe crisis in his ministry. Jim Bakker of the PTL television ministry had already been tainted by a sex scandal. Pat Robertson accused the Bush campaign of orchestrating the Swaggart revelations at a time that would be especially advantageous to their man. Talking to reporters, Robertson pointed to "the evidence that two weeks before the primary ... it suddenly comes to light." Robertson added that the Bush campaign was prone to "sleazy" tricks, and suggested that his own last-place finish in New Hampshire was "quite possibly" the result of "dirty tricks" by the Bush campaign. Bush responded by dismissing Robertson's charges as "crazy" and "absurd." Robertson had been linking Bush to the "international banking community" in his South Carolina campaigning. / Note #8 True to his Southern Strategy, Atwater had "front-loaded" Bush's effort in the southern states with money, political operatives, and television, straining the legal limit of what could be spent during the primary season as a whole. A few days before Super Tuesday came the South Carolina primary. The state's governor, Caroll Campbell, was a former customer of Lee Atwater. Strom Thurmond was for Dole, but his endorsement proved to be valueless. Here Bush got all the state's 37 delegates by scoring 48 percent of the vote to 21 percent for Dole, 19 percent for Robertson, and 11 percent for Kemp. Then, in the March 8 Super Tuesday polling, Bush scored an across-the-board triumph, winning in Florida, Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, Tennessee, Virginia, Missouri, and Maryland, plus Massachusetts and Rhode Island outside of the region. With this, Bush took 600 of 803 delegates at stake that day. Four and a half million Republicans had voted, the best turnout ever in southern GOP primaries. When Bush beat Dole by a three-to-two margin in Illinois, supposedly a part of Dole's base, it was all over. Bush prepared for the convention and the choice of a vice president. The Wedge Issues Campaign The Bush campaign of 1988 had no issues, but only demagogic themes. These were basically all on the table by June, well before the Republican convention. The first was the pledge of no new taxes, later embroidered with the Clint Eastwood tough-guy overtones of "Read My Lips -- No New Taxes." The other themes reflected Atwater's studies of how to drive up the negatives of Bush's Democratic opponent, who would be Massachusetts Governor Michael Dukakis. Very early on, Bush began to harp on Dukakis's veto of a bill requiring teachers to lead their class each day in the pledge of allegiance. Speaking in Orange County, California on June 7, Bush said: "I'll never understand, when it came to his desk, why he vetoed a bill that called for the pledge of allegiance to be said in the schools of Massachusetts. I'll never understand it. We are one nation under God. Our kids should say the pledge of allegiance." / Note #9 This theme lent itself very well to a highly cathexized visual portrayal, with flags and bunting. Atwater was assisted in these matters by Roger Ailes, a television professional who had been the executive producer of the Mike Douglas Show by the time he was 27 years old. That was in 1967, when he was hired by Richard Nixon and Leonard Garment. Between them, Atwater and Ailes would produce the modern American television equivalent of a 1930s Nuremburg party rally. At about this time, the Bush network we have seen in operation at the "Reader's Digest" since the 1964 campaign conveniently printed an article about a certain Willie Horton, a black convicted murderer who was released from a Massachusetts jail on a furlough, and then absconded to Maryland, where he raped a white woman and stabbed her fiance. The Massachusetts furlough program had been started by Republican Governor Frank Sargent, but this meant nothing. Bush was to use Willie Horton in the same way that Hitler and the Nazis exploited the grisly crimes of one Harmann, a serial killer in Germany of the early 1930s, in their calls for law and order. In Illinois in mid-June, Bush began to talk about how Dukakis let "murderers out on vacation to terrorize innocent people." As packaged by Bush's handlers, it was thoroughly racist without being nominally so, like Nixon's "crime in the streets" shorthand for racist backlash during the 1968 campaign. Later, Bush would embroider this theme with his demand for the death penalty, his own Final Solution to the problem of criminals like Willie Horton. To crown this demagogy, George H.W. Bush of Skull and Bones portrayed Dukakis as an elitist insider: "Governor Dukakis, his foreign-policy views born in Harvard Yard's boutique, would cut the muscle of our defense." Bush's frequent litany of "liberal Massachusetts governor" was shameless in its main purpose of suggesting that Bush himself was "not" a liberal. When Bush arrived in New Orleans for the Republican National Convention, he was accompanied by Baker, Teeter, Fuller, Atwater, Ailes, and James Baker's Girl Friday, Margaret Tutwiler. Up to this point, Bush's staff had expected him to generate a little suspense around the convention by withholding the name of his vice presidential choice until the morning of the last day of the convention, when Bush could share his momentous secret with the Texas caucus and then tell it to the world. Bush's vetting of vice presidents was carried out between Bush and Robert Kimmitt, the Washington lawyer and Baker crony who later joined Baker's ruling clique at the State Department, before being put up for ambassador to Germany when Vernon Walters quit in the spring of 1991. Bush and Kimmitt reviewed the obvious choices: Kemp was out because he lectured Bush on the SDI and was too concerned about issues. Dole was out because he kept sniping at Bush with his patented sardonic zingers. Elizabeth Dole was a choice to be deemed imprudent. John Danforth, Pete Domenici, Al Simpson, and some others were eliminated. Many were the possible choices who had to be ruled out not because of lack of stature, but because they might seem to have more stature than Bush himself. Quayle had shown up on lists prepared by Fuller and Ailes. Ed Rollins, attuned to the Reagan Democrats, could not believe that Quayle was being seriously considered. But now, at Belle Chase Naval Air Station north of New Orleans, Bush told his staff that he had chosen Dan Quayle. Not only was it Quayle, but Bush's thyroid was now in overdrive: He wanted to announce his selection within hours. Quayle was contacted by telephone and instructed to meet Bush at the dock in New Orleans when the paddle-wheel steamer "Natchez" brought Bush down the Mississippi to that city's Spanish Plaza. Why J. Danforth Quayle? Quayle turned up at the dock in a state of inebriated euphoria, grabbing Bush's arm, prancing and capering around Bush. As soon as the dossiers on Quayle came out, a few questions were posed. Had his Senate office been a staging point for Contra resupply efforts? One of the Iran-Contra figures, Rob Owen, had indeed worked for Quayle, but Quayle denied everything. Had Quayle, now a hawk, been in Vietnam? Tom Brokaw asked Quayle if he had gotten help in joining the National Guard as a way of ducking the draft. Quayle stammered that it had been 20 years earlier, but maybe "phone calls were made." Then Dan Rather asked Quayle what his worst fear was. "Paula Parkinson," was the reply. This was the woman lobbyist and "Playboy" nude model who had been present with Quayle at a wild weekend at a Florida country club back in 1980. The Bush image-mongers hurriedly convened damage control sessions, and Quayle was given two professional handlers, Stuart Spencer and Joe Canzeri. After a couple of Bush-Quayle joint appearances before groups of war veterans to attempt to dissipate Quayle's National Guard issue, Quayle was then shunted into the secondary media ma rkets under the iron control of his new handlers. Although Bush's impulsive proclamation of his choice of Quayle does indeed raise the question of the hyperthyroid snap decision, the choice of Quayle was not impulsive, but rather perfectly coherent with Bush's profile and pedigree. Bush told James Baker that Quayle had been "my first and only choice." / Note #1 / Note #0 Bush's selection of political appointees is very often the product of Bush-Walker family alliances over more than a generation -- as in the case of Baker, Brady, Boy Gray, and Henry Kravis -- or at least of a long and often lucrative business collaboration, as in the case of Mosbacher. The choice of Quayle lies somewhere in between, and was strengthened by a deep ideological affinity in the area of racism. J. Danforth Quayle's grandfather was Eugene C. Pulliam, who built an important press empire starting with his purchase of the Atchison (Kansas) "Champion" in 1912. The bulk of these papers were in Indiana, the home state of the Pulliam clan, and in Arizona. "Gene" Pulliam had died in 1975, but his newspaper chain was worth an estimated $1.4 billion by the time Dan Quayle became a household word. Old Gene was a firm opponent of racial integration. When Martin Luther King, Jr. was assassinated in 1968, Gene Pulliam sent a note to the editors of his papers in Indianapolis, Indiana ordering them not to give the King tragedy "much exposure" because he considered the civil rights leader a "rabble rouser." He instructed that the news of King's death be summarized in as few words as possible and relegated to the bottom of the front page. The Bush-Quayle alliance thus reposed first of all on a shared premise of racism. Quayle is known to the vast majority of the American public as a virtual cretin. Quayle is the first representative of the post-war Baby Boom to advance to national elective office. Unfortunately, he seems to exhibit some of the mental impairment that is known to overtake long-term, habitual marijuana users. Quayle was admitted by the University of Indiana Law School in violation of that school's usual policy of rejecting all applicants with an academic average of less than 2.6. He wanted to be a lawyer because he had heard that "lawyers make lots of money and do little," as he told his fraternity brothers at De Pauw. As it turned out, the dean of admissions at the University of Indiana Law School was one G. Kent Frandsen, who was a Republican city judge in Lebanon, Indiana, a town where the Pulliam family controls the local newspaper. He had always been endorsed by the Pulliam interests. Two years later, Frandsen would officiate at the marriage of J. Danforth Quayle to Marilyn Tucker. Still later, Frandsen would serve as Quayle's campaign manager in Boone County during the 1986 Senate race. It was thus no surprise that Frandsen was willing to admit Dan Quayle to law school as part of a program for disadvantaged students, primarily those from the black community. After all this, it may appear as a miracle that Dan Quayle was ever able to obtain a law degree. J. Danforth's receipt of that degree appears to have been mightily facilitated by the plutocratic Quayle family, who made large donations to the law school each year during Dan's time as a law student. What were Quayle's pastimes during his law school years? According to one account, they included recreational drugs. During the summer of 1988, a Mr. Brett Kimberlin told Dennis Bernstein and a radio audience of WBAI in New York that he had first met J. Danforth during this period at a fraternity party at which marijuana was indeed being consumed. "He found out that I had marijuana available at the time," said Kimberlin. "It was good quality, and he asked if I had any for sale.... I thought it was kind of strange. He looked kind of straight. I thought he might be a narc [DEA agent] at first. But we talked and I felt a little more comfortable, and finally I gave him my phone number and said, 'Hey, well, give me a call.' He called me a couple weeks later, and said, 'Hey, this is DQ. Can we get together?' and I said 'Yes, meet me at the Burger Chef restaurant.' We struck up a relationship that lasted for 18 months. I sold him small quantities of marijuana for his personal use about once a month during that period. He was a good customer. He was a friend of mine. We had a pretty good relationship. He always paid cash.... When him and Marilyn got married in 1972, I gave him a wedding present of some Afghanistan hashish and some Acapulco gold." / Note #1 / Note #1 Kimberlin repeated these charges in a pre-election interview on NBC News on November 4, 1988. Kimberlin was a federal prisoner serving time in Tennessee after conviction on charges of drug smuggling and explosives. Later that same day, Kimberlin was scheduled to address a news conference by telephone conference call. But before Kimberlin could speak to the press, he was placed in solitary confinement, and was moved in and out of solitary confinement until well after the November 8 presidential election. A second attempted press conference by telephone hookup on the eve of the election did not take place, because Kimberlin was still being held incommunicado. On August 6, 1991, U.S. District Judge Harold H. Greene ruled that the allegations made by Kimberlin against U.S. Bureau of Prisons Director J. Michael Quinlan were "tangible and detailed" enough to justify a trial. Kimberlin had accused Quinlan of ordering solitary confinement for him when it became clear that his ability to further inform the media about Quayle's drug use would damage the Bush-Quayle effort. The trial is still pending as of our publication date. In March 1977, Congressman Dan Quayle contributed an article to the Fort Wayne, Indiana "News-Sentinel" in which he recommended that Congress take a "serious" look at marijuana decriminalization. In April 1978, Quayle repeated this proposal, specifying he supported decriminalization for first-time users. / Note #1 / Note #2 The Last Lap The final stages of the campaign were played out amid great public indifference. Some interest was generated in the final weeks by a matter of prurient, rather than policy interest: Rumors were flying of a Bush sex scandal. This talk, fed by the old Jennifer Fitzgerald story, had surfaced during 1987 in the wake of the successful covert operation against Gary Hart. The gossip became intense enough that George W. Bush asked his father if he had been guilty of philandering. The young Bush reported back to the press that "the answer to the Big A [adultery] question is N-O." Lee Atwater accused David Keene of the Dole campaign of helping to circulate the rumor, and Keene, speaking on a television talk show, responded that Atwater was "a liar." Shortly thereafter, a "sex summit" was convened between the Bush and Dole camps for the purpose of maintaining correct GOP decorum even amidst the acrimony of the campaign. / Note #1 / Note #3 Evans and Novak opined that "Atwater and the rest of the Bush high command, convinced that the rumors would soon be published, reacted in a way that spelled panic to friend and foe alike." On June 17, 1987, Michael Sneed of the "Chicago Sun-Times" had written that "several major newspapers are sifting ... reported dalliances of Mr. Boring." / Note #1 / Note #4 But during that summer of 1987, the Brown Brothers Harriman/Skull and Bones networks were powerful enough to suppress the story and spare Bush any embarrassment. In the end, the greatest trump card of Bush's 1988 campaign was Bush's opponent Michael Dukakis. There is every reason to believe that Dukakis was chosen by Bush Democrat power brokers and the Eastern Establishment bankers primarily because he was so manifestly unwilling and unable seriously to oppose Bush. Many are the indications that the Massachusetts governor had been selected to take a dive. The gravest suspicions are in order as to whether there ever was a Dukakis campaign at all. Well before Dukakis received the nomination, supporters of Lyndon LaRouche in the National Democratic Policy Committee called attention to the indications of per sonal and mental instability in Dukakis's personal history, but the Democratic Convention in Atlanta chose to ignore these highly relevant issues. As the NDPC leaflet pointed out, "There is strong evidence that Michael Dukakis suffers from a deep-seated mental instability that could paralyze him, and decapitate our government, in the event of a severe economic or strategic crisis. This is a tendency for psychological breakdown in a situation of adversity and perceived personal rejection." / Note #1 / Note #5 The best proof of the validity of this assessment is the pitiful election campaign that Dukakis then conducted. The NDPC leaflet had warned that the GOP would exploit this obvious issue, and Reagan soon made his celebrated quip, "I'm not going to pick on an invalid," focusing intense public attention on Dukakis's refusal to release his medical records. The colored maps used by the television networks on the night of November 8 presented a Bush victory which, although less convincing than Reagan's two landslides, nevertheless seemed impressive. A closer examination of the actual vote totals reveals a much different lesson: Even in competition with the bumbling and craven Dukakis campaign, Bush remained a pitifully weak candidate who, despite overwhelming advantages of incumbency, money, organization, years of enemies-list operations, a free ride from the controlled media, and a pathetic opponent, just managed to eke out a hair's breadth margin. Bush had won 53 percent of the popular vote, but if just 535,000 voters in 11 states (or 600,000 voters in nine states) had switched to Dukakis, the latter would have been the winner. The GOP had ruled the terrain west of the Mississippi for many moons, but Bush had managed to lose three Pacific states: Oregon, Washington, and Hawaii. Bush won megastates like Illinois and Pennsylvania by paper-thin margins of 51 percent, and the all-important California vote, which went to Bush by just 52 percent, had been too close for George's comfort. Missouri had also been a 52 percent close call for George. In the farm states, the devastation wrought by eight years of GOP free enterprise caused both Iowa and Wisconsin to join Minnesota in the Democratic column. Chronically depressed West Virginia was having none of George. In the oil patch, the Democrats posted percentage gains even though Bush carried these states: In Texas, Oklahoma, and Louisiana the Democratic presidential vote was up between 7 and 11 percent compared to the Mondale disaster of 1984. In the Midwest, Dukakis managed to carry four dozen counties that had not gone for a Democratic presidential contender since 1964. All in all, half of Bush's electoral votes came from states in which he got less than 55.5 percent of the two-party vote, showing that there was no runaway Bush landslide. The voter turnout hit a new postwar low, with just 49.1 percent of eligible voters showing up at the polls, significantly worse than the Harry Truman-Thomas Dewey matchup of 1948, when just 51 percent had deemed it worthwhile to vote. This means that Bush expected to govern the country with the votes of just 26.8 percent of the eligible voters in his pocket. Bush had won a number of southern states by lop-sided margins of about 20 percent, but this was correlated in many cases with very low overall voter turnout, which dipped below 40 percent in Georgia and South Carolina. A big plus factor for George was the very low black voter turnout in the South, where a significant black vote had helped the Democrats retake control of the Senate in 1986. Among those Republicans who had succeeded in winning the White House in two-way races (excluding years like 1948 or 1968, when the totals were impacted by Henry Wallace and Strom Thurmond's Dixiecrats, or by George Wallace), Bush's result was the weakest since fellow Skull and Bones alumnus William Howard Taft in 1908. / Note #1 / Note #6 Notes for Chapter XXIII 1. George Will column, Jan. 30, 1986, in George Will, "The Morning After" (New York: Free Press London, Collier-MacMillan, 1986), p. 254. 2. Jack Anderson and Dale Van Atta, "Bush Waits and Hopes for Reagan Nod," "Washington Post," Aug. 18, 1986. 3. Jack W. Germond and Jules Witcover, "Whose Broad Stripes and Bright Stars: The Trivial Pursuit of the Presidency, 1988" (New York: Warner Books, 1989), p. 156. 4. "Bush Proves Successful in Ticklish Appearance," "Washington Post," Dec. 12, 1985. 5. "New Hampshire Chill," "Washington Post," Oct. 11, 1987. 6. For Bush in the 1988 campaign, see "Whose Broad Stripes and Bright Stars." 7. "Washington Post," Oct. 16, 1987. 8. "Robertson Links Bush to Swaggart Scandal," "Washington Post," Feb. 24, 1988. 9. "Whose Broad Stripes and Bright Stars," p. 161. 10. "Whose Broad Stripes and Bright Stars," p. 385. 11. Joel Bleifuss, "In Short," "In These Times," Nov. 16-22, 1988, p. 5, cited by Arthur Frederick Ide, "Bush-Quayle: The Reagan Legacy" (Irving, Texas: Scholars Books, 1989), pp. 55-56. 12. "Ibid." 13. "Washington Post," July 1, 1987. 14. "Washington Post," June 26, 1987. 15. See "Is Dukakis the New Senator Eagleton?" in "Dukakis's Mental Health: An Objective Assessment," "Executive Intelligence Review Reprint," Aug. 15, 1988, p. 8. 16. See Kevin Phillips, "The Politics of Rich and Poor" (New York: Random House, 1990), p. 215; "Facts on File," Nov. 11, 1988; and Paul R. Abramson, John H. Aldrich and David W. Rohde, "Change and Continuity in the 1988 Elections" (Washington: Congressional Quarterly, 1991). CHAPTER 24 PART 1 THE END OF HISTORY ""If the Emperor Tiberius -- George Bush -- is elected, this country will become a fascist state in the first year he is in office, I guarantee it." -- Lyndon H. LaRouche, Jr., April 15, 1988 campaign speech in Buffalo, N.Y." George Bush's inaugural address of January 21, 1989, was on the whole an eminently colorless and forgettable oration. The speech was for the most part a rehash of the tired demagogy of Bush's election campaign, with the ritual references to "a thousand points of light" and the hollow pledge that when it came to the drug inundation which Bush had supposedly been fighting for most of the decade, "This scourge will stop." Bush talked of "stewardship" being passed on from one generation to another. There was almost nothing about the state of the U.S. economy. Bush was preoccupied with the "divisiveness" left over from the Vietnam era, and this he pledged to end in favor of a return to bipartisan consensus between the President and the Congress, since "the statute of limitations has been reached. This is a fact: The final lesson of Vietnam is that no great nation can long afford to be sundered by a memory." There is good reason to believe that Bush was already contemplating the new round of foreign military adventures which were not long in coming. The characteristic note of Bush's remarks came at the outset, in the passages in which he celebrated the triumph of the American variant of the bureaucratic-authoritarian police state, based on usury, which chooses to characterize itself as "freedom": "We know what works: Freedom works. We know what's right: Freedom is right. We know how to secure a more just and prosperous life for man on Earth -- through free markets, free speech, free elections, and the exercise of free will unhampered by the state. / Note #1 After the inauguration ceremonies at the Capitol were completed, George and Barbara Bush descended Pennsylvania Avenue toward the White House in a triumphant progress, getting out of their limousine every block or two to walk among the crowds and savor the ovations. George Bush, imperial administrator and bureaucrat, had now reached the apex of his career, the last station of the "cursus honorum": the chief magistracy. Bush now assumed leadership of a Washington bureaucracy that was increasingly focused on itself and its own aspirations, convinced of its own omnipotence and infallibility, of its own manifest destiny to dominate the world. It was a heady moment, full of the stuff of megalomaniac delusion. Imperial Washington was now aware of the increasing symptoms of collapse in the Soviet Empire. The feared adversary of four decades of cold war was collapsing. Germany and Japan were formidable economic powers, but they were led by a generation of politicians which had been well schooled in the necessity of following Anglo-Saxon orders. France had abandoned her traditional Gaullist policy of independence and sovereignty, and had returned to the "suivisme" of the old Fourth Republic under Bush's freemasonic brother Francois Mitterrand. Opposition to Washington's imperial designs might still come from leading states of the developing sector, from India, Brazil, Iraq and Malaysia, but the imperial administrators, puffed up with their xenophobic contempt for the former colonials, were confident that these states could be easily defeated, and that the Third World would meekly succumb to the installation of Anglo-American puppet regimes in the way that the Philippines and so many Latin American countries had during the 1980s. Bush assembled a team of his fellow Malthusian bureaucrats and administrators from among those officials who had staffed Republican administrations going back to 1969, the year that Nixon chose Kissinger for the National Security Council. Persons like Scowcroft, James Baker, Carla Hills, and Bush himself had, with few exceptions, been in or around the federal government and especially the executive branch for most of two decades. All the great issues of policy had been solved under Nixon, Ford and Reagan; the geopolitical situation was being brought under control; all that remained was to consolidate and perfect the total administration of the world according to the policies and procedures already established, while delivering mass consensus through the same methods that had just proven unbeatable in the presidential campaign. The Bush team was convinced of its own inherent superiority to the Mandarin Chinese, the Roman and Byzantine, the Ottoman, the Austrian, the Prussian, the Soviet, and to all other bureaucratic-authoritarian regimes that had ever existed on the planet. Pride goeth ever before a fall. The imperial functionaries of the Bush team had chosen to ignore certain gross facts, most importantly the demonstrable bankruptcy and insolvency of their own leading institutions of finance, credit and government. Their ability to command production and otherwise to act upon the material world was in sharp decline. How long would the American population remain in its state of stupefied passivity in the face of deteriorating standards of living that were now falling more rapidly than at any time in the last 20 years? And now, the speculative orgy of the 1980s would have to be paid for. Even their advantage over the crumbling Soviet empire was ultimately only a marginal, relative, and temporary one, due primarily to a faster rate of collapse on the Soviet side; but the day of reckoning for the Anglo-Americans was coming, too. This was the triumphalism that pervaded the opening weeks of the Bush administration. Bush gave more press conferences during the transition period than Reagan had given during most of his second term; he reveled in the accoutrements of his new office, and gave the White House press corps all the photo opportunities and interviews they wanted, to butter them up and get them in his pocket. These fatuous delusions of grandeur were duly projected upon the plane of the philosophy of history by an official of the Bush administration, Francis Fukuyama, the deputy director of the State Department Policy Planning Staff, the old haunt of Harrimanites like Paul Nitze and George Kennan. In the winter of 1989, during Bush's first hundred days in office, Fukuyama delivered a lecture to the Olin Foundation which was later published in "The National Interest" quarterly under the title of "The End of History?" / Note #2 Imperial administrator Fukuyama had studied under the reactionary elitist Allan Bloom, and was conversant with the French neo-Enlightenment semiotic (or semi-idiotic) school of Derrida, Foucault and Roland Barthes, whose "zero degree of writing" Fukuyama may have been striving to attain. Above all, Fukuyama was a follower of Hegel in the interpretation of the French postwar neo-Hegelian Alexandre Kojeve. Fukuyama qualifies as the official ideologue of the Bush regime. His starting point is the "unabashed victory of economic and social liberalism," meaning by that the economic and political system reaching its maturity under Bush -- what the State Department usually calls "democracy." "The triumph of the West, of the Western idea, is evident first of all in the total exhaustion of viable systematic alternatives to Western liberalism.... The triumph of the Western political idea is complete. Its rivals have been routed.... Political theory, at least the part concerned with defining the good polity, is finished. The Western idea of governance has prevailed.... What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of postwar history, but the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government." According to Fukuyama, communism as an alternative system had been thoroughly discredited in the U.S.S.R., China, and the other communist countries. Since there are no other visible models contending for the right to shape the future, he concludes that the modern American state is the "final, rational form of society and state." There are of course large areas of the world where governments and forms of society prevail which diverge radically from Fukuyama's Western model, but he answers this objection by explaining that backward, still historic parts of the world exist and will continue to exist for some time. It is just that they will never be able to present their forms of society as a credible model or alternative to "liberalism." Since Fukuyama presumably knew something of what was in the Bush administration pipeline, he carefully kept the door open for new wars and military conflicts, especially among historical states, or between historical and post-historical powers. Both Panama and Iraq would, according to Fukuyama's typology, fall into the latter category. Thus, in the view of the early Bush administration, the planet would come to be dominated more and more by the "universal homogenous state," a mixture of "liberal democracy in the political sphere combined with easy access to VCRs and stereos in the economic." The arid banality of that definition is matched by Fukuyama's dazzling tribute to "the spectacular abundance of advanced liberal economies and the infinitely diverse consumer culture." Fukuyama, it turns out, is a resident of the privileged enclave for imperial functionaries that is northeast Virginia, and so has little understanding of the scope of U.S. domestic poverty and immiseration: For Fukuyama, writing at a moment when American class divisions were more pronounced than at any time in human memory, "the egalitarianism of modern America represents the essential achievement of the classless society envisaged by Marx." As a purveyor of official doctrine for the Bush regime, Fukuyama is bound to ignore 20 years of increasing poverty and declining standards of living for all Americans which have caused an even greater retrogression for the minority population. It is not far from the End of History to Bush's later slogans of the New World Order and the imperial Pax Universalis. It is ironic but lawful that Bush should have chosen a neo-Hegelian as apologist for his regime. Hegel was the arch-obscurantist, philosophical dictator, and saboteur of the natural sciences; he was the ideologue of Metternich's Holy Alliance system of police states in the post-1815 oligarchic restoration in Europe imposed by the Congress of Vienna. When we mention Metternich, we have at once brought Bush's old patron Kissinger into play, since Metternich is well known as his ego ideal. Hegel deified the bureaucratic-authoritarian state machinery of which he was a part as the final embodiment of rationality in h uman affairs, beyond which it was impossible to go. Hegel told intellectuals to be reconciled with the world they found around them, and pronounced philosophy incapable of producing ideas for the reform of the world. The Bush regime thus took shape as a bureaucratic-authoritarian stewardship of the financial interests of Wall Street and the City of London. Many saw in the Bush team the patrician financiers of the Nelson Rockefeller administration that never was. The groups in society which were to be served were so narrowly restricted that the Bush administration often looked like a government that had totally separated itself from the underlying society and had constituted itself to govern in the interests of the bureaucracy itself. Since Bush was irrevocably committed to carrying forward the policies that had been consolidated and institutionalized during the previous eight years, the regime became more and more rigid and inflexible. Active opposition, or even the dislocations occasioned by administration policies were therefore dealt with by the repressive means of the police state. The Bush regime could not govern, but it could indict, and the Discrediting Committee was always ready to vilify. Some observers spoke of a new form of Bonapartism "sui generis," but the most accurate description for the Bush combination was the "administrative fascism" coined by political prisoner Lyndon LaRouche, who was thrown in jail just seven days after the Bush inauguration. The Bush Cabinet Bush's cabinet reflected several sets of optimizing criteria: The best way to attain a top cabinet post was to belong to a family that had been allied with the Bush-Walker clan over a period of at least half a century, and to have served as a functionary or fundraiser for the Bush campaign. This applied to Secretary of State James Baker III, Treasury Secretary Nicholas Brady, Commerce Secretary Robert Mosbacher, and Bush's White House counsel and top political adviser, C. Boyden Gray. A second royal road to high office was to have been an officer of Kissinger Associates, the international consulting firm set up by Bush's lifelong patron, Henry Kissinger. In this category we find Gen. Brent Scowcroft, the former chief of the Kiss. Ass. Washington office, and Lawrence Eagleburger, the dissipated wreck who was named to the number two post in the State Department, Undersecretary of State. Eagleburger had been the president of Kissinger Associates. The ambassadorial (or proconsul) list was also rife with Kissingerian pedigrees: a prominent one was John Negroponte, Bush's ambassador to Mexico. Overlapping with this last group were the veterans of the 1974-77 Ford administration. National Security Council Director Brent Scowcroft, for example, was simply returning to the job that he had held under Ford as Kissinger's alter ego inside the White House. Dick Cheney, who eventually became secretary of defense, had been Ford's White House chief of staff. Cheney had been executive assistant to the director of Nixon's Office of Economic Opportunity way back in 1969. In 1971, he had joined Nixon's White House staff as Don Rumsfeld's deputy. >From 1971 to 1973, Cheney was at the Cost of Living Council, working as an enforcer for the infamous Phase II wage freeze in Nixon's "Economic Stabilization Program." The charming Carla Hills, who became Bush's trade representative, had been Ford's Secretary of Housing and Urban Development. William Seidman and James Baker (and Federal Reserve Board Chairman Alan Greenspan, a Reagan holdover who was the chairman of Ford's Council of Economic Advisers) had also been in the picture under Gerry Ford. Bush also extended largesse to those who had assisted him in the election campaign just concluded. At the top of this list was Governor John Sununu of New Hampshire, who would have qualified as the modern Nostradamus for his exact prediction of Bush's 9 percent margin of victory over Dole in the New Hampshire primary -- unless he had helped to arrange it with vote fraud. Another way to carry off a top plum in the Bush regime was to have participated in the coverup of the Iran-Contra scandal. The leading role in that coverup had been assumed by Reagan's own blue ribbon commission of notables, the Tower Commission, which carried out the White House's own in-house review of what had allegedly gone wrong, and had scapegoated Don Regan for a series of misdeeds that actually belonged at the doorstep of George Bush. The members of that board were former GOP Senator John Tower of Texas, Gen. Brent Scowcroft, and former Sen. Edmund Muskie, who had been secretary of state for Carter after the resignation of Cyrus Vance. Scowcroft, who shows up under many headings, was ensconced at the NSC. Bush's original candidate for secretary of defense was John Tower, who had been the point man of the 1986-87 coverup of Iran-Contra during the months before the congressional investigating committees formally got into the act. Tower's nomination was rejected by the Senate after he was accused of being drunken and promiscuous by Paul Weyrich, a Buckleyite activist, and others. Some observers thought that the Tower nomination had been deliberately torpedoed by Bush's own discrediting committee so as to avoid the presence of a top cabinet officer with the ability to blackmail Bush. Perhaps Tower had overplayed his hand. In any case, Dick Cheney, a Wyoming congressman with strong intelligence community connections, was speedily nominated and confirmed after Tower had been shot down. Another Iran-Contra veteran in line to get a reward was Bush's former national security adviser, Don Gregg, who had served Bush since at least the time of the 1976 Koreagate scandal. Gregg, as we have seen, was more than willing to commit the most maladroit and blatant perjury in order to save his boss from the wolves (see Chapter 17). Later, when William Webster retired as director of the CIA, there were persistent rumors that the hyperthyroid Bush had originally demanded that Don Gregg be nominated to take his place. According to these reports, it required all the energy of Bush's handlers to convince the President that Gregg was too dirty to pass confirmation; Bush relented, but then announced to his dismayed and exhausted staff that his second and non-negotiable choice for Langley was Robert Gates, the former CIA Deputy Director who had been working as Scowcroft's number two at the National Security Council. As it turned out, the Bush Democrats in the Senate proved more than willing to approve Gates. The Dismal Hundred Days Bush's first 100 days in office fulfilled Fukuyama's prophecy that the End of History would be "a very sad time." If "post-history" meant that very little was accomplished, Bush filled the bill. Three weeks after his inauguration, Bush addressed a joint session of the Congress on certain changes that he had proposed in Reagan's last budget. The litany was hollow and predictable: Bush wanted to be the Education President, but was willing to spend less than a billion dollars of new money in order to do it. He froze the U.S. military budget, and announced a review of the previous policy toward the Soviet Union. This last point meant that Bush wanted to wait to see how fast the Soviets would in fact collapse before he would even discuss trade normalization, which had been the perspective held out to Moscow by Reagan and others. Bush said he wanted to join with Drug Czar William Bennett in "leading the charge" in the war on drugs. Bush also wanted to be the Environmental President. This was a far more serious aspiration. Shortly after the election, Bush had attended the gala centennial awards dinner of the very oligarchical National Geographic Society, for many years a personal fiefdom of the feudal-minded Grosvenor family. Bush promised the audience that night that there was "one issue my administration is going to address, and I'm talking about the environment." Bush confided that he had been coordinating his plans with British Prime Minister Margaret Thatcher, and that he had agreed with her on the necessity for "international cooperation" on green iss ues. "We will support you," intoned Gilbert Grosvenor, a fellow Yale alumnus, "... Planet Earth is at risk." / Note #6 In order to be the Environmental President, Bush was willing to propose a disastrous Clean Air Act that would drain the economy of hundreds of billions of dollars over time in the name of fighting acid rain. Bush's first hundred days coincided with the notable phenomenon of the "greening" of Margaret Thatcher, who had previously denounced environmentalists as "the enemy within," and fellow travelers of the British Labour Party and the loonie left. Thatcher's resident ideologue, Nicholas Ridley, had referred to the green movement in Britain as "pseudo-Marxists." But in the early months of 1989, allegedly under the guidance of Sir Crispin Tickell, the British ambassador to the United Nations, Thatcher embraced the orthodoxy that the erosion of the ozone layer, the greenhouse effect and acid rain -- every one of them a pseudo-scientific hoax -- were indeed at the top of the list of the urgent problems of the human species. Thatcher's acceptance of the green orthodoxy permitted the swift establishment of a total environmentalist-Malthusian consensus in the European Community, the Group of 7 and other key international forums. Characteristically, Bush followed Thatcher's lead, as he would on so many other issues. During the first 100 days, Bush called for the elimination of all chlorofluorocarbons (CFCs) by the end of the century, thus accepting the position assumed by the European Community as a result of Mrs. Thatcher's turning green. Bush told the National Academy of Sciences that new "scientific advancements" had permitted the identification of a serious threat to the ozone layer; Bush stressed the need to "reduce CFCs that deplete our precious upper atmospheric resources." A treaty had been signed in Montreal in 1987 that called for cutting the production of CFCs by one half within a ten-year period. "But recent studies indicate that this 50 percent reduction may not be enough," Bush now opined. Senator Albert Gore, Jr. of Tennessee was calling for complete elimination of CFCs within five years. Here a pattern emerged that was to be repeated frequently during the Bush years: Bush would make sweeping concessions to the environmentalist Luddites, but would then be denounced by them for measures that were insufficiently radical. This would be the case when Bush's Clean Air Bill was going through the Congress during the summer of 1990. After Bush's appearance before the Congress with his revised budget, the new regime exploited the honeymoon to seal a sweetheart contract with the rubber-stamp congressional Democrats, who under no circumstances could be confused with an opposition. The de facto one-party state was alive and well, personified by milquetoast Senator George Mitchell of Maine, the Democrats' majority leader. The collusion between Bush and the Democratic leadership involved new sleight of hand in order to meet the deficit-reduction targets stipulated by the Gramm-Rudman-Hollings law. This involved mobilizing more than $100 billion from surpluses in the Social Security, highway and other special trust funds which had not previously been counted. The Democrats also went along with a $28 billion package of asset sales, financing tricks, and unspecified new revenues. They also bought Bush's rosy economic forecast of higher economic growth and lower interest rates. Senate Majority Leader Mitchell, accepting his pathetic rubber-stamp role, commented only that "much sterner measures will be required in the future." Since the Democrats were incapable of proposing an economic recovery program in order to deal with the depression, they were condemned to give Bush what he wanted. This particular swindle would come back to haunt all concerned, but not before the spectacular budget debacle of October 1990. In the spring of 1990, according to an estimate by Sid Taylor of the National Taxpayers' Union, the total potential liabilities of the federal government exceeded $14 trillion. At that point, the official national debt totaled $2.8 trillion, but this estimate included the commitments of the Federal Savings and Loan Insurance Corporation, the Federal Deposit Insurance Corporation, the Pension Benefit Guarantee Corporation, and other agencies. Bush's inability to pull his regime together for a serious round of domestic austerity was not appreciated by the crowd at the Bank for International Settlements in Geneva. Evelyn Rothschild's London "Economist" summed up the international banking view of George's temporizing on this score with its headline, "Bush Bumbles." A few weeks into the new administration, it was the collapse of the FSLIC, studiously ignored by the waning Reagan administration, that reached critical mass. On February 6, 1989, Bush announced measures that his image-mongers billed as the most sweeping and significant piece of financial legislation since the creation of the Federal Reserve Board on the eve of World War I. This was the savings and loan bailout, a new orgy in the monetization of debt and a giant step toward the consolidation of a neo-fascist corporate state. At the heart of Bush's policy was his refusal to acknowledge the existence of an economic crisis of colossal proportions, which had among its symptoms the gathering collapse of the real estate market after the stock market crash of October 1987. The sequence of a stock market panic, followed by a real estate and banking crisis, closely followed the sequence of the Great Depression of the 1930s. But Bush violently rejected the existence of such a crisis, and was grimly determined to push on with more of the same. This meant that the federal government would simply take control of the savings banks, the majority of which were bankrupt or imminently bankrupt. The depositors might get their money, but the result would be the debasement of the currency and a deepening depression all around. In the process, the U.S. government would become one of the main owners of real estate, buildings, and the worthless junk bonds that had been spewed out by Bush's friend Henry Kravis and his partner Michael Milken during the heady days of the boom. The federal government would create a new world of bonded debt to pay for the savings banks that would be seized. When Bush announced his bailout that February, he stated that $40 billion had already been poured into the S&L sinkhole, and that he proposed to issue an additional $50 billion in new bonds through a financing corporation, a subsidiary of the new Resolution Trust Corporation. By August 1989, when Bush's legislation had been passed, the estimated cost of the S&L bailout had increased to $164 billion over a period of ten years, with $20 billion of that scheduled to be spent by the end of September 1989. Within a few months, Bush was forced to increase his estimates once again. "It's a whale of a mess, and we'll see where we go," Bush told a group of newspaper editorial writers at the White House in mid-December. "We've had this one refinancing. I am told that that might not be enough." By this time, academic experts were suggesting that the bailout might exceed the administration's $164 billion by as much as $100 billion more. Every new estimate was swiftly overtaken by the ghastly spectacle of a real estate market in free fall, with no bottom in sight. The growing public awareness of this situation, compounded by the ongoing bankruptcy of the commercial banking system as well, would lead in July 1990 to a very ugly public relations crisis for the Bush regime around the role of the President's son Neil Bush, in the insolvency of the Silverado Savings and Loan of Denver, Colorado. One of the obvious reasons for Bush's enthusiastic choice of war in the Persian Gulf was the need to get Neil Bush off the front page. But even the Gulf war bought no respite in the collapse of the real estate markets and the chain-reaction bankruptcies of the savings banks: By the summer of 1991, federal regulators were seizing S&Ls at the rate of just under one every business day, and the estimates of the total pr ice tag of the bailout had ballooned to over $500 billion, with every certainty that this figure would also be surpassed. / Note #7 The carnage among the S&Ls did not prevent Bush from seeking an increase in the U.S. contribution to the International Monetary Fund, the main agency of a world austerity that claims upwards of 50 million human lives each year as the needless victims of its Malthusian conditionalities. The members of the IMF had been debating an increase in the funds each member must pay into the IMF (which has been bankrupt for years as a matter of reality), with Managing Director Michel Camdessus proposing a 100 percent increase, and Britain and Saudi Arabia arguing for a much smaller 25 percent hike. Bush attempted to mediate and resolve the dispute with a proposal for a 35 percent increase, equal to an $8 billion additional payment by the U.S. This sum was equal to more than three times the yearly expenditure for the highly successful Women, Infants and Children (WIC) program of the U.S. Department of Agriculture, savagely cut during Bush's first year, which attempted to provide a high-protein and balanced food supplement to mothers and their offspring. / Note #8 As the depression deepened, Bush had only one idea: to reduce the capital gains tax rate from 28 percent to 15 percent. This was a proposal for a direct public subsidy to the vulture legions of Kravis, Liedtke, Pickens, Milken, Brady, Mosbacher, and the rest of Bush's apostles of greed. The Bushmen estimated that a capital gains tax reduction in this magnitude would cost the Treasury some $25 billion in lost receipts over six years, a crass underestimate. These funds, argued the Bushmen, would then be invested in high-tech plant and equipment, creating new jobs and new production. In reality, the funds would have flowed into bigger and better leveraged buyouts, which were still being attempted after the crash of the junk bond market with the failure of the United Airlines buyout in October 1989. But Bush had no serious interest in, or even awareness of, commodity production. His policies had now brought the country to the brink of a financial panic in which 75 percent of the current prices of all stocks, bonds, debentures, mortgages, and other financial paper would be wiped out. If there was a constant note in Bush's first year in office, it was a callously flaunted contempt for the misery of the American people. During the spring of 1989, the Congress passed a bill that would have raised the minimum wage in interstate commerce from $3.55 per hour to$4.55 per hour by a series ofincrements over three years. This legislation would even have permitted a subminimum wage that could be paid to certain newly hired workers over a 60-day training period. Bush vetoed this measure because the $4.55 minimum wage was 30 cents an hour higher than he wanted, and because he demanded a subminimum wage for all new employees for the first six months on the job, regardless of their previous experience or training. On June 14, 1989, the House of Representatives failed to override this veto, by a margin of 37 votes. (Later, Bush signed legislation to raise the minimum wage to $4.25 per hour over two years, with a subminimum training wage applicable only to teenagers and only during the first 90 days of the teenagers' employment, with the possibility of a second 90-day training wage stint if they moved on to a different employer.) / Note #9 This was the same George Bush who had proposed $164 billion for bankrupt S&Ls, and $8 billion for the International Monetary Fund, all without batting an eye. This is also the George Bush who, customarily during holiday periods, joins his millionaire crony William Stamps ("Auschwitz") Farish III at his Lazy F Ranch near Beeville, Texas, for the two men's traditional holiday quail hunt. This is the same William Stamps Farish III whose grandfather, the president of Standard Oil of New Jersey, had financed Heinrich Himmler. William Stamps Farish III's investment bank in Houston, W.S. Farish & Co., had at one time managed the blind trust into which Bush had placed his personal investment portfolio. Farish was rich enough to vaunt five addresses: Beeville, Texas; Lane's End Farm in the Versailles, Kentucky bluegrass; Florida, and two others. Farish's hobby for the past several decades has been the creation of his own top-flight farm for the raising of thoroughbred horses, the 3,000-acre Lazy F Ranch, with its ten horse barns and four sumptuous residences. Over the years, Farish has saddled winners in the 1972 Preakness and the 1987 Belmont Stakes, and bred 80 stakes winners over the past decade. Farish, who is married to Sarah Sharp, the daughter of a Du Pont heiress, had worked with Bush as an aide during the 1964 Senate campaign. Farish III is rich enough to extend his largesse even to Queen Elizabeth II of the United Kingdom, probably the richest individual in the world. The queen regularly visits Farish's horse farm, traveling by Royal Air Force jetliner to the Blue Grass Airport in Lexington, Kentucky, accompanied by mares which Her Majesty wishes to breed with Farish's million-dollar prize stallions. Farish magnanimously waives the usual stud fees for the queen, resulting in an estimated savings to Her Majesty of some $800,000. Smear, Scandal and Sanctions For George Bush, the exercise of power has always been inseparable from the use of smear, scandal, and the final sanctions of police-state methods against political rivals and other branches of government. A classic example was the Koreagate scandal of 1976, unleashed with the help of Bush's long-time retainer, Don Gregg. It will be recalled that Koreagate included the toppling of Democratic Speaker of the House Carl Albert of Oklahoma, who quietly retired from the House at the end of 1976. That was in the year when Bush had returned from Beijing to Langley. Was it merely coincidence that, in the first year of Bush's tenure in the White House, not just the Democratic Speaker of the House, but also the House Majority Whip, were driven from office? The campaign against Speaker of the House Jim Wright was spearheaded by Georgia Republican Congressman Newt Gingrich, a typical "wedge issue" ideologue of the GOP's Southern Strategy. Gingrich's campaign against Wright could never have succeeded without systematic support from the news media, who regularly trumpeted his charges and lent him a wholly undeserved importance. Gingrich's pretext was a story about the financing of a small book in which Wright had collected some of his old speeches, which Gingrich claimed had been sold to lobbyists in such a way as to constitute an unreported gift in violation of the House rules. One of Gingrich's first steps when he launched the assault on Wright during 1988 was to send letters to Bush and to Assistant Attorney General William Weld, whose family investment bank, White Weld, had purchased Uncle Herbie Walker's G.H. Walker & Co. brokerage when Bush's favorite uncle was ready to retire. Newt Gingrich wrote: "May I suggest, the next time the news media asks about corruption in the White House, you ask them about corruption in the Speaker's office?" A similar letter went out from the "Conservative Campaign Fund" to all GOP House candidates with the message: "We write to encourage you to make ... House Speaker Jim Wright a major issue in your campaign." / Note #1 / Note #1 Bush placed himself in the vanguard of this campaign. When Bush, in the midst of his presidential campaign, was asked by reporters about the investigation of Reagan Attorney General Edwin Meese (no friend of Bush) concerning his dealings with the Wedtech Corporation, he replied: "You talk about Ed Meese. How about talking about what Common Cause raised against the Speaker the other day? Are they going to go for an independent counsel so the nation will have this full investigation? Why don't people call out for that? I will right now. I think they ought to." / Note #1 / Note #2 Reagan followed Bush's lead in calling for Wright to be investigated. In January-February 1989, the House took under consideration a pay increase f or members. Both Reagan and Bush had endorsed such a pay increase, but Lee Atwater, now installed at the Republican National Committee, launched a series of mailings and public statements to make the pay increase into a new wedge issue. It was a brilliant success, with the help of a few old Prescott Bush strings pulled on key talk show hosts across the country. Bush accomplished the coup of thoroughly destabilizing the Congress at the outset of his tenure. Jim Wright was hounded out of office and into retirement a few months later, followed by Tony Coelho, the Democratic Whip. What remained was the meek Tom Foley, a pliable rubber stamp, and Richard Gephardt, who briefly got in trouble with Bush during 1989, but who found his way to a deal with Bush that allowed him to rubber-stamp Bush's "fast track" formula for the free trade zone with Mexico, which effectively killed any hope of resistance to that measure. The fall of Jim Wright was a decisive step in the domestication of the Congress by the Bush regime. Bush was also able to rely on an extensive swamp of "Bush Democrats" who would support his proposals under virtually all circumstances. The basis of this phenomenon was the obvious fact that the national leadership of the Democratic Party had long been a gang of Harrimanites. The Brown Brothers Harriman grip on the Democratic Party had been represented by W. Averell Harriman until his death, and after that was carried on by his widow, Pamela Churchill Harriman, the former wife of Sir Winston Churchill's alcoholic son, Randolph. The very extensive Meyer Lansky/Anti-Defamation League networks among the Democrats were oriented toward cooperation with Bush, sometimes directly, and sometimes through the orchestration of gang vs. countergang charades for the manipulation of public opinion. A special source of Bush strength among southern Democrats is the cooperation between Skull and Bones and southern jurisdiction freemasons in the tradition of the infamous Albert Pike. These southern jurisdiction freemasonic networks have been most obviously decisive in the Senate, where a group of southern Democratic senators has routinely joined with Bush to block overrides of Bush's many vetoes, or to provide a pro-Bush majority on key votes like the Gulf war resolution. Bush's style in the Oval Office was described during this period as "extremely secretive." Many members of Bush's staff felt that the President had his own long-term plans, but refused to discuss them with his own top White House personnel. During Bush's first year, the White House was described as "a tomb," without the usual dense barrage of leaks, counter-leaks, trial balloons, and signals which government insiders customarily employ to influence public debate on policy matters. Bush is said to employ a "need to know" approach even with his closest White House collaborators, keeping each one of them in the dark about what the others are doing. Aides have complained of their inability to keep up with Bush's phone calls when he goes into his famous "speed-dialing mode," in which he can contact dozens of politicians, bankers or world leaders within a couple of hours. Unauthorized passages of information from one office to another inside the White House constitute leaks in Bush's opinion, and he has been at pains to suppress them. When information was given to the press about a planned meeting with Gorbachov, Bush threatened his top-level advisers: "If we cannot maintain proper secrecy with this group, we will cut the circle down." Bush routinely humiliates and mortifies his subordinates. This recalls his style in dealing with the numerous hapless servants and domestics who populated his patrician youth; it may also have been reinforced by the characteristic style of Henry Kissinger. If advisers or staff dare to manifest disagreement, the typical Bush retort is a whining "If you're so damned smart, why are you doing what you're doing and I'm the President of the United States?" / Note #1 / Note #3 In one sense, Bush's style reflects his desire to seem "absolute and autocratic" in the tradition of the Romanov czars and other Byzantine rulers. He refuses to be advised or dissuaded on many issues, relying on his enraged, hyperthyroid intuitions. More profoundly, Bush's "absolute and autocratic" act is a cover for the fact that many of his initiatives, ideas and policies came from outside of the U.S. government, since they originated in the rarefied ether of those international finance circles where names like Harriman, Kravis, and Gammell are the coin of the realm. Indeed, many of Bush's policies come from outside of the United States altogether, deriving from the oligarchical financial circles of the City of London. The classic case is the Gulf crisis of 1990-91. When the documents on the Bush administration are finally thrown open to the public, it is a safe bet that some top British financiers and Foreign Office types will be found to have combined remarkable access and power with a non-existent public profile. Notes for Chapter XXIV, Part 1 1. "Washington Post," Jan. 21, 1991. 2. For Fukuyama's "End of History," see "The National Interest," Summer 1989, and Henry Allen, "The End. Or Is It?" "Washington Post," Sept. 27, 1989. 6. "Bush's Earthly Pursuits," "Washington Post," Nov. 18, 1988. 7. See the transcript of Bush's statement and news conference, "Washington Post," Feb. 7, 1989; "With Signs and Ceremony, S&L Bailout Begins," "Washington Post," Aug. 10, 1989; and "Bush: S&Ls May Need More Help," "Washington Post," Dec. 12, 1989. 8. "Bush Backs Increase in IMF Funds," "Washington Post," Nov. 23, 1989. 9. See House Democratic Study Group, Special Report No. 101-45, "Legislation Vetoed by the President," p. 83. 11. John M. Barry, "The Ambition and the Power" (New York: Viking Press, 1989) pp. 621-22. 12. "Ibid." 13. "Bush: The Secret Presidency," "Newsweek," Jan. 1, 1990. CHAPTER 24 PART 2 THE END OF HISTORY One of the defining moments in the first year of the Bush presidency was his reaction to the Tiananmen massacre of June 4, 1989. No one can forget the magnificent movement of the antitotalitarian Chinese students, who used the occasion of the funeral of Hu Yaobang in the spring of 1989 to launch a movement of protest and reform against the monstrous dictatorship of Deng Xiaoping, Yang Shankun, and Prime Minister Li Peng. As the portrait of the old butcher Mao Zedong looked down from the former imperial palace, the students erected a statue of liberty and filled the square with the Ode to Joy from Beethoven's Ninth Symphony. By the end of May, it was clear that the Deng regime was attempting to pull itself together to attempt a convulsive massacre of its political opposition. At this point, it is likely that a pointed and unequivocal public warning from the U.S. government might have avoided the looming bloody crackdown against the students. Even a warning through secret diplomatic channels might have sufficed. Bush undertook neither, and he must bear responsibility for this blatant omission. The nonviolent protest of the students was then crushed by the martial law troops of the hated and discredited Communist regime. Untold thousands of students were killed outright, and thousands more died in the merciless death hunt against political dissidents which followed. Mankind was horrified. For Bush, however, the main considerations were that Deng Xiaoping was part of his own personal network, with whom Bush had maintained close contact since at least 1975. Bush's devotion to the immoral British doctrine of "geopolitics" further dictated that, unless and until the U.S.S.R. had totally collapsed as a military power, the U.S. alliance with China as the second-strongest land power must be maintained at all costs. Additionally, Bush was acutely sensitive to the views on China policy held by his mentor, Henry Kissinger, whose paw-prints were still to be found all over U.S. relations with Deng. In the pre-1911 imperial court of China, the etiquette of the Forbidden City required that a person approaching the throne of the "Son of Heaven" must prostrate himself before that living deity, touching both hands and the forehead to the floor three times. This is the celebrated "kow-tow." And it was "kow-tow" which sprang to the lips and pens of commentators all over the world as they observed Bush's elaborate propitiation of the Deng regime. Even cynics were astounded that Bush could be so deferential to a regime that was obviously so hated by its own population that it had to be considered as being on its last legs. In a press conference held on June 9, in the immediate wake of the massacre, Bush astounded even the meretricious White House press corps by his mild and obsequious tone toward Deng and his cohorts. Bush limited his retaliation to a momentary cutoff of some military sales. That would be all: "I'm one who lived in China; I understand the importance of the relationship with the Chinese people and with the government. It is in the interest of the United States to have good relations...." / Note #1 / Note #4 This was the wimp with a vengeance, groveling and scraping like Neville Chamberlain before the dictators, but there was more to come. As part of his meek and pathetic response, Bush had pledged to terminate all "high-level exchanges" with the Deng crowd. With this public promise, Bush had cynically lied to the American people. Shortly before Bush's invasion of Panama in December, it became known that Bush had dispatched the two most prominent Kissinger clones in his retinue, NSC Chairman Brent Scowcroft and Undersecretary of State Lawrence Eagleburger, on a secret mission to Beijing over the July 4th weekend, less than a month after the massacre in Tiananmen. The story about Scowcroft and Eagleburger, both veterans of Kissinger Associates, spending the glorious Fourth toasting the butchers of Beijing was itself leaked in the wake of a high-profile public mission to China involving the same Kissingerian duo that started December 7, 1989. Bush's cover story for the second trip was that he wanted to get a briefing to Deng on the results of the Bush-Gorbachov Malta summit, which had just concluded. The second trip was supposed to lead to the quick release of Chinese physicist and dissident Fang Lizhi, who had taken refuge in the U.S. embassy in Beijing during the massacre; this did not occur until some time later. The news of Bush's secret diplomacy in favor of Deng caused a widespread wave of sincere and healthy public disgust with Bush, but this was shortly overwhelmed by the jingoist hysteria that accompanied Bush's invasion of Panama. Bush's handling of the issue of the immigration status of the Chinese students who had enrolled at U.S. universities also illuminated Bush's character in the wake of Tiananmen. In Bush's pronouncements in the immediate wake of the massacre, he absurdly asserted that there were no Chinese students who wanted political asylum here, but also promised that the visas of these (non-existent) students would be extended so that they would not be forced to return to political persecution and possible death in mainland China. It later turned out that Bush had neglected to promulgate the executive orders that would have been necessary. In response to Bush's prevarication about the lives and well-being of the Chinese students, the Congress subsequently passed legislation that would have waived the requirement that holders of J-visas, the type commonly obtained by Chinese students, be required to return to their home country for two years before being able to apply for permanent residence in the U.S. Bush, in an act of loathsome cynicism, vetoed this bill. The House voted to override by a majority of 390 to 25, but Bush Democrats in the Senate allowed Bush's veto to be sustained by a vote of 62 to 37. Bush, squirming under the broad public obloquy brought on by his despicable behavior, finally issued regulations that would temporarily waive the requirement of returning home for most of the students. Noriega and the Thornburgh Doctrine George Bush's involvement with Panama goes back to operations conducted in Central America and the Caribbean by Senator Prescott Bush's Jupiter Island Harrimanite cabal. For the Bush clan, the cathexis of Panama is very deep, since it is bound up with the exploits of Theodore Roosevelt, the founder of twentieth-century U.S. imperialism, which the Bush family is determined to defend to the farthest corners of the planet. For it was Theodore Roosevelt who had used the U.S.S. "Nashville" and other U.S. naval forces to prevent the Colombian military from repressing the U.S.-fomented revolt of Panamanian soldiers in November 1903, thus setting the stage for the creation of an independent Panama and for the signing of the Hay-Bunau-Varilla Treaty, which created a Panama Canal Zone under U.S. control. Roosevelt's "cowboy diplomacy" had been excoriated in the U.S. press of those days as "piracy." Theodore Roosevelt had in December 1904 expounded his so-called "Roosevelt Corollary" to the Monroe Doctrine, in reality a complete repudiation and perversion of the anticolonial essence of John Quincy Adams's original warning to the British and other imperialists. The self-righteous Teddy Roosevelt had stated, "Chronic wrongdoing ... may in America, as elsewhere, ultimately require intervention by some civilized nation, and in the Western Hemisphere the adherence of the United States to the Monroe Doctrine may force the United States, however reluctantly, in flagrant cases of such wrongdoing or impotence, to the exercise of an international police power." / Note #1 / Note #8 The old imperialist idea of Theodore Roosevelt was quickly revived by the Bush administration during 1989. Through a series of actions by Attorney General Richard Thornburgh, the U.S. Supreme Court, and CIA Director William Webster, the Bush regime arrogated to itself a sweeping carte blanche for extraterritorial interference in the internal affairs of sovereign states, all in open defiance of the norms of international law. These illegal innovations can be summarized under the heading of the "Thornburgh Doctrine." The Federal Bureau of Investigation arrogated to itself the "right" to search premises outside of U.S. territory and to arrest and kidnap foreign citizens outside of U.S. jurisdiction, all without the concurrence of the judicial process of the other countries whose territory was thus subject to violation. U.S. armed forces were endowed with the "right" to take police measures against civilians. The CIA demanded that an Executive Order prohibiting the participation of U.S. government officials and military personnel in the assassination of foreign political leaders, which had been issued by President Ford in October 1976, be rescinded. There is every indication that this presidential ban on assassinations of foreign officials and politicians, which had been promulgated in response to the Church and Pike Committees' investigations of CIA abuses, has indeed been abrogated. To round out this lawless package, an opinion of the U.S. Supreme Court issued on February 28, 1990 permitted U.S. officials abroad to arrest (or kidnap) and search foreign citizens without regard to the laws or policy of the foreign nation subject to this interference. Through these actions, the Bush regime effectively staked its claim to universal extraterritorial jurisdiction, the classic posture of an empire seeking to assert universal police power. The Bush regime aspired to the status of a world power "legibus solutus," a superpower exempted from all legal restrictions. / Note #1 / Note #9 The hostility of the U.S. government against General Noriega was occasioned first of all by Noriega's refusal to be subservient to the U.S. policy of waging war against the Sandinista regime. This was explained by Noriega in an interview with CBS journalist Mike Wallace on February 4, 1988, in which General Noriega described the U.S. campaign against him as a "political conspiracy of the Department of Justice." General Noriega described a visit to Panama on December 17, 1985 by Admiral John Poindexter, then the chief of the U.S. National Security Council, who demanded that General Noriega join in acts of war against Nicara gua, and then threatened Panama with economic warfare and political destabilization when Noriega refused to go along with Poindexter's plans: "Noriega: Poindexter said he came in the name of President Reagan. He said that Panama and Mexico were acting against U.S. policy in Central America because we were saying that the Nicaragua conflict must be settled peacefully. And that wasn't good enough for the plans of the Reagan administration. The single thing that will protect us from being economically and politically attacked by the United States is that we allow the Contras to be trained in Panama for the fight against Nicaragua. "Wallace: He told you that you would be economically attacked if you didn't do that? "Noriega: It was stated, Panama must expect economic consequences. Your interest was that we should aid the Contras, and we said 'no' to that." Poindexter outlined plans for a U.S. invasion of Nicaragua that would require the fig leaf of participation of troops from other countries in the region: "Noriega: Yes, they wanted to attack Nicaragua and the only reason it hadn't already happened was that Panama was in the way, and all they wanted was that Panama would open the way and make it possible for them to continue their plans." According to Noriega's adviser, Panamanian Defense Forces Captain Cortiso, "[the U.S.] wanted that Panamanian forces attack first. Then we would receive support from U.S. troops." / Note #3 / Note #7 It was in this same December 1985 period that Bush and Don Gregg met with Ambassador Briggs to discuss Noriega's refusal to follow dictation from Washington. According to Gregg in his deposition in the Christic Institute lawsuit, "I think we [i.e., Bush and Gregg] came away from the meeting with Ambassador Briggs with the sense that Noriega was a growing problem, politically, militarily, and possibly in the drug area." When pressed to comment about Noriega's alleged relations to drug trafficking, Gregg could only add: "It would have been part of the general picture of Noriega as a political problem, corruption, and a general policy problem.... I don't recall any specific discussion of Noriega's involvement in drugs," Gregg testified. / Note #2 / Note #2 In this case it is quite possible that Don Gregg is for once providing accurate testimony: The U.S. government decision to begin interference in Panama's internal affairs for the overthrow of Noriega had nothing to do with questions of drug trafficking. It was predicated on Noriega's rejection of Poindexter's ultimatum demanding support for the Nicaraguan Contras, themselves a notorious gang of drug-pushers enjoying the full support of Bush and the U.S. government. In addition to the question of Contra aid, another rationale for official U.S. rage against Noriega had emerged during 1985. Panamanian President Nicky Barletta, a darling of the State Department and a former vice president of the genocidal World Bank, attempted to impose a package of conditionalities and economic adjustment measures dictated by the International Monetary Fund. This was a package of brutal austerity, and riots soon erupted in protest against Barletta. Noriega refused to comply with Barletta's request to use the Panamanian military forces to put down these anti-austerity riots, and the IMF austerity package was thus compromised. Barletta was shortly forced out as President. During 1986-87, Noriega cooperated with U.S. law enforcement officials in a number of highly effective antidrug operations. This successful joint effort was documented by letters of commendation sent to Noriega by John C. Lawn, at that time head of the U.S. Drug Enforcement Administration. On February 13, 1987, Lawn wrote to Noriega: "Your longstanding support of the Drug Enforcement Administration is greatly appreciated. International police cooperation and vigorous pursuit of drug traffickers are our common goal." Later in the same year, Lawn wrote to Noriega to commend the latter's contributions to Operation Pisces, a joint U.S.-Panamanian effort against drug-smuggling and drug money laundering. Panamanian participation was facilitated by a tough new law, called Law 23, which contained tough new provisions against drug money laundering. Lawn's letter to Noriega of May 27, 1987 includes the following: "As you know, the recently concluded Operation Pisces was enormously successful: many millions of dollars and many thousands of pounds of drugs have been taken from the drug traffickers and international money launderers.... "Again, the DEA and officials of Panama have together dealt an effective blow against drug dealers and international money launderers. Your personal commitment to Operation Pisces and the competent, professional, and tireless efforts of other officials in the Republic of Panama were essential to the final positive outcome of this investigation. Drug dealers throughout the world now know that the profits of their illegal operations are not welcome in Panama. The operation of May 6 led to the freezing of millions of dollars in the bank accounts of drug dealers. Simultaneously, bank papers were confiscated that gave officials important insights into the drug trade and the laundering operations of the drug trade. The DEA has always valued close cooperation, and we are prepared to proceed together against international drug dealers whenever the opportunity presents itself." / Note #2 / Note #4 By a striking coincidence, it was in June 1987, just one month after this glowing tribute had been written, that the U.S. government declared war against Panama, initiating a campaign to destabilize Noriega on the pretexts of lack of democracy and corruption. On June 30, 1987, the U.S. State Department demanded the ouster of General Noriega. Elliott Abrams, the assistant secretary of state for Latin American affairs, later indicted for perjury in 1991 for his role in the Iran-Contra scandal and coverup, to which he pled guilty, made the announcement. Abrams took note of a resolution passed on June 23 by the Senate Foreign Relations Committee demanding the creation of a "democratic government" in Panama, and officially concurred, thus making the toppling of Noriega the official U.S. policy. Abrams also demanded that the Panamanian military be freed of "political corruption." These were precisely the destabilization measures which Poindexter had threatened 18 months earlier. The actual timing of the U.S. demand for the ouster of Noriega appears to have been dictated by resentment in the U.S. financial community over Noriega's apparent violation of certain taboos in his measures against drug money laundering. As the "New York Times"commente d on August 10, 1987: "The political crisis follows closely what bankers here saw as a serious breach of bank secrecy regulations. Earlier this year, as part of an American campaign against the laundering of drug money, the Panamanian government froze a few suspect accounts here in a manner that bankers and lawyers regarded as arbitrary." These were precisely the actions lauded by the DEA's John Lawn. On August 12, 1987, Noriega responded to the opposition campaigns fomented by the U.S. inside Panama by declaring that the aim of Washington and its Panamanian minions was "to smash Panama as a free and independent nation. It is a repetition of what Teddy Roosevelt did when he militarily attacked following the separation of Panama from Colombia." On August 13, 1987, the "Los Angeles Times" reported that U.S. Assistant Attorney General Stephen Trott, who had headed up the Department of Justice "Get Noriega" Task Force for more than a year, had sent out orders to "pull together everything that we have on him [Noriega] in order to see if he is prosecutable." This classic enemies-list operation was clearly aimed at fabricating drug charges against Noriega, since that was the political spin which the U.S. regime wished to impart to its attack on Panama. In February 1988, Noriega was indicted on U.S. drug charges, despite a lack of evidence and an even more compelling lack of jurisdiction. This indictment was quickly followed by economic sanctions, an emba rgo on trade and other economic warfare measures that were invoked by Washington on March 2, 1988. All of these measures were timed to coincide with the "Super Tuesday" presidential preference primaries in the southern states. During the spring of 1988, the Reagan administration conducted a negotiation with Noriega with the declared aim of convincing him to relinquish power in exchange for having the drug charges against him dropped. In May, Michael G. Kozak, the deputy assistant secretary of state for inter-American affairs, had been sent to Panama to meet with Noriega. Bush had come under attack from other presidential candidates, especially Dukakis, for being soft on Noriega and seeking a plea bargain with the Panamanian leader. Bush first took the floor during the course of an administration policy-making meeting to advocate an end of the bargaining with Noriega. According to press reports, this proposal was "hotly contested." Then, in a speech in Los Angeles, Bush made one of his exceedingly rare departures from the Reagan line, by announcing with a straight face that a Bush administration would not "bargain with drug dealers" at home or abroad. / Note #2 / Note #5 Bush's interest in Noriega continued after he had assumed the presidency. On April 6, 1989, Bush formally declared that the government of Panama represented an "unusual and extraordinary threat" to U.S. national security and foreign policy. He invoked the National Emergencies Act and the International Emergency Act to declare a state of "national emergency" in this country to meet the menace allegedly posed by the nationalists of little Panama. The May 1, 1989 issue of "U.S. News and World Report" revealed that Bush had authorized the expenditure of $10 million in CIA funds for operations against the Panamanian government. These funds were obviously to be employed to influence the Panamanian elections, which were scheduled for early May. The money was delivered to Panama by CIA bagman Carlos Eleta Almaran, who had just been arrested in Georgia on charges of drug trafficking. On May 2, with one eye on those elections, Bush attempted to refurbish his wimp image with a blustering tirade delivered to the David Rockefeller-controlled Council of the Americas in which he stated: "Let me say one thing clearly. The U.S.A. will not accept the results of fraudulent elections that serve to keep the supreme commander of the Panamanian armed forces in power." This made clear that Bush intended to declare the elections undemocratic if the pro-Noriega candidates were not defeated. The CIA's $10 million and other monies were used to finance an extensive covert operation which aimed at stealing the elections on May 7. The U.S.-supported Civic Democratic Alliance, whose candidate was Guillermo Endara, purchased votes, bribed the election officials, and finally physically absconded with the official vote tallies. Because of the massive pattern of fraud and irregularities, the Panamanian government annulled the election. Somewhere along the line, the usual U.S.-staged "people power" upsurge had failed to materialize. The inability of Bush to force through a victory by the anti-Noriega opposition was a first moment of humiliation for the would-be Rough Rider. Speaking at the commencement ceremonies of Mississippi State University in Starkville, Mississippi, Bush issued a formal call to the citizens and soldiers of Panama to overthrow Noriega, asserting that "they ought to do everything they can to get Mr. Noriega out of there." Asked whether this was a call for a military coup against Noriega, Bush replied: "I would love to see them get him out of there. Not just the PDF -- the will of the people of Panama." Bush elaborated that his was a call for "a revolution...." During this period, Admiral William Crowe, the chairman of the U.S. Joint Chiefs of Staff, attempted to convince the U.S. commander in Panama, Gen. Frederick F. Woerner, to accept a brigade-sized reinforcement of 3,000 troops in addition to the 12,000 men already stationed in Panama. Woerner declined the additional men, which the Pentagon had intended to dispatch with great fanfare in an attempt to intimidate Noriega and his triumphant supporters. Operation Blue Spoon At this point, the Pentagon activated preparations for Operation Blue Spoon, which included a contingency plan to kidnap Noriega with the help of a Delta Force unit. There were discussions about whether an attempt could be made to abduct Noriega with any likelihood of success; it was concluded that Noriega was very wily and exceedingly difficult to track. It was in the course of these deliberations that Defense Secretary Cheney is reported to have told Crowe, "You know, the President has got a long history of vindictive political actions. Cross Bush and you pay," he said, supplying the names of a few victims and adding: "Bush remembers and you have to be careful." / Note #2 / Note #6 Thus intimidated by Bush, the military commanders concurred in Bush's announcement of a brigade-sized reinforcement for Woerner, plus the secret dispatch of Delta Forces and Navy Seals. On July 17, Bush approved a plan to "assert U.S. treaty rights" by undertaking demonstrative military provocations in violation of the treaty. Woerner was soon replaced by Gen. Maxwell Reid "Mad Max" Thurman, who would bring no qualms to his assignment of aggression. Thurman took over at the Southern Command on September 30. In the wake of this tirade, the U.S. forces in Panama began a systematic campaign of military provocations. In July, the U.S. forces began practicing how to seize control of important Panamanian military installations and civilian objectives, all in flagrant violation of the Panama Canal Treaty. On July 1, for example, the town of Gamboa was seized and held for 24 hours by U.S. troops, tanks, and helicopters. The mayor of the town and 30 other persons were illegally detained during this "maneuver." In Chilibre, the U.S. forces occupied the key water purification plant serving Panama City and Colon. On August 15, Bush escalated the rhetoric still further by proclaiming that he had the obligation "to kidnap Noriega." Then, during the first days of October, there came an abortive U.S.-sponsored coup attempt, followed by the public humiliation of George Bush, who had failed to measure up to the standards of efficacy set by Theodore Roosevelt. The provocations continued all the way up to the December 20 invasion. In his speech delivered at 7:20 a.m. on December 21, 1989 announcing the U.S. invasion, Bush said: "Many attempts have been made to resolve this crisis through diplomacy and negotiations. All were rejected by the dictator of Panama, Gen. Manuel Noriega, an indicted drug trafficker. "Last Friday, Noriega declared his military dictatorship to be in a state of war with the United States and publicly threatened the lives of Americans in Panama. The very next day forces under his command shot and killed an unarmed American serviceman, wounded another, arrested and brutally beat a third American serviceman and then brutally interrogated his wife, threatening her with sexual abuse. That was enough." / Note #2 / Note #7 Bush Orders Holocaust The U.S. military operations, which got under way just after midnight on Tuesday, were conducted with unusual ferocity. Mad Max Thurman sent in the new Stealth and A-7 fighter-bombers, and AC-13 gunships. The neighborhood around Noriega's Comandancia, called El Chorillo, was bombarded with a vengeance and virtually razed, as was the working-class district of San Miguelito, and large parts of the city of Colon. U.S. commanders had been instructed that Bush wished to avoid U.S. casualties at all costs, and that any hostile fire was to be answered by overwhelming U.S. firepower, without regard to the number of civilian casualties that this might produce among the Panamanians. Many of the Panamanian civilian dead were secretly buried in unmarked mass graves during the dead of night by the U.S. forces; many other bodies were consumed in the holocaust of fires that leveled El Chorillo. The Institute of Seismology counted 417 bomb bu rsts in Panama City alone during the first 14 hours of the U.S. invasion. For many days there were no U.S. estimates of the civilian dead (or "collateral damage"), and eventually the Bush regime set the death toll for Panamanian noncombatants at slightly over 200. In reality, as "Executive Intelligence Review" and former U.S. Attorney General Ramsey Clark pointed out, there had been approximately 5,000 innocent civilian victims, including large numbers of women and children. U.S. forces rounded up 10,000 suspected political opponents of "democracy" and incarcerated them in concentration camps, calling many of them prisoners of war. Many political prisoners were held for months after the invasion without being charged with any specific offense, a clear violation of the norms of "habeas corpus." The combined economic devastation caused by 30 months of U.S. sanctions and economic warfare, plus the results of bombardments, firefights and torchings, had taken an estimated $7 billion out of the Panamanian economy, in which severe poverty was the lot of most of the population, apart from the "rabiblanco" bankers who were the main support for Bush's intervention. The bombing left 15,000 homeless. The Endara government purged several thousand government officials and civil servants under the pretext that they had been tainted by their association with Noriega. Perhaps not by accident, the new U.S. puppet regime could only be described as a congeries of drug pushers and drug money launderers. The most succinct summary was provided by the "International Herald Tribune" on February 7, 1990, which reported: "The nation's new President Guillermo Endara has for years been a director of one of the Panamanian banks used by Colombia's drug traffickers. Guillermo Ford, the Second Vice President and chairman of the banking commission, is a part owner of the Dadeland Bank of Florida, which was named in a court case two years ago as a central financial institution for one of the biggest Medellin money launderers, Gonzalo Mora. Rogelio Cruz, the new Attorney General, has been a director of the First Interamericas Bank, owned by Rodriguez Orejuela, one of the bosses of the Cali Cartel gang in Colombia." The portly Guillermo Endara was also the business partner and corporate attorney of Carlos Eleta Almaran, the CIA bagman already mentioned. Eleta Almaran, the owner of the Panamanian branch of Philip Morris Tobacco was arraigned in Bibb County, Georgia in April 1989 by DEA officials, who accused him of conspiracy to import 600 kilos of cocaine per month into the U.S., and to set up dummy corporations to launder the estimated $300 million in profits this project was expected to produce. Eleta was first freed on $8 million bail; after the "successful" U.S. invasion of Panama, all charges against him were ordered dropped by Bush and Thornburgh. As for Endara's first vice president, Ricardo Arias Calderon, his brother, Jaime Arias Calderon, was president of the First Interamericas Bank when that bank was controlled by the Cali Cartel. Jaime Arias Calderon was also the co-owner of the Banco Continental, which laundered $40 million in drug money, part of which was used to finance the activities of the anti-Noriega opposition. Thus, all of Bush's most important newly installed puppets were implicated in drug-dealing. The invasion presented some very difficult moments for Bush. From the beginning of the operation late on December 20, until Christmas Eve, the imposing U.S. martial apparatus had proven incapable of locating and capturing Noriega. The U.S. Southern Command was terrorized when a few Noriega loyalists launched a surprise attack on U.S. headquarters with mortars, scattering the media personnel who had been grinding out their propaganda. There was great fear through the U.S. command that Noriega had successfully implemented a plan for the PDF to melt away to arms caches and secret bases in the Panamanian jungle for a prolonged guerrilla warfare effort. As it turned out, Noriega had failed to give the order to disperse. At War With the Vatican Then, on the evening of December 24, it was reported that Noriega, armed with an Uzi machine gun, had made his way unchallenged and undetected to the Papal Nunciature in Panama City where he had asked for and obtained political asylum. The standoff that then developed encapsulated the hereditary war of the Bush family with the Holy See and the Roman Catholic Church. For eight days, U.S. troops surrounded the Nunciature, which they proceeded to bombard with deafening decibels of explicitly satanic heavy metal and other hard rock music, which, according to some reports, had been personally chosen by Mad Max Thurman in order to "unnerve Noriega and the Nuncio," Monsignor LaBoa. At the same time, Bush ordered the State Department to carry out real acts of thuggery in making threatening representations to the Holy See. It became clear that Roman Catholic priests, nuns, monks and prelates would soon be in danger in many countries of Ibero-America. Nevertheless, the Vatican declined to expel Noriega from the Nunciature in accordance with U.S. demands. Bush's forces in Panama had shown they were ready to play fast and loose with diplomatic immunity. A number of foreign embassies were broken into by U.S. troops while they were frantically searching for Noriega, and the Cuban and Nicaraguan embassies were ringed with tanks and troops in a ham-handed gesture of intimidation. It is clear that in this context, Bush contemplated the storming of the Nunciature by U.S. forces. In Panama City, the Endara-Ford-Arias Calderon forces mobilized their BMW base and hired hundreds of those who had nothing to eat for militant demonstrations outside of the Nunciature. These were liberally seeded with U.S. special forces and other commandos in civilian clothes. As the demonstrations grew more menacing, and the U.S. troops and tanks made no move to restrain them, it was clear that the U.S. forces were preparing to stage a violent but "spontaneous" assault by the masses on the Nunciature that would include the assassination of Noriega and the small group of his co-workers who had accompanied him into that building. At about this time, Monsignor LaBoa warned Noriega, "you could be lynched like Mussolini." Noriega appears to have concluded that remaining in the Nunciature meant certain death for himself and his subordinates at the hands of the U.S. commandos operating under the cover of the mob. LaBoa and the others on the staff of the Nunciature would also be in grave danger. On January 3, 1990, after thanking LaBoa and giving him a letter to the Pope, Noriega, dressed in his general's uniform, left the Nunciature and surrendered to General Cisneros. A Crime and a Failure In Bush's speech of December 20 he had offered the following justification for his act of war, Operation Just Cause: "The goals of the United States have been to safeguard the lives of Americans, to defend democracy in Panama, to combat drug trafficking, and to protect the integrity of the Panama Canal Treaty." If these were the goals, then Bush's invasion of Panama must be counted not only a crime, but also a failure. On April 5, 1991, newspapers all over Ibero-America carried details of a new report by the U.S. Drug Enforcement Administration confirming that the U.S.-installed puppet President of Panama, Guillermo Endara, had been an officer of at least six companies which had been demonstrably implicated in laundering drug money. These were the Banco General, the Banco de Colombia, the Union Bank of Switzerland, the Banco Aleman, the Primer Banco de Ahorros, Sudameris, Banaico and the Banco del Istmo. The money laundered came from a drug-smuggling ring headed up by Augusto Falcon and Salvador Magluta of Colombia, who are reported to have smuggled an average of one ton of cocaine per month into Florida during the decade 1977-87, including many of the years during which Bush's much-touted South Florida Task Force and related operations were in operation. With the puppet President so heavily implicated in the activity of the international drug mafia, it can be no surprise that the plague of illegal drugs has markedly worsened in the wake of Bush's invasion. According to the London "Independent" of March 5, 1991, "statistics now indicate that since General Noriega's departure, cocaine trafficking has, in fact, prospered" in the country. On March 1, the State Department had conceded that the turnover of drug money laundered in Panama had at least regained the levels attained before the 1989 invasion. According to the "Los Angeles Times" of April 28, 1991, current levels of drug-trafficking in Panama "in some cases exceed" what existed before the December 20 invasion, and U.S. officials "say the trend is sharply upward and includes serious movements by the Colombian cartels into areas largely ignored under Noriega." Bush's invasion of Panama has done nothing to fight the scourge of illegal narcotics. Rather, the fact that so many of Bush's hand-picked puppets can be shown to be top figures in the drug mafia suggests that drug-trafficking through Panama toward the United States has increased after the ouster of Noriega. If drug shipments to the United States have increased, this exposes Bush's pledge to "protect the lives of Americans" as a lie. As far as the promise of democracy is concerned, it must be stressed that Panama has remained under direct U.S. military dictatorship and virtual martial law until this writing in the late autumn of 1991, two years after Bush's adventure was launched. The congressional and local elections that were conducted during early 1991 were thoroughly orchestrated by the U.S. occupation forces. Army intelligence units interrogated potential voters, and medical battalions handed out vaccines and medicines to urban and rural populations to encourage them to vote. Every important official in the Panamanian government from Endara on down has U.S. military "liaison officers" assigned on a permanent basis. These officers are from the Defense Department's Civic Action-Country Area Team (or CA-CAT), a counterinsurgency apparatus that parallels the "civic action" teams unleashed during the Vietnam War. CA-CAT officers supervise all government ministries and even supervise police precincts in Panama City. The Panamanian Defense Forces have been dissolved, and the CA-CAT officers are busily creating a new constabulary, the Fuerza Publica. Radio station and newspaper editors who spoke out against the U.S. invasion or criticized the puppet regime were jailed or intimidated, as in the case of the publisher Escolastico Calvo, who was held in concentration camps and jails for some months after the invasion without an arrestwarrant and without specificcharges. Trade union rights are non-existent: After a demonstration by 100,000 persons in December 1990 had protested growing unemployment and Endara's plans to "privatize" the state sector by selling it off for a song to the "rabiblanco" bankers, all of the labor leaders who had organized the march were fired from their jobs, and arrest warrants were issued against 100 union officials by the government. In the wake of Bush's invasion, the economy of Panama has not been rebuilt, but has rather collapsed further into misery. The Bush administration has set as the first imperative for the puppet regime the maintenance of debt service on Panama's $6 billion in international debt. Debt service payments take precedence over spending on public works, public health, and all other categories. Bush had promised Panama $2 billion for post-invasion reconstruction, but he later reduced this to $1 billion. What was finally forthcoming was just $460 million, most of which was simply transferred to the Wall Street banks in order to defray the debt service owed by Panama. The figure of $460 million scarcely exceeds the $400 million in Panamanian holdings that were supposedly frozen by the United States during the period of economic warfare against Noriega, but which were then given to the New York banks, also for debt service payments. As far as the integrity of the Panama Canal Treaty signed by Torrijos and Carter, and ratified by the U.S. Senate, is concerned, on February 7, 1989, Rep. Philip Crane (R-Il.) introduced a House Joint Resolution, with 26 co-sponsors, to express "the sense of the Congress that the President or the Congress should abrogate the Panama Canal Treaties of 1977 and the Neutrality Treaty." Then on March 21, 1991, Senator Larry Craig (R-Id.), together with Rep. Philip Crane on the House side, introduced a concurrent resolution, calling on George Bush to renegotiate the Canal Treaties "to permit the United States Armed Forces to remain in Panama beyond Dec. 31, 1999, and to permit the U.S. to act independently to continue to protect the Panama Canal" -- i.e., for the United States to keep a military presence in Panama indefinitely. These resolutions are still pending before the Congress. Thus, on every point enumerated by Bush as basic to his policy -- the lives of Americans, Panamanian democracy, anti-drug operations, and the integrity of the treaty -- Bush has obtained a fiasco. Bush's invasion of Panama will stand as a chapter of shame and infamy in the recent history of the United States. Notes for Chapter XXIV, Part 2 14. Transcript of President Bush's press conference, "Washington Post," June 9, 1989. 18. "Congressional Record," 58th Congress, 3rd session, p. 19. 19. See "Police State and Global Gendarme: The United States under the Thornburgh Doctrine," "American Leviathan: Administrative Fascism under the Bush Regime," (Wiesbaden: EIR News Service, 1990), pp. 61-102. 21. "Panama: Atrocities of the 'Big Stick,'|" in "American Leviathan", pp. 39-40. 22. For Gregg's testimony on Bush-Noriega relations, see "Testimony on Bush Meeting With Panama Ambassador," "New York Times," May 21, 1988. 24. "American Leviathan," pp. 41-42. 25. "Bush Presses to Cut Off Talks with Noriega," "Washington Post," May 20, 1988. 26. Bob Woodward, "The Commanders" (New York: Simon and Schuster, 1991), p. 89. 27. Text of President Bush's Address, "Washington Post," Dec. 21, 1989. ------------------------------------------------ (This file was found elsewhere on the Internet and uploaded to the Patriot FTP site by S.P.I.R.A.L., the Society for the Protection of Individual Rights and Liberties. E-mail email@example.com)
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