Krugman Rewrites Nixon History

http://www.futureofcapitalism.com/2009/08/krugman-rewrites-nixon-history

In this morning's New York Times, Paul Krugman gets the history of corporate influence in Washington wrong. Mr. Krugman writes: "I find myself missing Richard Nixon...The Nixon era was a time in which leading figures in both parties were capable of speaking rationally about policy, and in which policy decisions weren't as warped by corporate cash as they are now....There's another reason health care reform is much harder now than it would have been under Nixon: the vast expansion of corporate influence. We tend to think of the way things are now, with a huge army of lobbyists permanently camped in the corridors of power, with corporations prepared to unleash misleading ads and organize fake grass-roots protests against any legislation that threatens their bottom line, as the way it always was. But our corporate-cash-dominated system is a relatively recent creation, dating mainly from the late 1970s."

What is Mr. Krugman talking about? Nixon practically invented corporate-cash influence in Washington, as this letter from Public Citizen details:

In May 1971, the giant International Telephone and Telegraph Corporation (ITT) pledged through a San Diego subsidiary up to $400,000 to attract the 1972 Republican National Convention to San Diego. The company was facing several anti-trust lawsuits under the Nixon Administration. Just eight days after the selection of San Diego for the Republican convention, Deputy Attorney General Richard Kleindienst agreed to an out-of-court settlement with ITT that the company considered very favorable. Democratic National Committee Chair Lawrence O'Brien wrote to Attorney General John Mitchell demanding to know if the out-of-court settlement with ITT was linked to the company's pledge to the Republican convention.

Later testimony in hearings revealed that ITT executives and Nixon Administration officials had met repeatedly in secret in 1970 and 1971 on the anti-trust suits, and while negotiations were in process, ITT made the offer to underwrite the party's convention. Internal memos within the Administration urged the Justice Department to go easy on ITT. A reluctant Justice Department official was promptly fired by Nixon, and a settlement emerged a short time later.

The result of the Nixon-ITT scandal was the passage of the Federal Election Campaign Act of 1971, which was strengthened by amendments in 1974 that created the Federal Election Commission. In other words, the eruption of the "corporate-cash-dominated system" that Mr. Krugman so decries took place immediately after Congress, spurred by Nixon-era scandals, passed laws designed to reduce the influence of corporate money on politics.

What Mr. Krugman sees as a tribute to Nixon might be instead seen as a demonstration of the perils of unintended consequences in Washington.

by Editor  |  Aug 31, 2009 at 9:13 am Related Topics:  Campaign Finance, Paul Krugman, Press receive the latest by email: subscribe to the free futureofcapitalism.com mailing list