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DAVID: April 2, 1987 was a windy spring evening in Washington, D.C. and the air felt heavy, like a storm was about to blow in. Ed Gray hurried to a meeting in the Hart Senate Office Building, just kitty-corner from the Capitol Building. A senior senator wanted to meet with him, and told him to come alone.
As the chairman of the Federal Home Loan Bank Board, Ed regulated savings and loans. These were small banks that had been created in the 1930s to serve the needs of ordinary American households — people get mortgages and savings accounts, and pay their bills.
ARCHIVAL TELEVISION ADVERTISEMENT: I’m Hugh Danisow for First Federal Savings of Cleveland. Did you know that you can now use your telephone to pay your bills each month?
DAVID: But in the 1980s, the rules for S&Ls changed — allowing them to expand into new industries and make riskier loans — and many of them were now in over their heads and close to failure. Ed Gray had been pushing legislation in Congress that would help institute new regulations to get the S&Ls back on track.
Gray assumed that the senator wanted to talk about that legislation, but it was evening and most people were leaving to go home. Something felt off.
The senator met Ed at the door to his office and led him through, as though to a party. The walls of the senator’s office were decorated with Native American basketry from his home state — woven to depict butterflies, turtles and birds. And also in the room were three more senators, who appeared to have been waiting for Ed.
Surprise! Wait a minute. Where are the balloons? The cake? This wasn’t actually a party. This was a sneak attack. Years later, Ed Gray recounted the events of that evening in front of the U.S. Senate Ethics Committee.
CONGRESSIONAL TESTIMONY (ED GRAY): I sat down. Directly across from me was Senator DeConcini. To his right was Senator McCain. To his left Senator Cranston. Then to my right closest to me was Senator Glenn.
DAVID: He’s talking about Democratic Senator Dennis DeConinci from Arizona, in whose office they were gathered. Also present were Senator John Glenn from Ohio, Senator Alan Cranston from California — both Democrats — and Republican Senator John McCain, the junior senator from Arizona. Almost right off the bat, Ed Gray said that Senator McCain seemed ill at ease.
CONGRESSIONAL TESTIMONY (ED GRAY): Senator McCain said, “now, we don’t want to do anything that’s improper in this meeting.”
DAVID: You mean something like pressuring a federal regulator? But I’m getting ahead of myself. Go on.
CONGRESSIONAL TESTIMONY (ED GRAY): And Senator DeConcini said, “Mr. Chairman, we’re here to talk about our friend from Lincoln Savings.”
DAVID: The “friend” DeConcini was referring to was a Mr. Charles Keating, Jr. He was the wealthy and well-connected owner of Lincoln Savings & Loan and was quite resistant to any idea of regulation. Gray’s initiative could have restricted the kind of investments that Keating wanted to make — so Keating wanted it scrapped. Ed Gray again.
CONGRESSIONAL TESTIMONY (ED GRAY): By the time of our rulemaking, Mr. Keating had apparently been lobbying heavily to try to ensure that the rule wouldn’t be applied against Lincoln or that it would be scuttled by a powerful show of force in Congress.
DAVID: That powerful show of force included this not-very-fun surprise party for Ed Gray, hosted by four U.S. senators.
CONGRESSIONAL TESTIMONY (ED GRAY): I felt awkward and pressured. The whole setting was an intimidating one under these circumstances because I had never had a meeting like this before.
There were only five there… myself and four United States Senators. No one else to hear. No one else to know what was said. It was just us. I recognized that immediately.
DAVID: What would convince four senators to arrange a closed-door meeting with no aides, no one taking notes, no witnesses, to try to strong-arm a federal regulator on behalf of a constituent? And what would convince that constituent that he had enough clout to get multiple members of the United States Senate to do his bidding?
Say it with me now — money. In this episode, we explore how the Supreme Court’s campaign finance rulings of the 1970s led to a decade not just known for its big hair and big shoulder pads, but also for its big corruption. The events of the 1980s were reminiscent of Watergate and raised concerns that American politics had become an open-air auction. And we look at the transformation of one of those senators burned in what would become known as the Keating Five Scandal. He would use that sobering experience to push back and wage a counterattack against the influence of money in politics.
ARCHIVAL CAMPAIGN SPEECH (JOHN MCCAIN): As long as special interests dominate campaigns, they will dominate legislation as well. Until we abolish soft money, Americans will never have a government that works as hard for them as it does for the special interests.
DAVID: I’m David Sirota and this is Master Plan.
ARCHIVAL INTERVIEW AUDIO (JOHN MCCAIN): I ejected and broke my leg and both arms.
DAVID: John McCain first came to national attention in October 1967 as a Vietnam prisoner of war. He was the son and grandson of two U.S. admirals. He was shot down on a bombing run over North Vietnam and spent over five years in the infamous Hanoi Hilton. He was tortured and abused. And he gained a reputation for being principled and brave — refusing to be released before any of the other men who’d been captured before he was. In 1973, the North Vietnamese finally let him go — a story that made national news.
ARCHIVAL NEWS AUDIO: Here at Clark Airbase, the homecoming organization was ready to welcome its tenth, eleventh, and twelfth planeloads of returnees. Among them, an admiral’s son, Lieutenant Commander John McCain.
DAVID: McCain remained in the Navy for eight more years, eventually becoming the Navy’s liaison to the U.S. Senate — giving him his first taste of politics. In 1982, he ran for U.S. Congress as a Republican to represent Arizona’s first district, where he’d recently moved with his wife, Cindy, to be closer to her family.
He had no ties to the state other than Cindy and was seen as an outsider — but he had three things working in his favor: One: Money to bankroll his campaign from his wife and from his wealthy father-in-law, who owned an Anheuser-Busch beer distributorship. Two: A close friendship with Darrow Tully, the publisher of the most important newspaper in the state, The Arizona Republic. And three: McCain had several powerful benefactors — including a Phoenix businessman by the name of Charles Keating, Jr.
Those three things helped McCain through a very tough primary for Arizona’s first congressional district. He went on to easily win the general election. He served as a Congressman for two terms, and then, in 1986, he ran for the Senate, to replace retiring Senator Barry Goldwater — the conservative icon. In this ad, McCain waves from the back of a train as it does a whistle-stop tour through one of Arizona’s towns.
ARCHIVAL CAMPAIGN AD (JOHN MCCAIN): We have done much that is good but we can do better.
DAVID: He holds his baby daughter, conducts a patriotic band, and smiles and waves like he’s having the time of his life. There are crowds of people at the station, carrying homemade signs and balloons and waving miniature American flags.
ARCHIVAL CAMPAIGN AD (JOHN MCCAIN): He’s for Arizona and America.
DAVID: Running a campaign like this does not seem cheap. I mean, how much does it cost to rent a train? Then there are the specific advertising costs — hiring a band, a video crew, all those balloons. That doesn’t even include air time. In fact, television and radio ads were the single biggest campaign expense in 1986. That year, Senate candidates spent nearly $190 million on their campaigns and 34 percent of that — $64 million — went to TV and radio advertising. The Buckley decision that we learned about in the last episode meant candidates could spend this kind of money — but it also meant they had to find it.
MARK BUSE: It was this nonstop chase for money.
DAVID: That’s Mark Buse. He had loved politics in college and in 1983 became an intern for John McCain during his first term as a Congressman. Busey would eventually work his way up to become McCain’s chief of staff. All in all, he worked for McCain for nearly 23 years, and had a front row seat to the action — including, he told us, what it meant to campaign.
MARK BUSE: If you could be up on TV in prime time and be on radio on drive time, it was what you needed. And that was getting more and more expensive.
DAVID: To run a successful campaign, a candidate needed cash. In 1986, the McCain campaign brought in close to $2.6 million — about five times as much as his Democratic opponent. And, as in McCain’s previous two campaigns, some of that money came from Charles Keating. Keating was a former lawyer and financier who moved to Phoenix in the late 1970s and became a multimillionaire real estate developer. He was a perfect example of the wealth-chasing financial culture of the 1980s — ambitious and willing to take risks. In 1984, Keating became the chairman of the Lincoln Savings & Loan Association.
MARK BUSE: Senator McCain knew him because he lived in Arizona. Keating, he knew the Senator’s wife from before they’d even been married.
DAVID: And Keating had also been a Navy pilot, which was part of the reason he was drawn to McCain. Keating backed McCain’s first run for Congress in 1982, his reelection in 1984, and his Senatorial campaign in 1986. Over the course of those three elections, Keating gave McCain’s campaign about $112,000 — that’s about $320,000 in today’s money. Keating also hosted McCain and McCain’s family at his home in the Bahamas, flying him there on private planes — a fact that would come back to bite McCain when his friendship with Keating came under scrutiny from the Senate Ethics Committee.
ARCHIVAL CONGRESSIONAL HEARING: Did it ever concern you, as a Congressman…that you would be vacationing, having fun, drinking, whatever, with a friend such as Mr. Keating in the Bahamas, at or around the same time he has a matter of interest before the Bank Board and asking you for assistance…
ARCHIVAL CONGRESSIONAL HEARING (JOHN MCCAIN): No, I did not have any reservations about having friends, nor do I have reservations about having friends who contribute to my political campaigns. The key answer to your question is whether or not I would do anything improper for a friend of mine and the record clearly says I refused to do so.
DAVID: Improper…like, say…a senator pressuring a bank regulator? Anyhow, McCain may have had more of a personal relationship with Charles Keating, he certainly wasn’t the only one receiving money from him. Throughout the 1980s, Keating funneled a combined $1.3 million to the five senators who had pressured regulators on his behalf. In 1986, federal regulators started probing deeper into Charles Keating’s savings and loan business, alarmed by the bank’s rapid growth and its entry into high-risk ventures. So Keating called in favors from his five favorite senators.
ARCHIVAL NEWS FOOTAGE: The Keating Five are five United Senators who accepted Keating’s money and who are now accused of improperly intervening with the regulators.
DAVID: Keating was very public about insisting he wasn’t doing anything wrong. He was a constituent in the five senators’ states, he was a business owner who employed thousands. He’d made perfectly legal campaign contributions to lawmakers. So what if he needed to call in some favors from his Senate friends? And, as we heard earlier, those favors came in the form of the senators pressuring Ed Gray to slow-roll his initiative to regulate S&Ls like Keating’s. Here is Gray again, testifying before the Senate Ethics Committee.
CONGRESSIONAL TESTIMONY (ED GRAY) Then Senator DeConcini said we’re very concerned about this regulation of yours. He said, you know, we’re concerned that it’s unconstitutional. And he said, we’d like you to withdraw it until we can find out whether it’s constitutional.
DAVID: Just a week after Keating’s Senate pals pressured Gray, all five senators met with San Francisco federal bank regulators and pressured them to go easy on their donor, Charles Keating. The senators argued that intervention would “hurt a constituent,” but the regulators recommended a federal takeover of Lincoln Savings and Loan anyway. The bank was over-invested in risky ventures and would be unable to cover its losses if things went south. But then… nothing happened. Lincoln kept doing business as usual. It took almost two more years before Lincoln collapsed, and roughly 23,000 of its customers lost whatever investments they’d made with the savings and loan. For some retirees, this was their life savings. This happened in the midst of a little something called the Savings and Loan Crisis — one of the biggest financial news stories of the decade.
ARCHIVAL NEWS FOOTAGE: This week, runs on privately insured savings and loan associations in Maryland. 71 S&Ls closed down in Ohio, and before that runs on institutions in four other states
DAVID: Nearly one-third of American savings and loans institutions failed between 1986 and 1995. But Lincoln, in particular, stood out. For one, it was expensive. To cover the losses caused by just Lincoln’s failure, the government — meaning the taxpayers — would eventually spend almost $3.5 billion. That huge cost was due, in part, to the federal government’s delay in taking action –- and that delay may have had a little something to do with the pressure from Charles Keating’s five senators. In October 1989, Lincoln’s spectacular collapse prompted Common Cause — the same group that had been a thorn in Nixon’s side — to push for more information.
ARCHIVAL NEWS FOOTAGE: Common Cause today asked the Senate Ethics Committee to investigate the links between five senators and a savings and loan that crashed earlier this year.
DAVID: Keating certainly didn’t help his Senate pals defend themselves… when asked whether his donations bought senators’ favors, he replied, “I want to say in the most forceful way I can: I certainly hope so.’’
Wow. The balls on that guy. Screaming the quiet part out loud. The scandal was particularly huge because the accomplices included America’s seemingly squeaky-clean golden boys from each political party: There was astronaut-turned-Democratic-senator John Glenn, and there was the Vietnam war hero, Republican Senator John McCain.
Mark Buse remembers how difficult this time was for his boss, John McCain.
MARK BUSE: Oh, it was horrible for him. I mean, he prided himself on doing the right thing. You could tell it bothered him and upset him. His integrity was being questioned.
DAVID: Angry letters started pouring into McCain’s office.
MARK BUSE: Constituents would see on the nightly local news, they would read in the local newspapers about this. And so we would get mail, old-fashioned mail.
We got letters saying, you know, why did you do this or this is wrong or, you know, what do you have to say about this?
DAVID: McCain sat through a call-in show on C-SPAN and was forced to endure hostile comments with what was probably the most fake smile I’ve ever seen plastered on any politician’s face. Listen to this one:
ARCHIVAL C-SPAN FOOTAGE: You know I’m from Arizona too… it’s like Barry Goldwater told me about you one time: The only reason you got there was for the money
DAVID: Man, that is harsh. The Senate Ethics Committee opened up an almost 2-year investigation into the Keating scandal and held publicly televised hearings at which McCain testified.
ARCHIVAL CONGRESSIONAL HEARING (JOHN MCCAIN): Thank you, Mr. Chairman. Once again, I’m glad to have the opportunity to fully and publicly account for my relationship with Charles Keating and my conduct in connection with the April 1987 meetings with Chairman Ed Gray and regulators at the federal home loan bank board.
DAVID: Ultimately, the ethics committee cleared McCain of criminal impropriety but slammed him for his poor judgment. It could have been much worse. It could have spelled the end of his career. But during his campaign for re-election in 1992, McCain opted to do what most politicians never do: He faced the music and answered reporters honestly about what had happened with Keating.
ARCHIVAL CONGRESSIONAL HEARING (JOHN MCCAIN): It was a very serious mistake on my part. The appearance of a meeting with five senators was bad and wrong and I agonized over it at the time.
DAVID: Despite his mea culpa, McCain still had to run a campaign, and he still had to raise money. That meant schmoozing with corporate interest groups that spent big on election campaigns and wanted things from McCain in the Senate. But he seemed uncomfortable. Here’s Mark Buse again.
MARK BUSE: John would talk a lot about looking back at the Nixon scandals, that it were always, he would say, people walking around with valises full of money.
DAVID: It didn’t seem like this new way of doing things was all that far removed from the Watergate era. But, if McCain wanted to run for office, that was the corruption game he had to play, the ecosystem he had to live in, right? That was the world that the master planners had created. But McCain would soon argue that maybe it didn’t have to be that way…
JOHN MCCAIN: I want to take our politics. I want to take our politics and our government back from the special interests.
DAVID: Okay, put on your flannels and pop Nirvana into your CD player, because we’re moving from the late 1980s and into the 1990s. John McCain, signed by the Keating Five scandal, has become Captain Campaign Finance Reform. His mission? Take back our government from the special interests.
But how was he going to do that when the laws and the court system had already started to legalize corruption? This was an especially difficult question considering how much the master planners had undermined the Federal Election Campaign Act, FECA. That landmark Watergate-era law had been limited by the Supreme Court’s Buckley decision in 1976 — which said money was constitutionally protected speech. It was also limited by Lewis Powell’s Bellotti decision in 1978, which said corporations have the same spending rights as people. But FECA had also been weakened further by something we haven’t yet discussed: amendments added in 1979. Producer Laura Krantz is here to tell us more about those amendments.
LAURA: Hey David, let’s talk about FECA matters!
DAVID: Nice, nice.
LAURA: So Congress changed FECA again in 1979, reducing the disclosure requirements and allowing the national parties to spend money on “get-out-the-vote” drives and other “party-building activities.” And unlike individual candidates, the national political parties were allowed to raise unlimited amounts of cash for these programs — including from corporations.
DAVID: When you say “party building,” I’m imagining convention centers filled with campaign buttons, American flag-colored kazoos and lunatics wearing those Uncle Sam hats while yelling “Four more years.”
That seems pretty harmless, no?
LAURA: Sure, but that’s not really what this “soft money” was for — it couldn’t be used to directly promote a candidate, but the line between that and the legally-allowed “party-building activities” was pretty thin. It was another pretty big loophole. It’s complicated stuff, so I talked to Trevor Potter, who understands campaign finance inside and out.
TREVOR POTTER: What developed was this work around, this make believe world where corporations would give money directly to the party committees, which would be used in federal elections, but it would somehow comply with the law because it said it wasn’t for candidates.
DAVID: Trevor Potter was the Chairman of the Federal Election Commission. He was also general counsel to John McCain’s 2000 and 2008 presidential campaigns. And he’s currently the president of the Campaign Legal Center.
LAURA: Potter told me that the key to all this was the fiction of what were called “independent expenditures.” Back in 1976, with the Buckley case, the court protected unlimited spending on elections, as long as the spender was “independent” and did not directly coordinate the spending with specific candidates. And then there was one other loophole —something called “sham issue ads” or “issue advocacy.” The Buckley decision said that campaign ads couldn’t be regulated as long as they avoided some “magic words.”
“GHOSTBUSTERS”: What is the magic word, Mr. Venkman? Please.
LAURA: Nope. Try again.
DAVID: Wait, wait, I know.
“BEETLEJUICE”: Beetle…juice?
LAURA: Glad you only said that once, but no.
MUSIC: Abra, abracadabra…
LAURA: Good try, but not quite. The Buckley decision had this footnote –- footnote 52 –- that listed them –- it’s stuff like “vote for,” “elect,” “support,” “vote against,” “defeat,” “reject” — you get the drift. As long as those magic words weren’t invoked, political parties or PACs could raise and spend unlimited amounts of corporate money on ads supporting or attacking any political candidate. Here’s Trevor Potter again.
TREVOR POTTER: Money was being spent right before the election for ads that said, “Candidate Smith has voted twice to raise your taxes and has voted to let murderers out of jail. Call Candidate Smith and tell him you disagree with him.”
LAURA: Here’s probably the most famous example, the infamous Willie Horton ad from the 1988 presidential contest between the Democratic Governor of Massachusetts, Michael Dukakis, and Republican Vice President George H.W. Bush.
ARCHIVAL CAMPAIGN AID: Bush and Dukakis on crime. Bush supports the death penalty for first-degree murderers. Dukakis not only opposes the death penalty, he allowed first degree murderers to have weekend passes from prison. One was Willie Horton, who murdered a boy in a robbery, stabbing him 19 times. Despite a life sentence, Horton received ten weekend passes from prison. Horton fled, kidnapped a young couple, stabbing the man and repeatedly raping his girlfriend. Weekend prison passes — Dukakis on crime.
DAVID: That Willie Horton ad famously changed the course of the entire 1988 election, and represented the kind of “independent” spending that became huge in the 1980s and into the 1990s, just as the master planners wanted. It became a way to legally bribe members of Congress, who were basically selling access in order to raise enough money for their campaigns, and to get other “independent” groups to spend big on their behalf.
TREVOR POTTER: You would have written invitations that would say, you know, come speak to the leader or the committee chair of the Tax Writing committee, $10,000 for breakfast. Or give $50,000 to the RNC and have access to leadership retreats and at least two meetings a year with X or Y. And you saw that on both sides.
DAVID: Hang on. This sounds like the kind of access that Charles Keating had bought for himself - the kind of thing that was at the center of that huge scandal, right?
LAURA: Exactly. Most of the 1990s were like one big Keating Five scandal, only I’m not sure you can call it a scandal when it was kind of the political norm. Everyone was in on it — Republicans and Democrats — because that was the only way to successfully run for office. These were the waters they were swimming in. But it did not sit well with Senator McCain — a point he made to reporters right after he finished testifying about Keating to the Senate Ethics Committee.
ARCHIVAL CONGRESSIONAL HEARING (JOHN MCCAIN): I think we need to have campaign finance reform. I’ve felt that for a long time –- this problem probably reemphasizes it.
TREVOR POTTER: And so McCain’s concern was shared by others, was that you were actually selling meetings with the leadership of Congress for a specific price. And those meetings weren’t there to talk about golf or the weather. The meetings were there very specifically for someone to say I have a problem with the bill and the Commerce Committee. I’m hoping that you’ll be able to do something about whatever the issue was with their industry.
DAVID: Companies would buy access and lobbying opportunities through soft money and the prospect of future independent expenditures, essentially asking, “How much do we have to pay to see the right people?” And once those companies had ponied up piles of cash, it’s no surprise that many members of Congress would feel indebted to them.
TREVOR POTTER: The allegation was there was a meeting of the Republican caucus. And there was talk about a bill that would have regulated the tobacco companies and the Republican leader said, “We can’t bring that up. They just gave us a huge contribution,” and that was the feeling that companies, by giving contributions, were buying protection and that the leadership would in fact try and protect them as a result of the contribution. So that was getting very close to a sense of legalized bribery.
DAVID: Buying protection — it sounds like the mafia! So thanks to the master plan’s FECA loopholes and the Supreme Court rulings of the 1970s, politics wasn’t getting any cleaner. In fact, corruption was getting so flagrant and so rampant that the American political system was becoming a joke. Congress was basically a laughingstock and a national disgrace, and McCain had had enough. In September 1995, McCain took the campaign finance lessons he said he’d learned from the Keating Five experience and jumped into action, announcing new legislation on the floor of the Senate.
ARCHIVAL CONGRESSIONAL HEARING (JOHN MCCAIN): This legislation is intended to help restore the public’s faith in the Congress and the electoral system; to reaffirm that elections are won and lost in a competition of ideas and character, not fundraising.
DAVID: McCain introduced the Senate Campaign Finance Reform Act of 1995, co-sponsored by the junior Senator from Wisconsin, Democrat Russ Feingold. It called for limits on soft money, eliminating PACs from federal election activities, and amending FECA to strengthen election spending limits — a direct challenge to the master planners’ previous win in the Buckley case.
LAURA: And like any good Washington couple, McCain and Feingold also announced their political intentions in a newspaper op-ed, calling for limits on soft money. It seemed like the dawn of a new era… and then it died in the Senate in 1996.
DAVID: The two senators got a second bite at the apple when information about the excesses of the 1996 presidential campaign came out. That presidential election alone saw an influx of over 260 million dollars of soft money, and a flood of sham issue ads like the one we heard earlier. The pay-to-play culture that the master planners had created was on full display — the election prominently featured an incumbent president who rented out the Lincoln Bedroom to his Democratic donors. The media had a field day.
ARCHIVAL NEWS FOOTAGE: President Clinton today insisted the Lincoln Bedroom in the White House was not for sale. The Lincoln bedroom was never sold. That was one more false story we have had to endure. But White House documents, some in the President’s own handwriting indicate the Lincoln Bedroom was at least on the market to major political donors.
DAVID: Not surprisingly, the public was aghast. Polls from that time period showed that 90 percent of Americans thought campaign finance regulation should be overhauled or better enforced. Seizing the moment, McCain and Feingold introduced another version of their bill in January 1997. Senator Mitch McConnell — who public interest groups had taken to calling the Darth Vader of campaign finance reform — took a special interest in the bill. McConnell saw money as instrumental to success in politics; he’d said as much in lectures he gave when he taught law back in the 1970s. More money meant an increased chance at winning and McConnell liked to win. He also borrowed from the playbook of master planners Ralph Winter and John Bolton, who argued in the Buckley case that money was a constitutional freedom — and that restricting money was the same as restricting speech.
LAURA: So McConnell had it out for this bill from the start. In one legislative session, he took reams of newspaper and magazine articles criticizing McCain-Feingold and put them into the Congressional record, and then he followed those up with correspondence from the ACLU which claimed that the bill violated the First Amendment.
ARCHIVAL CONGRESSIONAL HEARING (MITCH MCCONNELL): Mr. President, I ask unanimous consent that four letters from the American Civil Liberties Union, outlining the constitutional infirmities of the McCain-Feingold bill be printed in the record.
DAVID: The bill died in the Senate again in 1998 after it failed to garner the 60 votes needed to defeat a McConnell filibuster.
At this point, McCain had been on the political money reform mission for three years with zero success. He’d alienated himself from his own party leadership, not to mention big corporate donors. The system was too entrenched, too powerful. A typical politician would have dropped this no-win issue like a bag of flaming shit, but if McCain was known for anything, it was for being stubborn.
LAURA: So, a year later, in 1999, he announced his plans to run for the Republican Party’s presidential nomination — and he decided to make campaign finance the centerpiece of his platform.
ARCHIVAL CAMPAIGN SPEECH (JOHN MCCAIN) The opponents of campaign finance reform will tell you the voters, particularly Republican voters, don’t care about this issue. They are wrong. Most Americans care very much that the Lincoln Bedroom has become a Motel 6, where the president, the United States, serves as a bellhop.
DAVID: That’s amazing. God, inject that straight into my veins. Here’s Trevor Potter again.
TREVOR POTTER: Senator McCain continued to want to talk about corruption in Washington, money in politics, the importance of limits and transparency, and his staff were highly unenthusiastic, saying no one cares this, you know, this is your issue in Congress. But it will not resonate with voters on the campaign trail.
DAVID: They told him he should talk about the economy. But, in true John McCain fashion, he’d made up his mind and he wasn’t going to let his staff deter him. He was going to take on what he called “the iron triangle” — special interests, campaign finance and lobbying.
TREVOR POTTER: And so he got to New Hampshire, where they have all these town hall meetings and you take lots of questions and the staff was amazed to discover that this issue was really important to voters, they wanted to talk about it. They were excited about it. And so the whole sort of McCain the reformer really developed in that campaign because he got such public support for this issue.
Here’s one of those voters at a New Hampshire town hall:
ARCHIVAL TOWN HALL FOOTAGE: My question, however, sir, is you have pushed very, very hard to eliminate soft money. And I wish you would define soft money and see what we can do to get rid of it. That’s an abomination on American politics.
DAVID: But McCain had his work cut out for him in this primary. His opponent — George W. Bush — was the descendant of a storied, wealthy New England family, the grandson of a former senator, the son of a former president, the governor of a wealthy oil state, and a millionaire in his own right. In other words, Bush was the well-connected, big-money candidate. His campaign created a network of family, friends, and associates… each of whom pledged to get at least 100 of their friends and associates to give the maximum donation allowed — $1,000. OK, $1,000 times 100. That’s a lot of zeroes. There we go, okay –- anyone who met this $100,000 fundraising goal was known as a Bush Pioneer. As reporters pointed out, the strategy seemed extremely successful.
ARCHIVAL NEWS FOOTAGE: We learned today that the governor of Texas, George W. Bush has raised more money than any other candidate has ever raised.
DAVID: More than 500 people signed up and records from Bush’s campaign show that they were able to raise close to $25 million by mid-March 2000. That same month, at the final Republican primary debate in Los Angeles, McCain went hard at Bush — trying to turn Bush’s money advantage into a liability by painting him as the personification of the corruption that McCain was fighting.
ARCHIVAL DEBATE FOOTAGE (JOHN MCCAIN): Governor Bush just said that he wants unlimited contributions from individuals. Maybe that’s — explains why there have been the sleepovers in Austin at the governor’s mansion by the Pioneers.
DAVID: McCain had so effectively raised the issue of campaign finance that, in response, Mr. Moneybags himself — George W. Bush — had to pretend that he, too, was outraged by corruption.
ARCHIVAL DEBATE FOOTAGE (GEORGE W. BUSH): You talk a lot about the iron triangle, and you’re ringing it like a dinner bell with all of those fundraisers with lobbyists in Washington, D.C.
DAVID: McCain tried to clap back.
ARCHIVAL DEBATE FOOTAGE (JOHN MCCAIN): By the way, George, if I am ringing it like the dinner bell, you have got both feet in the trough….
DAVID: For as much money as Bush was raking in, he was also spending like crazy to keep the McCain campaign at bay, after McCain’s anti-corruption message had powered him to a huge upset victory in the New Hampshire primary. By the time that debate in Los Angeles took place, the Bush campaign had already blown through close to $70 million, just to win the Republican nomination. And that didn’t include the money that other groups were covertly spending on Bush’s behalf. Here’s Trevor Potter again.
TREVOR POTTER: There was a group called Republicans for Clean Air that was a phony organization. A couple of Texas billionaires established an entity which then ran ads with pictures of belching smokestacks, saying that John McCain was in favor of pollution…
ARCHIVAL CAMPAIGN AD: Last year, John McCain voted against solar and renewable energy.
TREVOR POTTER: …and they tried to do this while hiding who they were…
DAVID: These billionaires were using the so-called “independent expenditure” loophole that McCain had been railing against — and the sham of it seemed to underscore McCain’s whole critique. These unregulated ads were allowed to be aired because they were supposedly “independent” but they were funded by two billionaire pals of George Bush, including one who was a Pioneer. I have a hard time believing that, right before Super Tuesday, the Bush campaign had no clue about those ads. So did McCain.
TREVOR POTTER: So McCain said that violated existing law because you can’t make an independent expenditure if you’re actually coordinating with the campaign and part of their strategy. So those sorts of incidents left McCain more determined than ever to reform the campaign finance laws.
DAVID: Ultimately, the amount of money that Bush’s campaign spent was overwhelming and after Super Tuesday, McCain dropped out of the race.
ARCHIVAL CAMPAIGN SPEECH (JOHN MCCAIN): Therefore, I announce today on this fine Arizona morning and in this beautiful place that I am no longer an active candidate for my party’s nomination for president
DAVID: Now, most people come off of a failed presidential bid and kind of disappear for a while to lick their wounds and soothe their egos. But John McCain’s campaign had resonated with people — really resonated. He was popular and the issue of campaign finance reform had struck a chord.
TREVOR POTTER: McCain came back to the Senate as somebody of increased stature, that he had made campaign finance reform a centerpiece of his campaign and almost won on that issue, he had faced a candidate who in some ways embodied what McCain was trying to stop this secret money.
DAVID: McCain may have been out of the race but because he’d succeeded in making campaign finance reform a national issue, even Bush had to explicitly say he supported reform.
GEORGE W. BUSH: If I’m the president, John is there carrying a reform package, the fact that he has a president helping him would enable him to advance an agenda that he thinks is important and I think is important and that’s banning corporate and labor union’s soft money from politics. That would be a major reform.
DAVID: So McCain doubled down and used his newfound political popularity and power as leverage to make yet another push on campaign finance reform. On January 22, 2001, two days after popular vote loser George W. Bush was installed as president, John McCain and Russ Feingold introduced a new version of McCain-Feingold — the Bipartisan Campaign Reform Act of 2001 — or BCRA. Really rolls off the tongue…
Among other things, BCRA prohibited political parties from raising or spending any money that wasn’t subject to the federal limits laid down by FECA. It also required campaigns to disclose where their money came from and where it was spent. And it put limits on when those scammy issue advocacy ads could be run. In short, it pushed for all the things the master planners hated — radical things like “disclosure” and “spending limits”.
And the master planners were pissed.
ARCHIVAL CONGRESSIONAL HEARING (JOHN MCCAIN): Today we confront yet again a very serious challenge to our political system, and it will take the best efforts of every public-spirited American to defeat it. We must pass campaign finance reform legislation.
DAVID: It was 2001. McCain had lost his bid for the presidency but polls showed overwhelming popular support for campaign finance reform, a message he continued to hammer home at every opportunity. However, despite senators from both parties supporting McCain’s bill, Democratic and Republican party bosses were not happy about it.
Part of the reason that McCain got branded a “maverick” during his presidential campaign was because he was pushing for something that was deeply unpopular with the leadership of both parties. Campaign committees depended on the loopholes that McCain wanted to close. If TV ads had been pricey back in 1986 when McCain took his whistle stop tour through Arizona, they were considerably more expensive in the new millennium.
In the 2000 presidential race, the Republican and Democratic National Committees used almost $80 million to buy political ads for their respective candidates. Most of it was that unregulated soft money. If they couldn’t get cash from their corporate and union donors, the campaigns would be dead in the water. Plus, as flawed as it was, everyone in the Washington swamp understood how the system worked. Neither side really wanted a change.
TREVOR POTTER: What was interesting about the congressional dynamic is that you had the Republican leadership opposed to McCain-Feingold –- BCRA –- quite publicly. So the question always was, we knew the Republican leadership would oppose it — would the Democratic leadership try to find ways to sabotage it without having fingerprints on it?
DAVID: Politicians aside, the voting public was very much on board with this bill, and people were particularly outraged by a new scandal that was being heavily reported in the media — the fraudulent actions of a company called Enron.
ARCHIVAL NEWS FOOTAGE: Enron had grown into the seventh largest company in the country ahead of IBM and AT&T. But the energy trading business was undone by murky accounting and growing doubts about its finances.
DAVID: Now, the Enron debacle was a huge business scandal — but it also intersected with campaign finance. The company had been a large and prominent donor to the Republican party — especially its CEO, Ken Lay. Ken — or ”Kenny Boy” to George W. Bush — had been palsy-walsy with Bush when he was governor, sending him letters, Christmas cards, CDs of Hootie and the Blowfish… while also making suggestions on how Bush could help his company Enron.
Kenny Boy was also a Pioneer and one of Bush’s earliest donors. But perhaps more importantly, when Enron collapsed, McCain pointed to it as proof that campaign finance reform was needed now more than ever.
ARCHIVAL INTERVIEW FOOTAGE (JOHN MCCAIN): The Enron situation, this isn’t just a financial scandal but that the millions and millions of dollars that Enron, their executives gave to in so-called soft money that we’re trying to ban is having an effect.
DAVID: By February 2002, a Gallup poll came out showing that over 70 percent of Americans supported the idea of new campaign finance legislation. McCain knew he had a simple majority in the Senate but the question was whether or not he could get the 60 votes needed to beat a filibuster — which he knew was coming, because Senator McConnell, the Darth Vader of campaign finance reform, was determined to stop the bill.
ARCHIVAL CONGRESSIONAL HEATING (MITCH MCCONNELL): Mr. President, I say to the majority leader, Senator McCain, and Senator Feingold, who have labored so long on behalf of this legislation, if there were an effort to unduly delay the bill, it would probably be led by myself.
DAVID: As the Senate prepared to vote on March 20, 2002, McConnell made a last ditch effort to try to prevent its passage. He spent over an hour on the Senate floor, maintaining a straight face while criticizing the bill as an infringement on free speech and denying that campaign money corrupts Washington.
ARCHIVAL CONGRESSIONAL HEATING (MITCH MCCONNELL): Although the facts about the provisions of this bill are almost always misrepresented, the driving mantra behind the entire movement is that we are all corrupt or that we appear to be corrupt. You cannot have corruption unless someone is corrupt. At no time has any member of either body offered evidence of even the slightest hint of corruption.
DAVID: No corruption, huh? There had been Abscam and the Keating Five and the Lincoln Bedroom and the Bush Pioneers… and then Mitch McConnell is on the Senate floor saying this right in the middle of Congressman James Traficant being indicted on federal corruption charges for personal use of campaign funds. Just weeks after this statement by McConnell, Traficant was convicted of ten felony counts of tax evasion, racketeering, and bribery. Is that enough of a hint for you, Mitch? The public sure thought so. And so, on March 20, 2002, with senators facing pressure from voters in their districts, the bill squeaked through the Senate with a vote of 60 to 40. McCain expressed his happiness with the outcome.
ARCHIVAL NEWS FOOTAGE (JOHN MCCAIN): I’m very happy. I’m grateful for friends like Russ Feingold and Chris Shays and Marty Meehan and so many other people that were so helpful in this effort. And yes, it’s a good day. I feel good. And I think we have a lot of other reforming to do
DAVID: McCain’s crusade against the master plan had taken more than a decade, from the Keating scandal to legislation to his presidential campaign and now, finally, to campaign finance reform becoming law. Let us pause here for a moment to let McCain take a victory lap.
ARCHIVAL CAMPAIGN AD: He’s for Arizona and America!
DAVID: Historians would place this new legislation in the same “win” column as the Tillman Act of 1907 and FECA in the 1970s — a moment when the American political system sought to self-correct against out-of-control corruption.
This hard-won victory should be the end of this part of the story, but after the break, the master planners try to fight back.
Like I said before, passing McCain’s bill was a really big deal, on par with other campaign finance victories of the past. It must have had President George W. Bush celebrating, right? I mean, after all, right after McCain ended his primary campaign in 2000, Bush said he supported the legislation. So when the bill passed, what was the reaction by Bush and his White House? Trevor Potter again.
TREVOR POTTER: He did sign it, as I recall, virtually in the middle of the night in private. No signing ceremony, no McCain standing next to him. So I think that tells you how he felt.
DAVID: President Bush quietly signed the Bipartisan Campaign Reform Act into law on March 27, 2002. But he let his true feelings be known in the White House’s written press release. There was the obligatory verbiage about being happy to sign the bill, but at the end, there’s a caveat. Since he didn’t make an actual speech, listen to our very bad George W. Bush impersonator read the key passage.
GEORGE W. BUSH IMPERSONATOR: “When individual freedoms are restricted, questions arise under the First Amendment. I also have reservations about the constitutionality of the broad ban on issue advertising. I expect that the courts will resolve these legitimate legal questions as appropriate under the law.”
Here it is… remember back in 1974, when President Gerald Ford was basically forced into signing the FECA amendments after Watergate? Here’s what Ford said in his press release, as read by our very bad Gerald ford impersonator:
GERALD FORD IMPERSONATOR: “And although I do have reservations about the First Amendment implications inherent in the limits on individual contributions and candidate expenditures, I am sure that such issues can be resolved in the courts.”
DAVID: There’s a joke in here about history repeating itself but I’m tired of making it. Bush’s caveat was a wink and nod to McConnell, who had already stated publicly, in the Senate, that if the legislation passed, he was going to take the matter to court.
ARCHIVAL CONGRESSIONAL HEARING (MITCH MCCONNELL): After a decade of making my constitutional arguments to this body, I am eager to become the lead plaintiff in this case and take my argument to the branch of government charged with the critical task of interpreting our Constitution.
DAVID: George W. Bush probably hadn’t even finished capping his pen after signing the new law before Senator “Darth McConnell” assembled his legal team.
Much like the Buckley case in our last episode, McConnell was joined by a collection of strange bedfellows including the National Rifle Association, the National Right to Life Committee, the U.S. Chamber of Commerce, the California Democratic Party, and the ACLU. This was all familiar to Roger Witten, the Watergate prosecutor who we heard from in Episode 2. Witten knew that judges would look at what lawmakers were saying about the bill when it passed. So he teamed up with McCain and Feingold to create ammunition that would defend it in court — here is Witten explaining the strategy.
ROGER WITTEN: We beefed up the legislative history by writing speeches for the senators and congressmen to give which would put into the record, facts that we thought we would want to rely on in the court litigation, and we provided materials and studies and polling and other evidence to bolster the legislative record.
DAVID: As they constructed their defense of the new law, Witten would sometimes meet with Senator McCain in his chambers while he was on his lunch break.
ROGER WITTEN: It was always the same lunch — bacon, lettuce, and tomato sandwich, which he salted. The only person I know who salts bacon. And he concentrated very hard for fifteen or twenty, twenty-five minutes — whatever it took — and we were off.
DAVID: Witten and McCain knew McConnell’s assault in court would rehash the same old tune that the master planners had been calling since the days of Buckley v. Valeo.
ROGER WITTEN: Basically their pitch was money is speech and this law restricts money and so it restricts speech and so the first amendment frowns on it.
DAVID: The court battle felt like the NBA playoffs…of campaign finance cases. How much of John Tesh’s Roundball Rock can we play without getting sued?
*MUSIC*
DAVID: Close enough. God I love that song. The conference finals were played on a lower federal court — get it? — in Washington D.C. And there, McCain’s team prevailed.
But McConnell and his team appealed, so the two teams progressed to the championship round …squaring off against one another at a Supreme Court led by Chief Justice William Rehnquist.
ARCHIVAL SUPREME COURT AUDIO (WILLIAM REHNQUIST) We’ll hear argument now in the Bipartisan Campaign Reform Act cases.
DAVID: Of the nine justices on the bench, seven had been appointed by Republican presidents — Nixon, Ford, Reagan, and George H.W. Bush. Bill Clinton had appointed the other two justices during his first term. McConnell’s side was represented by an all-star group of big name lawyers. A 5’9” graduate of Yale University, guard Floyd “Laddie” Abrams… At 6’0” from the University of Florida, forward James “Blitzkrieg” Bopp… And standing 6” tall, from Duke University, the master of disaster, the one the only, Kenneth Starr. I always wanted to be an NBA announcer.
This was a squad that came to be known as the Dream Team. Floyd Abrams had represented the New York Times during the 1972 Pentagon Papers case and would later be involved in Citizens United.
James Bopp was one of the conservative legal movement’s most potent secret weapons –- we’ll be hearing about him in a later episode. And Ken Starr had led the various investigations into Bill Clinton and would later join Donald Trump’s legal team during his first impeachment trial. Starr was lead attorney for the plaintiffs. Starr tipped off the game by saying that the reform law was…
ARCHIVAL SUPREME COURT AUDIO (KEN STAR): …not only a Federal intrusion into state and local activity, but a significant diminution in speech and associational activity by parties, activity that lies at the very core of the First Amendment.
DAVID: Okay I know, legalese isn’t as exciting as playoff basketball. Stick with me here. Like pretend each syllable is a dunk. But while McConnell may have assembled the Dream Team, the lawyers on McCain’s side were no slouches. There was Roger Witten, who we mentioned before, but also Seth Waxman, the former solicitor general under President Clinton, who at that point had argued 34 cases in front of the Supreme Court and made this case –- McConnell v. FEC — his 35th.
ARCHIVAL SUPREME COURT AUDIO (SETH WAXMAN) It’s a challenge that this Court has recognized that the imperative of a representative democracy to retain the confidence of the individual citizens with whom we all share the franchise, that big money doesn’t call the tune.
DAVID: The justices’ questions gave no hint as to which way the Court was leaning. An earlier ruling, in 1996, had struck down a regulation that prevented parties from using soft money to support their candidates, which did not bode well for McCain’s side.
In keeping with our ridiculous basketball metaphor, nobody knew how this one was going to go in the final moments of the game. And then the court released its decision. In a 5-4 vote, the Republican-stacked Supreme Court went for… John McCain and against the master plan.
In a 300-page opinion, the Court upheld the ban on soft money and limits on sham issue ads. Here’s Justice Rehnquist, reading the opinion on December 10, 2003.
ARCHIVAL SUPREME COURT AUDIO (WILLIAM REHNQUIST) The joint opinion concludes that this prohibition is an appropriate response to Congress’ legitimate concerns with preventing the actual and apparent corruption threatened by large soft money contributions and preserving the integrity of the federal election process.
DAVID: In essence, the Court agreed that if money is speech, then putting some restraints on speech was justified in order to counteract the decline in citizen participation and citizen faith in American democracy. This was a high water mark for those trying to prevent the wealthy from polluting elections with money. It was a moment to celebrate. But even Roger Witten knew it might not last.
ROGER WITTEN: We had foreboding for sure. We didn’t know whether it be sooner or later, but we thought the empire would strike back.
DAVID: But how exactly would the empire strike back? A Republican-dominated Supreme Court had just delivered a clear blow against the master plan to legalize corruption. What could possibly change?
ARCHIVAL SWEARING-IN CEREMONY FOOTAGE (GEORGE W. BUSH): Judge Roberts, thank you for agreeing to serve our country and for accepting this new call to duty, And now I ask senior associate justice of the court, Justice John Paul Stevens, to step forward and please administer the oath…
DAVID: That’s next time, on Master Plan.