THE ART OF DECEPTION
In the decades following World War II, Republican administrations sought to dismantle the "creeping socialism" of the New Deal. By the 1970s, the American system appeared to be heading in an unmanageable direction. The nation began to plunge into a deep malaise. The Vietnam War was just winding down; the nation was faced with double digit inflation and high unemployment; crime was on the upswing; and a proliferation of the nuclear arms race continued. It appeared as if Carter could not be elected in 1980. Behind in the polls just one month prior to the Presidential election, Reagan and Bush orchestrated the October Surprise, pressuring Ayatollah Khomeini to keep the 52 American hostages in Iran until after the November election. With the hostages still in Teheran, Carter's popularity waned, assuring the Presidency for Reagan.
The largest number of voters, 38 percent, chose Reagan because "it was time for a change," while a mere 11 percent voted for him because "he is a real conservative." Thus, Reagan, along with a Republican Senate which backed him for six of his eight years in office, was able to launch his revolution. The Reagan-Bush administration quickly moved to inflict enormous damage upon the nation's working class and its poor, while corporate America received a boost.
Reagan's specifics were clear. He promised to cut the deficit by cutting programs in order to balance the budget. He slashed almost every social program by $140 billion in his first term, slashing spending for health, education, senior citizens, pregnant women, welfare, and the environment. Reagan also promised tax cuts of $196 billion, primarily for the wealthy, and still informed the public that he would balance the budget. He claimed that these cuts would not hurt the poor because of comparable reductions in income taxes. To the contrary, it was this segment of society which was impaired the most. The Congressional Budget Office reported that 23 percent of all families, earning under $10,000 annually, would gain $120 in tax cuts, but they would also lose $360 in benefits. On the other hand, the richest 1 percent of families lost an average of $120 in benefits, but they gained a enormous $15,250 in tax cuts. In the mean time, unemployment increased and 16 million Americans lost health insurance.
On the other hand, he increased defense spending by nearly $200 billion in the same time period, giving the Pentagon a virtual blank check. Military spending skyrocketed out of control, and so too did the national budget, soaring nearly 300 percent to almost three trillion dollars in eight years. This left him with the legacy of being the biggest spender in the country's history. When Reagan moved into the White House, the national debt was $907.7 trillion which had been slowly accumulated over 190 years. This averaged out to a debt of under $50 billion per year. By the time Reagan left the White House eight years later, the debt had skyrocketed to $2.86 trillion, an increase of $1.89 trillion or an increase of $236 billion for each year he was in office.
In foreign affairs the Reagan administration regressed from a period of detente back to a chilly cold war with the Soviet Union. Reagan were frequently referred to them as the "Soviet empire." In the 1980s, the Soviet Union asked for another set of INF talks. They prepared to make severe concessions, all of which were rejected by Reagan. Brezhnev unilaterally supported a no first-strike nuclear pledge and repeatedly asked the United States to do the same. The Soviet delegation offered to reduce medium-range missiles in Europe from 600 to 162. Additionally, they unilaterally froze the deployment of SS-20 missiles, while urging the United States not to deploy cruise and Pershing 2 missiles in Western Europe. They proposed a cutback in both countries' land-based intercontinental missiles by 25 percent. Finally, the Soviet Union unilaterally placed a moratorium on nuclear testing and urged the United States do the same.
Yet, the Soviets did not consider the hundreds of French and British intermediate range missiles, which were capable of reaching their territory from Western European land, sea based missiles and bombers. With all the concessions the Soviet Union made to the United States, their proposals were not accepted by the Reagan administration.
Reagan waged several wars in Latin America including one which continued into Bush's administration. The contra war against the democratic Sandinista government in Nicaragua resulted in several indictments of high level White House officials. In addition, scandals involving top level government officials engulfed the Reagan administration. Corruption ran rampant and the corporate profits and salaries of executives soared, while working class wages dropped. Fraud moved into several government agencies. More than 100 Reagan administration officials faced allegations of questionable activities. Many resigned and others faced criminal charges.
On the domestic front, the political action committee (PAC) money escalated in the 1980s and added to charges of corruption. Since 1925, laws made it illegal for corporations and labor unions to contribute money to candidates, but such legislation was unenforceable. Then the infamous Watergate scandal surfaced in 1972, and two years later Nixon was forced to resign. In the wake of these revelations, Congress was forced into enacting sweeping campaign reform laws, and the six- person Federal Election Act was created in 1974. This established the Federal Election Commission (FEC). Tougher restrictions on political spending were implemented, and a more responsible system on public financing of Presidential campaigns was put into place.
With the influence of corporations and to some extent labor unions severely impeded, the corporate world looked for a new means to enable itself to continue funneling money into the bank accounts of their favorite candidates. Even though each corporation and labor union could establish only one PAC to provide funds to a least five candidates, hundreds of other special interest groups could also establish PACs to contribute money to the same candidates. Thus, the chance of electing candidates to office was greatly enhanced. In addition the law also set up limits of how much an individual could spend on his or her own campaign. However, the Supreme Court struck down limitations on "soft" PAC money, that is, contributions which go directly to a particular political party -- not to a specific candidate. The high court ruled that the right to run for office and to express one's opinions included the right to spend an unlimited amount of his of her own money.
One year into Reagan's first term PACs contributed $55.3 million to candidates, hoping that they would be elected and would return favors to them. Candidates elected to Congress received one- third of their war chests in PAC contributions. By 1982, PAC money increased to $83.6 million, and in the Congressional elections two years later, PAC contributions topped $100 million. By 1994, PACs helped "buy" Congressional candidates by turning over an excess of $200 million.
PAC contributions invariably assured victory for Congressional candidates. The newly elected candidates frequently reciprocated by voting for bills which were beneficial to the PACs. For example, in the early 1980s, the House voted to raise dairy price supports throughout the United States, and proponents of the bill received nearly six times more money from dairy PACs than did those members who opposed such legislation.
In his eight years in the White House, Reagan carried out a continuous attack on the environment. On several occasions, he displayed his ignorance as well as his disdain for ecology. While campaigning in 1980 he stated, "80 percent of our air pollution stems from hydrocarbons released by vegetation, so let's not go overboard in setting and enforcing tough emissions standards from man-made sources." On another occasion, he stated that "trees cause pollution."
As Reagan whittled away at environmental laws, Congress subpoenaed his EPA documents in 1983. In a televised news conference, he said "he will never invoke executive privilege if there's suspicion in the minds of the people that maybe it is being used to cover up some wrong-doing." The next day, White House spokesperson Larry Speakes denied that he had made that statement and that his records would be submitted to the Justice Department.
Corruption ran rampant in many government agencies. In the Department of Commerce, James Watt was a fiercely anti-environmentalist who protested federal control over the rich mineral and timber resources in the western states. Additionally, Watt set out to cripple the EPA and to permit oil drilling in scenic areas. After telling an off-color ethnic joke in 1983, Watt was forced to resign. He described members of a federal advisory panel as "a black ... a woman, two Jews, and a cripple."
Corporate fraud spilled over to Housing and Urban Development (HUD). Billions of dollars were channeled into the private sector, as developers, banks, and speculators profited. All this was occurring while HUD provided very few homes for the needy. For example, in the late 1980s a Palm Springs, California developer was given millions of dollars to build low-cost housing for the poor. However, very few poor families migrated to this expensive community. Also, a New Jersey developer embezzled millions of dollars in the late 1980s. Between 1981 and 1986, $17 billion was cut in HUD funds for public housing.
While in the Reagan administration, Secretary of Interior Watt was indicted on 41 felony charges for using his HUD connections to help his clients seek federal funds for housing projects in Maryland, New Jersey, Massachusetts, Puerto Rico, and the Virgin Islands. Watt conceded that he had received $500,000 from clients who were granted very favorable housing contracts after he intervened. He also was given $100,000 for a project in Puerto Rico. Testifying before a House committee Watt said, "That's what they offered, and it sounded like a lot of money to me, and we settled on it." After over ten years of investigation, Watt was sentenced to five years of probation and 500 hours of community service for withholding documents from a grand jury which investigated HUD in March 1996.
Corruption spread to the EPA. Anne Burford, who headed the superfund of the EPA, resigned after she bent environmental regulations for dozens of industrial polluters. One of Burford's subordinates, Rita Lavelle, headed the EPA's toxic waste clean-up program. She was indicted and served three months in a federal penitentiary for lying to Congress. She was able to clean up only a small handful of the nation's thousands of toxic waste sites. In addition, EPA administrator, John W. Hernandez, resigned after his staff disclosed that he illegally allowed Dow Chemicals to review a report which named it a dioxin polluter. Assistant EPA administrator John Horton was dismissed for using government employees for private business. Matthew Novick, EPA Inspector General, was fired after he used government officials to work on private business. Theodore Olson, Assistant Attorney General of the United States, was under investigation for obstructing justice in the investigation of the EPA. EPA General Counsel Robert Perry resigned after improper participation in a settlement which involved a former employer. John Tudhunter, assistant EPA administrator, resigned after being accused of meeting privately with chemical company lobbyists. Additionally, the Reagan administration sold and leased billions of dollars worth of coal and oil reserves, timber lands, and mineral reserves.
In addition, Reagan tampered with environmental laws in his crusade to bolster corporate profits. These included the effect which factory pollutants, originating in upper state New York, had on destroying Canadian forests, rivers, and streams. White House chief of staff Michael Deaver always denied Canada's allegations that sulfides from New York factories caused any harm to the environment. However, when Deaver left the White House, he immediately lobbied on behalf of foreign countries, in violation of The Ethics in Government Act which prohibits anyone for lobbying for one year after leaving a White House post. Deaver immediately he went to work for the Canadian government, being paid $105,000 to lobby for compensation from the United States for damage inflicted on Canadian territory from acid rain. Deaver also received $250,000 from Daewoo, a South Korean steel corporation, to market its product in the United States. Other foreign lobbyists included Ed Rollins, a member of Dole's campaign committee in 1995, and former Republican National Chairman Frank Fahrenkopf, were on the payroll as lobbyists for the Taiwanese government.
Also in 1982, lobbyists continued their assault on the consumer. Congress struck down a bill which would have required used car dealers to disclose known defects on vehicles to prospective buyers. The 286 House members, who voted against the bill, received five times more PAC contributions from used car dealers than did the 133 members who supported the legislation. And finally in 1982, the House passed a United Automobile Workers (UAW) bill which would have required only American automobile parts be used in American manufactured cars. The 215 House members, who supported the bill, received $1.3 million in PAC money from the UAW, 18 times more than PAC contributions which were given to those who opposed the legislation.
With the skyrocketing cost of health care, there have been several proposals to enact a national health care system. The American Medical Association (AMA) spent nearly $20 million in PAC money since 1980s to oppose any reforms. Along with the AMA, numerous health insurance corporations and HMOs contributed tens of thousands of dollars in PAC money to legislators in an effort to buy their votes as well. A national health care system would included the 22 percent of families with incomes below $25,000. A ceiling on all medical costs -- hospital stays, doctors' charges, and prescriptions -- would have been negotiated. However, PAC contributions influenced members of Congress to defeat this measure.
Universal health care also became a state issue, but corporate pressure prevented it from becoming a reality. For example in California, Proposition 186 would have provided health care recipients with essentially the same care but at a lower rate. Over two million dollars in PAC money rolled in, as disinformation was fed to the public to defeat the initiative. Residents of California would pay a mere 2.5 percent of their state income tax liability. This would have amounted to an average of approximately $500 to $600 per person every year. Even those who pay no taxes would have been covered. There would be no need to continue with Medicare and Medicaid. Thus, bureaucracy would be minimized, since the health insurance corporations would be eliminated. In short, the cost of health care would diminish; yet the private sector would still be left intact. Through a disinformation campaign by corporations, subsidized primarily by PAC contributions, Proposition 186 was defeated by nearly a two to one margin.
In the 1980s, the national budget accounted for annual chunks of approximately $100 billion a year for price supports as well as for bailouts of corporations such as Chrysler and Lockheed. Continental Illinois Bank itself received $7.5 billion in 1984. At the same time, small struggling farmers faced with foreclosure were ignored by the Reagan administration. Yet these numbers seemed minuscule after the savings and loan scandal was publicized.
Prior to 1982, federal chartered savings and loans were required to place almost all their loans in home mortgages which was quite stable and secure. Then the Reagan administration assumed a laissez faire approach to the banking system, resulting in the failure of hundreds of savings and loans. A new federal law allowed savings and loans to invest their money more freely. If they desired, they could place 100 percent of their money in speculative commercial real estate ventures. This was similar to what occurred during the speculative decade of the 1920s when many savings and loans gambled with their federally insured reserves and were forced into bankruptcy. Soaring interest rates in 1982 made millions of low- interest mortgages undesirable. This federal deregulation and the subsequent default of numerous banks had severe repercussions. One savings and loan institution which failed in the 1980s was Colorado's Silverado. George Bush's son, Neil, was appointed to the board of directors, and several years later the corporation declared bankruptcy. This one institution cost American taxpayers an estimated $1 billion. The massive bailout favored this corporate industry, while it was the taxpayer who bore the enormous cost. The initial projection in 1988 was that it would be as high as $100 billion to save this failing industry. However, by the mid-1990s that figure was readjusted to over $500 billion.
By the time Reagan left the White House and the smoke had cleared, a laundry list of government upper management officials had surfaced. Some of them included:
Anne Burford, Rita Lavelle, James Watt, and Michael Deaver.
Richard Allen, National Security adviser, who resigned amid controversy over a $1,000 honorarium after arranging an interview with Nancy Reagan.
James Beggs, chief administrator at NASA, who was indicted for defrauding the government while an executive at General Dynamics.
Guy Flake, Deputy Secretary of Commerce, who resigned after allegations of a conflict of interest in contract negotiations.
Louis Glutfrida, director of Federal Emergency Management Agency, who resigned amid allegations of misuse of government property.
Edwin Gray, chairman of Federal Home Loan Bank, who was charged with illegally repaying himself and his wife $26,000 in travel costs.
Max Hugel, CIA chief of covert operations, who resigned after allegations of fraudulent financial dealings.
Carlos Campbell, Assistant Secretary of Commerce, who resigned after charges of awarding grants to his friends' firms.
Raymond Donovan, Secretary of Labor, who was indicted for defrauding the New York City Transit Authority of $7.4 million.
John Fedders, chief of enforcement for the Securities and Exchange Commission, who resigned after charges of wife-beating.
Arthur Hayes, commissioner of the Food and Drug Administration, who resigned after being under investigation for illegal travel reimbursements.
J. Lynn Helms, chief of the Federal Aviation Administration, who resigned after a grand jury investigated illegal business activities.
Marjory Mecklenburg, Deputy Assistant Secretary of the Department of Health and Human Resources, resigned after allegations of irregularities on her travel vouchers.
Edwin Meese, Attorney General, was under investigation by a special prosecutor for his role in helping Wedtech Corporation.
Robert Nimmo, head of Veterans Administration, who resigned when a report criticized him for improper use of government funds.
Lyn Nofziger, White House aide, who was under investigation for his role in helping Wedtech Corporation.
J. William Petro, a United States attorney, who was fired and fined for tipping off an acquaintance about a forthcoming grand jury indictment.
Thomas C. Reed, White House counselor and National Security Council adviser, who resigned and paid a $427,000 fine for stock market insider trade information.
Emanuel Savas, Assistant Secretary of HUD, who resigned after he had assigned staff members to work on a book he was writing.
Peter Voss, Postal Service governor, who pleaded guilty to charges of expense account fraud and to accepting kickbacks.
Charles Wick, director of the United States Information Agency (USIA), who was accused of taping conversations with public officials without their approval.
In addition, charges were brought against several high level officials in regard to Iran-contra. Those included:
National Security Council advisers Robert McFarlane and John Poindexter
Secretary of Defense Casper Weinberger
Deputy Secretary of State Elliot Abrams
Colonel Oliver North of the National Security Council
Major Richard Secord of the National Security Council
Deputy Assistant to the President Jonathan Miller
CIA chief William Casey died before he was indicted.
Click here to read about Iran-contra and Reagan's involvement in Central America
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When George Bush was inaugurated in 1989, he inherited a national debt of $2.86 trillion. He continued on a spending spree to rank alongside Reagan as one of the two biggest spenders in American history. Four years later the debt had risen to $4.1 trillion, an average increase of $410 billion per year.
Not only did Bush continue massive spending on the nation's defense, but he continued on a war path as Reagan had done for eight years. The Reagan scandals spread on a wide scale through numerous government agencies. As vice president, Bush was a member of the National Security Council which carried out an illegal war against the Sandinista government in Nicaragua. As president, Bush built up Saddam Hussein's war machine in a scandal known as Iraqgate, and then he turned and waged war on Iraq in 1991.
Bush's first embarrassment involved a scandal which involved vice presidential nominee Dan Quayle just prior to the November 1988 election. However, nothing surfaced until after the election. In 1992 the New York Times ran an article about a 1988 incident involving a federal prisoner by the name of Brett Kimberlin and allegations that the Bureau of Prisons had tried to silence him for political purposes. The article reported that Kimberlin made allegations that he had sold marijuana to then vice presidential candidate, Dan Quayle, just prior to the 1988 election. When the press began to pay attention to those allegations, the Bureau of Prisons took a number of actions to silence him.
Approximately one month before the 1988 presidential election Brett Kimberlin, who was incarcerated in federal prison since 1979, talked to National Public Radio reporter Nina Totenberg about his allegations of selling marijuana to vice president Dan Quayle in the 1970's. Shortly thereafter, Totenberg, without disclosing Kimberlin as the source, asked the deputy press secretary of the Bush-Quayle campaign, Mark Goodin, to comment on the allegations. When Goodin declined to comment without more information on who was making the allegations, Totenberg provided a signed affidavit from Kimberlin.
On November 3, 1988, five days before the presidential election, NBC News asked the prison at El Reno, Oklahoma, where Kimberlin was incarcerated, for an on-camera interview with Kimberlin. The prison offered to schedule the interview on Wednesday of the following week, its regular scheduling day for media interviews. Because that day would be after the election, NBC asked that the interview take place before the election.
The prison released Kimberlin from detention the following day. He later attempted to give an interview to a group of reporters by telephone. Kimberlin was seized in his cell by six guards, handcuffed, marched to the detention unit in the cold, strip-searched and placed in a small cell. Prison officials issued the order, "No more calls for this inmate." This order has been described by El Reno officials as unusual. Kimberlin remained in administrative detention for a week until well after the election. A month later, when the press again began to pay attention to Kimberlin's allegations, the Bureau again returned him to administrative detention. The Bureau of Prisons violated prison rules in its effort to silence Kimberlin.
The Bush team's goal was to keep Kimberlin's allegations out of the 1988 campaign, since it obviously would have serious consequences. The most senior officials in the Bush-Quayle campaign --Jim Baker, Lee Atwater, Fred Fielding, Stu Spencer and Joe Canzeri, as well as Quayle himself -- knew about Kimberlin's allegations and his efforts to publicize them.
The House of Representatives Subcommittee on Oversight of Government Management attempted to investigate these allegations. The Justice Department denied them the right to interview key people under oath as to the facts pertaining to the cancellation of Kimberlin's press conference and his detentions by the Bureau of Prisons.
Congressman Newt Gingrich also served as a liability to Bush. In 1989, Newt Gingrich set up GOPAC (GOP Action Committee) to promote "the conservative philosophy of the Republican Party." Independent PACs could funnel as much "soft money" as they wished into the coffers of a political party, if the funds were not spent to promote the election of any specific candidate. However, Gingrich used GOPAC funds to bolster his war chest in the 1990 elections. According to the Federal Election Commission, Gingrich transferred $250,000 from GOPAC to his personal slush fund, and he was elected to the House by 954 votes. In addition thousands of GOPAC dollars have been spent to benefit corporate donors.
In 1990, the chairman of J.C. Nichols Company, a real estate firm, sent Gingrich $10,000 to be deposited in GOPAC. The check was accompanied with a letter from Nichols. It read, "The federal government is causing the J.C. Nichols Company a great deal of financial distress. This is in connection with federal regulations . . . It is costing my company millions and millions of dollars to comply with federal regulations." Gingrich wrote back, assuring Nichols that he would "look into" the problematic asbestos regulations.
Also in 1990, Houston-based Southdown Corporation, the world's largest producer of cement, donated $10,000 to GOPAC. Eventually Gingrich reciprocated by urging President Bush to assist in the company's trade dispute with Mexican competitors. In 1989, Gingrich also arranged for Emil Ogden, a Texas oil entrepreneur, to meet with high level Bush officials to pass legislation favorable to the petroleum industry. In a letter to Ogden, Gingrich wrote, "I have also written to (the official) on your behalf. Please let me know if there is anything more I can do to help."
Four of the five Republicans, whom Gingrich appointed to the House Ethics Committee, had ties to GOPAC. As an example, Congressperson David Hobson of Ohio received assistance from GOPAC, while Congressperson Porter Goss of Florida was a contributor. The five Democrats on the committee investigated a college course which was taught by Gingrich in which GOPAC handled much of the tax-deductible fundraising.
Later in December 1995, the Federal Election Commission released 8,000 pages of evidence. It included the acceptance of prohibited gifts, misuse of official resources. Members of Congress are prohibited from using official resources for unofficial purposes. However, on the House floor Gingrich illegally plugged a satellite broadcast of his educational series, "Renewing American Civilization," sponsored by GOPAC. Surprisingly, the Republican-dominated Ethics Committee found him in violation of rules by using the floor to promote videocassettes of his class. The committee also ruled that Gingrich violated house rules by allowing Joseph Gaylord, his chief advisor, to operate out of his Congressional office. However, no action was taken. The committee also cleared him of any wrongdoing on the issue of his $4.5 million book contract with Robert Murdoch, his personal friend and owner of Harper Collins. The Ethics Committee merely stated that, "At a minimum, this creates the impression of exploiting one's office for personal gain. Such a perception is especially troubling when it pertains to the office of the Speaker of the House, a constitutional office requiring the highest of standards of ethical behavior."
In 1994, GOPAC legally raised over two million dollars for the Republican campaign. However, thousands of dollars in contributions were spent on videocassettes, television shows, and Gingrich's lecture series, "Renewing American Civilization," which focused on teaching political skills. The money allocated for these purposes was technically exempt from disclosure, but one could easily ascertain that various corporations and their CEOs are promoted. For example, Gingrich described CEO Roger Milliken of the textile corporation as "an extraordinary man ... one of the most forceful human beings I have ever dealt with." Yet Gingrich denied that this promotion had anything to do with the fact that Milliken had donated $250,000 to GOPAC.
After the 1994 Congressional elections, the Republicans gained control of both houses and elected Gingrich speaker of the House. Gingrich vowed to pass legislation in ten areas in the first 100 days, but he failed in all but one. "An overwhelming majority had never heard of his "Contract with America." Yet he proceeded quickly with his agenda. First, Gingrich moved quickly to dismantle the welfare system. Then he pushed to terminate the Food Stamp Act of 1977, the Child Nutrition Act of 1966, the National School Lunch Program of 1946, and the Emergency Food Assistance Act of 1983 -- as well as attempting to terminate other legislation intended to prevent hunger and to provide health care. In 1993 $23 billion was allocated to food stamps; $16 billion to welfare and family support, and $21 billion to supplemental income for the poor, elderly, and disabled. However, the wealthy benefitted the most, receiving $49 billion in deductions for interest payments on their mortgages and $16 billion for corporate farm price supports. Total payments to the poor were less than the three largest tax breaks that benefitted the middle class and wealthy.
While the Contract with America denied substantial aid to the poor, it called for an increase in welfare for the wealthy. Gingrich's program included increased exemptions for gifts and estates, capital gains cuts by nearly 50 percent, reduced health and safety standards, investment subsidies, and more favorable rules for depreciating rental property. At the same time, the speaker lobbied for more defense allocations including production of the multi-million dollar stealth bomber and research on star wars, even though every test failed under the Reagan administration.
Eventually in 1997, the Ethics Committee worked out a deal with Gingrich, and he was fined $300,000 for using tax-exempt organizations for partisan political purposes and for misleading the committee. Although making a public apology, Gingrich shifted the blame to his personal attorneys who, he claimed, did not properly advise him. Gingrich denied that the $300,000 was a fine, saying that it was a "fee" to cover the cost of the House investigation.
Many scandals revolved around the Bush family members. In January1990, President Bush signed a contract with an American corporation, the Texas-based Harken Energy Corporation in Bahrain. Under the terms of the deal, Harken was given the exclusive right to explore for gas and oil off the shores of Bahrain. If gas or oil were found in waters near two of the world's largest gas and oil fields, Harken would have exclusive marketing and transportation rights for the energy resources. This turned out to be a gold mine for a company which had never drilled an offshore well. George Bush, Jr. was on the board of directors of Harken as well as being a consultant and a stockholder. President's Bush's contract with Harken was a blatant conflict of interest. Their relationship made the president a valuable asset for Harken.
George Bush's third son, Prescott, also was involved in fraudulent dealings. When his father flew to the Far East for a Presidential visit in February 1989, Prescott simultaneously scheduled a business trip to the same countries -- China, Japan and South Korea. Prescott was hired by Asset Management, which paid him a $250,000 fee for consulting in its joint venture with China to set up its internal communications network. Prescott was hired shortly after President Bush imposed economic sanctions in June 1989 in response to Beijing's crackdown after the Tienanmen Square demonstrations.
Corruption in the Bush family continued with another son, Jeb, who profited handsomely when the Bush administration bailed out Broward Federal Savings and Loan in Sunrise in Florida. This savings and loan institution fell into bankruptcy in 1988, forcing the Federal Deposit Insurance Corporation (FDIC) to absorb $285 million in bad loans.
Another son of George Bush, Neil, plea bargained after the failure of Silverado Savings and Loan in Colorado. 45 Federal regulators shut down Silverado shortly after George Bush was elected president in 1988. Neil was a member of Silverado's board of directors from 1985 to 1988. "There was no conflict of interest," Neil told reporters. The Office of Thrift Supervision (OTS) in Washington issued a notice of intent in January 1990 to hold a hearing on the failure of Silverado Banking Savings and Loan. The federal bailout cost United States taxpayers $1 billion.
Neil responded to charges made in an OTS report by stating that he had "breached his fiduciary duty" to Silverado by engaging in unethical and illegal business deals while a board member of the Denver savings and loan. The report documented that Neil personally profited from questionable Silverado loans to his business partners, Ken Good and Bill Walters. Good and Walters later defaulted on $132 million in loans to Silverado, leaving the taxpayers to pick up the remains.
Corruption also spilled over into other savings and loan institutions. In 1988 alone, hundreds of savings and loans donated $800,000 in soft money to the George Bush campaign as well as giving $11 million to Congressional candidates and party committees throughout the 1980s. Eight financial institution officials donated more money to the Bush campaign, and five of these were involved in high-risk junk bond investments with Michael Milken. One of these was convicted felon Charles Keating of Lincoln Savings and Loan. The White House reciprocated by deregulating the savings and loan industry. This became a potential for a tremendous windfall for the institution's corporate officials, since they no longer were accountable to the government and free to speculate in high risk junk bonds.