Q: If you were looking for somebody who could carry the whole story from 1968 to the present day, who would you pick as a person who has been inventing and doing interesting things in this area?
Phillips: Well, the only name that comes to mind who's still operating really is Dwayne Andreas, because he was very close to Hubert Humphrey during the 1960's. So I think it's probably fair to say that he does go back to the 60's. I can't think of many others who do.
Q: Is he good at this?
Phillips: I would assume he's very good at this. He has an asset in that he's representing farm products, basically, and not only can he describe it as supermarket to the world, but you can talk about him as breadbasket to the electorate of 15 or 20 states. And as a result, something that is essentially a food company I think is seen as more benign. If this were an international oil spill or something like that, it might be a problem. So I think he probably was able to do a lot politically because of the notion of representing farmers in farm states.
The ethanol thing is important to farmers. And also the green revolution in the sense that the enormous opportunities for US exports overseas. I think it's very difficult to do these things in a grand style, as he has, unless you luck into a situation that gives you a lot of selling ability as well as maneuvering room.
Q: Does it catch your eye when two brothers who are in the grape business, the Gallos, start giving lots of money to a senator in Kansas?
Phillips: Does it catch my eye? Bob Dole, because he's the Senate Republican leader and was chairman of the Senate Finance Committee, has received huge contributions from the business community over the last 15 years. So it wouldn't catch my eye. I'd figure it was because Dole was in those two roles.
Q: So grapes in corn country is just interesting?
Phillips: No, it goes with the turf. The Senate Finance Committee. The Republican leadership of the Senate. That was the appeal of Bob Dole.
Q: So if Bob Dole hadn't been chairman of the Finance Committee, grapes would not have found him there on the plains?
Phillips: Well, if he'd been chairman of Senate Agriculture, grapes would have found him. But they wouldn't have found every committee, is my point.
Q: Is it so terrible that a family tries to pass a law that has an effect roughly on seven families in the entire society, but affects the passage of wealth from one generation to another?
Phillips: Well, I don't think it's so terrible. The only question is whether you want that sort of legislation to pass on a broad basis. If this is to be singled out as some great harm to the country, it clearly can't be. If it's to be taken as an example of special tax or financial legislation for people who can afford to make connections and make donations and hire lobbyists, in that context, it then becomes a problem.
Q: The accounting on this is kind of interesting. If I were very rich, and I paid you, a lawyer, $50,000 to help me get a law passed, and I hired political connections at another $50,000, and I made political contributions for another $50,000, and I made more through my wife for another $50,000, and I'm spending like $250,000 to get a tax break, does the tax break have to be worth a multiple of $250,000, like a million or 2 million or 3 million to make it worth my while? Or how does this work on an accounting basis?
Phillips: Well, as you say, it's a very difficult accounting basis, because suppose that you get a second tax loophole you want two years later, which is worth a certain amount of money, passed with a fairly low expenditure, because a fair amount of your first outlay is amortizable for the second transaction. So I think it's an even more difficult accounting problem than you think. But an awful lot of people have found it enormously worthwhile to invest in Washington influence peddlers. And they've grown enormously. Right after World War II, there were perhaps 1500 lobbyists in Washington, and there's one estimate now that there are 91,000 people who are lobbyists, who are engaged in supporting lobbying activities.
Q: 91,000? Well, that's one of those estimates where you count everybody who's served them lunch or something.
Phillips: Well, not serves them lunch, but serves them, I grant you, but it's still something that has multiplied enormously. So what you have to assume out of this is that the cost-benefit ratio is very favorable to the further employ of lobbyists.
Q: What do you make of the fact that businessmen give to Republicans, and give to Democrats, sometimes in equal measure and sometimes in almost equal measure?
Phillips: Well, you could say that that's buying access, which clearly is part of what's involved. You can also say it's creating a disposition on the part of Democrats, who are supposed to represent the party of the people, to represent virtually the same special interests as the Republicans, or really more supposed to buy into what they do. So I think in that sense, it's corrupting the idea of two parties that are fundamentally different on who they represent economically. But is that corrupt by definition? No.
Q: If you were talking to Plato, and you say, now, check out that guy, Mr. Andreas. He gives a huge chunk of money to the opposition, and then he also gives a huge chunk of money to the empowered. And then when they change, he keeps giving to both sides. What does Plato say?
Phillips: Well, Plato probably knew that they did the same thing in Greece. So I doubt that he probably would have been too appalled. But my guess is that in that situation, you'd have to look beyond the fact of just giving money, to what in fact somebody could say he got from it. That I don't know, but he's got himself quite an empire, and I'm sure his political contributions didn't hurt him.
Q: Ron Brown occasionally gets on planes and goes to foreign countries. And there are ceremonies at the airport and then with the head of state. Why is it such a deal to get on that airplane?
Phillips: Well, it's such a deal because essentially, foreign corporations and governments know they have to throw a fair amount of business the way of the United States. And if you're arriving on a plane with the Commerce Secretary, you're clearly wired, as it were, to the US political process.
Q: So --on the plane equals smiled on by Washington?
Phillips: Well, it equals to some extent, smiled on. To the extent that you're going to be able to draw on Washington, so if you want something, you will probably be able to have the ambassador second your desire. So it just gives a lot of sense to the people in these ministries that something is there. And of course, that's the way their governments work.
Q: If you were an American, and I'm the head of China, how do you let me know that you were on the plane?
Phillips: Oh, I don't think that's particularly difficult, because you're in their country, and you're arriving there for a meeting with a ministry. And if you're on the list of people who came through with the Secretary of Commerce, you were probably at a dinner given by the Vice Minister of Finance the night before, you'd have to assume they knew nothing about what was going on for there to be any question. There will be all kinds of lists circulating. There will be dinners. There will be receptions. This is so standard an osmosis that I don't think anybody's in doubt as to how it works.
Q: The computer business and the high technology business, centered in Silicon Valley in California, seems to have been wooed somewhat successfully by the Clinton administration. And in a particular case, the Vice President, who seemed to have wanted to build a highway all by himself, then switches. To what degree did Al Gore's switch have anything to do, do you think, with money?
Phillips: Well, money is part of the equation, I suppose, but I think that they're very committed to winning California in the next election and to raising funds in California and establishing a power base there. And there's no doubt that among the industries in California, one of the most amenable to Democrats or liberals is high tech, as well as Hollywood, and there's some overlap between Hollywood and high tech, frankly. So I think it's a very logical relationship, and I think that any attempts by the administration to move in this direction really have a lot of reasons, not just a deal, but politics, fund raising.
Q: Wouldn't, however, computer people not want to be regulated? It's a growing, infant business that's stretching out world wide. And what it seems not to want is to have inspectors and regulators and people chasing them around the block.
Phillips: Well, it's very interesting about regulation and government involvement. They, for a while, wanted a national strategy for the semiconductor industry, because of the feeling that the competition from some of the Asian countries would overwhelm them without it. So they were anxious for government to take a role. They favor export subsidies. They favor protection, the government being involved in protecting informational property rights and so forth. So they see a major role for government. They don't want to be regulated in a way they don't like. They're nervous about antipollution laws, and they want very favorable capital gains treatment. So they have a whole laundry list of things they want. And some of them involve friendly government activity.
Q: The ladies. Politicians have always married, but now the people that they marry have existences that are separate and independent from the guys. So you'll get Hillary Clinton with a real interest in Children's Defense Fund and a lawyer in her own right. And you get Liddy Dole, who has a whole career of her own, and you get Wendy Gramm, who is an economist and whatever. If I were interested in influencing him, what do I think about her?
Phillips: Well, there's no doubt that that's a potentially legally grey area if you have, say, two attorneys in the White House, as we do right now. But in terms of the previous roles exercised politically by women, Nancy Reagan was an enormous influence, but she was an influence in a way that I don't see how you could possibly regulate it, because it was quite akin to the influence of queens over kings in the 16th century. So I'm not concerned about that.
Q: But Ms. Dole has an interest in the Red Cross. We've noticed that some people have all of a sudden given huge amounts of money to the Red Cross. Why would they do that?
Phillips: Well, I think the answer there is that they're indirectly trying to make a point with the Doles. Now, Bob Dole had a foundation, the Dole Foundation. It was for disabilities, for handicapped people. And there's no doubt that a number of lobbyists gave money to that simply so that Bob Dole would see their name on the list of people who did. I'm not too concerned about the conflict of interest in the Red Cross and the handicapped. We have a lot more important things to worry about in terms of conflict of interest than the Red Cross and the handicapped.
Q: How about this situation. Wendy Gramm, who sits on the board of about five different companies, including the Iowa Beef Packers. Guess who hires buses to take people to vote in the Iowa caucus? Wendy's outfit, I guess you could say. Does this bother you?
Phillips:Yes, I think that's an obvious example. If Iowa packers were providing transportation for Gramm people to play a political role, that seems to me to be a political contribution. Whether they filed it or not, I think that was--
Q: What should she have done?
Phillips: Well, I don't think anybody has gone after them on this in any meaningful way. I think she was foolish to do that for her husband when she was still sitting on the board. I think Wendy Gramm should have said, 'We shouldn't do this.' If she had nothing to do with the decision, I think she should have said, 'We shouldn't do it.' Because it calls into question her role as an IBP director, and IBP's possible role in the grand campaign. And I just don't think that's something that somebody really concerned about the ethics should do.
Q: It seems to me that one of the ways you could think about this is, this is a static system. It's got centrist politicians, surrounded by regular contributors who give to both sides, helped by political professionals, and everybody just goes to work all the time, every day. They just do their political thing. How hard would it be to break into this system as an independent candidate and just say, 'Out of my way. I'm doing it differently.'
Phillips: Well, the mere fact of an independent being elected president, were that to happen, would create such a new context for the whole city of Washington, because undoubtedly the city itself would have been a major issue. Perot would make it one. Powell, if he were to run that way, would probably make it one, so that I think the new President would really have a lot of room to change things in campaign finance and lobbying. He'd have to do it quickly. Have to mobilize the public. But the mere election of an independent would be such a body blow to the whole existing Washington structure that has basically interlocked with the two party system, but I think it would create the opening.
Q: Is there a difference between Republicans and Democrats? A meaningful difference at this stage, on this issue?
Phillips: On this issue, referring to lobbying and campaign finance, I think there are meaningful differences, because each has reforms they would accept because it would principally hurt the others. They've figured this out. Neither would accept the reform that would hurt them, and therefore, they can't agree on something. But there are meaningful differences. Where there is no meaningful difference is that neither one of them wants to pass legislation to benefit the entire country by putting a whammy on both their practices.
Q: Does a candidate, other than a Steve Forbes or a Ross Perot have a chance in this system to make a meaningful real run without the money connections?
Phillips: Well, I think somebody can run as an independent and do it without "real money" because somebody with a high profile could probably raise $10 or 20 million. But if they attacked the system that's broken and what so many Americans think is semi-corrupted, I think that would be the issue that they could use to explain why they don't have the money to drown the average person in all these billboards and advertising, and how important it is that somebody who doesn't represent this massive money power have a shot.
Q: Would that be a successful appeal?
Phillips: Well, I'm not certain just saying, 'Help me, help me, help me.' I would say, 'Help yourselves.' Because everything that's passed by this cabal in Washington that doesn't regulate something, it hurts your child or puts a tax loophole that lets some other people not pay taxes so you have to pay; that is part of what's got the middle class in this country on the run. And I would say, 'Help yourself.'
Q: Thinking now about Colin Powell's candidacy. When he chose to run as a Republican, how much of that choice reflects his money problems?
Phillips: I think Colin Powell's decision to run as a Republican was based partly in an awareness that if he tries [as] an independent, he wouldn't have the resources that would come with a Republican nomination. But I also think it reflects the extent to which Powell is a Washington insider. He didn't want to have to be out there running against the inside culture. He's been a part of it. And I think he's more comfortable dealing with the lobbyists and taking the money from the power brokers in the Republican Party. And that may be an issue that he has to confront because there's some down side to that, too.
Q: Had he chosen the other option, had he decided to run as a purely independent, without these Republican connections, what's the size of the handicap on him as a money raiser?
Phillips: I think that's an X factor. Ross Perot didn't have to raise money. He was a man whose polls were up in the 30's for while. If he had to raise money with those polls, I think he could have raised it. If Powell had to raise money, my feeling is he could raise it up to a point. But obviously, there's no precedent for knowing how much, and it's very understandable to make the decision that, as a Republican, you get money. As an independent, it's a question mark. And therefore, take the safe route.
Q: In the end, having seen everything we've seen, how does one go about fixing this?
Phillips: Well, the difficulty is that there's no obvious, easy fix. What I think has to happen, if everything goes well for this country, is that developments come really on three dimensions. The first is that we change the lobbying and campaign finance laws and try to tighten them down.
Q: Again. After all those previous tightenings.
Phillips: But it won't be easy to do, as long as you're dealing with the Republican and Democratic parties, because basically what they want to do is create loopholes and sieves and such. So I think if the party system is starting to weaken, and we're getting the rise of independents who make this an issue, it increases the pressure on the party system to respond and not just create another flim flam. Now, the last ingredient, as I think we have to start moving power out of Washington. Now, some of that can be giving programs back to the states, but that's not really what I mean. I think it's important to somehow disperse Washington where possible. Maybe move the occasional cabinet office out. But more important is to give power back to the people as people. The more decisions that are made by ordinary Americans, maybe even an occasional national referendum every couple of years, the more you take away from Washington, the people cannot be called up by the Washington lobbyists.
Q: Well, does that mean, first, that you think that the legislators who sit in Albany, New York, or Austin, Texas, or Lansing, Michigan, or Sacramento, California are somehow more immune to the temptations of money than legislators in Washington?
Phillips: No. And obviously, if you push things back to the states, you increase the roles of state interest groups relative to federal ones. But I would say the average person would prefer to have state-based interest groups having more power over his legislators or her legislators than the anonymous ones in the catacombs of Washington. I don't think that's true everywhere, but I think generally as a rule--
Q: What makes you think that? I mean, I don't know the people who influence my state capitol legislators any more than I know the ones that do it in Washington.
Phillips: No, but we're talking here about federal type issues being pushed back. We're not talking about regulating utilities in Montana where you'd be very leery if you were a Montanan, or perhaps the local power company. But in terms of the decision on state, or on federal taxes, on federal regulation, federal trade laws, I think the average person in Iowa would have more faith in Iowa interest groups than he would in the collectivity of London, Washington, New York, Tokyo that guides Washington.
Q: It sounds to me like you're suspicious of representative democracy. As soon as I allow someone else to make civic decisions on my behalf, the rich people gather around them and then buy them. And so your solution is that I should go in and vote more often on the telephone or something? Is that right?
Phillips: I don't think I totally agree with the phraseology. But in terms of the question, what we're looking at here is that when representative government basically was operating in a Washington of 200,000 people, and hardly any lobbyists and a smaller government, it worked. But we now have in infrastructure in Washington that overwhelms the institutions of representative democracy and turns the representatives into representatives of interest groups as opposed to the 12th district of Missouri. And this has happened in capitol cities before. It's almost inevitable in a great power, that the capitol city becomes an interest group of its own, and representative democracy is in trouble when that happens. And that's what I think we're up against.
Q: But your solution, that I would carry more of the civic weight on myself, that I would have to think about things like Bosnia or think about things like the economy, or think about things like even campaign finance reform, seems like I don't have time for that.
Phillips: Well, I think people would like to have time. I think people would like to have more of those decisions put in their hands. They certainly tell pollsters that. A national referendum was favored to make policy by 76% to 19% last year.
Q: Well, it's fine when someone calls me up and says, 'Hey, do you want to make these decisions yourself?' I'd say to the pollster, 'Yes.' But at 5:45, when I'm trying to pick up my son at his drumming class, and I have to run down, I just don't know whether I can bother to read the three editorials. I just don't know whether I can. That's why I have a congressman.
Phillips: Well, you have a congressmen who'll read three checks and three memos from lobbyists. I think you'd probably prefer if you had the choice to read the three editorials.
But let me pick up on that more. We have the most educated electorate in the world. And we have that for an unfortunate reason, in part. Because so few Americans vote. Only 50% in a presidential election, and 36% to 38% in a midterm. Our electorate is more qualified educationally than the country as a whole. And if you can't trust the educational level of the American electorate with a whole history of democracy in this country to make those decisions, and you would prefer to rely instead on a representative government situation that has its origins in an era where nobody could conceive of the size of Washington and lobbyists, I think that's a mistake in interpretation of our history. Democratic forces have been a revitalization in America many times before. I think this is their acid test.
Q: And you think that really the only fundamental solution to the money problem is to take those decisions back to me in my household, or at least to my neighborhood or my state?
Phillips:Well, all of those. I think you can reduce the problem in Washington with tough legislation. I think you can move some of the functions of Washington back to the states. I think you can let Americans participate more and raise their level of participation and their concern about doing it, so they don't think it's wasted. And I think you can help them into a high tech system that's got a bit of a virtual Washington. And I think state and local government can play more of a role. It's got to be all of these things together.
Q: But what about the Frank Capra solution? You get rid of all those bad people, and you put in decent, honest, intelligent, courageous politicians?
Phillips: Mr. Clinton goes to Washington? Ran against Washington in the election. Arrives there, and it's like iron filings hitting a magnet. When Jimmy Stewart's fellow went to Washington in the 1930's, it was a different city. You could park your convertible under the White House portico and put up the top. You could walk into your senator's office. K Street didn't exist, except as a bunch of brownstones. This is a totally different Washington. Sixty years later, that's a dream. We saw it become a dream with Clinton, who ran against all this, came in there, and was just swallowed up and became a part of it.
