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Campaign Finance Reform

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Curtis Gans

  • Round Three

    Sen. John McCain
  • Round Three

  • Remarks From Susan Tolchin

    Part Three Of Five

    Foreign Money

    By Susan J. Tolchin
    April 4, 1997

    What first captured the public imagination was foreign money. The stealth contributors, who rented Arlington apartments by the hour (Did they launder the money in basement washers?) and slipped hundreds of thousands of dollars into the hands of White House collectors. The Chinese restauranteur from Arkansas, the front man for the Far Eastern conglomerate at Commerce and the DNC, the mystery woman contributing for her mother.

    It smelled a lot like Watergate, where paper bags chock full of cash were delivered to the White House in exchange for policies bought and sold on the open market. What I remember best was milk subsidies. Then as now, what really caught fire was the drama of it all: the bungled burglary of Democratic headquarters. The real scandal, the money politics, played second fiddle to the playbill.

    All told, the colorful Riady family, the Chinese gun runners and all the gross examples that have recently pepped up the front pages were eminently predictable given the patterns of foreign money that began encroaching on America in the late 1980s. I tracked these patterns in two books, co-authored with my husband, Martin Tolchin (a journalist formerly with the New York Times; now publisher and editor of The Hill): Buying Into America - How Foreign Money is Changing the Nation - l988, and Selling Our Security - The Erosion of America's Assets, l992.

    Buying tracked the encroachment of foreign contributions to American elections, and Selling showed how the sale of U.S. assets affected national security. More important, what we found was that even though the laws clearly prevented foreign nationals from donating money to American elections, a giant loophole prevented enforcement: American affiliates of foreign corporations clamed they were domestic companies; as such, their American executives could freely contribute to U.S. elections. Naturally, the Federal Election Commission was split, which rendered the agency virtually useless on this issue.

    Memorable to me was the lax enforcement of the laws, which enabled the former Soviet Union to own a U.S. bank in Silicon Valley--the better to gain technological secrets, or financial information to see who was vulnerable to blackmail. Or the revolving door of trade officials that enabled, indeed encouraged folks negotiating computer agreements at Commerce, USTR or State, to work for foreign companies well before the ink was dry. One example: Frank Carlucci, a former Secretary of Defense, testified before the Armed Services Committee in favor of the sale of LTV to Thomson, CSF, a company mostly owned at that time by the French government, and on whose behalf Carlucci was lobbying. Four years out of office, Carlucci was able to get the Defense Department to change its testimony mid-hearing--a feat that was unprecedented in congressional history.

    I testified on the other side: against selling a U.S. company, subsidized for years by tax dollars, to a foreign government. After testifying at other times, many members of Congress quietly told me that they favored strengthening information gathering and enforcement of the laws, as well as new laws to stop the revolving door, but that their staffers stopped them. After all, they had to make a living after Congress; and with the push for term limits today, I'd venture that the pressures to retain the status quo are even more intense.

    It is deja vu all over again, as Leo Durocher allegedly said.

    Here inside the Beltway the issue of foreign money has been obfuscated by the argument of: the U.S. did it for years; we're just getting our just desserts. Look at the U.S. interventions in Chile, Iran, Lebanon, the Dominican Republic, et. al. We've subsidized "democratic" movements, labor unions, political parties, poured money into elections and tried to influence political outcomes since World War II.

    So far, no one is countering this argument, urging us to take off our national hairshirt. Yes we did intervene, but we intervened in countries that were weak and vulnerable. Where one company, like United Fruit, dominated, or where local elitee cooperated and played into our hands.

    Superpowers don't allow outside intervention in their politics. Not without a fight, anyway.