Blago and backlash

How the Chicago corruption story and other lavish raids on the public treasury (and trust) could induce an angry populist backlash.
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Gov. Rod Blagojevich at the Illinois State Fair in 2003.

How the Chicago corruption story and other lavish raids on the public treasury (and trust) could induce an angry populist backlash.

The federal charges against Illinois Gov. Rod Blagojevich are only the most recent and prominent episode in a series of events which are building toward a bigtime populist backlash.

Corruption in Illinois, as in Louisiana, New Jersey, Nevada, Rhode Island, oldtime Boston, and other notorious political venues, should come as no big shock. Yet Blagojevich's pattern of conduct, as revealed in the charges, was so blatant and reckless that you wonder why it took so many years to be found out.

A couple Illinois-related jokes come to mind: The first, in a cartoon, portrays convicts in a prison chow line. One turns to the other: "The food was much better here when you were governor." The second related to the discovery, after his death, of shoe boxes containing millions in cash in the bedroom closet of Illinois State Treasurer Paul Powell. Sen. Adlai Stevenson, when asked to comment on Powell's death and the bedroom discovery, remarked that "Paul Powell left big shoe boxes to fill."

We can laugh about such matters, but these recent abuses of public trust are nonetheless disgusting. They are contributing to a public backlash which could be both angry and vengeful. President-elect Barack Obama has not been implicated in the Illinois scandals and is unlikely to be. His unifying temperament should help us get us through a difficult period of at least a couple years. But it will not be easy. Below are some of my concerns about the coming backlash.

One of the reasons for backlash is the way Master of Universe types took reckless risks that weakened our financial system and economy. Yet many of them have walked away with personal fortunes and remain in line for seven-figure holiday bonuses this month. The price has been paid by investors, taxpayers, retirees, ordinary working families, and a growing army of unemployed.

Meanwhile, the Federal Reserve and Treasury have put huge sums into major financial houses, few questions asked. The federal government has taken over Fannie Mae and Freddie Mac, has a major equity position in AIG, and appears about to become a partner of the Detroit Big Three while extending an initial $15 billion bailout which will be burned for operating expenses. The industry will be back for much more. Bottom-up help has been slower in coming.

A final reason: the Masters, federal regulators, Fannie Mae/Freddie Mac and auto executives, relevant Members of Congress, and others have characteristically responded with "Who could have known?" statements about the crisis, presenting themselves as victims rather than perpetrators.

Add these factors up and the times are ripe for a populist George Wallace or Ross Perot. (Perot, remember, got a surprising 19 percent of the national popular vote for president in 1992, despite running an ineffectual, mistake-filled campaign). As a result of all this, mountains of public and private debt have been accumulated. Social Security and Medicare reform and national health and energy schemes will have to be pushed to the back burner.

There are several unintended consequences of all these rapid changes. For instance, American financial and economic systems have been moved in an unprecedented direction toward European models, where government is an active and often intrusive partner of private business and finance. U.S. presidents, over 40 years, have tried to maintain an American competitive edge by moving in the other direction.

As he should, Obama early in 2009 will institute major infrastructure spending (on roads, highways, bridges, water and electric facilities, ports, public buildings, etc.) to bring jobs and economic activity to the local level. But there is a big peril in having this spending turn into an irresponsible porkfest tailored to suit the political priorities of state and local officials. Do you have any doubt, for instance, that Mayor Greg Nickels will try to channel these monies to his Mercer Project and Seattle streetcar public-works boondoggles and to Sound Transit, which he chairs, at the expense of work having far higher public priority?

The auto subsidies almost surely will lead other auto-manufacturing countries to bring formal complaints, and perhaps retaliations, in the World Trade Organization against the U.S. In their shoes, we would do exactly the same. This will help deepen a global tide toward protectionism.

But let me go back to the issue of public corruption, brought to the fore by the shocking revelations in Chicago. We tend to think of public corruption as being Chicago-like — that is, money in envelopes in exchange for public contracts or favors; "pay-to-play" as they say where the game is played. But are we so different here?

After first rejecting it, voters approved in November Proposition 1 which will impose heavy taxes on area citizens for many years in order to construct a light rail system which will be far more expensive, take longer to construct, and serve fewer passengers than alternative bus transit systems. The campaign to pass Prop. 1 was financed by the contractors, sub-contractors, law firms, financial institutions, consultants, and others who derive big money from light rail. The same people make big political contributions to Mayor Nickels, other Sound Transit Board members, and other elected officials who support this multibillion-dollar project.

Gov. Chris Gregoire got a free pass in her reelection campaign from friendly media and a tolerant electorate on an issue which to me constituted prima facie corruption — namely, her deal with tribes which exempted them from taxes on tribal gaming, which other states harvest bigtime, while accepting huge campaign contributions from them. The Port of Seattle has let a couple senior employees resign and put negative letters in the files of others following state auditor and federal prosecutor investigations of outrageous contracting and other management practices there.Where are the prosecutions? To what degree were Port Commissioners, a former port CEO, and others in the chain of command involved?

Unless media and a few reformist elected officials pursue such issues avidly, they tend to disappear from view. But, even if they do, their cumulative effect will over time cause voters to have a mad-as-hell-and-won't-take-it-anymore reaction to it all. Chicago is not so distant as we might think.


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About the Authors & Contributors

Ted Van Dyk

Ted Van Dyk

Ted Van Dyk has been active in national policy and politics since 1961, serving in the White House and State Department and as policy director of several Democratic presidential campaigns. He is author of Heroes, Hacks and Fools and numerous essays in national publications. You can reach him in care of