A few weeks ago, as news of the torture at Abu Ghraib made its way out to the wider world, David Brooks published a column that many of his readers had probably been waiting months to see. Brooks, who joined The New York Times op-ed stable in 2003, had long been among the more cogent defenders of the invasion and occupation of Iraq. But as the prison scandal reached its apogee, Brooks seemed to have had enough. "This has been a crushingly depressing period, especially for people who support the war in Iraq," he wrote. "The predictions people on my side made about the postwar world have not yet come true. The warnings others made about the fractious state of post-Saddam society have." Though he was not ready to give up on Iraq, Brooks continued:
Like the natural world, campaign finance is governed by inescapable laws of physics. One is that what goes up usually keeps going up: During every presidential election, the two parties manage to raise more money than they did the last time around. Another is that any given action rarely produces an equal and opposite reaction. Every four years, the GOP outraises and outspends the Democratic Party, usually by tens of millions of dollars.
Until recently, the Democrats could even the scales somewhat by raising "soft" money, the unlimited contributions from rich individuals, corporations, and labor unions that flowed to both parties in roughly equal amounts during the 1990s. But two years ago, the McCain-Feingold Act prohibited parties from raising soft money, a goal long sought by liberal newspaper editorialists and good-government activists. Ever since, the Democratic Party's fundraising has lagged even farther behind the GOP's than usual.
But last summer, a coterie of labor campaign operatives, liberal advocacy-group leaders, and old Clinton hands began exploiting one of McCain-Feingold's loopholes. They organized several groups under Section 527 of the tax code to raise and spend the soft money which the Democratic Party no longer could. Scores of wealthy liberals, among them George Soros, have together given tens of millions of dollars to these "527s," which have generic names like Americans Coming Together and Voices for Working Families. And in March and April, these groups spent a chunk of the money on issue ads attacking Bush, just as Bush was spending $50 million from his campaign war chest to attack Kerry. Though Kerry has raised $85 million worth of the $2,000 and under "hard money" donations permitted under McCain-Feingold -- a Herculean amount for a Democrat -- Bush has raised more than twice that. Without help from the 527s, the Kerry campaign would probably be in big trouble.
The GOP, of course, is well aware of this. Which is why its lawyers have filed legal challenges with the Federal Election Commission to get the 527s shut down, charging that this "Democratic shadow party" represents a "conspiracy" to "illegally" pump soft money into the presidential race. Such campaign finance groups as Democracy 21, the Campaign Legal Center, and the Alliance for Better Campaigns -- which once butted heads with Bush over his opposition to McCain-Feingold -- have joined the battle against this new Democratic weapon, as have anti-soft money editorial boards at newspapers across the country. In an editorial titled "Soft Money Slinks Back," The New York Times inveighed against "political insiders" who were "carving a giant loophole" in election law, while the Los Angeles Times called upon the FEC to "issue tough new rules" against the 527s. The Boston Globe was even more acerbic, raging in April that the commission "has all but declared itself impotent to act during this election cycle."
Thus chastened, the FEC last month held two days of hearings on the issue. But a curious thing happened. Instead of coming in for the kill, the GOP's lawyers who were invited to testify refused to appear. Why did they pass up an opportunity to potentially cripple the Kerry campaign, an opportunity for which they had implored the commission for months? Because the FEC had decided that, as long as it was trying to figure out what kind of political activities were legal for 527s, it should also take a look at another category of organizations, known as "501(c)s." Many well-known groups -- from AARP to the Nature Conservancy -- are set up under Section 501(c) of the tax code, and are also allowed to raise and spend donations for political purposes, including running television "issue ads" that mention candidates. And such 501(c)s as the National Rifle Association and the National Right to Life Committee are vital allies of the GOP; they raise money mostly from their members and use it to buy ads or direct mail supporting the position of one candidate (usually the Republican) or attacking the position of another (usually the Democrat) on issues important to the group. The GOP lawyers had an obvious interest in not wanting the FEC to do anything that might cripple these groups' ability to help the party.
But they were also eager to protect a whole other category of 501(c)s -- one that has garnered little attention from campaign finance reform groups or reporters covering the 2004 election. Like the Democratic 527s, these groups have innocuous-sounding names: Americans for Job Security, for example, and Progress for America. Like the 527s, these groups are staffed by veteran party operatives and, in practice, are wholly or primarily devoted to getting their side's candidates elected. And like the 527s, they may raise and spend unlimited amounts of soft money on radio and television ads, direct mail, and voter contact efforts.
There are, however, a few key differences that make 501(c)s a far more insidious vehicle for soft money. The law does not require that they disclose how much they spend until well after Election Day. Worse, they don't have to disclose who their donors are at all. Even foreign governments can in theory give money, with no questions asked. No one knows how much the Republican shadow party has raised or will spend this year. But the tens of millions they spent in 2002 were instrumental in putting the Senate back in GOP hands -- and there's every possibility they could help push Bush and the Republicans over the line come November.
They've got issues
One of the peculiarities of Washington's influence industry is that large parts of it aren't actually in Washington. If you wanted to learn what issues are important to, say, the American Academy of Physician Assistants or the National Rural Letter Carriers Association, you'd have to journey beyond the district line, and in particular to Alexandria, Va., a small suburb located a few miles down the Potomac. Not too long ago, Alexandria was a fading industrial center, its economy kept afloat by tourists and antique-hunters treading the quaint brick sidewalks of colonial-era Old Town. But beginning in the early 1990s, hundreds of trade associations -- drawn by the cheap office space, city-subsidized financing, and easy access to Capitol Hill -- began setting up shop here. So many trade associations have flocked here during the past decade, in fact, that they've become the city's second biggest industry, producing almost as many jobs as the local tech businesses.
One of the recent arrivals is Americans for Job Security, located in a tidy brick building on the northern border of Alexandria's new white-collar sprawl. "It's so much cheaper out here than being downtown," says AJS's president, Michael Dubke, as he greets me at the front door and leads me into a nondescript conference room. Like many of its neighbors, AJS is organized as a 501(c)(6), which is to say a not-for-profit "business league" or trade organization. But as trade organizations go, it is rather unusual. Not only is the group's membership -- several hundred individuals, corporations, and other trade organizations -- secret, but by all appearances, the members don't share a particular line of business. Despite a budget of millions of dollars a year, AJS doesn't have the kind of public relations or policy staff that, say, the Chamber of Commerce does. In fact, Dubke, a cheerful, clean-cut 33-year-old with the rangy build of an ex-jock, is AJS's sole employee. The group has no Web site, puts out no policy briefs or press releases, and does no lobbying on the Hill.
About the only thing that AJS does is buy television, radio, and newspaper advertisements -- lots of them. This is a source of pride for Dubke. "Ninety-five percent of the money that we take in membership [dues] is spent on our grassroots lobbying," he tells me, like a discount carpet salesman bragging about his low overhead. "We spend our money on product." During the hotly contested 2000 race, widely regarded asa watershed election for issue advertising, AJS spent about $9 million on political ads. A chunk of the money went towards attacking Democratic presidential candidate Al Gore for his prescription-drug plan, with ads airing in such key media markets as Spokane, Wash., and Tampa, Fla. (All told, according to a study by the Brennan Center, AJS was the most active outside group supporting Bush in 2000.) But AJS didn't stick to the presidential race. It also spent millions of dollars on behalf of Republican candidates in closely-fought Senate races in Michigan, Nebraska, and Washington. During the midterm elections two years later, with Democratic control of the Senate at stake, AJS dumped another $7 million into advertising, again mostly in key races, notably Minnesota's.
Traditional 501(c) groups run ads on a narrow set of issues important to their members. This year, for instance, the NRA might run ads attacking candidates who support extending the ban on assault weapons, while the Sierra Club might air spots against candidates who support drilling in the Arctic National Wildlife Refuge. AJS, by contrast, is more catholic in its interests. During the last two election cycles, the group's campaign ads have addressed taxes, education, tort reform, prescription drugs, immigration, dam removal in the Pacific Northwest, even federal regulation of drinking water -- "basically anything we label a 'pro-paycheck' message," Dubke remarks.
Much like a political party, AJS only seems to lurch into action at election time, even if one of its many core issues is being debated in Congress at some other time. Traditional Washington trade associations expend most of their resources trying to affect the legislative process, but Dubke sees this as a waste of time. "Our main purpose is to get these public policy issues out into the debate," he told me. "I have yet to have somebody tell me when is a better time to talk about public policy issues" than during campaign season.
Aside from timing, about the only thing AJS's ads have in common is that nearly all of them attack Democrats, usually those in tight races. And although groups running "issue ads" are not supposed to coordinate with candidates, in at least some cases AJS appeared to do just that. During 2000, for example, AJS launched a massive ad campaign in support of embattled incumbent Sen. Spencer Abraham (R-Mich.). As Newsweek reported that year, funding for the ads came from the tech industry, which cut checks to AJS at the request of then-Senate Majority Leader, Trent Lott (R-Miss.), Abraham's mentor. In 2002, the group ran ads in Alaska, where incumbent Republican Sen. Frank Murkowski was in a tight race with the state's Democratic lieutenant governor. According to published reports at the time, AJS's ads followed a conference with Murkowksi's political consultant and used the same themes that Murkowski's own campaign was employing.
The other shadow party
By all appearances, AJS's main purpose is rather like that of a Democratic-leaning 527. Just as the 527s collect soft money from traditionally pro-Democratic interests and spend it to help defeat Republicans, AJS collects soft money from traditionally pro-Republican interests and spends it to defeat Democrats -- but without facing any of the scrutiny the 527s do. Indeed, that's the whole idea. The Democratic shadow party has received massive press coverage during the past year, their donors demonized as shady fat cats by Bush surrogates in the conservative press. Contributors can give to the Republican 501(c)s, however, with no fear of being outed. Dubke allows that his donors include corporations, other trade associations, and individuals, but won't disclose their names (though a few, including the American Insurance Association and the American Forest and Paper Association, have gone public with their involvement). It makes sense that corporations and trade groups that give to AJS might not want their names to get out. With business on Capitol Hill, and hence a need to court Democratic members of Congress, they don't necessarily want to be seen contributing to a group that might be targeting some of those same Democrats. As Dubke puts it, "We have the ability to say things that other people might be afraid to say because they have other agendas and other interests."
Another GOP soft-money conduit is Progress for America, a self-described "national grassroots organization" that listed zero income from membership dues on its last tax return. Like many such groups, it is run by a handful of operatives with a half-degree of separation from the GOP. Its founder is Tony Feather, the political director of President Bush's 2000 campaign. Feather's own consulting firm handles direct-mail and get-out-the-vote contracts for Bush's reelection effort, the Republican National Committee, and the party's congressional campaign committees. The former political director of one of those committees, Chris LaCivita, is now executive director of PFA. The group's Web site used to describe its purpose as "supporting Pres. George Walker Bush's agenda for America," but that slogan, apparently too brazen to pass legal muster, has since been changed; now PFA supports "a conservative issue agenda that will benefit all Americans." The group hopes to raise up to $60 million in soft money this year, and has enlisted the help of some prominent Republicans to do so, including Bush's campaign manager, chief campaign counsel, and party chairman. Thus, when Bush's lawyers accuse the Democrats of organizing a "soft-money conspiracy," they know what they're talking about.
Other GOP soft-money front groups include the American Taxpayer Alliance, run by Republican operative Scott Reed, and two groups chaired by former RNC lawyer Christopher Hellmich, Americans for Responsible Government and the National Committee for a Responsible Senate. Then there's the benignly-named United Seniors Association (USA), which serves as a soft-money slush fund for a single GOP-friendly industry: pharmaceuticals. USA claims a nationwide network of more than one million activists, but, just like Progress for America, listed zero income from membership dues in its most recent available tax return. USA does, however, have plenty of money on its hands. During the 2002 elections, with an "unrestricted educational grant" from the drug industry burning a hole in its pocket, the group spent roughly $14 million -- the lion's share of its budget -- on ads defending Republican members of Congress for their votes on a Medicare prescription-drug bill.
So how much will these groups spend on behalf of the GOP this year? There's no way to know now, because, unlike 527s, these 501(c)s won't have to disclose their 2004 fundraising activities until 2005 at the earliest. But it's a pretty fair guess that they'll give their Democratic doppelgänger a run for its (soft) money. According to an investigation by The Washington Monthly, just three of the pro-GOP groups -- Americans for Job Security, the United Seniors Association, and the American Taxpayer Alliance -- spent close to $40 million during 2002. And that was an off-year election. By contrast, the eight Democratic groups currently being sued by Bush's reelection campaign have raised about $50 million so far during the 2004 presidential cycle.
To the average person, it might seem that if the Democratic 527s are a cynical mechanism for evading the ban on soft money, then surely the GOP-leaning 501(c)s are even more so. How, then, does the Republican shadow party get away with it? First, while the 527s admit that their ads are meant to affect elections, the 501(c)s do not. Instead, they insist that they're running "issue ads" intended merely to rouse debate about specific issues, not get anyone elected or defeated. Legally, this is considered "grassroots lobbying," an activity on which 501(c)s can spend unlimited amounts of money.
Now, the IRS code wisely allows 501(c)s to spend some of their money on ads meant to affect elections. Otherwise, traditional membership groups like the NAACP or Concerned Women for America wouldn't be allowed to make their voices heard on a candidate's position on, say, voting rights or gay marriage. So the second legal test is whether a group's "primary purpose" is to affect elections. The Democratic 527s admit up front that electioneering is their primary purpose; indeed, that fact is built into the legal definition of a 527. But to merit 501(c) status, the GOP groups must -- and do -- insist that electioneering is not their primary purpose. Indeed, like most of the GOP shadow groups, AJS reports on its 2000 returns spending zero dollars on political activity.
This is a curious claim for a group like AJS to make, considering it spends 95 percent of its budget on campaign-season ads that mention candidates. Indeed, were you to compare almost any Democratic 527 spot to one run by the Republican 501(c), you would be hard pressed to explain why one is intended to influence an election and the other is not. Following the 2000 elections, University of Wisconsin political scientist Kenneth Goldstein surveyed the issue-ad campaigns run by dozens of outside groups. As part of the study, his student volunteers viewed a series of AJS spots and answered the question, "In your opinion, is the purpose of the ad to provide information about or urge action on a bill or issue, or is it to generate support or opposition for a particular candidate?" They found without exception that what they had seen fell into the second category. When I mentioned the study to Mike Dubke, he responded, "I think that's ridiculous."
So who should decide whether AJS's ads are electioneering (and, hence, whether AJS's primary purpose is or is not political)? Legally, it's up to the Internal Revenue Service. But here, the GOP has yet another advantage. Because when it comes to checking up on nonprofits, the IRS makes the notoriously lax FEC look like a band of jackbooted thugs. Given that there are 1.4 million tax-exempt organizations in the United States, and enough personnel to inspect about 2,000 of them per year, the chance of a random audit is about one in 700. In practice, the IRS rarely investigates a nonprofit unless somebody files a complaint. And even then, privacy concerns constrain the IRS from revealing whether or not it has opened an investigation, and indeed whether or not it has come to any judgment.
But even if the taxmen did decide to take a closer look at AJS, it would still be in little danger of an unfavorable ruling. Since the IRS was never intended to police elections, the rules governing political activity by nonprofits are extraordinarily vague. In fact, there is no bright-line test for deciding whether an activity is political in nature or whether a 501(c) organization is "primarily" engaged in electioneering activities, and thus in violation of its tax status. Instead, IRS auditors judge organizations' activities on more than a dozen criteria and decide whether or not all the "facts and circumstances" of those activities taken together "tend to show" a violation. In other words, the process is completely subjective.
Not surprisingly, this subjectivity makes the auditing process vulnerable to political pressure. And since taking control of Congress in 1995, the GOP has done its best to frighten the IRS away from snooping around. In 1998, Senate Republicans, hoping to galvanize the anti-tax vote for the upcoming elections, staged an elaborate series of hearings featuring horror stories of abusive behavior by IRS agents. A review by the General Accounting Office would later conclude that "no evidence was found of systematic abuses by agents." But by then Congress had passed legislation that hamstrung the agency's enforcement efforts. "IRS audit activity fell off dramatically across the board" after the hearings, notes Marcus Owens, a former director of the IRS's Exempt Organizations Division. "While it has recovered somewhat for individuals and corporations, it has not recovered for tax-exempt organizations."
When the IRS does try to step up to the plate, the agency usually gets smacked down. During the late-1990s, the IRS decided to revoke the tax exemption of a charity run by former Republican congressman Newt Gingrich, after finding that Gingrich had used it as a slush fund for his political action committee. But later, under pressure from a GOP member of Congress, the IRS reopened the case and restored the group's tax exemption.
It may not be surprising that, with President Bush in the White House and Congress run by his fellow Republicans, the IRS isn't going after the GOP's shadow party. A greater mystery is why the press and campaign finance groups haven't blown the whistle, even as they pound away at the Democrats' 527s. One reason is that -- as with most things -- the GOP "won the early game to define the issue," observes Simon Rosenberg of the New Democratic Network, a 527 which runs electioneering ads. "They convinced reporters that this was only about 527s." Another reason is that reformers in Washington are often like the drunk who looks for his keys not where he thinks he dropped them, but under a streetlamp, where the light is better. Because 527s must disclose their donors and expenditures every quarter, it's easier for political reporters and watchdog groups to blow the whistle on them in real time, issuing reports and press releases about the latest soft-money outrage. The 501(c)s disclose virtually nothing -- and by the screwy rules of Washington, no data, no foul. "When it comes to 501(c)s, the information is so sparse that hardly anyone has ventured into this area," says Craig Holman of Public Citizen, one of the few groups that tries to keep tabs on 501(c) political activity.
Holman suggests that a first step towards minimizing this abuse is to require 501(c)s to be at least as transparent as 527s: They should disclose their donors and electioneering expenses quarterly, and the IRS should make that information available on the Web. This disclosure solution probably makes more sense than what the FEC seemed to be contemplating in April: Banning all 501(c)s from using any soft money for any political purpose, a move that might have, for example, made it impossible for nonprofits to run non-partisan voter registration drives. Not surprisingly, the FEC has backed off that idea and now seems inclined to take no action against either 501(c)s or 527s, at least until after Election Day. That's good news for the Kerry campaign, though the GOP's campaign of harassment may well have scared off some liberal donors. But it's great news for the Bush campaign, since it means that groups like AJS can continue to work their magic under the radar with far less oversight than Democratic 527s.
Should the Republican shadow party give Bush the extra artillery he needs to prevail against Kerry, the newspaper editorialists and good-government activists may someday regret the fact that they decried the Democratic shadow party while blithely ignoring the Republican version. Not because it may help get Bush reelected (what do they care?) but because it will drive the whole soft-money political economy deeper underground. Should Kerry lose, the Democratic operatives running 527s may conclude that there's little value in declaring themselves openly as electioneering outfits. Instead, they'll likely transmogrify their groups into 501(c)s. Nobody will be able to see how much money George Soros gave this quarter, or figure out who sponsored that $500,000 ad campaign in the St. Louis suburbs. Soft money won't disappear. It will just become invisible.
Additional reporting for this article was provided by Jason Stevenson and Kathryn Williams.
Nicholas Confessore is an editor of The Washington Monthly.
In the fall of 1999, journalist James K. Glassman and economist Kevin A. Hassett published a book provocatively titled "Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market." The New Economy was not a high-tech version of tulipmania, they argued, and the stock market was not overvalued. Properly understood, wrote Glassman and Hassett, the Dow -- then upwards of 10,000 -- was actually undervalued: "Stock prices could double, triple, or even quadruple tomorrow and still not be too high."
It was a bold thesis, and more than a few skeptics disputed it in op-eds and book reviews. But this was the height of the boom, the authors were telling Wall Street exactly what it wanted to hear, and Dow 36,000 was a sensation. It rapidly became a New York Times bestseller, sparking incessant water-cooler conversation and wide coverage on the nation's business pages. Glassman, having already been a chat-show host and nationally syndicated financial columnist for The Washington Post, became a bona fide celebrity, widely profiled in the press and invited on television shows across the country to predict that the party, far from being over, was just getting started.
So optimistic was Glassman, in fact, that a few months after the book appeared, he launched a dot.com, Tech Central Station, based on just the kind of vague-but-intriguing business plan that attracted so much venture funding at the height of the tech boom. TCS would be "a cross between a journal of Internet opinion and a cyber think tank open to the public," as Glassman described it in a press release accompanying the site's New York launch party, held in Grand Central Station. TCS would be part Slate, part Red Herring, articulating "a high-tech agenda of freedom and opportunity" with a libertarian conservative bent.
Within a few months, of course, Glassman was forced to eat a certain amount of crow. The market peaked, then plunged 3,000 points over the course of two years, before struggling back to slightly below where it was when Dow 36,000 was published. Meanwhile, the dot.com bubble burst, burying thousands of Web ventures and billions of investor dollars. Many of Glassman's peers were ruined. (Conservative high-tech guru George Gilder, for instance, lost over 90 percent of the subscribers to his newsletter and still has a lien on his house.)
But Glassman not only survived the crash -- he also thrived. He was soon back on The Washington Post's business page dispensing stock picks and earning sizable fees on the lecture circuit. Last year, he even published another investment tome, this one titled "The Secret Code of the Superior Investor: How to Be a Long-Term Winner in a Short-Term World." Most surprisingly of all, Tech Central Station is one of the few Internet magazines to grow into middle age. Today, the hybrid venture enjoys a monthly readership approaching that of Web sites for more established public affairs magazines. It has around 100 columnists and semi-regular contributors, and runs smartly-written think pieces by the likes of Newt Gingrich, James Pinkerton, and Michael Fumento.
Glassman's triumph owes, in part, to his quick mind, deft prose style, and telegenic presence. But the real secret of his success is that the market Glassman writes about is very different from the one in which he thrives: the burgeoning world of Washington influence-peddling. As a writer and public figure, Glassman has, over time, aligned his views with those of the business interests that dominate K Street and support the Republican Party; he has also increasingly taken aggressive positions on one side or another of intra-industry debates, rather like a corporate lobbyist. Nowhere is this more apparent than on TCS, where Glassman and his colleagues have weighed in on everything from which telecommunications technologies should be the most heavily regulated to whether Microsoft is a threat to other software companies.
But TCS doesn't just act like a lobbying shop. It's actually published by one -- the DCI Group, a prominent Washington "public affairs" firm specializing in P.R., lobbying, and so-called "Astroturf" organizing, generally on behalf of corporations, GOP politicians, and the occasional Third-World despot. The two organizations share most of the same owners, some staff, and even the same suite of offices in downtown Washington, a block off K Street. As it happens, many of DCI's clients are also "sponsors" of the site it houses. TCS not only runs the sponsors' banner ads; its contributors aggressively defend those firms' policy positions, on TCS and elsewhere.
James Glassman and TCS have given birth to something quite new in Washington: journo-lobbying. It's an innovation driven primarily by the influence industry. Lobbying firms that once specialized in gaining person-to-person access to key decision-makers have branched out. The new game is to dominate the entire intellectual environment in which officials make policy decisions, which means funding everything from think tanks to issue ads to phony grassroots pressure groups. But the institution that most affects the intellectual atmosphere in Washington, the media, has also proven the hardest for K Street to influence -- until now.
More Kemp than Bork
Glassman has always had a knack for seeing opportunities before others do. After graduating from Harvard in 1969, he and his wife moved to New Orleans and launched Figaro, an early harbinger of the urban alternative weeklies that would proliferate in the coming decades. After selling the paper in 1978, he moved to Washington and up the media food chain, with stints as an editor or publishing executive first at Washingtonian and The New Republic, then at Atlantic Monthly and U.S. News & World Report. In the mid-1980s, he also began to pen an occasional column on business for TNR and other publications. Most business writing of the time was dull and technical, but Glassman's articles had charm and flavor. They ranged from a satirical look at corporate tax evasion (titled "How to Beat the I.R.S.: With llamas, Scottish stamps, and rent-a-cows") to a lacerating profile of Lee Iacocca, the former Chrysler executive. ("Something about Lee Iacocca," he wrote, "inspires exaggeration.")
His next business success was with Roll Call, a Capitol Hill newspaper bought by Arthur Levitt in 1986, when it was little more than a sleepy newsletter with four employees and an unpaid circulation of 5,000. Hired as the paper's editor, Glassman quickly amassed a group of energetic young reporters and pushed them to cover the Hill less like a legislative sausage factory and more like a community. Several former staffers describe him as a laid-back boss who strolled the offices with a golf putter and threw raucous election night parties at his house on Capitol Hill. "He was a great story editor, and a spectacular editorial writer," says Levitt. "His mission, when he signed on, was to create a paper which screams, 'Read me.' And he did that."
Just as importantly, Glassman -- with his wife, Mary, who served as publisher -- figured out how to make Roll Call a financial success. Through the 1980s, Washington's lobbying industry had grown massively, as businesses rushed to extract favors from a sympathetic Reagan administration. Glassman convinced individual corporations and trade associations to supplement their handshake lobbying with advertisements in the pages of Roll Call, promoting or attacking pending legislation. "It was a singular business insight," says Glenn Simpson, an early Glassman hire who now writes for The Wall Street Journal. "You have a captive audience of 535 of the most powerful people in the world and their 10,000 staff members who all read you closely, and then you have all these people who want to influence those people." Within a year, circulation more than doubled and Roll Call's ad pages increased sevenfold. Levitt eventually awarded Glassman equity in the paper, which by all accounts made him a wealthy man when he sold it in 1993.
As he became more successful, the onetime student radical and McGovernik also moved right. In 1995, by then a business columnist for The Washington Post, Glassman began moonlighting for the op-ed page; there, during the height of Gingrichism, he assailed federal student loans, defended high C.E.O. pay, and agitated for the flat tax. Articulate and irreverent, Glassman was also a hit on Washington chat shows. In the fall of 1996, he was named a fellow at the American Enterprise Institute, a leading conservative think tank and a kind of government-in-exile for Republican officials from the first Bush administration. But though he had become increasingly conservative, Glassman was more Jack Kemp than Robert Bork; as a pundit, he usually favored the shiv over the cudgel. During fierce congressional debate over the National Endowment of the Arts, for instance, many conservatives appeared to consider the likes of "Piss Christ" a portent of American decline. Glassman's objection to the NEA was more practical: Based on the available evidence, he noted, "Government money makes bad art."
Like most pundits, of course, his predictions were not always borne out by events. In a column shortly before the 1996 election, for instance, he wrote that the stock market might "nose dive" if Bill Clinton were re-elected president. Nor was Glassman always consistent. In a 1994 column, he attacked those of his colleagues "who give speeches to trade associations and corporations and get paid $2,000 or $5,000 or even $30,000 a pop" and confessed to giving up his own then-modest lecture schedule because he felt "uneasy" about the potential conflicts. Later, his conscience balmed, Glassman would rejoin the speakers' circuit, commanding up to $15,000 a pop.
Glassman was extraordinarily prolific -- and increasingly influential. By the late 1990s, his financial column in the Post was nationally syndicated; he was a regular contributor to The Wall Street Journal and other publications; and he hosted two different television programs, "TechnoPolitics" on PBS and the Sunday show "Capital Gang" on CNN. And as the stock market continued to climb, he found his next niche: tribune of the New Economy. Until then, Glassman's financial advice was invariably middle-of-the-road and circumspect; like most sensible investment columnists, he told his readers to avoid day-trading, to buy and hold for the long-term, and to diversify their holdings. But in 1998, in the Journal, Glassman and Hassett published the first of several op-eds arguing against the notion that stocks might be overvalued. "We are not so foolish as to predict the short-term course of stocks," they wrote as the Dow was approaching 9,000, but "[w]orries about overvaluationâ€¦are based on a serious and widespread misunderstanding of the returns and risks associated with equities." A year later, with the Dow breaking five figures and a book advance in their pockets, the two were somewhat less circumspect, predicting in a follow-up column that the Dow would hit 36,000 -- "tomorrow, not 10 or 20 years from now."
When Dow 36,000 was finally published in book form, a number of reviewers took exception to the book's thesis on stock valuation. The Journal's concluded that Dow 36,000, while well-argued, was "dangerous" to investors; Jeremy Siegel, a University of Pennsylvania economist on whose work Glassman and Hassett had based part of their argument, at one point complained that they had misinterpreted his data and drawn erroneous conclusions. But Glassman had become a prophet. By October 2000, with the Dow sinking, reported the New York Observer, Glassman was making over 100 speeches a year. "We are on the verge of a tremendous wealth explosion, the likes of which has never been seen," he told one group of New York investors.
The New New Journalism
Some months before the publication of Dow 36,000, Glassman's PBS show was cancelled, and he began to look around for a new gig. With his longtime friend Charles Francis, a prominent Republican lobbyist and public relations maestro, Glassman began approaching funders with a new pitch. Taking a nod from "TechnoPolitics," he envisioned an entity that would cover "the nexus between science and technology on the one hand and public policy on the other," as he later described it to me, with assorted "sponsors" and himself as the site's "host." Tech Central Station was launched in early 2000, with a smattering of content and one sponsor, AT&T. But Glassman had bigger plans. As he explained during a speech in Los Angeles not long after the launch, "We concentrate on such issues as Internet taxation, broad-band dissemination, privacy, biotechnology, high tech trade, and so on," serving as "a kind of watchdog in an area in which few people seem to be doing long-term principled thinking on public policy." Glassman exulted, "I think in a sense we kind of invented a new sort of institution."
But what sort of institution, exactly? At first glance, TCS does resemble a think tank-cum-opinion magazine -- indeed, a successful one. Each day, the site publishes a new batch of brisk, topical articles. In style and substance, TCS's content is an intellectual descendent of the rapid-response policy briefs pioneered by conservative think tanks during the 1980s, and as influential: The site's articles and contributors have been cited hundreds of times in the mainstream media and reprinted on op-ed pages across the country. TCS brings all of this off with a relatively small staff, drawing on the brainpower of established think tanks rather than housing and paying its own fellows and scholars, and publishing their arguments in its own "magazine" rather than hawking sound-bites to print reporters and columnists. "We can get the word out much more quickly [than a traditional think tank]," says Glassman, "and it's a lot less expensive not having a lot of bricks and mortar."
If TCS combines all the strengths of a modern advocacy think tank with the reach and accessibility of a successful political magazine, it has succeeded largely by rejecting the conventions that traditionally govern journalism and policy scholarship. Traditional think tanks are organized under the 501(c)(3) section of the tax code and must disclose many details of how they are financed, being -- at least in theory -- expected to justify their non-profit status with work in the public interest. Even think tanks of an acknowledged ideological bent seek to insulate the work of their scholars and fellows from the specific policy priorities of the businesses or foundations that provide their funding. Likewise, traditional newspapers and magazines, whether for-profit or not, keep a wall between their editorial and business sides; even at magazines of opinion, the political views of writers are presumed to be offered in good faith, uninfluenced by advertisers.
Unlike traditional think tanks, Tech Central Station is organized as a limited liability corporation -- that is, a for-profit business. As an LLC, there is little Tech Central Station must publicly disclose about itself save for the names and addresses of its owners, and there is no presumption, legal or otherwise, that it exists to serve the public interest. Likewise, rather than traditional advertisers, TCS has what it calls "sponsors," which are thanked prominently in a section one click away from the front page of the site. (AT&T, ExxonMobil, and Microsoft were early supporters; General Motors, Intel, McDonalds, NASDAQ, National Semiconductor, and Qualcomm, as well as the drug industry trade association, PhRMA, joined during the past year.) Each firm pays a sponsorship fee -- although neither Glassman nor any of the sponsors would disclose how much -- and gets banner advertisements on the site. When I contacted a few of the sponsors, each described their relationship to TCS in a slightly different way. An Intel spokeswoman said that TCS was "a consultant" to the computer-chip maker. AT&T's representative said her firm was "a funder." A Microsoft representative explained that the company "is constantly looking for ways to educate on some of the critical and important issues in the technology sector."
On closer inspection, Tech Central Station looks less like a think-tank-cum-magazine than a kind of lobbying practice. Which makes sense: Four of the five co-owners of TCS are also the co-owners of the DCI Group, the Washington public affairs firm founded by Republican operative Thomas J. Synhorst. TCS's fifth owner is Charles Francis, who is also a senior lobbyist at DCI and is listed on TCS's phone directory. And as it happens, three of TCS's sponsors -- AT&T, General Motors, and PhRMA -- have also retained DCI for their lobbying needs. (Both DCI's spokeswoman and TCS's chief executive officer declined to be interviewed for this article. However, after I requested comment, the Web site was changed. Where it formerly stated that "Tech Central Station is published by Tech Central Station, L.L.C.," it now reads "Tech Central Station is published by DCI Group, L.L.C.")
Like its publishing arm, DCI's business is to influence elite opinion in Washington. But instead of publishing articles, DCI specializes in what's known as "corporate-financed grass-roots organizing," such as setting up front groups to agitate for a client's position, placing letters to the editor with key newspapers, and using phone banks to generate calls to politicians. TCS, for its part, includes a disclaimer on its site noting that "the opinions expressed on these pages are solely those of the writers and not necessarily those of any corporation or other organization." But it is startling how often the opinions of TCS's writers and sponsors converge.
Last July, for instance, PhRMA retained DCI to lobby against House legislation that would permit the reimportation of FDA-approved drugs from Canada and elsewhere. The same month, TCS put out a press release announcing that it planned to cover an upcoming bus trip taken by Canadian patients to "access prescription drugs and medical treatment" in the U.S. (The trip was sponsored in part by the Canadian subsidiaries of many of the same pharmaceutical companies that belong to PhRMA.) A few days after the press release was issued, TCS columnist Duane Freese published an article touting the bus trip and attacking the legislation; other contributors also wrote columns for the site attacking reimportation.
The articles on Tech Central Station address a broad range of issues, some of concern to its sponsors, many not. And most of the site's authors are no doubt merely voicing opinions they have already reached. But time and time again, TCS's coverage of particular issues has had the appearance of a well-aimed P.R. blitz. After ExxonMobil became a sponsor, for instance, the site published a flurry of content attacking both the Kyoto accord to limit greenhouse gasses and the science of global warming -- which happen to be among Exxon-Mobil's chief policy concerns in Washington.
TCS's articles have also complemented work being done by DCI. During 2000, Microsoft contracted with DCI to perform various services, among them generating "grassroots" letters opposing a breakup of Microsoft and launching Americans for Technology Leadership, an anti-breakup group funded in part by Microsoft and run out of DCI's office. Meanwhile, down the hall, Tech Central Station went on the offensive, inaugurating an "anti-trust" section that over the coming months would publish little except defenses of Microsoft and attacks on the software maker's corporate and governmental antagonists, with occasional detours into the subject of lawsuit reform. (Microsoft smartly plugged some of the articles on its own Web site.)
Kill the Bells
But the greatest asset Glassman offers his site's sponsors is himself. "He's conversant in many different topics," says an admiring former employee, "and he also knows how to talk like an expert on something even if he doesn't know anything about it." (For the record, AEI lists Glassman's research interests as "Social Security, economics, technology, politics, federal budget, interest rates, stock market, taxes, and education.") Glassman is not a registered lobbyist. But with his credentials as an AEI fellow and Post columnist, his knack for colorful writing, and his easy access to chat shows and op-ed pages across the country, he is an effective advocate for whatever side he chooses to take. And since becoming the "host" of TCS, he has often taken the side of the site's sponsors.
Until 2000, for instance, Glassman had written about the government's case against Microsoft on precisely one occasion. (He opposed it.) After Microsoft became a sponsor of TCS, he inveighed against the suit in nearly two dozen columns for the site. He also penned op-eds for another dozen or so publications and appeared on TV to attack a Microsoft breakup in vivid, even strident terms. (On "Crossfire" Glassman argued that one court decision in the suit placed "in jeopardy not just high technology, but, I think, the entire U.S. economy that's been booming.") When it came to the subject of climate change, on which he had seldom remarked before TCS was launched, Glassman became equally prolific, attacking Kyoto or the science of climate change in 40 columns for the site, many of them syndicated elsewhere. Meanwhile, he also took to the op-ed pages of The Wall Street Journal, the St. Louis Dispatch, and The Washington Times to trash Kyoto; in none of them did he disclose TCS's connection to ExxonMobil.
All of these positions are, in theory, perfectly compatible with Glassman's generally libertarian, anti-regulatory politics. But in at least one area -- telecommunications -- the only discernable consistency to Glassman's opinions is the degree to which they track those of AT&T, the original sponsor of TCS. During 2001, in a string of columns and in an appearance before the House Judiciary Committee, Glassman criticized legislation that would have relaxed the requirement that regional Bells rent their phone lines to other companies, including AT&T, seeking to offer local services to the Bells' customers. Identifying himself as a journalist, think tank fellow, and host of TCS -- but not disclosing the Web site's sponsorship by AT&T -- Glassman told Congress that the bill, known as Tauzin-Dingell, would "kill" the Bells' competitors. Though this was perhaps the only area of policy in which he favored more government regulation, and though his position was similar to that of congressional Democrats and liberal public interest groups, Glassman argued his was actually the true expression of free market principles. "I have devoted much of my professional career to advocating deregulatory, free-market solutions to economic and social problems," he insisted. "I know deregulation when I see it, and the Tauzin-Dingell bill is not deregulation."
As it happens, however, AT&T was not merely an aspiring provider of local phone services. At the time, it was the largest owner of cable systems in the United States. During 1999, America Online, the Internet service provider, lobbied aggressively for legislation to force cable companies like AT&T to offer its services on their cable systems at government-mandated rates. But when Glassman later wrote about this issue, he took a very different view of government's requiring companies to open up their expensive hardware to competitors -- although he again presented his position as a defense of high principle. "Common sense tells you that government has no business dictating the terms under which you rent your property to other people," he wrote on TCS. "But somehow, thanks to an aggressive lobbying campaignâ€¦many reporters took seriously the idea that cable companies could be forced to rent out their property at prices set by government." The real principle, it would appear, is that government has no business forcing companies to share their wires with competitors -- unless the competitor happens to sponsor a web site one hosts.
During my brief phone interview with Glassman -- he declined a follow-up -- I asked him whether or not TCS published opinions that contradicted the policy views, of, say, AT&T. "Frankly, we think that other points of view are well represented everywhere else," he responded cheerfully. "To have one point of view on an issue like telecom is something that we don't have a problem with." He added, "We're an advocacy group. There's no doubt about that. I don't think we ever had pretenses of being an academic think tank."
The Rise of Idea Laundering
Government decision-makers are subject to a cacophony of opinions -- from paid lobbyists, think-tank scholars, academics, newspaper editorials, consumer groups, and letters from ordinary citizens. And in the past decade, corporate lobbying has evolved to influence -- and, where possible, control -- the arguments emanating from each of these sources. It's why corporations have put so much money into think tanks, issue advertisements, and consulting arrangements with economists and other academics. It's how firms like DCI have flourished by orchestrating pseudo-grassroots movements to simulate or amplify constituent opinion on behalf of corporate clients.
After all, it's only human nature to put more trust in the arguments of seemingly independent observers than those of paid agents of an interested party. And that's why a journalist willing to launder the arguments of corporations and trade groups would be so valuable. A given argument, coming from such a journalist, would have more impact than precisely the same case articulated by a corporate lobbyist.
Glassman certainly has impact. Earlier this year, the Federal Communications Commission considered whether regional Bell companies should continue to fully share their wires with competitors like AT&T -- the position Democrats favored. The tiebreaking vote was cast by a conservative Bush appointee, Kevin Martin. Martin sided with his Democratic colleagues, a surprising position, but one made easier, say observers, by the fact that a few prominent conservative pundits, chief among them Glassman, had taken AT&T's side in the argument. "Glassman's clueless," opines an economist who specializes in telecom and supports relaxed regulations on both cable and phone systems. "But he gives good cover."
As he has so many times in his career, James Glassman has recognized a new and largely untapped opportunity for his journalistic talents. If his past is any guide, two things are likely to happen. Other journalists and pundits will follow suit, touching off a growth market in Washington journo-lobbying -- and then that market will crash.
Nicholas Confessore is an editor of The Washington Monthly. Nicole S. Cohen, Alexander Kirshner, and Zachary Roth contributed to the reporting of this article.
There have always been columnists who, for better or worse, commanded the greatest attention of their day. Think of Walter Lippmann during the postwar consensus, Joseph Kraft during the Vietnam era, or George Will during the Reagan years. William Safire heralded the Clinton backlash of the early 1990s, Maureen Dowd the frothy, decadent latter half of the decade. In much the same way, Paul Krugman, who has written a column twice-weekly for The New York Times since January 2000, is essential reading for the Age of Bush. If you work in Washington, you probably read Krugman's column, and if you read Krugman's column, you probably have strong feelings about Krugman himself. Mention his name at a Washington dinner party, and at least a few people are bound to rave -- or curse.
It's not immediately clear why. Krugman is a pretty good writer, but not a great one. He's adept at explicating numbers and statistics in clear English, but he's not a stylist like Dowd or the Washington Post's Michael Kelly. Krugman isn't well-connected in Washington; in fact, he almost never leaves the environs of Princeton University, where he has taught economics since 2000. He's not a connoisseur of politics. He can't tell you how many votes John F. Kennedy won Illinois by in 1960 or who Arthur Finkelstein is. Nor is Krugman much of a reporter. There are few facts in his columns that any Times intern couldn't glean from documents published daily by the Congressional Budget Office or dozens of Beltway think tanks. Krugman doesn't travel around the country interviewing lieutenant governors or lard his columns with juicy blind quotes. He doesn't plot Democratic strategy like E.J. Dionne, dine with foreign dignitaries like Thomas Friedman, or write smart big-think like Ronald Brownstein. Nevertheless, for nearly two years, Krugman has been the columnist every Democrat in the country feels they need to read -- and every Bush Republican loves to hate.
Krugman's primacy is based largely on his dominance of a particular intellectual niche. As major columnists go, he is almost alone in analyzing the most important story in politics in recent years -- the seamless melding of corporate, class, and political party interests at which the Bush administration excels. Like most people, the Washington press, and especially pundits, were slow to grasp the magnitude of the shift. Krugman, whether puncturing the fuzzy math of Bush's tax cut or eviscerating the deceptive accounting behind Bush's Social Security plans or highlighting the corruption behind Dick Cheney's energy task force, has nearly always been the first mainstream writer to describe -- and condemn -- Bushonomics in plain English.
As an economist, of course, Krugman surely has an edge over most liberal pundits; his sterling academic reputation gives his critiques a punch that few Democratic politicians or liberal editorialists could hope for. But in truth, little that Krugman writes about has relied on his academic expertise. His columns aren't about trade theory or stochastic calculus, but about flagrant deceptions and fourth-grade arithmetic. What makes Krugman interesting, in short, is not just why he writes what he writes. It's why nobody else does.
Facts vs. Spin
"This is not what I do. This is not who I am," Krugman sighs. It's a week before the election, and he has invited me to his tiny, cluttered office on the fourth floor of Princeton's Woodrow Wilson School, an imposing pile of white marble that, from a distance, resembles an oversized bicycle rack. In pictures, Krugman looks self-assured, even a little hard-eyed. In person, he's friendly but ill at ease, a schlumpy professor in chinos and a beige button-down, who dislikes being interviewed, he says, owing to a few bad experiences with reporters. And it shows -- his eyes dart nervously around the room, and every so often he rubs his face vigorously with both palms. "This is not my natural habitat. Sometimes, I think that if I had known what it would be like, I would never have agreed to do this column. What I really do is international trade and finance," he says, gesturing toward an anonymous stack of papers on one side of the room. "Professionally," he adds, "I should be worrying a lot about Brazil right now."
In truth, Krugman hasn't been a pure academic since at least the mid-1990s, when he first began writing widely for popular magazines like Fortune and Slate. But his column for the Times has been unusual on several counts. One is what Krugman enthusiasts might call his sense of mission. Beginning during the 2000 campaign Krugman began to write frequently about George W. Bush, and since Bush took office, the president or his administration have made an appearance in about three-quarters of Krugman's 200 or so columns. He has written especially forcefully, and especially often, about the Bush administration's plans for privatizing Social Security ("Enron-like") and Bush's now-passed tax plan ("patently, shamelessly dishonest"). Indeed, Krugman has written so many columns attacking Bush's tax cut that you could make a book from them -- as, in fact, he did, publishing Fuzzy Math: The Essential Guide to the Bush Tax Plan in May 2001. And although Krugman can get pretty worked up -- he once compared Bush to the nativist French politician Jean-Marie Le Pen -- he's generally not a screamer. Rather, he writes mostly about facts, and spin: the fact that at least 40 percent of Bush's tax cut will eventually go to the wealthiest one percent of Americans, versus the administration's spin that it was aimed mainly at the middle class. Plenty of other columnists have made these points. But only Krugman makes them in such detail, over and over again.
If Krugman's zeal is in part what makes him so appealing to liberal activists, it's also what makes him so off-putting to Republicans and conservatives -- and a fair number of center-left journalists. Krugman is regularly attacked by fellow pundits, most exhaustively by former New Republic editor-turned-blogger Andrew Sullivan and former Washington Monthly editor-turned-blogger Mickey Kaus, each of whom inveighs against Krugman almost as often as Krugman inveighs against Bush. And like many partisans, Krugman can stir unruly passions. Last year, after he published an encomium to the late economist James Tobin, he received a bizarre screed from actor and game-show host Ben Stein; Stein, who majored in economics in college, accused Krugman, a likely future Nobel laureate, of having a "limited background" in the field. There are Web sites devoted to attacking Krugman's work, as well as a Paul Krugman Archive, which contains every article he has ever written, started by a high school student in New York.
For Krugman devotees, however, the main appeal is his proclivity for writing things before it is okay to write them. Journalists may love to break news, but they hate to contradict the narratives that crystallize around particular politicians or policies. Late last winter, for instance, the established storyline on California's energy crisis was that Left Coasters had only themselves to blame: the state had passed a flawed deregulation law, which led its utilities to rely on the spot energy market when prices were high. This neutral explanation came from the supposedly competent and disinterested Federal Energy Regulatory Committee, so reporters favored it. And while the press gave plenty of column inches to the Bush administration's preferred spin -- that environmentalists had stymied the construction of needed generation capacity -- few reporters gave credence to groups like Public Citizen, who blamed the crisis on market manipulation by energy companies, many of them based in Texas and enjoying close ties to the administration. But Krugman, noting that economists had long worried about the vulnerability of California's trading system to price-fixing, argued that market manipulation was the obvious culprit; otherwise, he wrote in March 2001, the power company executives "are either saints or very bad businessmen." Krugman was ignored at the time. Twenty months later -- following the collapse of Enron, three federal investigations into the California crisis, and a passel of indictments against energy company officials -- Krugman has been proved right.
More often, though, his scoops are conceptual. The tax cut, Bush's Social Security plan, Enron, the energy crisis, and Harken -- all Krugman hobbyhorses -- were widely covered in the media. But he has been the only prominent columnist to attempt to weave all of them into a single, continuing narrative about the Bush administration's policies, wealth inequality, corporate profiteering, and the ascendancy of crony capitalism. Many political columnists, for instance, expressed outrage and anger over the way Enron executives locked ordinary employees into Enron-only 401(k) plans while they themselves were unloading the company's stock. For Krugman, though, Enron's abuse was of a piece with the Bush approach on tax cuts: "First, use cooked numbers to justify big giveaways to the top. Then if things don't work out, let ordinary workers who trusted you pay the price."
Krugman was not, and is not, the only person in America who believes that the Bush administration is in cahoots with interests out to bilk Americans and pervert the political process. But as a Times columnist, closely read by the political elite and syndicated to papers across the country, he has been able to validate the anger of a whole class of angry, frustrated Democrats who feel that he's the only one prepared to describe the world as it really is. "He goes against the very basic thing that people and journalists want to believe about Bush: 'Say what you want, but the guy's honest,'" says James Carville, the blunt, flamboyant host of CNN's "Crossfire." "Krugman says, no -- he's a complete fraud."
Krugman was born and raised on Long Island, where he enjoyed what he describes as an "utterly conventional" suburban childhood. After reading Isaac Asimov's classic "Foundation" novels, he nurtured a secret desire to be one of Asimov's "psychohistorians" -- futuristic social scientists who could predict the course of human history. At Yale during the 1970s, he did the next best thing, majoring in economics under the tutelage of economist William Nordhaus. Like Nordhaus, Krugman attended graduate school at MIT; in 1977, Krugman joined the economics faculty at Yale. Within a few years, he had begun to help think through what would later be called "new trade theory," which holds that an increasing proportion of trade can be explained by technological innovation rather than countries' comparative advantage (i.e., in natural resources). Krugman's work on the subject cemented his academic reputation and launched him into the ranks of rising young stars in the field.
His first and last sojourn in Washington began in 1982, when Martin Feldstein, then chairman of Ronald Reagan's Council of Economic Advisers (CEA), invited Krugman, Lawrence Summers, and a few other whiz kids onto the CEA's staff. The early '80s recession and debt crisis had thrown Reagan's economic policy into disarray, and Feldstein had been brought in to fix things up. Working in government had two contradictory effects on Krugman. On the one hand, it induced in him a deep dislike for those he would later describe as "policy entrepreneurs" -- activists and journalists, usually lacking academic credentials, who seemed to exert so much influence over economic decision-making in Washington. Feldstein was a pioneer of the supply side policies then in favor among Reaganites, who believed taxes were the most important determinant of economic growth. But unlike policy entrepreneurs such as Jude Wannisky and the Wall Street Journal's Robert Bartley, Feldstein refused to pretend that Reagan's massive tax cut could pay for itself. When Feldstein insisted on issuing accurate budget projections anticipating government deficits, and even called for a small tax increase to offset them, the administration's supply side purists attacked. (Treasury Secretary Donald Regan even urged reporters to "throw out" the council's annual report.) Like many economists, Krugman cherished his discipline's purity, and the sight of Feldstein being pummeled for not painting a rosier election-year picture was deeply disillusioning. "One thing you learn when you're working in an administration -- not to mention at the Fed, where it's even more extreme -- is to think three times before you speak and then bite your tongue," says Alan Blinder, the Princeton economist and former vice chairman of the Federal Reserve. "That's not how academics normally behave."
But Krugman also found that he liked writing about economic policy, and a seed was planted. The technical papers and books that he produced during the mid- and late 1980s, many of them integrating and extending his earlier work on trade theory, were notable for their creativity and number and helped set Krugman on his way to winning the John Bates Clark Medal, awarded biennially to a rising young economist, in 1991. But Krugman's late-'80s work was also less abstract than his previous efforts, drawing inspiration from real-world policy dilemmas. Eventually, at the suggestion of Michael Barker, a former Hill staffer working at the Washington Post, Krugman, by then ensconced at MIT, sat down to write his first book for a popular audience. "The Age of Diminished Expectations," a kind of primer on basic economic principles as they applied to current events, was published in 1990. And while it wasn't a bestseller, the book was lucid, informative, and widely read among journalists and opinion leaders, launching Krugman's career as a bona fide public intellectual.
Very soon, however, Washington disappointed Krugman again. His writing and congressional testimony about income inequality brought him to the attention of Bill Clinton's campaign in 1992, which used some of his findings to attack the Bush administration. When Wannisky and other conservatives argued that skyrocketing income inequality was in fact a myth, Clinton's aides enlisted Krugman to help them fight the ensuing propaganda war. When he published a defense of Clinton's economic plan in the Times that August, it was widely assumed that Krugman would be Clinton's pick, should he win, as chairman of the Council of Economic Advisers.
Clinton did win. But his economic transition team was headed by Robert B. Reich, a Harvard lecturer, journalist, and author who had penned the early '90s other big policy tome, "The Work of Nations." Not only had Reich tussled with Krugman over trade policy during the 1980s; he had also gone to Oxford with Clinton. Eventually, Reich became Secretary of Labor in the new administration, while Berkeley economist Laura D'Andrea Tyson was named chair of the CEA. Many other economists were drafted into top administration slots, including Krugman's colleague from the Reagan days, Larry Summers. But Krugman was passed over -- largely, say former Clinton officials, because he was deemed too volatile. (After clashing with fellow attendees at Clinton's Little Rock economic summit, for example, he had appeared on "Larry King Live" to declare the meeting "useless.")
Krugman didn't take the rejection well, and lashed out at Clinton's appointees. To Washingtonians, the key division on the Clinton economic team lay between the stimulators, such as Reich and Tyson, and the deficit hawks, notably Treasury Secretary Lloyd Bentsen and budget director Leon Panetta. But for Krugman, the key division was between real economists qualified to set national policy and policy entrepreneurs, who were not. In a Times article that January, he was quoted as saying Tyson lacked "analytical skills" -- just a few weeks after giving a speech at the annual meeting of the American Economic Association lambasting Reich and Ira Magaziner as "pop internationalists" who "repeat silly clichés but imagine themselves to be sophisticated."
Reich, Tyson, and a handful of other alleged policy entrepreneurs came in for further attack in Krugman's next book, "Peddling Prosperity" (1994). It wasn't just that they were wrong, Krugman declared. It was that they were all dangerous hacks, snake-oil salesman selling foolish remedies to credulous politicians (like Clinton). Real economists eschew policy, insulating themselves from the intellectual compromise endemic to the political world. Policy entrepreneurs, however, tend to write "in newspapers and semi-popular magazines like Foreign Affairs, the Harvard Business Review, and the New Republic." Moreover, the "fault line between serious economic thinking and economic patent medicine, between the professors and the policy entrepreneurs," Krugman wrote, "is at least as important as the divide between left and right."
But what was strange about "Peddling Prosperity," as economics journalist Robert Kuttner would note in a lengthy assessment of Krugman published in the American Prospect two years later, was that Krugman quickly became the most prolific policy entrepreneur of them all. (Reich and Kuttner are co-founders of the Prospect, where I was a staff writer for four years.) By 1996, Krugman had published enough articles in Foreign Policy, Fortune, the Economist, Harper's, the Washington Monthly, and, yes, Foreign Affairs and the Harvard Business Review to fill a second mass-audience book -- "Pop Internationalism". His defense? "What I eventually realized," he wrote in the introduction, "was that an effective answer to pop internationalism would require a new kind of writing ... essays for non-economists that were clear, effective, and entertaining."
Evidently, the urgency of combating pop internationalists outweighed the dangers of popular writing, and Krugman took to his new task with great enthusiasm. Slate signed him up for a column, as did the New York Times Magazine, and he quickly mastered the form. Some of Krugman's best writing dates from this period, and he was acclaimed as the heir to John Kenneth Galbraith. His pieces in Slate, especially, were funny, revealing, and exceptionally fluid, if occasionally dismissive to those with whom he disagreed. As always, a good portion of his writing was devoted to debunking them -- leftists who criticized the World Trade Organization, supported protectionism, and still believed in Keynes; conservatives who argued that the Dow could reach 36,000 and still believed in supply side economics.
It was largely on the strength of Krugman's writing for the Times Magazine and Slate -- plus, of course, his burgeoning academic reputation -- that Howell Raines, then the Times editorial-page editor, approached Krugman about writing a regular column. This was in 1999, at the height of the boom, and Raines felt that the Times needed someone who could, as Krugman puts it, "write about the vagaries of business and economics in an age of prosperity." Krugman's early Times column was notably less droll than his earlier writing and covered the kinds of topics he and Raines had discussed: the AOL Time-Warner merger, Bill Gates, and, when it finally happened, the stock market plunge. But Krugman still had a taste for the blood of the "hired gun" -- "usually a mediocre economist," he wrote in an April 2000 column, who "has found a receptive audience for work that does have an ideological edge."
The Anxieties of Influence
There's a sense, then, in which Krugman hasn't changed. His writing about the Bush administration, like that about policy entrepreneurs, is primarily concerned with stupid economic policy -- or at any rate, what Krugman considers to be stupid economic policy. He hasn't changed his substantive views on comparative advantage or monopolistic competition. It's worth noting, moreover, that Krugman was passed over for a Clinton economic post for precisely the qualities that make him such an effective Bush critic: His peevishness; his confidence -- bordering on arrogance -- in his own ideas; his lack of concern for the niceties of political or bureaucratic culture, and his resulting isolation from Washington life.
And yet something has changed. Now it's Krugman's work that cuts with an ideological edge. To read through his columns about Bush is to watch disdain pass through frustration into rage. The first few, written during the 2000 campaign, are dismissive; how could anyone take what this guy is saying about his budget seriously? But a few weeks before Election Day, Krugman was getting impatient. "I really, truly wasn't planning to write any more columns about George W. Bush's arithmetic," he wrote in an October dispatch. "But his performance on 'Moneyline' last Wednesday was just mind-blowing." In the space of a few minutes, he noted, Bush had made three major misstatements -- about how much he had promised to spend on prescription drugs for seniors, about how much of the surplus his tax cut would eat up, and about whether Social Security got a better "return" than bonds. "What is really striking here is the silence of the media -- those 'liberal media' conservatives complain about," Krugman lamented. "As I said, I don't want to keep writing about this. But reporters seem to be too busy chasing rats and dogs to look at what the candidates say about their actual policy proposals." The same went for Bush's Social Security proposal. "It just was not acceptable to report Bush's plan straight," Krugman told me recently, "to assert that it requires a large influx of money from someplace to make it work."
Even after Bush became president, it's clear that Krugman saw Bush's deceptions as more joke than threat. In particular, Krugman, like many people outside and inside Washington, didn't believe that the Bush administration would persevere with the tax cut in the face of a deepening slump. But as Bush and his lieutenants did just that -- and more infuriatingly, began to offer an endlessly changing, and often contradictory, set of explanations and numbers to defend their plan -- Krugman's writing changed. He no longer wrote about policy hustlers of the left and the right; instead, he began to devote the majority of his columns to the Bush administration. His tone was more angry, less wry. During the campaign, Raines had forbidden him to use the word "lie" when describing Bush's proposals, even the demonstrably mendacious Social Security plan. Now Krugman used it with gusto. "Mr. Bush was lying [during the tax cut debate]," he wrote in August 2001. "It was obvious from the start that the administration's numbers didn't add up. And in case you were wondering, the administration is still lying."
"There's been a kind of missionary quality to his writing since then," muses Princeton's Blinder. "He's trying to stop something now, using the power of the pen." But that's not all. The change is deeper: Krugman now takes politics seriously. As Kuttner puts it, "The interesting thing about Krugman is that he was a mainstream neoclassical economist who was moderately liberal as a citizen, but tended to look at politics as an illegitimate distortion of the perfection of the market economy. He viewed the left and the right as symmetrical evils. Krugman has now discovered power."
Krugman seems to agree. "I think we were all living in a fool's paradise in the late 1990s. There probably wasn't as much energy in my criticism of the right. I was wrong, obviously," he says. "If I'd understood where politics would be now, it would have been quite different. I thought that Reich and Magaziner were proposing bad ideas, but that's not the same as being frightened of where they might be taking us. We can have arguments about trade policy later. Now I'm frightened."
White and Wrong
Krugman has also discovered that when you're the center of attention and you make a mistake, people notice. The most serious error was in a column written last July about Bush's dealings with the Texas Rangers, of which he became a part-owner in 1989. It's well known that Bush put $606,000 into the syndicate that bought the Rangers in 1989, about two percent of the total cost. When the deal was initialized that same year and Bush became the team's general manager, the syndicate awarded their well-connected partner an additional 10 percent stake, gratis. When the team was sold in 1998, Bush earned $14.9 million on his original investment. But Krugman went further, charging that Bush's extra return was "a 12-million dollar gift" to "a sitting governor," when in fact the gift had been awarded years before Bush's election as governor in 1994. Krugman later admitted the error -- on his Web site, but not in the Times.
In a column about Army Secretary Thomas White, Krugman, citing a report by reporter Jason Leopold in the online magazine Salon, wrote that shortly after White knew of Enron's impending losses, he wrote an email to another executive "Close a bigger deal. Hide the loss before the 1Q." White, charged Krugman, was an "evildoer." But two weeks later, after White told the Times he couldn't "recall" writing the email in question, Salon took the story off their site, and after re-examining Leopold's evidence, neither Salon nor the Times could authenticate it. In his next column, Krugman apologized for the mistake. But not before he was roundly pilloried for repeating the quote, even more so than Salon for printing it. "Krugman Comes Clean" wrote Andrew Sullivan on his Web site, as though Krugman had been involved in some kind of cover-up.
Both columns involved major errors -- one sloppy, one more understandable. (If columnists re-reported every article they ever cited from reputable magazines, we wouldn't have op-ed pages.) But it is a measure of the nerve Krugman touches that his mistakes draw vastly more criticism than the same or worse sins committed by other columnists. In a November Times column, for instance, William Safire declared it an "undisputed fact" that 9/11 terrorist Mohammed Atta had visited an Iraqi agent in Prague, even though investigations by the CIA and by the Czech intelligence agency -- not to mention reams of reporting by Safire's own paper -- had determined that no such meeting had ever taken place. Later, Safire changed his mind, calling his assertion "a hunch," but not an error -- and nobody, save MSNBC columnist Eric Alterman, called him on it. But Safire isn't the only one. During the Enron scandal, according to the Web site Spinsanity.org, nearly 20 pundits, reporters, and columnists repeated the myth that Ken Lay had stayed in the Lincoln Bedroom during the Clinton administration; only about half of them issued corrections. Likewise, many liberal columnists -- Michael Moore, Robert Scheer, even The New Yorker's Hendrick Hertzberg -- wrote that the Bush administration had given $43 million in aid to the Taliban prior to 9/11, when in fact it was $43 million worth of foodstuffs and food security delivered to Afghans through the United Nations. Yet few of these errors sparked anything close to the reaction that Krugman's have.
Pages of Sin
On balance, Krugman's record stands up pretty well. On the topics he writes about most often and most angrily -- tax cuts, Social Security, and the budget -- his record is nearly perfect. "The reason he's gotten under the White House's skin so much," says Robert Shapiro, a former undersecretary of commerce in the Clinton administration, "is that he's right. None of it is rocket science."
So if dismantling the facade of lies around, say, Bush's tax cut is so easy to do -- and makes you the most talked-about newspaper writer in the country -- why don't any other reporters or columnists do it themselves? Because doing so would violate some of the informal, but strict, rules under which Washington journalists operate. Reporters usually don't call a spade a spade, unless the lie is small or something personal. When it comes to big policy disagreements, most reporters prefer a he-said, she-said approach -- and any policy with a white paper or press release behind it is presumed to be plausible and sincere, no matter how farfetched or deceptive it may be.
Similarly, among pundits of the broad center-left, it's considered gauche to criticize the right too persistently, no matter the merits of one's argument. The only worse sin is to defend a politician too persistently; then you become not a bore, but a disgrace to the profession and its independence -- even if you're correct. Thus, in Washington circles, liberal Times columnist Bob Herbert is written off as a predictable hack, while The New York Observer's Joe Conason, who vigorously defended the Clintons during the now-defunct Whitewater affair, is derided as shrill and embarrassing. Obviously, conservative columnists and pundits aren't quite as averse to being persistent or shrill. But center-left journalists do not, to put it mildly, take their cues about what's acceptable practice from conservative pundits.
That's because liberal journalists and conservative journalists have different value systems. Most liberal pundits -- E.J. Dionne, Ronald Brownstein, or Maureen Dowd -- came up through the newsroom ranks, a culture that demands shows of intellectual independence from politicians, especially Democrats. Many conservative pundits, on the other hand -- Safire, Tony Blankley, or Peggy Noonan -- come straight from political careers, a culture that encourages intellectual fealty and indulges one-sidedness. Krugman is not a journalist by training, and he's never held appointive or elective office. But like conservative pundits, he doesn't feel bound by the niceties that professional reporters do. Hence the discomfort with Krugman's methods among center-left journalists.
"He is obviously a very smart guy, basically liberal, with complicated views, who once recognized when his own side was wrong. And at some point he switched and became someone who only sees what's wrong with the other side, in fairly crude terms," says Mickey Kaus. "The Bush tax cut is based on lies. But it's not enough to criticize a policy to say that it's based on lies. You have to say whether it's good or bad for the country." True, Kaus is probably Krugman's most vociferous non-right-wing critic. But even among those journalists and politicos who enjoy his column, it's not uncommon to hear the comment that Krugman might be a little more effective if he were just a little less rabid. "It is considered the appropriate thing to say at a dinner party that, while Krugman is very bright, he's just too relentless on Bush," drawls James Carville. "Because to accept Krugman's facts as right makes the Washington press look like idiots."
These days, however, there's a good market for journalists willing to be a little relentless when it comes to the Bush administration. Of course, Krugman, like any good economist, knows that in most markets the biggest profits come from having some sort of monopoly. But monopolies don't endure; competitors always arise. Right now, when it comes to analyzing the intellectual underpinnings of the Bush administration, Krugman has no competition. But as is usually the case, it might be better for everyone else if this particular monopoly didn't last.
Nicholas Confessore is an editor of The Washington Monthly.