Too Big to Nail: The Biggest Scandals in Washington DC Have Nothing to Do with Bob Menendez

Okay, so Senator Robert Menendez (D-NJ) is in a heap of trouble. His admitted free airplane rides--and alleged hookers and influenced peddling--are the latest juicy Washington scandal; even the MSM is coming around to covering it. And yet as we shall see, the Menendez scandal is dwarfed by many other, bigger DC flagrante delictos. The difference, though, is that those other larger scandals are legal.   

You see, inside the Beltway, mere crooks finagle dollar amounts denominated in thousands, maybe millions.  And if those crooks get caught, they might go to jail. Meanwhile, higher up on the political food-chain, those whom we dub “statesmen” finagle in billions, even trillions. Yet if those “statesmen”--and, oh yes, “stateswomen”--get caught in mid-finagle, the worst they suffer is a nasty headline or two; nothing stops them gaining plush and prestigious gigs at the end of their “public service.”  

In other words, inside the Beltway, if the dollar numbers associated with shenanigans are big enough, they don’t call it a “crime,” they simply call it “policy.” That is, past a certain point, the money amounts are so huge that the whole system is implicated in the corruption. And nobody in DC wants to see that, lest the taxpayers out in flyover country start to wonder if there’s something systemically wrong with Washington. And so, through the power of spin, and with the complicity of the MSM, massively awful actions--the bank bailouts being the most spectacular example--are declared to be something much different; they are categorized, instead, as honest actions that some folks might have a problem with.  

So the Powertown thinking goes: Let’s chase after the little guys, because the big guys are, shall we say, too big to nail. As the Czech peasants of yore used to say, “The big thieves hang the small thieves.”  

But first, Menendez, now seen as an expendable small sleazeball. Allegations have surrounded him for years; the Associated Press put it ever so delicately in a recent headline: “NJ Senator Menendez is no stranger to investigations.” 

Yet on November 1, 2012, the investigations got hotter: Breitbart News’ own Matthew Boyle, then writing for The Daily Caller, reported that Menendez had been consorting with prostitutes in the Dominican Republic (DR), courtesy of a jet-setting--and jet-owning--doctor-turned-tycoon, Salomon Melgen, who runs a chain of eye clinics across Florida.  

Menendez denied the hookers part, but has admitted to being in the DR for unspecified recreational purposes.  So maybe the rest of us should just guess why Menendez found himself in that prostitution paradise

Meanwhile, confirming at least the outlines of Boyle’s original story, Menendez has reimbursed Melgen for $58,500 for those free jet trips to the Dominican Republic. Melgen himself didn’t ask for the money back, of course, but Menendez thought it expedient; we’ll see if the IRS gets curious as to why the Senator never reported what now should be considered income, in the form of those free trips.  

Meanwhile, we learn that Melgen is much more than a doctor. Let us count the ways:

First off, he’s a bigshot doctor: He has given the Senate Democrats’ campaign group, called Majority PAC some $700,000. And last year, that PAC turned around and gave $582,000 to Menendez’s re-election campaign. Perhaps Melgen has noticed that Menendez serves on the Senate Finance Committee, which wields jurisdiction over the Medicare and Medicaid programs, which are the lifeblood of most medical tycoons. 

Second, Melgen has business interests far beyond doctoring; according to the Miami Heraldhe enlisted Menendez to help him muscle his way into a big a port-security contract in the DR. Did we mention that Menendez is the incoming chairman of the Senate Foreign Relations Committee? Whether we mentioned it or not, it’s a safe bet that folks in DR were paying close attention.  

Third, the AP has raised some interesting questions about other airplane trips to the DR:

A private plane owned by Melgen’s company, DRM Med Assist LLC, made more than 100 trips to the Dominican Republic since July 2009, an Associated Press review of flight records found. Nearly a dozen of those trips showed brief stopovers at Washington, D.C.-area airports, although it’s unclear who was on board because Federal Aviation Administration rules don’t require private aircraft to file flight manifests.

A dozen private-plane trips from Washington DC to the fleshpots of DR? Which other politicians, besides Menendez, might have been hitching rides on that jet?    

Menendez is in so much trouble that even though he is a just re-elected Democrat, the Democratic Party and the MSM might well conclude that they are better off without him. Indeed, we might note that such was the fate of two other New Jersey Democratic senators in recent decades; Harrison Williams, convicted in the “Abscam” investigation, resigned from the Senate in 1982, and Robert Torricelli, amidst swirling corruption accusations, suddenly decided not to seek re-election in 2002.  

So that’s Garden State politics for you. Yet as the pundit Michael Kinsley observed years ago, “The real scandal in Washington isn’t what’s illegal--the real scandal is what’s legal.” Exactly. We must remember the DC rule: Small things--say, sex tourism to the DR--are scandals; big things, measured in billions, are policy.  Let’s consider three examples:  

First, the Tim Geithner-to-Jack Lew handoff at the Treasury Department.  It’s worth remembering that the familiar “crony capitalism” we see every day--from the sugar program to the auto bailout to Solyndra--is dwarfed by the huge bailouts of the banks over the last five years. In 2011, Bloomberg News reported that the total value of all those subsidies to financial institutions amounted to $7.77 trillion. Yes, that’s “trillion” with a “t.”  And of course, almost all of this bailing-out took place on the watch of Tim Geithner, who was president of the Federal Reserve Bank of New York from 2003 to 2009 and then, of course, Barack Obamas Treasury Secretary for the last four years.   

Geithner’s actions on behalf of the banks--all legal, as far as anyone can tell--have been detailed by many investigators, including Gretchen Morgenson, author of a 2011 book, Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon

 And now Morgenson, writing for the New York Times, is back with a summing-up of  Geithner’s tenure at Treasury: “Banks, at Least, Had a Friend in Geithner.” 

Meanwhile, although the last four years have seen a slow economy--in fact, the slowest economic recovery in the last half-century, according to the Heritage Foundation--that national problem wasn’t Geithner’s worry.   His concern was more closely focused on the financial sector, which he took good care of.   As Morgenson notes: 

His major tasks included responding to the home foreclosure mess, unwinding federal bailouts under the Troubled Asset Relief Program and tackling the problem of financial institutions that are too big to manage and too interconnected for America’s good.

But now here it comes: 

But in scanning these agenda items, a pattern of winners and losers emerges. Let’s just say the financial institutions that dominate the United States were rarely on the losing end in the Geithner years.

Okay, no Republican, at least, should begrudge the success of the banks, in theory. But if the bank’s success comes from bailouts of a scale that make “crony capitalism” seem like too small a term, then everyone ought to be outraged.   

So now to Geithner’s replacement, Jack Lew. As Breitbart News pointed out last month, Lew received a $950,000 bonus from Citigroup after the bank received a federal bailout; indeed, since the meltdown, Citigroup has received an astonishing $476.2 billion in cash and guarantees.  Three years ago, Obama said that it was “obscene” that “fat cats ... are getting rewarded for their failure.”  Indeed. Yet meanwhile, there’s little doubt that Lew will be confirmed by the well-lobbied, well-greased US Senate. 

So that’s what’s legal. Geithner presides over trillions in bailouts, and now he is destined to be rewarded with tens of millions in speaking and consulting fees over the rest of his career. And who knows--he might even consider taking a job at one of the banks that he bailed out. Once again, it’s all perfectly legal.   

The second legal scandal, is the continuing scandal of Obamacare. The President’s health-care program was always a cornucopia of crony capitalism; the basic idea was that liberals would get their wish for a national health insurance program, but only if they agreed to work with the private health-insurance companies. And so the quiet deal was this: The insurance companies would support the legislation, if, in turn, Uncle Sam would agree to round up every last American and dragoon them into buying insurance from those companies.  In other words, the state would force people to serve a private master. Does that sound a bit like feudalism or something?  Well, welcome to America in the year 1013--oops, I mean, 2013. 

But of course, the techniques for achieving this dragooning goal are new--as new as the Big Data-driven Obama re-election campaign, now repurposed into a “permanent campaign” entity, Organizing For Action (OFA).  As an aside, we might note one glitch in the new effort: OFA announced itself before it secured the domain names; those domains were scooped up by others.  

That careless glitch aside, nobody in Washington doubts that OFA will possess real punch. And that’s why it’s going to be one of the best-funded “progressive” operations, since, well, Obama’s re-election  campaign. And one of OFA’s new missions is working to fulfill that promise to the insurance companies--that is, getting the private insurers all the new customers they are owed. Here’s the revealing headline in Politico last week: “Secret donors back new Obamacare push.” As the article explains, OFA is teamed up with an insurance front-group, Enroll America, which, interestingly enough, is run by the two former Obama campaign staffers.  

Enroll America boasts a bevy of fatcats--top officials from such big companies as Blue Shield of California, Kaiser Permanente, and Aetna. And of course, liberal stalwarts AARP and the Service Employees International Union are also in the mix. Moreover, Politico adds, “Other big money White House allies expected to play major roles in the Obamacare fight include the corporate-funded trade group Business Forward, the think tank Center for American Progress and the liberal donor network Democracy Alliance.”  Those who accuse Obama of being some sort of leftist miss the real truth: His past might be in community organizing, but every community organizer in the country has been on the payroll of the Ford Foundation, or ACORN, or a hundred other public or private money-spigots. And so the smartest of the community organizers quickly figure out that there’s money in working with corporations, not against them.  

Now we come to the third legal scandal: the anti-trust revolving door. The New York Post reported last week on the proposed friendly acquisition of Mexico’s Grupo Modelo brewery, the maker of Corona beer, by Anheuser-Busch In Bev (AB), the conglomerate formed when the Belgian company In Bev purchased the maker of Budweiser in 2008.   

The new Justice Department anti-trust chief, William Baer, is suing to stop AB from making this acquisition, arguing that if it went through, AB would be too big and thus able to restrain trade. That’s an argument for economists and others to sort out in the months and perhaps years to come, but, for now, we can marvel at the circularity of Department of Justice anti-trust enforcers.   

As the Post puts it, in filing the suit, Baer is “throwing down a direct challenge to a recent DoJ antitrust boss--Christine Varney.” You see, Varney had Baer’s job, as DOJ anti-trust chief, from 2009 to 2011, and now she is at the swanky law firm of Cravath, Swaine, and Moore, where she works on--guess what--anti-trust issues.  Indeed, Varney is representing Grupo Modelo, which wants the deal to go through.    

And guess what else: The DOJ’s chief anti-trust chief in between Varney and Baer was one Sharis Pozen, and Pozen now works at another powerhouse law firm, Skadden Arps, where she represents, amazingly enough, the pro-acquisition interests of AB.  Oh and by the way, Baer, the incumbent DOJ anti-trust chief, was formerly a partner at yet another mega law firm, Arnold & Porter.  Interestingly enough, the co-founder of that firm, Thurman Arnold, held the same post, as Justice’s anti-trust chief, back in the 30s and 40s.  Those were the days when New Deal Democrats were filing anti-trust lawsuits right and left--but mostly left. 

Yet after five years of New Dealing, Arnold left public service to enter, um, corporate service, all the while remaining a good Democrat, DC-style. Not surprisingly, big companies fearful of being trust-busted immediately saw the value of retaining Arnold & Porter, just in case. And so, in the venerable tradition of those who come to Washington to do good and end up doing well, Arnold became a well-connected--one of his law partners being appointed to the Supreme Court in the 60s--and a very rich Democrat.   So we can take a few guesses about the good things in store for Arnold & Porter alum Baer when he decides to revolving-door his way back to the private sector.   

Once again, it must be said that this is all legal. The finest lawyers at the finest law firms all agree--it’s clean, clean, clean. So no more questions! 

By now, we might be feeling a bit of sympathy for Bob Menendez. All he wanted was a little fun in the DR--plus whatever else, here and there, during his long career in New Jersey politics.  And yet now he’s getting nailed, while others, too big to nail, are getting rich--and richer.  Indeed, as we think of Menendez, we might recall the story of another Jersey boy, the fictional Terry Malloy, played by Marlon Brando in the 1954 Oscar-winning film “On the Waterfront.”  In the film, Malloy, an ex-boxer, laments that he threw away his career in fixed fights; as he says in a famous scene, he “took them dives for the short-end money, ” and so, as a result, he found himself only with a “one-way ticket to Palookaville.”

Maybe someday, playing out the same scenario in real life, ex-Senator Menendez will look up from his “community service” duties at some halfway house in Hoboken and see, high in the sky, a Gulfstream jet whizzing overhead, lifting off from the private airport in Teterboro, NJ, heading toward Aspen or London or Hong Kong.  And up there amidst the streaming contrails, comfy in the plush upholstery, will be former secretary Geithner, or the OFA team, or those revolving-door trust-busters, off to some to billion-dollar board meeting.  And perhaps Menendez will think to himself, “If only I’d thought bigger, if only I’d held out longer, I coulda really been somebody.”  And then he’ll go back to pushing his broom, lamenting that he couldn’t resist cheap temptation.  


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