FOR IMMEDIATE RELEASE October 12, 1992 "HANDLER-IN-CHIEF" JAMES BAKER'S RECORD: TRICKLE-DOWN, DUBIOUS DEALS, AND COVER-UPS When George Bush announced mid-debate that James Baker would take over economic policy, it was the President's starkest admission yet of his failure. George Bush has no plan. He has no vision. Instead, he offers us his handler-in-chief as a new de facto President. Thanks, but no thanks. Now comes word that in his second term, Bush would fire the economic team from his first term. His reelection slogan should be: "Vote for me, and I promise to fire my staff." George Bush said when the election is over, he's going to get Jim Baker to do for domestic policy what he's done for foreign policy. Actually, that makes sense. Domestic policy has always been foreign to Bush. Apparently, the Handler-in-Chief will be delivering a major policy address to outline his economic goals and plans. The big question is: will James Baker offer George Bush a substantial policy role in his administration? Despite his assiduous cultivation of his own image -- often at the expense of his boss -- James Baker has a decidedly mixed record in government. Baker's past record makes him an ironic choice to try and save George Bush, since he has been involved in so many of the disastrous policies of the past twelve years. Baker and "trickle-down" Reaganomics. As Ronald Reagan's first Chief of Staff, he was the political mastermind behind efforts to cut taxes for the wealthy and services for everyone else. On Baker's watch as Chief-of-Staff: the Gramm-Latta budget and tax cut legislation . . . the deregulation of the S&Ls . . . Republican efforts to cut Social Security. (Indeed, as Treasury Secretary, Baker ordered the sale of long-term investments held by the Social Security trust fund to tide the government over when it was about to run out of money. [1985 CQ Alm.]) * Baker is a trickle-down convert. In 1988, he said: "What some of us thought might be best termed 'voodoo economics' really turned out to be 'can do' economics." [Speech to the Jack Kemp Tribute Dinner to the Reagan Revolution and Supply-Side Economics, 12/01/88] * At the same dinner, he said: "I am proud to have spent the last 3 1/2 years . . . defending and advancing supply side economic principles." [ibid.] Baker and the S&Ls As Treasury Secretary from 1985-1988, Baker presided over the most disastrous financial debacle in recent history: the $500 billion S&L scandal. * Baker ignored warnings from senior regulators about the looming disaster. On June 5, 1985, FDIC Chair FDIC chair William Isaac wrote Baker a letter marked "HIGHLY CONFIDENTIAL" and warning: When we got together a few months ago in your office, I told you that one of my principle concerns about the financial system was the condition of the thrift industry and the ability of the [S&L depositor insurance fund] to cope with the problems. About that time I requested our staff to prepare an analysis of the thrift industry . . . the study concludes that the problems of the thrift industry are of such proportions that they will soon overwhelm the ability of the FSLIC to deal with them unless something major is done to shore up the FSLIC. * Baker testified that no more taxpayer funds would be needed. "We think the regulators are doing a good job," he told the House Banking Committee on June 15, 1988. Baker added: "We think the problem is being dealt with." Shortly before the election, he told the National Press Club that Bush opposed a taxpayer bialout. Shortly after the election, regulators suddenly announced that a huge taxpayer rescue would, in fact, be needed. Baker and Iraqgate. Last night, Bush said, "I'm going to say to Jim Baker when this campaign is over, 'you do in domestic affairs what you've done in foreign affairs.'" Presumably, this is supposed to be reassuring. But Baker played a central role in what is emerging as a major scandal and cover-up: the secret policy of aid to Saddam Hussein. For as recent revelations indicate, James Baker stretched logic and common sense in his efforts to appease Saddam. Baker and other senior Bush administration officials vigorously supported and armed Saddam Hussein's regime in the years before he invaded Kuwait. Baker repeatedly intervened when other government officials balked at supplying Saddam with credits (which were used to buy arms) and other aid. And Judge Marvin Shoob ruled last week in the BNL trial, "It is apparent that decisions were made at the top levels of the United States Justice Department, State Department, Agriculture Department and within the intelligence community to shape this case and that information may have been withheld from local prosecutors seeking to investigate the case or used to steer the prosecution." An "economic czar" Jim Baker would spend a good deal of his time dealing with the legal fallout from this exploding scandal. Baker has confused public service with self service. Baker has had a string of conflicts of interest, where he used his public office in a way that benefitted his private business interests. He took care of George Bush's political business, and occasionally the nation's business, but he always made sure to take care of himself. * He loves to fly, and it shows. Baker used a military jet to make 11 strictly personal trips over a two year period, at a cost to taxpayers of $371,599. He said he was "shocked" by this figure, and vowed never to do it again; shortly thereafter he took a well-publicized commercial flight. (AP, 4/3/92) * Bank stock and third world debt. Financial disclosure records indicate that Baker owned at least $250,000 of stock in Chemical Bank (but the number has been reported as several million dollars). During his time as Treasury Secretary, he pushed an ill-fated "Baker Plan" to solve the problem of third world debt. The plan was notable for protecting one interest -- big U.S. banks, such as Chemical Bank -- while choking South America's economies. This blatant conflict-of-interest was not publicly revealed until Baker left the Treasury Department. (New Republic, 3/6/89) * Baker and Bush's barge company: Hollywood Marine. Baker, Bush and Robert Mossbacher are partners in a company called Hollywood Marine, which owns oil barges. In the early 1980s, Hollywood Marine's fleet was comprised of "single hull" barges; a pending environmental rule would have required a second skin to protect against oil spills. The Task Force on Regulatory Relief, chaired by Bush, killed the double hull rule, after vigorous lobbying by Hollywood Marine (among others). (WSJ, 7/20/92.) - 30 -