The 1990s

The 1990s were supposed to be the era of good governance. The Cold War had ended. The economy was booming. Federal deficits were shrinking and would eventually turn to surpluses. Yet corruption flourished in new forms. The House of Representatives was rocked by a cascading series of institutional scandals that destroyed public confidence in Congress. Campaign finance spiraled into a money arms race that made a mockery of post-Watergate reform. And a real estate deal in Arkansas launched a seven-year, $80 million independent counsel investigation that consumed the Clinton presidency.

What distinguished the 1990s was the emergence of corruption as a weapon of partisan warfare. Ethics investigations, once rare and bipartisan, became routine tools of political combat. The Speaker of the House was brought down by ethics charges. The President was impeached. And both sides learned that accusing your opponent of corruption was often more politically useful than actually fighting corruption itself.

The decade also saw the explosion of "soft money"; unlimited contributions to political parties that were theoretically for party-building activities but were in practice used for campaign advertising. Both parties became addicted to this loophole, and the 1996 election cycle demonstrated that the post-Watergate campaign finance system was effectively dead. The corruption of the 1990s was less about envelopes of cash and more about the systemic corruption of the democratic process through unlimited political money.

The House Post Office Scandal (1991–1995)

The House Post Office scandal began as a relatively minor investigation into embezzlement by postal employees and expanded into a case that brought down one of the most powerful chairmen in Congress. A 1991 investigation by the Capitol Police and later by the U.S. Attorney's office revealed that House members had been using the House Post Office to illegally convert stamps and postal vouchers into cash and to embezzle official funds.

The central figure was Dan Rostenkowski, the Democratic congressman from Illinois who had served as chairman of the powerful House Ways and Means Committee since 1981. On May 31, 1994, Rostenkowski was indicted on 17 counts of fraud, including charges that he converted $50,000 in House Post Office stamps to cash, used official funds to purchase gifts such as crystal and china, and maintained "ghost employees" on his payroll who did little or no work. On April 9, 1996, Rostenkowski pleaded guilty to two counts of mail fraud and was sentenced to 17 months in federal prison and a $100,000 fine. He was pardoned by President Clinton in December 2000.

The House Banking Scandal (1992)

In late 1991, the General Accounting Office revealed that members of the House of Representatives had written approximately 8,331 overdraft checks at the House Bank (officially the Office of the Sergeant at Arms) without penalty over a 39-month period. The House Bank had been routinely covering overdrafts for members as an unofficial perk of office; in effect, providing interest-free loans unavailable to ordinary citizens.

When the full list of offenders was released in April 1992, it included 450 current and former members who had written at least one overdraft check. The worst offenders had hundreds of overdrafts: former Representative Tommy Robinson (R-AR) had 996 overdraft checks totaling over $500,000. While the overdrafts did not involve taxpayer money (the bank used members' aggregate deposits), the scandal destroyed public trust in Congress and became a powerful symbol of congressional privilege and self-dealing. It contributed significantly to the anti-incumbent wave of 1992 and 1994.

Newt Gingrich: The Speaker Falls

Newt Gingrich rose to the speakership in January 1995 on the back of the Republican Revolution and a personal brand built on ethics attacks against Democrats; he had been instrumental in forcing Speaker Jim Wright's resignation in 1989 over a book deal controversy. It was therefore deeply ironic that Gingrich's own tenure was consumed by ethics problems.

In 1995, the House Ethics Committee began investigating a college course Gingrich had taught, "Renewing American Civilization," which was funded by tax-exempt organizations in possible violation of tax law. The course was essentially a political enterprise disguised as educational programming. On January 21, 1997, the House voted 395-28 to reprimand Gingrich; making him the first Speaker in American history to be formally disciplined for an ethics violation. He was also ordered to pay a $300,000 penalty (described as reimbursement for the cost of the investigation) for providing false information to the Ethics Committee during its investigation.

The reprimand damaged Gingrich's authority, and after Republicans lost five House seats in the 1998 midterm elections; a historically unusual result for the party opposing the president during his second term. Gingrich resigned as Speaker and from Congress entirely on November 6, 1998.

The Campaign Finance Explosion

The 1996 presidential election cycle represented the complete breakdown of the post-Watergate campaign finance system. Both parties exploited the "soft money" loophole, contributions to party committees that were technically for party-building but were in practice used for campaign advertising, to raise unprecedented sums. The Democratic National Committee raised $122 million in soft money; the Republican National Committee raised $138 million.

1996 DNC Fundraising Controversies

The DNC's fundraising operation under chairman Don Fowler and fundraiser John Huang generated particular controversy. Investigations by the Senate Governmental Affairs Committee, chaired by Senator Fred Thompson (R-TN), and the House Government Reform Committee revealed:

• Foreign money: The DNC accepted contributions from foreign nationals, including Indonesian businessman James Riady and his Lippo Group, in violation of federal law. The DNC eventually returned approximately $2.8 million in illegal or improper contributions.
• White House access for donors: The Clinton administration hosted 103 overnight stays in the Lincoln Bedroom for major donors and held coffee meetings in the White House Map Room where contributions were solicited. While not illegal, the access-for-money arrangement embodied the corruption of the campaign finance system.
• Buddhist temple fundraiser: Vice President Al Gore attended a fundraising event at the Hsi Lai Buddhist temple in Hacienda Heights, California, on April 29, 1996, where $55,000 in illegal contributions were laundered through temple monastics. Gore initially claimed the event was "community outreach," not a fundraiser.
• John Huang: A former Lippo Group executive who was appointed to a Commerce Department position with a top-secret security clearance and then became DNC vice finance chair. Pleaded guilty in 1999 to a felony charge of campaign finance violations.

Whitewater and the Independent Counsel

The Whitewater controversy began with a failed real estate investment. In 1978, Bill and Hillary Clinton joined James and Susan McDougal in a land development venture called the Whitewater Development Corporation in the Ozark Mountains of Arkansas. The development lost money. But the McDougals' subsequent involvement in the collapse of Madison Guaranty Savings and Loan, which cost taxpayers approximately $73 million, raised questions about whether the Clintons had received improper benefits or used their political influence to assist the McDougals.

Attorney General Janet Reno appointed Robert Fiske as a special counsel in January 1994 to investigate Whitewater. After the independent counsel law was renewed in June 1994, a three-judge panel replaced Fiske with Kenneth Starr, who broadened the investigation over the next four years to encompass the firing of White House Travel Office employees, the handling of FBI files, and ultimately President Clinton's relationship with Monica Lewinsky. The investigation cost approximately $80 million.

Whitewater-related convictions included: James McDougal (convicted of 18 felony counts in 1996; died in prison in 1998), Susan McDougal (convicted of four felony counts; served 18 months for civil contempt for refusing to testify), and Arkansas Governor Jim Guy Tucker.

Bob Packwood: Resignation Under Investigation

Bob Packwood, a Republican senator from Oregon who had served since 1969, resigned from the Senate on October 1, 1995, after the Senate Ethics Committee voted unanimously to recommend his expulsion. The committee's investigation, triggered by a November 1992 Washington Post report, documented a pattern of sexual misconduct spanning decades: at least 29 women accused Packwood of uninvited sexual advances, groping, and harassment, including staff members and lobbyists.

The investigation also revealed that Packwood had altered his personal diaries, which he had been compelled to turn over, to remove incriminating entries, constituting possible obstruction. Additionally, the committee found evidence that Packwood had solicited employment and business opportunities for his ex-wife from lobbyists with business before his committees, a form of influence peddling. The Ethics Committee's 10,145-page report found Packwood guilty on all three charges: sexual misconduct, obstruction of the investigation, and soliciting favors from lobbyists. Packwood resigned rather than face a floor vote that was certain to result in expulsion.

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