Washington Bulletin

Washington Bulletin

Asiagate, Day Four: Hip Hong Hurray
Fred Thompson and committee Republicans made the most Tuesday out of not-exactly blockbuster witnesses. Their examination of two Lippo-connected witnesses, bookkeeper Juliana Utomo and former Lippo Bank president Harold Arthur, consisted mostly of showing them various memos and documents and asking them if they were shocked or surprised by them (usually the answer was "no": at one point Sen. Susan Collins [R., Maine] deadpanned to the elderly banker Arthur: "You're a hard man to surprise, Mr. Arthur"). But Republicans did introduce several new revelations, and, in a significant development, Joe Lieberman and other Democrats admitted that Thompson had been right to say at the hearings outset that there was a secret Chinese plan to influence the U.S. elections.

The day's first witness, Utomo, was a small woman with a soft heavily accented voice who had worked with Huang at one of the several Lippo holding companies in the U.S. called Hip Hong Holdings. Before Thompson even called her he revealed that in exchange for a $100,000 contribution the DNC helped arrange a meeting for a British citizen living in Hong Kong with top national security officials to discuss policy regarding Taiwan. The DNC flack outside the hearing room defended the DNC's action as appropriate, although he did at least look a little guilty about it. Then, after Thompson's brief opening statement, chief counsel Mike Madigan began to gently question Utomo, walking her through a series of documents that showed that the Lippo holding companies all lost money but nonetheless contributed tens of thousands of dollars to the DNC.

In one striking example Huang wrote a $50,000 check in 1992 to the DNC Victory Fund, then a memo went out to Jakarta directly asking for reimbursement for the contribution. It was a clear case of foreign money making it into Democratic coffers, and the implication was that the same occurred with other contributions, even if the paper trail wasn't as explicit. But Democrats tried to dispute the idea that the holding companies didn't have the money to make the contributions all morning, pointing out that some of the holding companies at times had enough income to cover contributions. What they were willfully neglecting was the expense side of the ledger which clearly put the companies in the red (no pun intended). GOP chief counsel Michael Madgian pointed this out repeatedly, but even after he had thoroughly discredited the income idea, Sen. Bob Torricelli—the committee's biggest partisan joke—kept at it. Someone—presumably from the Democratic side of the aisle—also circulated among the press tables a "clarification" saying it was income not profitability that determined the legality of such a contribution. Apparently wrong again—Thompson cited a 1992 advisory ruling by the FEC that contributions must come from net profits.

It was Lieberman, as usual, who was the Democrat most willing to be forthcoming. Considering the reimbursement of the $50,000 in 1992, he said frankly: "Here's a clear trail of foreign money coming into the U.S. elections." It was Lieberman who also, during a morning break, stood before a bank of microphones, surrounded by thirty or forty craning reporters and ten TV cameras, and announced that he had been wrong to doubt Thompson's opening statement regarding evidence of a secret Chinese plan to influence the U.S. elections. He said after a FBI briefing on Monday it was clear in his mind that there had been such a plan, at least as regards U.S. congressional elections. Whether it extended to presidential elections is, as yet, an open question, according to Lieberman. And whether the plan was actually implemented remains to be seen as well, although Lieberman pointed out that the FBI did warn certain congressional candidates that they might be the targets of the plan. Lieberman said his fellow Democrats who were privy to the briefing had drawn the same conclusion as he had, a significant development given that the Democrats had harassed Thompson about the alleged inappropriateness of his statement for a week.

In the afternoon, the committee called Harold Arthur, a former president of the Lippo Bank who worked in an office next to John Huang. Like Utomo, Arthur didn't know much and, in one sense, wasn't a very good witness: it is hard to imagine the frail banker as part of a shady enterprise, even tangentially. But in her questioning of Arthur, Sen. Susan Collins (R., Maine) revealed the close ties between Huang and Lippo even after he left for the Commerce Department: he made on average one business call a day to Lippo during his tenure at Commerce; he continued to use his Lippo Bank phone card; and he was identified as a Lippo "advisor" for an international conference as late as 1996 (he left Lippo for Commerce in the summer of 1994). It was also revealed that Huang visited the White House residence an eyebrow-raising five times in 1993 when he still worked for Lippo. (Please see the text of a letter from Huang to Clinton in 1993—but get out your barf bag first).

Also Tuesday: A private intelligence expert testified as to the growing ties in recent years between the Lippo Group and China, mainly through China Resources, a Chinese government entity often used in espionage. Huang took the chairman of China Resources to a meeting at the White House with Jack Quinn, then Vice President Gore's chief of staff (see the text of Huang's thank-you letter for the meeting). . . . Democrats tried to make it seem as though Huang's calls to Lippo were innocent, as Huang was only returning calls about forwarded mail and the like. Committee sources strongly dispute this and say more will be released about Huang's avalanche of calls to Lippo on Thursday. . . . Democratic counsel Alan Baron, in an attempt to knock down the idea that there is anything sinister about Lippo or its connection to China, alleged that Pat Robertson has Lippo ties and unveiled a chart showing a smiling Robertson with lines connected to Lippo and a Chinese flag. . . . In the duel of somewhat silly revelations, Madigan got chuckles from the press when revealed that Riady is building a mansion in Brentwood, home of O.J. . . . Committee sources continue to complain that the Justice Department is dragging its feet in approving immunity for nuns involved in Al Gore's fund-raiser. One high-ranking staffer calls the idea that Justice would prosecute the nuns—the only presumed legitimate reason for the department's hesitation—"ludicrous." . . . Committee Republicans have instituted a background briefing each afternoon, which suggests more attention is being paid to press spin.

What to expect today: Expected to testify today is former White House associate personnel director Gary Christopherson, who processed Huang's paperwork when he was hired. He will likely testify that Huang was a high-priority hire because he was an Asian-American and also because of his fundraising prowess. In this connection, there will also likely be discussion of a Maeley Tom letter to deputy director of presidential personnel John Emerson recommending Huang. The letter mentions his fund-raising prowess and also his close ties to the Riadys (for a previous Maeley Tom letter discussing the idea that the administration tap East Asian companies for fundraising see the July 11 Washington Bulletin). . . . A Huang superior at the Commerce Department will likely testify today that he, in the words of a committee source, "walled off" Huang from any policy matter having to do with China, and was "shocked" to learn that Huang had gotten classified briefings regarding China anyway. . . . The CIA detailee who briefed Huang will also testify, and express his consternation that Huang was supposed to be cut off from China policy, but nonetheless received 300-500 raw pieces of intelligence.

TNR Supplies Snide Economics
Jonathan Chait wrote a savage attack on Cato Institute fiscal-policy analyst (and NR contributing editor) Stephen Moore in the New Republic a few weeks ago, and Moore's gentlemanly response appears in this week's edition, with a rejoinder from Chait. It's worth going over the substance of the dispute, if only because it concerns one of the most important subjects of economic policy: whether the Reagan tax cuts helped the economy and the Bush–Clinton tax increases hurt it. Let's take the arguments point by point:

1) Moore points out that revenues soared under Reagan. Chait says that that's because he hiked payroll taxes. Moore replies that it's contradictory to say that deficits rose under Reagan because of income-tax cuts, but revenues rose because of payroll-tax cuts. Missing the point, Chait rather lamely explains that "it's not contradictory to state that Reagan raised some taxes and cut others." Score one for the supply-siders.

2) Chait thinks Moore cooks the books in favor of Reagan by measuring revenue growth from 1982 to 1989, missing part of the impact of the early '80s recession by leaving out 1981. Moore responds that Reagan's tax cuts weren't fully implemented until 1983, so 1982 is the last year before it took effect. (Moore also explains that if he really wanted to cook the books, he would not have used "the year before a Niagara Falls drop-off in federal revenues.") Chait argues that "Reagan cut taxes started in 1981, so whether or not they were 'fully implemented' yet doesn't matter." This argument won't work for a number of reasons. The most important is that most supply-siders always maintained that a phased-in tax cut would actually depress economic activity until the last phase, as people deferred lucrative economic activity until they could exploit the lower rate. (And remember, Chait's trying to disprove supply-side claims, which he can't do by ignoring them.) Point two goes to the supply-siders.

3) Chait says Moore and other supply-siders were wrong to say Clinton's tax increases would "torpedo . . . the U.S. economy." In fact, says our triumphant editorialist, "we now have more jobs, faster economic growth, and a lower deficit than we did in 1992." Strictly speaking, of course, comparisons of 1992 and 1996 prove nothing about particular policies and don't even necessarily invalidate supply-siders' arguments. After all, it's possible that the deficit shrank for other reasons, or that growth would be even faster had Clinton's tax increases not been enacted. (In fact, we'd argue that both propositions are true.) But let's concede that there were some overstated attacks on the Clinton plan—although it's worth remembering that its worst component, the energy tax, was defeated. The most careful supply-siders, like Alan Reynolds, have seen their predictions come true. Growth has been anemic during this "boom" phase of the business cycle, and even though the first quarter growth figures this year were impressive, we'd be surprised if growth overall tops the 2.7 per cent rate of 1992 (which was actually a pretty good year economically). Let's be generous and give Chait half a point here.

Does any of this justify Chait's descriptions of Moore as "devious" and "sneaky," or his declaration that Moore is "a raving voodoo zealot"? Chait's work at the New Republic, Moore observes, is "an unnerving reminder that there are still liberals who seem incapable of any sane discussion of the Reagan era." True enough. But it's also evidence of the New Republic's continued slide into trashy insubstantiality.

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Updated By:
Rich Lowry - National Political Reporter
Ramesh Ponnuru - National Reporter

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