Rangel’s ethics inquiry may put Pelosi in a bind

Speaker Nancy Pelosi took stewardship of the House two years ago with a pledge to “drain the swamp” and clean up ethical abuses in Congress. Now an investigation of one of her party’s best-known members is putting her in an uncomfortable spot.

Rep. Charles B. Rangel of New York is the subject of an investigation by a House ethics panel over his ownership of several rent-controlled apartments in New York, his failure to pay taxes on an offshore rental property, and his use of office letterhead to solicit donations for a public-policy school that would bear his name.

Last month, a story in the New York Times pointed to another potential problem. It suggested that Rangel preserved a tax break for an oil-drilling company in exchange for a $1-million contribution to the planned public-policy school. Since then, calls have increased for Rangel to step back from chairing the powerful House Ways and Means Committee, at least while the investigation continues.

All this has left Pelosi in something of a bind, as a new Congress takes over in January with an emboldened Democratic majority eager to work with President-elect Barack Obama to enact an economic stimulus plan.

Rangel, 78, is poised to be a highly visible player in rushing the stimulus package through the House. The committee he leads considers tax legislation, and the stimulus plan is expected to include some form of middle-class tax relief.

But Rangel could be assuming the limelight just as the ethics panel issues its report, risking political embarrassment for Pelosi, who had criticized the corruption scandals that plagued Republicans such as Reps. Bob Ney of Ohio and Randy “Duke” Cunningham of Rancho Santa Fe while the GOP controlled Congress.

Rangel has strongly denied that any legislative action benefiting the oil-drilling company came in return for a donation to a school named after Rangel at the City College of New York. The 37-year House member has challenged the New York Times story in a letter to the newspaper, and House leadership aides say they fear a rush to judgment before the facts are clear.

The congressman asked for the ethics investigation in a bid to clear his name. “I really don’t believe that making mistakes means you have to give up your career,” he said at a September news conference.

Ethics investigators are thought to be looking into Rangel’s ownership of four rent-controlled apartments in New York, one of which he used as a campaign office, possibly in violation of renting laws. Among other things, the investigators are also thought to be looking into Rangel’s failure to pay taxes on unreported income from a property in the Dominican Republic.

Pelosi has demonstrated that she isn’t afraid to take on senior members of her party. Last month, for instance, she stood by as Rep. Henry A. Waxman (D-Beverly Hills) successfully unseated veteran Rep. John D. Dingell (D-Mich.) as head of the Energy and Commerce Committee. And Pelosi has been willing to bypass committee chairs by bringing key bills directly to the House floor, diminishing their influence in the legislative process.

But if Pelosi were to ask Rangel to surrender his chairmanship, she would risk the wrath of the Congressional Black Caucus. Some in the caucus were unhappy when Pelosi forced the indicted Rep. William J. Jefferson (D-La.) from the Ways and Means Committee. Rangel, popular with his constituents and well known on the national stage, would not be easy to push aside.

Compounding the matter: Next in line behind Rangel to chair the Ways and Means Committee is Rep. Pete Stark (D-Fremont), one of the most liberal and outspoken members of the House. Stark famously said last year that troops were being sent to Iraq to “get their heads blown off for the president’s amusement,” and he might prove to be an awkward fit with Pelosi’s vow to “govern from the middle” following last month’s Democratic gains in Congress.

“I think [Pelosi] has quite a problem on her hands,” said Melanie Sloan, executive director of the watchdog group Citizens for Responsibility and Ethics in Washington.

Pelosi, in the eyes of some critics, muddied the waters last month when she said she expected the ethics inquiry to conclude before the new Congress was sworn in. Rep. John Carter (R-Texas) sent Pelosi a letter suggesting that her remarks might coerce the independent committee into reaching a premature conclusion.

Pelosi’s office said her statement was merely an observation that such investigations were routinely resolved before the end of the session in which they were launched. But if the House ethics panel chooses to, it could continue the investigation into the next Congress.

Pelosi was asked last week if Rangel’s chairmanship was in jeopardy. “We have to wait to see what the committee has to say,” she said. “I don’t foresee that.”

Rangel interpreted Pelosi’s remarks as a vote of confidence, but her aides said it was simply a statement that the process needed to be followed to its conclusion.

More crucially for Rangel, the allegations in the New York Times regarding the tax break and the donation to the City College of New York have not been part of the investigation, so they could be the subject of a new or expanded inquiry.

The newspaper reported that Rangel met in February 2007 with oil executive Eugene Isenberg and Manhattan Dist. Atty. Robert Morgenthau to discuss donations to the public-policy school. Then, the paper said, Rangel met with Isenberg, chief executive of Nabors Industries; and Kenneth Kies, a company lobbyist, about a tax provision concerning companies that incorporate overseas to avoid paying U.S. taxes.

The same day in Washington, the paper said, Rangel crafted a bill that preserved the tax break for firms such as Nabors, ignoring a Senate-passed bill that eliminated it. About the same time, Isenberg pledged $1 million to the public-policy school named for Rangel, with an initial outlay of $200,000.

Rangel attacked the story in a letter to the New York Times.

Kies said in an interview that the paper had it wrong, that Isenberg wasn’t at the first meeting with Morgenthau and Rangel. “That never happened,” he said.

At the second meeting, Kies said, a donation to the public-policy school never came up. He said the tax provision was discussed, but that Rangel was already in line with the corporation’s position because the provision would have changed tax laws retroactively.

“It is a clear matter of public record that I have consistently opposed retroactive changes to tax law, because I believe it is unfair to taxpayers and bad tax policy,” Rangel said last month.

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joliphant@tribune.com