Moves on Taxes, Contras : Activist Wright Takes Risks in Job of Speaker

Times Staff Writers

In his first year as Speaker of the House, Jim Wright has boldly led House Democrats into uncharted political territory, often charging ahead before they are ready to follow.

The 65-year-old Texas Democrat has scored at least one stunning political victory: He has forced Ronald Reagan to back down from his stand against higher taxes, making it much more difficult for Republicans to use the issue again as a campaign weapon in 1988.

Brings Discipline

Most Democrats also agree that the Speaker has brought badly needed discipline to the House's day-to-day operations. He can boast that, in one year, the House has acted on most of his ambitious agenda, which ranged from rebuilding roads to providing aid to the homeless to changing the rules on international trade.

"Our success in this past year has been tremendous," crows Rep. Tony Coelho (D-Merced), assistant House majority leader and one of Wright's chief lieutenants.

But in other areas where Wright has taken the lead, he may have gone too far--particularly in his unorthodox decision to play a key role in Central American peace negotiations, against the advice of Coelho and others.

"Wright is a practitioner of high-risk politics," said political scholar Norman J. Ornstein of the American Enterprise Institute. "This is high risk, and I think in the end it's a foolish risk. Foolish for himself, foolish for his party, foolish for the country."

Although it has yet to be seen whether his initiatives with Nicaraguan leaders will be recorded as a triumph or a blunder, Democrats are concerned that Wright's tendency to move ahead on only his own instincts will inevitably lead to a serious misstep.

Says one uneasy Democrat, who asked not to be identified: "He goes out front and hopes the troops will follow him. Thus far, I think the jury is out on whether that strategy is going to work. I think some of it is good. Maybe too much of it is not. It's only his first year."

Some Democrats fear that Wright--whose bushy eyebrows and flowery rhetoric prompted former Budget Director David A. Stockman to liken him to a "snake oil salesman"--creates a sleazy and even sinister image for the party whenever he appears on television as the Democrats' chief spokesman.

They also worry about the questions that have been raised about Wright's personal integrity. Rep. Newt Gingrich (R-Ga.) has publicly called him "the most unethical Speaker of the 20th Century." Scrutiny has centered on Wright's lobbying on behalf of ailing Texas savings and loan associations and his financial relationships with some of his political backers in Fort Worth.

Wright hotly denies that he has done anything improper and dismisses Gingrich as "a gnat." In October, he put his financial assets, then valued at about $185,000, into a blind trust.

Still, the ethics issue has continued to dog the Speaker. "That's probably the area of greatest concern. There's an undercurrent there, and a sense that it's potentially dangerous," says a Democrat, also speaking on a guarantee of anonymity. "Of course, no one talks about it. It's not the kind of thing you talk about."

Can Handle the Heat

As the controversy around him grows, Wright contends that he can handle the heat: "I asked to be assigned to the kitchen," he says in his slow drawl.

The Speaker claims to want a harmonious relationship with Ronald Reagan, but he clearly sees himself as Reagan's chief adversary, the Democrats' commanding officer in a winner-take-all battle to set the nation's priorities.

Wright says of his first year as Speaker: "There are times when a leader has to get out front. It's the difference between the group commander who flies in the lead plane over the enemy target and the one who stays back at group headquarters."

Not surprisingly, and perhaps in backhanded tribute to Wright's effectiveness, the other side is returning the fire.

Republican National Committee Chairman Frank J. Fahrenkopf Jr. describes Wright as "the most divisive and blatantly partisan Speaker the House of Representatives has seen in a long, long time. . . . His ambition is exceeded only by his ego and his desire for power."

Called Machiavellian

Rep. Henry J. Hyde (R-Ill.) calls Wright "Machiavellian" and says: "I think he is a slick operator who, when forced to chose between power and image, he takes power."

From the outset, it was clear that Wright would be a dramatic change from retiring Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.), whose intensely personal approach to leadership usually began with putting his large arm around the shoulders of a fellow lawmaker. O'Neill rarely moved on an issue until he knew that he had a solid consensus of Democrats behind him.

Although few Democrats regard Wright with the warmth they felt for the affable, bear-like O'Neill, many say they were ready for a more aggressive leader--one who could recognize and capitalize on the inevitable waning of a lame-duck President.

In the weeks before Wright stepped into his new job, his opportunities seemed to grow as the President was further weakened by two sudden, serious blows: Reagan's party lost control of the Senate, dashing much of his leverage with Congress, and the Iran-Contra scandal erupted, sparking the worst crisis of his presidency.

But rather than play to those weaknesses, the combative Wright stunned fellow Democrats by confronting the President on an issue in which he was thought to be almost invulnerable: The day he was elected Speaker, Wright boldly called for a tax increase to reduce the deficit. In particular, he urged delaying the rate cuts scheduled to go into effect under the sweeping tax overhaul legislation that Reagan had shepherded into law only a few months before.

"Everybody went bananas," Coelho says, recalling the furor that swept Democratic ranks. "Everybody agreed he was right, but they said you shouldn't do it politically."

Agrees to More Taxes

The gamble paid off. Shaken by a stock market crash that was blamed in part on the deficit, the President eventually did agree on higher taxes, to the dismay of many of his Republican supporters. What's more, the $9-billion increase was accomplished by raising a handful of taxes that are felt most by the traditional GOP constituencies of business and the wealthy.

For Democrats, it was a particularly sweet victory over a President who had gotten a lot of political mileage by tagging them the party of "tax and spend."

"We're off the hook," says Rep. Robert T. Matsui (D-Sacramento), a member of the tax-writing Ways and Means Committee.

But the tactics that Wright employed to win that battle rankled even some in his own party, who complain that he is sometimes willing to sacrifice long-run policies for short-run politics.

Many Democratic liberals, for example, voted against an early version of the tax increase because the legislation also included $3 billion more in defense spending than Wright had promised. One of them, Rep. George Miller (D-Martinez), told the Wall Street Journal: "I felt he misled me." (Miller refused to discuss the incident with The Times, but an aide confirmed his comment.)

For all his political juggling, Wright almost lost that first, crucial House vote on taxes.

Extends Balloting Time

When time officially ran out, the bill was losing by a single vote. But Wright turned defeat into a dramatic and controversial victory by keeping the balloting open 10 minutes longer than normal, during which time fellow Texas Democrat Jim Chapman switched his vote and carried the bill, 206 to 205.

"If we had lost that vote, there would have been mass chaos," Coelho says. Instead, he adds, "we put Republicans on the spot."

Rep. Trent Lott (R-Miss.), the House's assistant Republican leader, still fumes as he recalls that Oct. 29 vote: "He abused the rules, bent the rules, stamped on the minority."

Indeed, the House's arcane rules have become the rein with which Wright keeps in check the House's disparate, often-unruly membership. "The House rules, if one knows how to use them, favor getting things done," he says.

The Speaker's aim, he says, is to prevent the House from becoming "a debating society, rather than an action agency." An important part of his strategy is Wright's use of the House Rules Committee to limit the number of amendments that get added to legislation and, therefore, more closely control the final product.

"This is getting to be a farce here," grouses Rules Committee member Delbert L. Latta (R-Ohio). "They jump through the hoops."

Restricts Chairmen

Wright has also shown less deference to the powerful committee chairmen long accustomed to running their legislative fiefdoms as they wished. Last year, for example, marked the first time that the Appropriations Committee was forced to write all of its spending bills within the limits of the congressional budget resolution.

"We've never had the self-annointed, self-appointed budget crazies after us before," complains one Appropriations Committee aide.

To the world outside the House chamber, Wright became most visible with his bold stand on Central America.

Wright, always viewed as a moderate to conservative Democrat, appears to have shifted slightly to the left since he took over as Speaker--moving closer to the center of his party membership in the House. One issue where this move was most evident is Contra aid, to which he has emerged as a vocal opponent.

Even Wright's staunchest backers initially opposed his involvement with Reagan in the development of a peace plan for Central America. If the peace process collapsed, they feared, the President would then be in a position to call Wright's bluff and demand Democratic support for the Contras.

"I thought Jim was being sandbagged, and I told him so," Coelho recalls. His sentiments were echoed by House Majority Leader Thomas S. Foley (D-Wash.) and Rep. David E. Bonior (D-Mich.), a member of the House Democratic leadership and an influential force among House liberals.

"We tried everything to convince him he was being trapped," Coelho said. But, he added, "he let his gut work, and he was right."

Reagan Uncomfortable

Indeed, it was the President--and not Wright--who initially seemed to be the most uncomfortable in supporting the Central American peace process. Conservative Republicans repeatedly accused Reagan of abandoning the Contras, and Wright appeared to have boxed Reagan into a position in which he might be forced to accept the cutoff of military aid to the Nicaraguan resistance.

Wright's staff boasted that the Speaker had entered into the deal knowing that the Sandinistas were prepared to participate in indirect peace negotiations with the Contras--something Reagan Administration officials apparently were not aware of.

But Wright may have overplayed his hand in mid-November, when he held a face-to-face meeting in Washington with Sandinista leader Daniel Ortega at a time when Reagan was refusing to hold bilateral talks with the Nicaraguan government.

Administration officials angrily accused Wright of trying to undermine official U.S. policy in the region. Congressional Republicans derided him for trying to be the "Speaker-tary of state."

Wright was even admonished personally by the President, but he emerged from the session neither intimidated nor repentant. "I don't have to get permission," he said. "I regard the relationship between the executive and the legislative branch as a co-equal relationship. One does not extend one's wrist for slapping."

The Administration struck back several weeks later when it produced a Nicaraguan defector who said that the Sandinista government, despite its talk of peace, was planning a huge military buildup. The report was confirmed by Sandinista officials.

Contra Aid Renewed

Suddenly, Wright was vulnerable to charges that he had been duped by Ortega, and liberal Democrats found their hand so weakened that they were unable to defeat renewed assistance for the Contras beyond Dec. 31. Some moderate Democrats feared that they--like the Speaker--would be accused of being pro-Sandinista if they voted to cut off aid.

"The Sandinistas have had a history of snatching defeat from the jaws of victory," a dismayed Wright said after learning of the reports.

"The Speaker should rightfully be embarrassed and mortified," RNC Chairman Fahrenkopf says. "The Speaker was really a foil, a dupe for the Sandinistas."

Still, his Democratic counterpart, Democratic National Committee Chairman Paul G. Kirk Jr., says that Wright's move into foreign policy was a wise one, in terms of both politics and the national interest. "I don't fault him a bit," Kirk said. He added that Wright, who had long-standing personal relationships with key figures in Central America, brought a "credibility and coherence" to U.S. foreign policy that the Administration had lacked.

Several weeks ago, in the final days of Wright's first session as Speaker, Gingrich and other Republicans renewed their attacks on his ethics. Fahrenkopf warns that Wright's personal integrity is "a major issue that we are certainly going to try to bring to the public's attention" during next year's elections.

Wright has been plagued over the years by suggestions of impropriety. In 1979, for example, around the same time that Fort Worth oilman Richard Moncrief cut Wright in on a lucrative drilling venture, Wright lobbied Egyptian President Anwar Sadat to save a multimillion-dollar Middle Eastern investment that Moncrief had made.

Calls Implication 'Insulting'

Wright denied that his own investment was tied to his efforts on Moncrief's behalf: "The implication is insulting," he told the Dallas Times Herald at the time.

More recently, Wright's home-town newspaper, the Fort Worth Star-Telegram, has published stories scrutinizing his financial relationships with leading local businessmen, particularly his 25-year friendship with Fort Worth developer George A. Mallick.

The two and their wives are partners in a business venture they named Mallightco Inc., a fusion of their two names. Its investments form a major part of the assets that Wright put into blind trust as a means of severing his financial connection with Mallick.

The relationship has raised possible conflicts. Wright was instrumental, for example, in funneling $30 million in federal funds toward refurbishing Fort Worth's stockyards. While voters expect and demand that a lawmaker exercise his influence to bring home government money, the stockyard project is one in which Mallick had at one time planned to invest. He subsequently dropped the idea.

Last February, Wright is reported to have intervened with high-level officials of the Federal Home Loan Bank Board to prevent the board from closing insolvent Texas savings and loans, particularly Dallas-based Vernon Savings & Loan, which was owned by Donald Dixon. Dixon and other Vernon officers were later the target of a civil racketeering suit filed by the Federal Savings and Loan Insurance Corp.

Officials 'Astonished'

In a story headlined, "The Speaker and the Sleaze," the Washington-based business magazine Regardie's wrote last month that bank board officials were "astonished that the Speaker, one of the most important people in American politics, was going to bat for a sleazeball like Dixon, who exemplified an industry run amok."

However, Wright insists that Texas savings and loans were in large measure the victims of deregulation and the state's oil bust, which sent land values plummeting. The result, he says, was "a great dislocation," which bankrupted even "people whose names stood for rock-ribbed stability."

Banks, savings and loans and their borrowers, Wright says, found themselves "in straits where they required some forbearance."

Despite concerns of other Democrats about Wright's dealing, Coelho insists that the Speaker's decision to put his assets in blind trust have put him "over the hurdle. . . . He is putting his own personal house in order."

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