Who Needs Divine Intervention? : The Watt case shows how bilking the poor can be both lucrative and apparently legal.

James G. Watt looked so happy the other day flashing a confident grin and the thumbs-up sign as he emerged from a federal court in Washington. He hasn’t had so much fun since the old days when he was secretary of the Interior opening the entire U.S. coastline to offshore drilling and clearcutting ancient forests.

Why shouldn’t he be smiling? Watt copped a plea to a single misdemeanor charge of attempting to mislead a federal grand jury and thereby avoided trial on 18 felony charges. When indicted, Watts had proclaimed his innocence and asserted, “I am trusting God that justice can arise . . .” Thanks either to divine intervention or a slick plea bargain, Watt is now looking at serving six months max.

A light sentence indeed for the top fish caught in the Reagan-era influence peddling scandal that left 16 other well-connected conservative Republicans convicted for hustling a Department of Housing and Urban Development program intended to provide housing funds to the poor. Six years and $2 million in fines later, it affords a perfect case study of why programs for the poor are in such trouble; they have been run, for the past three decades of mostly Republican administrations, by reverse Robin Hoods.

Do you remember Watt, the moralizing free-marketeer czar of Interior who once tried to ban the Beach Boys from performing on the Capitol Mall because they might attract an “undesirable element?” He was contemptuous of everyone who wasn’t into raping the environment, dismissing environmentalists as “Nazis” and deriding members of a federal advisory panel overseeing his activities as “every kind” of mixture. “I have a black, I have a woman, two Jews and a cripple.”

Well, once forced out of office by the excesses of his garbage mouth, he did what any good believer in downsizing the federal government would do: He ripped it off. He became a consultant to developers looking to cash in on HUD money. Watt had been in the Reagan Cabinet and was on intimate terms with the hapless Samuel Pierce, who served as secretary of Housing and Urban Development. Watt didn’t claim any expertise in urban housing, but he knew how to use a telephone. He got $300,000 for a couple of phone calls to HUD on behalf of a Maryland developer.

We have Pierce’s testimony that the environment at HUD was conducive to “improper and even criminal conduct.” Scarce housing money for the poor was transformed into a slush fund for well-connected Republicans. “On a number of occasions,” Pierce wrote, “I met or spoke privately with personal friends who were paid to obtain funding for mod rehab (moderate rehabilitation) projects, including among others, James Watt.” Pierce added, “These meetings and conversations, and my following discussions with staff members, created the appearance that I endorsed my friends’ efforts and sent signals to my staff that such persons should receive assistance.” No wonder Jack Kemp pronounced HUD “a swamp” when he took over.

But what’s the big loss? Just some subsidized housing for the poor that people like Watt didn’t support in the first place. If poor people would learn how to use the phone, maybe they could get their own government handouts.

Bilking the poor can be a lucrative way of life and apparently a largely legal one. What is not disputed is that Watt received $500,000 from clients who were granted very profitable housing contracts after the former Interior secretary intervened with HUD.

Watt, in his own testimony before a House subcommittee, conceded that he was in the influence peddling business and that it was quite profitable. Referring to $100,000 he made from a project in Puerto Rico, he said of his developer client, “That’s what they offered, and it sounded like a lot of money to me, and we settled on it.”

Former independent counsel Arlin M. Adams claimed that the investigation of Watt enabled the federal government to recover $10 million intended for low-income housing in the Virgin Islands that had found its way into rich people’s pockets.

In the end, Watt’s penchant for erasing computer files may have been his salvation. When questioned if he had a memorandum of talks with Pierce on a housing project, he stated: “I intentionally don’t make such memoranda so that lawyers like you won’t be able to get them.” So much for divine intervention.