Poison pill: how Abramoff's cronies sold the Medicare drug bill.

• Author: Dreyfuss, Barbara T.
• Position: Jack Abramoff

When Rep. Bob Ney (R-Ohio) pleaded guilty in September to selling legislative favors to clients of the disgraced lobbyist Jack Abramoff, it signaled that the fallout from the corruption scandal is far from over. Indeed, prosecutors are still issuing subpoenas, using information fed to them by Abramoff and three associates who pleaded guilty earlier this year: Tony Rudy; Michael Scanlon; and Neil Volz, Ney's former chief of staff. Other key Abramoff associates remain under scrutiny, most notably Ed Buckham, a former staffer of Rep.Tom DeLay (R-Texas), and the founder of the Alexander Strategy Group consulting firm, and the U.S. Family Network, the nonprofit that formed the nexus between DeLay and many of Abramoff's clients. And while DeLay stepped down last September as House majority leader and departed Congress in June, the scandal's shadow still hangs over others who remain on Capitol Hill, including Sen. Conrad Burns (R-Mont.) and Rep. John Doolittle (R-Calif.).

Abramoff's influence-peddling scheme has already figured prominently in many mid-term election campaigns. Democrats accuse Republicans and their lobbyist allies of being motivated by greed. Ney, who recently checked himself into an alcohol rehabilitation clinic, blames the bottle. There's no shortage of either greed or booze in Washington, but the root cause is much deeper. After Republicans took the House in 1994, and especially since they gained the White House in 2000, DeLay and others in the GOP leadership built a vast political machine operating largely outside the scrutiny of campaign-finance laws. The coterie of lobbyists surrounding Abramoff was at the heart of that system. The role of these lobbyists was not just to enrich themselves or to attract large sums from corporate America to Republican campaign coffers---although they certainly did both those things. The lobbyists were also an essential component of a governing strategy the leadership used to get laws passed.

There's perhaps no better example of this than Medicare. The Medicare prescription-drug bill, passed in late 2003 after a bitter partisan struggle, represented the program's biggest expansion since it began more than 40 years ago. But with its enormous expense and inadequate coverage, it has proved to be a disaster. Twenty percent of enrollees have higher drug costs than they did before signing up. In the next three months, an estimated three and a half to seven million people will hit the notorious "donut hole," in which coverage stops until their drug spending reaches $5,100. "We ended up with a program that undermines Medicare and costs way too much for a program with major gaps in coverage," said Roger Hickey, co-director of the Campaign for America's Future and a founder of Americans United, a coalition of consumer and labor groups demanding that Congress fix the plan.

It's well known that in his crusade to pass the bill, DeLay drew on more than 800 pharmaceutical-industry lobbyists, millions of dollars in campaign contributions, and the efforts of numerous business and healthcare groups. But this grossly flawed legislation could never have passed without the help of the same players who were central to Abramoff's lobbying operation: Tony Rudy and Ed Buckham. Using a nest of nonprofits flush with corporate cash, the discredited lobbyists played a vital, albeit hidden, role in whittling down congressional opposition to the bill for more than a year before the final vote. In particular, Alexander Strategy made use of three senior nonprofit groups the United Seniors Association, the Seniors Coalition and 60 Plus--and a Christian evangelical group, America 21, which were all funded heavily by the pharmaceutical industry. This is the story of how this shadowy network helped saddle the American public with the Medicare drug bill--the biggest, most important piece of policy in which the dubious talents of Abramoffs acolytes were brought to bear.

All in the family

Ed Buckham is a balding lay minister who, as chief of staff to then House majority whip Tom DeLay, often led prayers in the office. In 1997, Buckham quit to answer a higher calling, establishing his own consulting firm, Alexander Strategy Group. He'd also founded a nonprofit called the U.S. Family Network, ostensibly to promote a pro-family agenda. But after Buckham entered the lobbying world, it was hard to tell that he'd left DeLay's employ. He continued as DeLay's spiritual adviser and remained in close contact with his office. Alexander Strategy employed DeLay's wife, Christine, as well as Karl Gallant, who had headed DeLay's PAC, Americans for a Republican Majority (ARMPAC). For more than a year, ARMPAC, Alexander Strategy, and the U.S. Family Network shared a D.C. townhouse, which DeLay sometimes used to make fundraising calls. Dick Armey, the former House majority leader, told The New York Times this year, "Tom DeLay sent Buckham downtown to open shop and set up a branch office on K Street. The whole idea was 'what's in it for us.'"

Occasionally, Buckham coordinated a little too closely with the Republican House leadership. In 1999, the National Republican Congressional Committee (NRCC) made a $500,000 payment to the U.S. Family Network. Buckham then transferred $300,000 of this sum to a shell group called Americans for Economic Growth to run ads against House Democrats on Medicare issues. The Federal Election Commission later fined the NRCC $280,000 for this transaction, which violated campaign-finance laws. But for the most part, Buckham's connections generated rich rewards. Early on, a major contract from Enron secured with DeLay's assistance helped launch Alexander Strategy. Abramoff also steered some of his biggest clients to the firm, funneling their money through the U.S. Family Network And in 2000, Alexander Strategy landed what would eventually become its biggest account: Pharmaceutical and Research Manufacturers of America (PhRMA), the drug industry's powerful lobbying arm.

As Abramoff, Buckham, and their associates built their influence empire, one of their most useful instruments was the nonprofit organization--groups like the U.S. Family Network that existed in name only and acted as conduits for money from lobbying clients, often donated for political purposes. In their Medicare campaign, Alexander Strategy operatives also made creative use of nonprofits in a different way, this time employing a favored modus operandi of the DeLay era. Groups registered under section 501c of the tax code aren't required to disclose their donors, but they're also not supposed to make electioneering their main activity. However, thanks to vague language in the tax code and the fact that the IRS rarely polices violations, some nonprofits became havens for unlimited, untraceable corporate wealth, used to run "grassroots" campaigns for partisan causes and political candidates.

The obscure nonprofit that would play a central role in Alexander Strategy's Medicare work was the United Seniors Association. United Seniors was founded in 1991 by Richard Viguerie, the Republican who pioneered political fundraising by soliciting small donations through direct mail. Viguerie (who is no longer associated with the organization) had intended United Seniors as a conservative alternative to the American Association of Retired People (AARP), but it never threatened the 35 million-member group's dominance. United Seniors was run by economic conservatives concerned about tax cuts, balanced budgets, and Social Security privatization; their Medicare platform revolved largely around defeating President Clinton's healthcare plan and promoting private, tax-free healthcare accounts. It employed a grassroots...