Once again, I turn to Steve Perlstein of the Washington Post, my favorite business columnist, for the best macro-look at what's happening in the markets and the economy. His take on the dispute over increased spending to get us out of this mess-- it's not that much new debt in any relative sense. Definitely worth reading.
What about the flap over Rush Linbaugh? I think the Republicans are nuts to allow Rush to become their spokesman, while the Dems are doing exactly what they need to do to make Rush into their posterchild. Without a real party leader, Rush has filled the void, and while he might have 10 million loyal finge supporters, that won't get anyone elected. I am guessing that name recognition for Michael Steele (flailing at trying to actualy own his own title as RNC Chair), Mitch McConnell (Senate Minority leader), and John Boehner (House Minority leader) is non-existent. But Rush is first and foremost an entertainer, not a politician, and the sight of real party leaders cowtowing to him, apologizing on his show for daring to criticize his anti-Obama remarks, just reminds the general population why they threw the Republicans out of office. Good for D's to have a convenient target that the public actually has heard of, very bad for the R's.
Don't make the mistake of thinking this was by accident. Politico has a good insider look at how Rush was targeted by the D's as their punching bag-- a role he relished to the detriment of their party.
And that's been a real challenge for the R's-- they can't go after Obama because his approval ratings are through the roof. That doesn't leave them with any symbols of the Democratic excesses that they feel were evident in the stimulus bill, and that they hate in the budget. Speaker Pelosi is only slightly better known than McConnell and Boehner (notwithstanding her being third-in-line to the Presidency), so the mileage of going after her is limited. Newt was a much better target for the Dems a dozen years ago. Now it's Rush's turn...
There are a couple of Washington Post articles today worth checking out for all you Damage Control fans. The first is a story that was all over the place yesterday, the decision by FaceBook to alter its policies on its rights to user information. Tech gadget columnist Rob Pegoraro has a good write-up of the issue, which essentially stems from a lawyer's edits to their existing fine print, but that some FaceBook fans believe will give FaceBook the rights to use their information in perpetuity.
FaceBook could have learned a little something from a former clinet of mine, DoubleClick, the on-line ad behemeth. Ten years ago, DoubleClick inadvertently stepped into a similar mess. The company, through its ad serve technology, had enormous banks of information on the activities of everyone surfing the internet-- although the identity of every surfer was limited to url's that don't include, for example, names, home addresses, credit information, and all of the other details that make us real as opposed to virtual human beings. What got DoubleClick in trouble was a little change to its privacy notice announcing it might cross-reference that on-line data with off-line data that it had purchased from the Direct Marketing Association-- the kind that does include your name, address, age, income, shopping habits, and all types of personally identifiable intelligence that marketers collect and use to target new customers.
The ensuing firestorm that the policy change set off was enormous, and resulted in investigations by the Federal Trade Commission and two state attorneys general (New York and Michigan). By the time I was called in, the company was in reputational free fall. We ended up rescinding the policy change, hired on a respected chief privacy officer and appointed an outside board of ombudsmen to review future policy issues. That ended the firestorm, but not until after DoubleClick suffered significant stress and damage to its brand, not to mention the unwanted attention it received.
There's an important lesson here-- In the on-line world, even what you might think are the smallest and most meaningless of policy changes will be scrutinized intensely, and will be assumed by a skeptical public to have sinister motives behind them. The other lesson is to pay attention to recent history so you don't repeat the mistakes of others.
The second article is by Howard Kurtz about the struggles of the print news media to figure out how to survive in an age where everything is being given away for free on the internet. Towards the end of the article, Kurtz mentions a number of alternative news collecting entitites as a source for some of the enterprise reporting that is being ignored in the wake of budget cuts at the traditionally strong papers.
He failed to mention the Center for Public Integrity here in Washington, which is dedicated to producing original investigative journalism about significant public issues to make institutional power more transparent and accountable. Two of my good friends are overseeing the reporting there, and both are among the best journalists in the business. Editorial Director Dave Kaplan, who I have known for the better part of 25 years, came from the Center for Investigative Reporting and was a top investigiatve reporter for U.S. News & world Report until its recent demise. And Managing Editor Gordon Witkin, who I have only known for about 20 years, was national editor at U.S. News. Under their leadership, I am confident that CPI will be a strong outlet for investigative articles that are no longer being written by the traditional publications.
Lesson Two-- It's Okay To Pre-empt Your Adversary's Media Strategy
There was one silver lining, at least for me, in the Travel Office, and I learned a valuable Damage Control lesson that I preach to this day. After the Republicans gained the majority following the 1994 mid-term elections and began investigating in earnest (and called for all those depositions and hearings) they decided to issue an extremely partisan and one-sided investigative report on the Travel Office Affair. And they planned to do so in press conference on Capitol Hill for maximum effect.
Three days before the scheduled press conference--and two days before a required meeting of the Government Operations Committee to formally vote on and approve the report as required in the Committee rules, I got a call from a Republican staffer who thought the report was an outrage. In a scene right out of "All The President's Men," this person asked to secretly meet in the garage of the Rayburn House Office Building. In the dark recesses of underground parking lot, this Republican staffer gave me a copy of the report.
I hurriedly ran back to my desk to review it, and found myself facing a fairly perplexing challenge. (No, it wasn't guilt at having a purloined advanced copy of a leaked confidential report--Remember, I'm in the Damage Control business, not the remorse business.)
The question I faced was, Now what do I do?
There wasn't time to craft a point-by-point rebuttal to the Republican report, and even if I did, it wouldn't have the credibly with reporters to offset the damage that the report would inflict in the media. So I leaked it to my friend Glenn Simpson at the Wall Street Journal, which ran it on the back page of their front section the morning of the Committee meeting, the day prior to the planned press conference.
That might seem counter-intuitive, to give to a major national publication the very report I was charged with rebutting. But it turned out to be extremely effective, and here's why:
1) It utterly ruined the Republican's media strategy. No one was interested in their press conference after the WSJ had already done the story.
2) The Journal, as a business publication less interested in political intrigue but not wanting to pass on a scoop, ran it on the back page instead of the front page.
3) It gave the Democrats an issue at the Committee meeting that day--the Republicans had violated the rules by leaking out an unapproved report (I guess I neglected to tell my Dem members that I had given the report to the Journal, but since I had been leaked the report by a Republican staffer on the Committee, I didn't think that was my obligation. And why spoil their fun?).
4) Screaming about violations of process is a much better issue than trying to defend the facts of the Travel Office case.
5) It turned out that there was a demonstrable error in the report: The First Lady had been overseas at a time that the report alleged she was involved in a key meeting central to their findings. That mistake was pointed out in the coverage, undermining their case against Mrs. Clinton.
The lesson—When playing defense, there are two, and only two, factors that you can control: · When the bad news comes out; and, · Where it comes out.
These can be used effectively for Damage Control, but if you cede them to your adversaries, you will have lost them for good.
Addendum: Several years ago I had a large corporate client facing imminent indictment on a number of regulatory violations (trumped up, in my opinion, for political purposes), and they wanted to know how they should respond to the Attorney General's impending press Conference. It took me many, many hours of arguing why we should not let that happen. Instead, we should undermine the prosecutor's media strategy by announcing ourselves in one discreet media outlet that we expected an indictment. We would supplement that with a credible outside advocate lined up to argue that it was a politically-motivated investigation (the corporation's executives were large contributors to the other political party). The strategy worked brilliantly, the prosecutors were embarrassed by the media coverage, which was severely muted, and a fine was eventually agreed to after all of the initial charges were dropped.
Washington Post columnist Steven Perlstein has a must-read today about the stimulus package [yes, I am veering off of damage control on this].
His basic point-- all of the items in the stimulus bills being floated will create jobs or help rebuild a failing infrastructure, that creating government jobs has just as much merit as creating private sector jobs, and that tax cuts are not nearly as effective in stimulating the economy as spending. His main message to the Congressional critics of the stimulus package-- shut up already, you don't know what you are talking about, and talk to a real economist or financial advisor if you want to sound intelligent in this debate. Here's a sample:
My modest proposal is that lawmakers be authorized to hire personal economic trainers over the coming year to sit by their sides as they fashion the government's response to the economic crisis and prevent them from uttering the kind of nonsense that has characterized the debate over the stimulus bill during the last two weeks.
Coming from Perlstein, who is the best business columnist writing right now in my humble opinion, we should all take notice.
It was exactly a decade ago in February that the impeachment trial of President Clinton ended and I left the White House Counsel's office, and with the arrival of a new President and staff, I thought this might be a good time to give my words of wisdom for any incoming Chief Executive. I am going to do this over a series of postings, and talk about the problems I faced as I was trying to protect and defend the reputation of the President in face of a wide variety of political and legal controversies.
A few caveats. First, because everything I did at the time was subject to subpoena by both the offices of the Independent Counsels and by the Republican-controlled Congressional investigating committees, I did not take notes or create any sort of diary at the time. Thus, this is my best recollection, and I welcome any comments and complaints if I get anything a little wrong.
Second, this is not intended to settle any old scores. I am not in the business of trashing colleagues or political adversaries.
Finally, political scandals are inevitable in Washington. No matter how conscientious President Obama and his team try to be in implementing ethics rules, political adversaries will attempt to exploit any opening by any of the thousands of appointees, and be willingly aided by what's left of the media. Just take that as a given.
Lesson 1. Don't Investigate Yourself-- It Just Gets You Into More Trouble
The White House Travel Office: The non scandal that just wouldn't die.
The first scandal that landed on my plate upon the arrival of the Clinton Administration was dubbed Travelgate, after the incoming team decided it needed to get rid of the existing travel office staff that had served under President's Reagan and Bush 41. These were all non-protected political appointees who served at the will of the President, so there were no restrictions on their hiring and firing.
As the chief Democratic staffer in the House charged with defending the Clinton Administration foibles (I was the Deputy Staff Director of the House Government Operations Committee, the primary oversight committee of the House of Representatives and thus the focal point for Administration scandals), I spent a total of more than three years dealing with that issue, conducted scores of depositions of hapless players large and small in the events, staffed several very public hearings, and had shouting matches with reporters-- and to this day I do not think that the White House acted inappropriately, unethically, or in any way in violation of any rules when it decided to put its own travel office staff in place.
The reason this became such an issue, to put it bluntly, was because the White House press corps had gotten to know and like these guys over the years. And why wouldn't they? The travel office staff took care of them on trips without worrying too much about budgets and expenses, they would carry their luggage, and they would happily look the other way when reporters would return from trips with imported wine and other contraband in violation of numerous rules and regulations (this is all true! We got all of the records duing the various investigations). They were nice people who treated the media well. What's not to like?
So while the travel office firings might have been allowable, the White House clearly never saw the impending train wreck that this would become in the media. And there were the inevitable twists and turns to the story. A third cousin of the President's from Arkansas wanted the job of director of the travel office and may have played a role in engineering the firings. The First Lady may or may not have played some sort of decisive part. A couple of their Hollywood friends thought the operation was out of whack and inefficient. All of these facts may have been titillating, but at the end of the day, the new White House clearly had the authority to put their own people in place.
The White House's first reaction to the blow-up that ensued was in keeping with its new approach to accountable government: Conduct its own investigation and issue a report on what happened. And that's exactly what they did. Then-staff secretary John Podesta issued a thorough and critical review that accomplished--- absolutely nothing. It simply had no credibility with the media, and it only angered insiders who felt they had been embarrassed by it.
Worse, it became a document for Republicans to tear apart, point out inconsistencies, look for contradictions, demand depositions and hearings, and otherwise use to prolong the interest of the media in this non-issue. John took on a terrible task, handled it laudably, and yet unwittingly provided more fuel for the fire.
In politics (and in the private sector, in my opinion), there is no mileage in quelling a scandal by conducting your own internal review. Bring in an outside auditor, allow the Justice Department to take a look if you have to, but don't take it on yourself. It won't buy you anything but more trouble.
Urged on by the handful of loyal readers of DamageContro101, one of my New Year's resolutions is to do a better job of updating this blog. Please feel free to hound me whenever possible. So here goes.
I have been wracking my brain trying to figure out this whole Bernie Madoff thing. Not the part about how could his investors have been so greedy, not recognized the warning signs, allowed themselves to be ruined, etc. (full disclosure—my parents invested a small sum of money with Madoff several decades ago, and their accountant, upon seeing the sparse annual statement, told them it was highly suspicious and to get out, which they did). I will leave it to the armchair psychologists for that analysis.
As a damage control specialist, what I don't understand is why Madoff didn't have an exit strategy. When asked what the person should have done in cases where guilt with criminal consequences is inescapable (think Spitzer, as another example, or read MSNBC Legal Analyst Dan Abram's assessment of the Illinois Governor's predicament on the DailyBeast.com), my advice tends toward the “leave the country” variety. In other words, when it is clear that you can't talk your way out of this one, the only sensible thing to do is to flee.
In Madoff's case, assuming he has been running his Ponzi scheme for decades, he should have had plenty of time to purchase a nice estate under an assumed name in, say, Venezuela (no extradition treaty, not exactly on good terms with the U.S. government, etc.), set up some secret contingency funds, paid off the requisite local officials, and had a hard-to-trace route to live out the remainder of his life. It worked for Marc Rich and Robert Vesco.
I have narrowed it down to two theories of why he didn't do so, neither of which involves guilt or remorse--I have seen no evidence that Madoff actually feels sorry for what he has perpetrated.
First, he may have been caught so flat-footed that he never, ever, believed his Ponzi scheme would come to an end. There is some logic there, because if the economy hadn't totally tanked last fall, requiring a critical mass of his investors to need their money back to cover other failing investments, he might very well have outlived his fraud. There seemed to be an endless supply of want-to-be Madoff investors lined up in every wealthy Jewish community across the country. The Ponzi scheme could have gone on for decades more.
Or second, his attorney may have told him, don't worry about it. It will take the government several years to unwind your adventures before they will lock you away, and who knows, maybe you will get off, or die before then.
Don Goldberg’s background includes work as a professional journalist prior to holding senior positions in both the legislative and executive branches of government. As a Special Assistant to President Clinton, he was responsible for developing strategic responses to investigations and helped pioneer the integration of communications and legal strategy.
Goldberg has been described by the Capitol Hill newspaper, Roll Call, as “the White House expert on congressional investigations,” and National Journal called him “a key player on President Clinton’s 25-hour-per-day damage control team.”
Goldberg has helped guide dozens of corporate clients through difficult communications challenges, including General Motors, IBM, Adobe, Koch Industries, Double- Click, 3M, ZeroKnowledge and Horizon Airlines.
He has been involved in responding to almost every major national political scandal since the mid-1980s, ranging from the Iran/Contra affair to the Lewinsky scandal.
This blog contains Goldberg’s musings on crises of the day and scandals – political or corporate, domestic or international.
