Big Deal

Did the Sharpstown Scandal really make any difference?

January 1976By Comments

The scene on the floor of the House was bedlam: representatives clustered around the Speaker’s desk whispering advice; others gathered at the back microphone bellowing for recognition; and smaller groups huddled at scattered spots across the giant chamber where members passed rumors or strained to hear them. It was the closing hour of the 1971 regular session of the Texas Legislature, and the legislative process had broken down under the weight of the Sharpstown Scandal. The heavy-handed tactics of Speaker Gus Mutscher, under attack for shepherding two suspicious-looking banking bills through a previous special session for discredited Houston promoter Frank Sharp, had divided the House into three groups: blind loyalists, troubled conservatives, and a coalition of liberals and Republicans known as the Dirty Thirty. A huge backlog of legislation was hopelessly stalled, and time was running out. Would Mutscher ask the governor to call a special session? Or would he order the hands of the clock turned back at midnight, extending the session while he tried to arm-twist members into passing a few of the more important bills? Or perhaps he would make a dramatic appeal to the House, asking members to put aside animosities and try to pass something in the little time remaining.

“May I have your attention, members?” Mutscher for once had no trouble with this request; all eyes were on him. “The Chair recognizes Mr. Nelms.”

The legislators were stunned. Why Nelms, everyone was thinking. Johnny Nelms of Pasadena was only a freshman, and a mediocre one at that. What could he do? The silence was broken by the sound of a guitar. Johnny Nelms could sing, that’s what he could do. And as the clock at the back of the chamber ticked away the final minutes of Gus Mutscher’s hegemony over the House, Johnny Nelms serenaded his colleagues with a song the Speaker particularly liked. It was called “Everything I Touch Turns to Dirt.”

It has been five years now since the federal Securities and Exchange Commission (SEC), in a neat–and not accidental—bit of timing, filed suit against Frank Sharp for a stock manipulation scheme on the very day that Governor Preston Smith was inaugurated for a second term. Supporting documents in the case indicated that Smith and Mutscher had traded heavily in the suspect stock just prior to the special session when Sharp’s banking bills would be before the Legislature. The SEC, backed by Republican Administration in Washington, expected the scandal to produce a voter reaction that would finally end Democratic dominance of Texas politics. Liberals saw Sharpstown as an opportunity to wrest control of the Democratic Party away from the entrenched conservatives. Reformers decided this was their chance to change the way state government worked by making it more accountable to the people. Everyone said the scandal would be a watershed in Texas’ political history.

On the surface it appears that they were right. The voters reacted by forcing one of the biggest legislative turnovers in years. Mutscher loyalists were destroyed by slogans like, “Why fire the ventriloquist and hire the dummy?” Tarnished Preston Smith sought vindication from the voters in the form of a third term; he was rewarded with a pathetic 8 per cent of the vote. Voters adjudged Lieutenant Governor Ben Barnes, the one-time Golden Boy of Texas politics, guilty by association even though he had never been tied directly to the scandal. Two years earlier Barnes had carried all 254 Texas counties, but he could run no better than a poor third in the 1971 gubernatorial primary with less than 20 per cent of the vote. Mutscher and two key lieutenants were indicted and convicted for accepting bribes, and several other legislators were successfully prosecuted by Travis County District Attorney Bob Smith for misusing state funds in their expense accounts.

The reform spirit dominated the 1973 Legislature, as new House Speaker Price Daniel, Jr., threw his weight behind a series of bills designed to clean up the mess in Austin. The package included an ethics bill, a strict campaign finance law, a lobby registration act, and requirements for open meetings and open public records. Daniel guided the bills through the House and sent them to a reluctant Senate which considered itself untouched by the scandal. Still, public pressure carried the day and forced the Senate to enact the bills into law. Sharpstown was given credit for changing Texas politics.

But did it really? We have to come to view politics so much as a game between two sides—call them liberals and conservatives, Republicans and Democrats, ins and outs; it doesn’t really matter—that we gauge success and failure according to our idea of how points are scored. Aha, we say, reformers must have won the Sharpstown game—after all they beat X candidates and passed Y bills. The trouble is, of course, that these are only statistics, not the final score, and statistics quite often tell very little about who won or lost. The only important question is: did it make any difference?

Randall Wood is someone who believes that Sharpstown did change things for the better. Now executive assistant to State Comptroller Bob Bullock, Wood was the lobbyist for Common Cause, a self-style citizens’ lobby, during the 1973 reform session. He points to campaign financing as one area where reform laws have had a major impact.

“Before 1974, candidates just didn’t report any contributions they didn’t want to report,” Wood says. “They could conceal donations under the Harris County Committee for Joe Doaks and didn’t have to tell who made up the committee. Or they could just list the contributions under someone else’s name. Corporations gave their upper management people bloated expense accounts and generous bonuses which would then be channeled to sympathetic candidates. You just can’t do that any more.”

So score a point for liberals and reformers, right? Well, maybe. Some liberals paint a different picture. “The campaign finance law hurts liberals more than conservatives, there’s no doubt about it,” says one veteran Texas politician. “Liberals used to take money from the lobby and hide it under a committee. They can’t do that now, so they can’t risk taking the money. But most conservatives don’t care. People figure they’re supposed to be for business.” Another liberal in a key administrative position says he gets calls all the time from liberals inquiring about loopholes in the campaign financing law.

No one disputes that money is harder to raise these days. But that doesn’t mean that stricter reporting requirements will lead to the election of independent-minded public officials. The best test so far of the impact of the campaign financing law was Sissy Farenthold’s lawsuit against Dolph Briscoe during the 1974 Democratic gubernatorial primary. She accused Briscoe of gross violations and apparently caught him red-handed, but no one seemed to care and Briscoe won in a landslide. Nor has the campaign financing law had much effect on the legislative success of the politically active lobby groups like utility companies. Utilities have long been specialists in the art of concealing campaign contributions; they were among the primary targets of the new law. Yet in a year when the telephone, gas, and electric power industries were all under heavy fire, utility lobbyists succeeded in substantially watering down a utilities regulation bill.

The ethics and disclosure law can be viewed in much the same light as the campaign financing act: it sounds good but it doesn’t really affect anything. “Why not let the public know who’s backing you?” says House Speaker Billy Clayton, a conservative. “If you disclose a possible conflict of interest, people won’t get mad at you for voting that way. They knew about it before they elected you. Disclosure really is more to the protection of the candidate than the public.” A liberal legislator agrees: “Financial disclosure doesn’t help our side one bit. If you’re clean your opponent is going to lie about you anyway; and if you’ve got a conflict of interest, you can always shrug your shoulders and say, ‘What’s there to get so excited about? See, I disclosed all this right here.’ The public doesn’t really give a damn about anything that’s out in the open. It’s only when you look like you’re hiding something that you get killed.”

Another law of major importance to reformers was the revision of the lobby registration act. The bill placed sharp restrictions on the amounts lobbyists could spend on entertainment in an effort to stop them from feeding, watering, and clothing compliant legislators.

Well, it worked. During the 1975 session little groups of forlorn legislators could be spotted at cheap Mexican restaurants and cafeterias around Austin buying their own dinners. Meanwhile lobbyists dined together at expensive restaurants. They were delighted. Most of them never liked legislators much anyway and greatly preferred each other’s company at mealtime. Lobbyists, it developed, had been feeding legislators all these years because they had to, not because they wanted to. The new law may even have increased their influence, because instead of spending money on all those mandatory meals, lobbyists can now save their entertainment funds and pour them into campaigns instead. Money still buys influence, only now the transaction is less visible. “The lobby bill has done nothing but make the lobby happy,” says a high-level Senate aide. “It certainly hasn’t diminished their power any.”

Where Sharpstown may actually have had some effect was on the legislative process itself. Before Sharpstown, almost nothing was decided in debate. Votes were procedural necessities; the outcome was a foregone conclusion. Skilled lobbyists could work with conniving members to slip noxious provisions into bills at the last minute. If a legislator wasn’t a member of the leadership team, particularly in the 150-member House, he might as well spend the session at Scholz’s beer garden–and quite a few did. Many bills zipped through the Senate by a process known as floor reporting, a fanciful voting technique which in effect allowed senators to pass blank sheets of paper and decide later what to fill in. The House was more subtle. Bills piled up there till the last moment, and most could emerge only on a “consent calendar.” Once a bill made it to the floor on a consent calendar, it passed automatically. True, any five representatives could knock a bill of the calendar – but their own bills would then be subject to the immediate retribution of their colleagues. Bills authored by potential troublemakers were always delayed until the final weeks. It was an intentionally corrupt system, delighted in by the leadership, which used it to cement their power, and by the lobby, which knew how to use the secretive system to slip in the harmless-looking exemptions and requirements that meant millions of dollars of their clients.

All that has changed now. Floor reporting is a thing of the past in the Senate. All bills must have a fiscal note prepared by the Legislative Budget Board setting forth the cost of a proposal. Committee hearings can only be held after proper notice is posted well in advance. Even the consent calendars are handled differently, though the potential for abuse still lingers. In the Senate each candidate for the consent calendar is individually checked by the Administration Committee as well as by the lieutenant governor’s staff; consent bills are also perused closely in the House. Major issues like school finance and utility regulation make it to the floor these days instead of dying in committee as they usually have in the past. Debates and votes are often passionate and close.

Many legislators credit the change to Sharpstown. The Romans had a phrase for such fallacious reasoning: post hoc ergo propter hoc; after this, therefore because of this. It is equally plausible that the post-Sharpstown reforms were the inevitable result of a long trend toward a more professional legislature. As recently as 1961, most legislators had no private offices. They came from rural districts to sit at their desks on the House floor, secretaries by their side, where they received constituents and lobbyists. Beginning in 1963, legislators got offices in the Capitol, although House members often had to double up. Senators began hiring full-time lawyers for staff help in 1969, despite rules that placed a $650-per-month ceiling on salaries; at the same time House members began to raise their meager $800 monthly allotment for all staff salaries.

If Gus Mutscher were to return to the Legislature today, he would find it a vastly different place. Reapportionment has continued to change the makeup of both the House and Senate; they are now distinctly urban and suburban rather than rural. Sing-member districts make a difference, too. No longer could Mutscher rely on the bloc support of a sheep-like Dallas delegation obedient to its downtown Establishment. He would find that senators now have expense allowances of $3900 per month, representatives $3000, and these will undoubtedly go up next session. He would notice that House members don’t have to share offices anymore, and that many have lawyers, not just law students, on their staffs. He would find them more serious, and, in part because of their larger and more professional staffs, better informed. All this would have happened without Sharpstown. The Scandal did not cause the change; it merely accelerated it.

To the extent that Sharpstown can be considered a reform movement, its effect never really penetrated beyond the walls of the State Capitol. The history of America since the Civil War includes three major reform movements: Populism in the late nineteenth century, Progressivism in the early twentieth, and the New Deal during the Great Depression. All sprang from fear that the competitive process in America had somehow gotten out of whack, that the system had malfunctioned to the point where hard work no longer earned its just reward. Reform was aimed at excessive accumulations of power; it attempted to restore the balance and save the worth ethic. The legislative process in Texas was in a similar predicament under Ben Barnes and Gus Mutscher: if you weren’t a member of the Team, nothing else mattered – not your skill, not hard work, nothing. Today membership on the Team is still an advantage, to be sure, but a legislator’s display of independence no longer automatically condemns him to a session in exile.

Aside from changing the rules of the game, however, Sharpstown has had relatively little long-term effect. Genuine reform movements in America have always brought about a redistribution of political or economic power. Sharpstown produced neither; it was a reaction, not a movement. The wrath of the electorate was vented against Smith, Barnes, Mutscher, and incumbents generally, but it was short-lived. Conservative Democrats were in control before Sharpstown; they have continued to hold power since. The liberal and Republican factions which comprised the Dirty Thirty made no measurable gains, either in the Legislature or in the statewide elections. The reform laws produced no wave of activist politicians of any persuasion, and the special interest lobby still calls most tunes in the Legislature. Common Cause, the vanguard of the nonpartisan reform movement, is having trouble raising money and has been forced to release its full-time lobbyist.

Five years after the Sharpstown Scandal shook the foundations of political power in the state, the names and perhaps the style of Texas politics have changed, but not the substance. Mutscher and Barnes are long gone, Mutscher to appeal his conviction and Barnes back to Brownwood to make millions. Smith works in development and public relations for Texas Tech. Frank Sharp still has his realty company in Houston, having escaped the wrath of the SEC by accepting immunity from Judge John Singleton in return for state’s evidence that didn’t seem to add much to the case. Even the leading reform figures have disappeared from the scene: Daniel retired after the ill-fated Constitutional Convention to practice law and ruminate on the wisdom of volunteering to make oneself a lame duck; Farenthold lost embarrassingly in her second try for the governorship against Dolph Briscoe in 1974. Of the original Dirty Thirty, fewer than half are still in the Legislature. Meanwhile, business goes on a before – different, but the same. In short, despite impressive first-quarter statistics, reformers have yet to put any points on the scoreboard.

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