WaPo fact checker gives 4 Pinocchios to Harry Reid

posted at 10:41 am on August 7, 2012 by Ed Morrissey

You’re probably asking yourself, “Only four?”  That’s as high as the scale goes for Washington Post fact-checker Glenn Kessler, who takes a rather dispassionate view of the McCarthyite tactics of Senate Majority Leader Harry Reid, one of the highest-ranking Democrats in government.  Instead of ripping Reid for his ethics, Kessler tries to reverse-engineer Mitt Romney’s already-public returns to see whether it’s even possible for Reid to be right.  Answer?  No, not really:

Romney’s 2010 return and his estimated 2011 return do show that he paid substantial taxes in those years. In 2010, he earned nearly $22 million, including $3 million in taxable interest, nearly $5 million in dividends and more than $12 million in capital gains. He reduced his taxes by giving $3 million in charitable contributions (much of it in appreciated stock, when shielded him from paying additional capital gains.)

In other words, this tax return shows a portfolio that is not structured to yield zero taxes. We spoke to a number of tax experts, all of whom said that, given Romney’s current portfolio, it was highly improbable for Romney to have had 10 years with taxfree returns — though there could have been one or two years with little or no taxes. …

But none of this appears to add up to 10 years of tax returns with no taxes paid. “It is theoretically possible, but it seems quite improbable in practice given the portfolio in 2010,” Kleinbard said.  “It is improbable that a man of his wealth would have paid no taxes for ten years.”

In his conclusion, Kessler allows himself a little righteous annoyance:

We use a reasonable person standard here. Without seeing Romney’s taxes, we cannot definitively prove Reid  incorrect. But tax experts say his claim is highly improbable. Reid also has made no effort to explain why his unnamed source would be credible. So, in the absence of more information, it appears he has no basis to make his incendiary claim.

Moreover, Reid holds a position of great authority in the U.S. Congress.  He should hold himself to a high standard of accuracy when making claims about political opponents.

Well, it’s safe to say that Reid holds himself to the lowest possible standard, and does so on a consistent basis.  Reid refuses to release any of his own tax returns, for instance, even though as a leader in Congress he has had a lot more opportunity to make himself a wealthy man at the expense of taxpayers.  And even when complies with the disclosure requirements of his office, Reid does so belatedly, grudgingly, and incompletely.

For instance, here’s a post from Captain’s Quarters from October 2006 about Reid’s disclosures of financial transactions that only came to light because of a lengthy LA Times probe into Reid’s involvement in real estate deals that benefited from his legislative efforts:

Reid Offers To Disclose His Land Deal … Five Years Late

Harry Reid, stung by the AP’s exposure of his complicated land deals with a lobbyist he helped make rich through his personal interventions in Congress, has told the Senate Ethics Committee that he will file amended disclosure statements that would reveal his business relationships for the first time. Reid claims the amendment would be “technical”:

The Senate Democratic leader, Harry Reid of Nevada, said his office contacted the Senate ethics committee on Wednesday and offered to correct his financial disclosure statements if they misrepresented his ties to a land deal in his home state in which his family made a profit of about $700,000.In a statement, Mr. Reid did not acknowledge errors in the disclosure forms but said he was ready to make a “technical correction” if the ethics committee determined that adjustments were needed. …

In 2001, the timeline showed, ownership of the land was transferred to a holding company, Patrick Lane LLC, named for a street near the properties, as part of effort to rezone the area for development of a shopping center. Mr. Reid became a partner in the holding company. After the rezoning was approved, the land was sold for $1.6 million, with $1.1 million directed to Mr. Reid as his share, a return of about $700,000 on the investment.

The senator’s financial disclosure statements during the period show that he never reported that the land had been transferred to the holding company, leaving the impression that he continued to own the land directly instead of through a partnership with Mr. Brown and others.

Congressional ethics specialists said the omission was at least a technical violation of the disclosure rules, which are intended to identify a lawmaker’s business partners and potential conflicts of interest. Spokesmen for the Senate ethics committee did not return phone calls Wednesday night.

Reid’s avoidance of disclosure hid two aspects of his business relationships. The first was his association with Jay Brown, who has a history of being involved in scandal. The NY Times describes him as “a prominent Las Vegas lawyer,” but they never get around to mentioning … Brown’s work as a lobbyist, as the AP did, nor do they follow up on the AP’s report of connections between Brown and organized crime.

The other part Reid wanted to keep secret was the financial ties between himself and Harvey Whittemore. The AP story reported that Reid bought the parcel from “a developer who was benefiting from a government land swap that Reid supported,” a perfect description of Whittemore in 1998 when Reid purchased the land. For the next seven years, Reid would work to ease Whittemore’s difficulties in developing the Coyote Springs project by forcing the government to swap its right-of-way for less valuable land owned by Whittemore; he tried to get the government to literally give away more of its land to Whittemore, although he would not succeed; and in the end, he pressed federal regulators to lift a endangered-species restriction on Whittemore’s Coyote Springs real estate. All of this helped give Whittemore an opportunity to make tens of millions on residential and commercial development in the former test range site.

Disclosing those partnerships, the latter of which the NYT doesn’t even bother to mention from the AP report, would have exposed Reid’s machinations for Coyote Springs as financially beneficial to himself through his partnership with Whittemore and Brown. Reid has no choice but to amend the disclosures, but by now it’s far too late; Congress agreed to almost everything Whittemore needed already, pushed by Reid in a blatantly corrupt manner. And now we know the payoff: a real-estate “investment” that garnered a 175% return in six years.

Disclosures now are pointless. The Ethics panel needs to order a full investigation not just into the $700,000 profit, but all of Reid’s business partners and any legislation or intervention with federal regulators Reid pushed on their behalf.

Note: The link to the AP story goes to another CapQ post, which has an excerpt from the AP article published on October 11, 2006, written by John Solomon and reconfirmed via Nexis.  For the sake of convenience, I’ll post the other CapQ article here:

Harry Reid And The Culture Of Corruption

Once again, we discover why the Democrats quietly dropped their “culture of corruption” theme for the upcoming midterms. The AP catches Harry Reid without a disclosure on real-estate deals that netted him $700,000 in profit:

Senate Democratic Leader Harry Reid collected a $1.1 million windfall on a Las Vegas land sale even though he hadn’t personally owned the property for three years, property deeds show.In the process, Reid did not disclose to Congress an earlier sale in which he transferred his land to a company created by a friend and took a financial stake in that company, according to records and interviews.

The Nevada Democrat’s deal was engineered by Jay Brown, a longtime friend and former casino lawyer whose name surfaced in a major political bribery trial this summer and in other prior organized crime investigations. He’s never been charged with wrongdoing – except for a 1981 federal securities complaint that was settled out of court. …

The deal began in 1998 when Reid bought undeveloped residential property on Las Vegas’ booming outskirts for about $400,000. Reid bought one lot outright, and a second parcel jointly with Brown. One of the sellers was a developer who was benefiting from a government land swap that Reid supported. The seller never talked to Reid.

In 2001, Reid sold the land for the same price to a limited liability corporation created by Brown. The senator didn’t disclose the sale on his annual public ethics report or tell Congress he had any stake in Brown’s company. He continued to report to Congress that he personally owned the land.

After getting local officials to rezone the property for a shopping center, Brown’s company sold the land in 2004 to other developers and Reid took $1.1 million of the proceeds, nearly tripling the senator’s investment. Reid reported it to Congress as a personal land sale.

In fact, this isn’t a new development for Harry Reid. Less than two months ago, I wrote about Reid’s questionable involvement and compensation in a related real-estate deal outside of Las Vegas, and the post turned into a column for the New York Post. Harvey Whittemore, a lobbyist and real-estate investor, plied Reid with campaign contributions and employed Reid’s family members — and in exchange, Reid did a number of favors that allowed Whittemore to realize large profits at the expense of environmental regulations that Reid helped Whittemore bulldoze. I wrote at the time:

The story of Coyote Springs sounds like a Horatio Alger story. The land Whittemore bought in 1998 from a defense contractor who intended on using it for target practice had a number of restrictions on its use. A quarter of it was subject to a federal power-line right of way. Another quarter had federal protection for the desert tortoise, an endangered species that also is Nevada’s official state reptile. The land had a fragile series of streams and washes that required special permission on which to build without ruining the desert’s ecosystem.None of these obstacles proved too difficult for Whittemore, at least not while he had his friend Harry Reid running interference in Congress. Interior refused to relocate the tortoises for over five years, until the Bureau of Land Management agreed to swap the land for another parcel abutting a federal preserve elsewhere. No one ever did an analysis to determine whether the deal was fair to either party, nor did the BLM go to Congress for approval on the changes to a project that Congress had explicitly legislated.

In 2002, Reid worked on the power corridor. He inserted obscure provisions into a land management bill that relocated the power corridor, freeing Whittemore to build on the 10,500 acres that Congress had previously held — which means that someone else now had to lose property value for Whittemore’s benefit, and for no cost whatsoever. That bald move caused raised eyebrows at the BLM and the Senate’s Energy and Natural Resources Committee, and Reid backed away — for the moment. Less than two years later, Reid tried again to give Whittemore the land for a song ($160,000), but Congress balked again. He finally settled for freeing the land for development and allowing Whittemore to buy it at a fair market rate, and forcing the government to relocate the power corridor.

In 2005, Reid and fellow Nevada Senator John Ensign conducted a series of interventions with the EPA to eliminate the final obstacle — the environmental impact on the fragile ecosystem in Coyote Springs Valley. When the agency blocked Whittemore’s efforts, Reid and Ensign held several meetings with EPA officials to pressure them into submission. Whittemore used another Reid son, Lief, to lobby his father’s office for assistance. In the end, the pressure paid off, as the EPA backed down from its opposition after winning a few concessions on the development plan.

What did Reid get in exchange for all of this support? According to the Times, Whittemore contributed $45,000 to Reid and his PACs since 2000. He also gave the DSCC $20,000 in 2000, when it pushed Reid as a leader for the party in the Senate. Reid’s son Josh got $5,000 for his unsuccessful campaign for a city council seat; his other sone Rory got $5,000 for his successful effort to win a spot on the Clark County Board of Commissioners.

This appears to be of a piece with the Whittemore connection. In fact, it seems as though Whittemore’s project was part of the transactions the AP discovered. “One of the sellers was a developer who was benefiting from a government land swap that Reid supported” — that’s the same project as Coyote Springs. A major portion of that story had to do with Reid trying to grease the skids for the land swap so that Whittemore could get around the federal right-of-way.

Hilariously, this appears just days after James Webb tried smearing George Allen with a pseudoscandal over stock options that Allen disclosed and never exercised, meaning that he never cleared a dime from the options. Now we have the Democratic caucus leader dodging disclosures and failing to disclose $800,000 in profits from a project on which he partnered with a lawyer suspected of connections to organized crime and a bribery scandal. And let’s not forget Reid’s connections to Jack Abramoff, whom Democrats tried mightily to use as a poster boy for Republican-only graft:

The activities _ detailed in billing records and correspondence obtained by The Associated Press _ are far more extensive than previously disclosed. They occurred over three years as Reid collected nearly $68,000 in donations from Abramoff’s firm, lobbying partners and clients. …Abramoff’s records show his lobbying partners billed for nearly two dozen phone contacts or meetings with Reid’s office in 2001 alone.

Most were to discuss Democratic legislation that would have applied the U.S. minimum wage to the Northern Mariana Islands, a U.S. territory and Abramoff client, but would have given the islands a temporary break on the wage rate, the billing records show.

Reid also intervened on government matters at least five times in ways helpful to Abramoff’s tribal clients, once opposing legislation on the Senate floor and four times sending letters pressing the Bush administration on tribal issues. Reid collected donations around the time of each action.

Reid also had a former staffer go to work for Abramoff, who then held campaign fundraisers in Abramoff’s offices.

No wonder Reid hung up on the AP reporter when they asked him to comment on this story. Reid has demonstrated that he has few scruples when it comes to using his position and power for his personal enrichment and that of his family and “associates”. If the Democrats continue to have Reid as the leader of their Senate caucus, voters should realize the kind of leadership he will provide if the Democrats win control of the Senate.

UPDATE: This story provides an answer to a question I had regarding Reid’s dealings with Whittemore. The earlier story showed that Whittemore benefited Reid’s kids and his election campaigns, but Reid worked awfully hard for Whittemore’s benefit for no direct personal payoff. This land-swap deal and the $700,000 profit shows that Reid had a direct financial interest for his earlier interventions on Whittemore’s behalf.

So when will Harry Reid provide his returns that show his income from these transactions?

Update: As some commenters note, Politifact gave Reid a “pants on fire” rating for his attack.


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