POLITICS SEPTEMBER 3, 2001
Robert L. Johnson came to the Bush administration's attention when it needed him most. The cause of the White House's duress was an annoyingly munificent collection of millionaires, headed by Bill Gates Sr., who had banded together to oppose President Bush's plan to abolish the estate tax. In newspaper ads and press conferences, they held forth on the obligation of the wealthy to give back to society. So effectively did they seize the moral high ground that even the most fervent opponents of the estate tax resigned themselves to it. "$(I$)t is looking increasingly doubtful," reported The Wall Street Journal a week later, "that large estates will escape federal taxation altogether."
Evidently this didn't sit well with Johnson, the billionaire founder of Black Entertainment Television (BET), whose family stood to gain millions if Bush succeeded. Johnson is not a man with a deep sense of social obligation. Not long ago, when an interviewer prodded him for his views on philanthropy, Johnson scoffed, "$(B$)eing a very wealthy person is not something that I wake up in the morning and say, 'Gee, I got all this money. How do I give it away?'" There is, however, an important exception to this every-man-for-himself ethos: society's duty to aid extremely wealthy African Americans. This social obligation Johnson takes very seriously.
So Johnson did what he often does when his interests are at stake: He played the race card. Johnson gathered a collection of black business leaders and demanded an end to the estate tax. Taking out newspaper ads of their own, Johnson's group attacked the tax for draining wealth from the black community. Unlike "very wealthy white Americans" who supported the tax, he declared, "We as African Americans have come to our wealth on a different path, a different road than they have." Gates and his friends, Johnson implied, were not really promoting the common good; they were trying to keep the black man down. All of a sudden, it was not so clear who held the moral high ground. Estate tax repeal had become a civil rights issue.
Almost no one--not even the White House--had thought to frame the issue this way. And for good reason: It is a bizarre inversion of the truth. "Elimination of the Estate Tax," Johnson's ad argued, using extraneous capitalizations for emphasis, "will help close the wealth gap in this nation between African American families and White families." But the estate tax is paid only by people who inherit large fortunes, and black people, as one might suspect, are far less likely than white people to do so. (Blacks make up about 12 percent of the population, but less than one-half of 1 percent of estate tax payers.) And the revenues from the tax, obviously, fund government programs, which tend to help those with low incomes, who are disproportionately black. Repealing the estate tax, therefore, would dramatically widen the wealth gap.
But Johnson gave Bush the cover he needed to once again cast himself as a champion of minority interests. "As Robert Johnson of Black Entertainment Television argues, the death tax and double taxation weighs heavily on minorities," said Bush, who added that his plan would allow people to transfer wealth "from one generation to the next, regardless of a person's race."
Fortunately for Johnson, and even more fortunately for his heirs, estate tax repeal subsequently passed into law. But Johnson's campaign to abolish the estate tax was more than just a way to save a few million bucks. It was the beginning of a political partnership between the CEO of BET and the president of the United States, one that has now turned its attention to an even grander cause: the privatization of Social Security. On May 2, Bush appointed Johnson to his commission charged with transforming the popular program. Once again, Johnson has racialized a long-standing conservative crusade. We must turn Social Security into a system with individual investment accounts, he argues, because the existing program unfairly shortchanges blacks. Social Security overhaul is Bush's most radical--and most politically perilous--aspiration. That the administration has entrusted Johnson with this task, despite his lack of expertise (and, indeed, his lack of any history of public interest in the issue), is a measure of the ideological reliability with which it now regards him. Johnson, according to one analyst, "is trying to position himself as Bush's go-to guy in the African American community." And it looks like he's succeeding.
At first blush, there is something peculiar about this burgeoning partnership. Before Bush took office, Johnson cut the standard political profile of a member of the black bourgeoisie--his strongest political connections were with the civil rights establishment, and he donated hundreds of thousands of dollars to Democrats. And yet his alliance with the president is not as strange as it may appear. Johnson has spent his career converting the moral capital of the black struggle for equality to his own personal economic advantage. One of Bush's central innovations has been to cloak an economic agenda radically geared to the interests of the wealthy in multicultural imagery. In a sense, the business strategy of Robert Johnson and the political strategy of George W. Bush were destined for each other.
Johnson presents himself as the very opposite of a shrewd manipulator of racial politics. His preferred self-image is that of a bottom-line businessman who does his best to disregard racial barriers. A New York Times profile last year began with Johnson recounting how, early in his career, he swallowed his anger while a white colleague told a racist joke at a bar. (Profiles of Johnson often feature him recounting racial slights, always to make the point that he is not bothered by them.) The Times summed up Johnson's ethos this way: "That philosophy--keep emotions in check, don't let issues of race get in the way of the deal--has helped Mr. Johnson, 54, become one of the country's most successful black entrepreneurs."
But while Johnson's talent as a businessman is undeniable--he has, after all, earned more than $1 billion from scratch--he didn't come by his fortune through the classic build-a-better-mousetrap method of American capitalism. Rather, his genius lies in finding certain corners of the economy where he can guarantee himself a steady stream of risk-free profit without having to provide goods or services of any special value. He does so by making himself politically indispensable to his business partners. Johnson's career has less in common with Henry Ford than with, say, the Soviet gas monopoly. And to acquire such franchises, he offers not baksheesh but racial absolution.
Johnson first demonstrated this ability in 1979, when, as a cable TV lobbyist, he came up with the one true innovation in his business career: a cable TV station targeted to black viewers. At the time, cities represented cable's only remaining untapped market. And cable companies that could claim to support black culture enjoyed a political advantage in the race to wire them. All of which set the stage for Johnson's sweetheart deal. A Denver-based cable giant called TCI put up half a million dollars to acquire a minority share of Johnson's new network, which he called Black Entertainment Television. Johnson got the majority stake--after putting up just $15,000 of his own money. The benefit to TCI was clear: It could tell the mayors and city councils in charge of doling out contracts that it carried and financed a black-owned, black-themed station. "Under traditional investment standards, the return on investment has not been what one would look for," a TCI official told The Washington Post ten years later. But that, he added, doesn't account for "how much goodwill we get from making a major attempt to provide programming of interest to the minority community." Johnson, meanwhile, reaped a windfall.
Of course, now that Johnson had a cable station, he had to put content on the air. But this turned out to be pretty simple, too. Since BET's main purpose was to score political points for Johnson's financial patron, the actual programming hardly mattered. As Johnson liked to tell his staff, "We don't have to reinvent the wheel. We just have to paint it black." During its first couple of years, BET broadcast only two hours per week--an old movie on Friday nights. It took four years to expand to 24-hour broadcasting, and its main criterion still seems to be finding ways to fill airtime at no cost. The network devotes hour after hour to infomercials--"Black Entertainment Television," goes one joke, "is neither black nor entertainment." And it relies heavily on music videos, which studios provide to the network for free in order to promote their albums and which, as of two years ago, accounted for more than half of BET's content.
Unfortunately, the videos tend to feature the least edifying elements of African American culture--gangsta rappers and booty-shaking dancers. That's one reason Johnson and BET have for years come under withering criticism within the African American community. One BET executive confessed at a music conference in June 1996 that she doesn't permit her daughter to watch the station. Aaron McGruder, who authors an edgy cartoon about black life, has made a living disparaging Johnson. In one strip, a character asserts that he "used to be a firm believer" that "powerful black business people would then act in the best interests of black America." But then "BET shot a few holes in that theory."
Johnson has also endured criticism for serving as a front man for TCI--a role he reprised in 1984 when he acquired the rights to provide cable television to Washington, D.C. Like many other local governments, Washington's city council put great emphasis on finding a locally owned, minority contractor. Even though the council's cable committee recommended another firm, Johnson's group won the bid, in large part--as the Post suggested at the time--because its shareholders included a number of cronies and financial donors of then-Mayor Marion Barry.
Johnson promised that his company "would not be back seeking relief from promises we could not keep." But, within a few months, Johnson acknowledged (as did cable contractors in other cities) that he could not keep his commitment without millions of dollars in concessions from the city. Johnson also obtained tens of millions in additional financing from TCI, giving it financial control of the operation. With Johnson and his local, minority partners reduced to figureheads, a Post columnist observed, "Would the D.C. City Council have given the cable franchise in the first place to a white company from Denver with local black managers? I doubt it."
Johnson has a blunt reply to such detractors. "There are thousands of white businessmen who never get asked, 'Are you a hero?' and never are asked what they have given back to the white community," he told c-span in 1992, "What are my responsibilities to black people at large? If I help my family get over and deal with the problems they might confront, then I have achieved that one goal that is my responsibility to society at large."
As Johnson tells it, he asks only to be treated like any other entrepreneur, black or white. But he applies his disregard for race selectively. When he's asked to help the black community, he's just a businessman. On the other hand, when Johnson's own interests are at stake, he portrays himself as a stand-in for black America. Race is his catchall justification for all sorts of socially and economically noxious behavior. He has turned the racial mau-mau into a business plan.
For example, Johnson has a long record of quashing efforts by his underpaid employees to unionize. On one occasion he laid off or reduced the hours of BET workers who joined an electricians' union, an action that a federal judge subsequently ruled illegal. He justifies such behavior by accusing the unions of racial bias for trying to organize a black-owned network. "I don't see them taking part in the $(naacp's threatened network$) boycott. I don't see them writing open letters to the networks about their lack of black representation. Why do they pick on BET? Why not ABC or NBC or Fox?"
In 1994 Johnson brought his tactics to the world of professional sports when he decided he wanted to purchase Washington's NBA franchise, the Bullets. When the team's owner, Abe Pollin, turned down his entreaties, Johnson tried another tack. "I told him, 'Abe, you're from the suburbs, I'm from the city,'" he recounted to the Post, "'You're white, I'm black. The city is mostly black, and the players are too.'" When Pollin resisted this line of reasoning, Johnson declared that he wanted to bring a second NBA franchise to the area. The league, he acknowledged, traditionally discourages the establishment of a new franchise in such close proximity to an existing one. But, he mused, it might not want to oppose a prospective black owner. That plan failed, too, but only after Johnson waged a protracted fight against Pollin's effort to build a new arena in downtown Washington--just the sort of economic development most boosters of the majority-black city encourage.
But the quintessential Robert Johnson business deal was unveiled last spring, when United Airlines announced its intention to purchase its main rival, US Airways. The merger was politically perilous, since the Clinton Justice Department did not seem favorably disposed toward another merger in such a heavily consolidated industry. The airlines tried to solve this problem by cutting Johnson in on the deal. Under the proposed arrangement, Johnson would create a new airline, DC Air. DC Air would lease its planes and runway spots from United, with which--in theory--it would also compete.
It was yet another no-lose proposition for Johnson. He would get a pre-fab airline--complete with planes, parts, and the people to make it work--for well below market value. (Continental Airlines subsequently offered to pay 50 percent more than Johnson for the same assets.) In return, Johnson provided United essentially the same thing Virgil "the Turk" Sollozzo wanted from Don Corleone: police and political protection. Johnson enjoyed a close relationship with President Clinton, having donated hundreds of thousands of dollars to Democratic campaigns. Airline analysts speculated--but, of course, could not prove--that United believed Johnson's influence could help make antitrust concerns disappear.
Johnson quickly went about using race to demonize the merger's opponents. In a hearing on June 15 of last year, James Oberstar, the top-ranking Democrat on the House Transportation Committee, pointed out that DC Air would be dependent on its supposed rival, United. "That's not a real competitive environment," Oberstar noted. At that point he slipped in an unfortunate phrase: "That's a plantation." Oberstar later explained that he was trying to draw an analogy to the serf-like status of the District of Columbia, which is sometimes called "the last plantation." But US Airways Chairman Stephen Wolf saw the remark on c-span, and--no doubt sensing an opportunity--phoned Johnson, who pounced. Calling Oberstar's remark "blatant racism," he demanded that the congressman apologize and recuse himself from the issue. Oberstar dutifully apologized, but Johnson played the race card again the following January, accusing New York Senator Charles E. Schumer, a merger critic, of favoring DC Air's rivals "because they are white businesspersons."
Despite Johnson's best efforts, the Justice Department delayed the merger. In fact, its review dragged on past the end of the year (before being officially nixed at the end of July). But, even before the deal fell through, something happened that completely overturned its political calculus: Bush took office. All at once, Johnson's connections with Clinton were useless. "I think with $(Johnson's$) issue on the airlines," speculates Harry Alford, a fellow black anti-estate-tax activist, "he saw he had to get both sides of the aisle."
As alford implies, it is highly unlikely that Johnson would have undergone such a rapid political metamorphosis had his business dealings not demanded it. Yet his newfound conservatism is not entirely philosophically incoherent. The premise of Johnson's special pleading has always been that his business interests are the only legitimate civil rights issue. His right to amass more wealth trumps his employees' interest in higher wages, the community's interest in non-debasing black entertainment, and travelers' interest in affordable airfares. The fact that many of the people on the other side of the equation are black does not enter into Johnson's accounting. And, in recent months, he seems to have discovered that the moral logic that propelled his spectacular business career has an application in the world of public policy as well.
Johnson's interest in the estate tax is, of course, a direct consequence of his financial interests. His membership on the President's Commission to Strengthen Social Security, on the other hand, came about by accident. In mid-March, Johnson delivered a speech at Brown University about his life. By happenstance, Sam Beard was in the audience. Beard is a full-time evangelist for Social Security privatization. He is particularly intent on sharing the gospel with nonconservatives--he treated me to a soliloquy in the course of telling this story--and can explain the idea so it sounds not like the product of right-wing think tanks but like the natural outgrowth of the Great Society. Beard saw in Johnson an ideal convert. "His whole presentation is about wealth," recounts Beard, meaning this as a compliment. Beard struck up a conversation with Johnson and, finding him receptive, asked whether he would like to serve on a presidential commission on the topic if invited to. Johnson said yes.
Chuck Blahous, the White House staffer in charge of Social Security reform, does not recall the precise genesis of Johnson's involvement. "We were looking for diversity of background," he explains. In fact, there is nothing in the public record to suggest that Johnson had any previous interest in the topic. And that may have worked in his favor. Johnson's obvious role on the commission is to argue that Social Security privatization will help blacks, who, he claims, are treated unfairly by the current system. Pro-privatization think tanks, such as the Heritage Foundation and the Cato Institute, have argued that for years, pumping out position papers and targeting the black media. But the idea never received much mainstream attention until Bush anointed Johnson to take it up. Johnson well understands his role--he brings up the racial angle at every turn, generally leaving to others the broader case for personal accounts. He doesn't have to reinvent the case for privatization. He just has to paint it black.
Johnson's argument is rooted in a simple misunderstanding. "African Americans who contribute to the Social Security system and payroll taxes," he says, "also have one of the highest mortality rates, so in the end, they may not receive the full benefits of what they put in Social Security." And it's true that blacks, on average, die younger than whites. Social Security pays its retirement benefits only as long as a worker is alive. Therefore, privatizers conclude, blacks would particularly benefit from individual retirement accounts. That way, those who die early won't get less benefits--extra money in their account will be passed on to their heirs.
There are two reasons this conclusion is false. First, Social Security does more than pay benefits to retirees. It also gives benefits to the families of workers who die or are disabled at a young age. Since black workers are more likely to suffer workplace injuries, they benefit disproportionately from this part of the program. And the more Social Security tax dollars are drained away into private accounts--as Bush proposes to do--the less that is available for survivors' benefits.
Second, Social Security's retirement benefits are progressive: They offer a higher rate of return to lower-paid workers. Since black workers, on average, earn less than the population at large, they benefit from this redistribution. This more than makes up for any loss they suffer from dying younger. On the whole, then, Social Security redistributes money from whites to blacks. Most plans for private accounts do not. As with the estate tax, Johnson has his racial analysis backward.
But Johnson's argument is more than untrue; it is deeply revealing. Before Social Security, retirees couldn't know how much of a pension to allot themselves out of their savings, if they had any, because they didn't know how long they would live. If they spent too much, they might outlive their savings. Social Security fixed that problem by giving retired workers a guaranteed income for as long as they lived. Johnson, and Bush's commission, now argue that it would make more sense to give each retiree an individual account. It's true that this one feature, by itself, would tend to benefit those who die younger. But, of course, nobody can be certain that he or she will die young. Suppose we were to discover that, say, Italian-Americans are somewhat less likely than other Americans to lose their homes from natural disasters. One could then make the case that federal disaster relief constitutes a net transfer of wealth out of their community, and that they should oppose it. The important point here is not even that blacks wouldn't benefit from Social Security privatization. It's that Johnson implicitly rejects the very idea that politics is about the common good.
Conservatives used to vehemently--sometimes even eloquently--oppose this kind of thinking. Color-blindness, they once insisted, was the only moral basis for decent public policy. But the Bush administration has changed that. It boasts incessantly about its racial, ethnic, and gender diversity and has hatched a slew of initiatives targeted at specific constituencies. For women, the White House is pushing the "Winning Women" campaign. For Catholics, Bush appropriates the language of the Church. For Mexican-Americans, Bush last month floated an amnesty program that wouldn't apply to all immigrants--just this one, politically important immigrant group. Bush, of course, did not invent identity politics; his contribution has been to tether it to policies geared toward the interests of accumulated wealth.
In short, Bushism and Johnsonism are made for each other; their nascent alliance represents a historic synthesis of the racial separatism of the left and the libertarianism of the right. Johnson, even more than Bush, seemed to recognize this commonality from the beginning. "If he's smart," the businessman said of the president last April, "he'd take the opportunity to reach out to these African American business leaders and say, 'We agree on at least one thing. What else can we talk about?'" The answer, alas, is plenty.
Jonathan Chait is a senior editor at The New Republic.