AUGUST 2, 2010

http://online.wsj.com/article/SB10001424052748703787904575403630779178398.html

Two possible ethics trials of senior Democratic members of Congress are compounding the governing party's political woes and raising hopes among Republican leaders that they can make large gains in November's mid-term elections.

On Sunday, Republicans sought to capitalize on the ethics troubles of Democratic Reps. Charles Rangel of New York and Maxine Waters of California.

House Minority Leader John Boehner (R., Ohio) said on Fox News that Democrats had failed to "drain the swamp" of House ethics as they had promised.

House Speaker Nancy Pelosi (D., Calif.) moved to limit the damage, saying the proceedings facing the two members show that Democrats are taking ethics seriously. "When I came in, we said, 'We'll drain the swamp,' and we did," she said on ABC's "This Week."

The comments came after Ms. Waters failed Friday to reach a plea agreement with ethics investigators and will face a public trial for allegedly using her influence to steer federal bailouts funds to a Boston-based bank in which her husband owned stock. A spokesman for Ms. Waters didn't return calls Sunday.

At the time that Ms. Waters was seeking government money for the bank, she had disclosed her husband's financial interest in the bank, as is required under congressional ethics rules.

Her predicament came a day after Mr. Rangel was formally charged Thursday with 13 counts of violating House ethics rules, mostly related to his attempts to raise money from companies for an educational institution that bears his name. Mr. Rangel couldn't immediately be reached for comment on Sunday. He has acknowledged making "honest mistakes," but has denied intentionally deceiving anyone.

The scenario is reminiscent of 1994 and 2006, when ethics scandals dominated the political landscape in advance of elections, and control of the House changed hands. That prospect is far from certain this time.

"This is precisely the distraction that Democrats don't need right now," said Nathan Gonzales, a political handicapper with the Rothenberg Political Report. "The entire Democratic strategy is to focus on Republicans....The more the public is focused on Democrats this fall, the worse the losses are going to be."

The ethics issue "almost ensures that the conversation is going to be about Democrats," Mr. Gonzales said.

Republicans say allegations that Mr. Rangel didn't pay taxes on rental income from a house he owned in the Dominican Republic could play most directly into their message.

"When you're writing policies to increase taxes on the American people and you're not paying your own, it looks hypocritical," said Ron Bonjean, a former senior congressional staffer who provides informal advice to House and Senate GOP leaders.

Some Democrats say the trials wouldn't overly sway the election, because the economy and the Democrats' efforts to rescue it will be the hot topic.

"It's not helpful—we all understand that," said former Rep. Martin Frost, who headed House Democrats' campaign efforts in the mid-1990s. "But I believe the election will turn on the economy and the Democrats' ability to present the case that the president and Congress prevented us from falling into a Depression."

The Democrats' current woes have a certain deja vu quality. Republicans confronted a series of scandals shortly before they lost control of the House and Senate in 2006. Then-majority leader Tom DeLay (R., Texas) stepped down after several associates were charged by law enforcement officials in the influence-peddling scandal connected to lobbyist Jack Abramoff. Rep. Randy Cunningham (R., Calif.) pleaded guilty to accepting bribes from defense contractors. And then-Rep. Mark Foley (R., Fla.) became embroiled in a sex scandal involving House pages. He apologized and resigned. Mr. DeLay denied wrongdoing.

Former Rep. Rahm Emanuel (D., Ill.), who led House Democrats' 2006 campaign efforts, attacked what he called a Republican "culture of corruption" and created a web site featuring "Tom DeLay's House of Scandal." Mr. Emanuel, now President Barack Obama's chief of staff, declined to comment Sunday about the Democrats' new travails.

Republicans are already emulating Mr. Emanuel's tactics. The National Republican Congressional Committee, which coordinates GOP House campaigns, has publicly highlighted Mr. Rangel's contributions to individual Democratic candidates.

Democrats have returned a total of $650,000 in Rangel contributions so far. Last week, as the detailed charges against Mr. Rangel were made public, a half-dozen Democratic candidates called on him to resign.

When Democrats lost the House in 1994, they were engulfed in allegations that senior Democrats had misused funds from the House Post Office. Rep. Dan Rostenkowski (D., Ill.) pleaded guilty to mail fraud charges after the election, saying he gave gifts from the House stationery store to constituents at taxpayer expense.

Democrats could still avoid the spectacle of trials for Mr. Rangel and Ms. Waters, if either or both reach a settlement with the ethics committee.

Even if they don't, it would be difficult for the committee to fit in two trials in the few weeks House members will be in session before the election. The House is in recess now, and representatives will return for about four weeks starting in mid-September. So, proceedings against Ms. Waters may be delayed until after the election.

Mr. Obama made comments to CBS News last week that some interpreted as a signal to Mr. Rangel to consider quitting, which most Democrats believe would quickly quiet the storm. Mr. Rangel has served as a congressman for four decades and chaired the Ways and Means panel.

"I think Charlie Rangel served a very long time and served his constituents very well," Mr. Obama said. "But these allegations are very troubling, and, you know, he's somebody who is at the end of his career, 80 years old. I'm sure that what he wants is to be able to end his career with dignity, and my hope is that happens."

The allegations against Mr. Rangel and Ms. Waters, both senior members of the Congressional Black Caucus, could exacerbate tensions between Democratic leaders and the group. In the past, the caucus has clashed with House leaders over the treatment of its members who face ethics violations.

Rep. Barbara Lee (D., Calif.), who chairs the caucus, warned recently against a rush to judgment on Mr. Rangel. "All Americans are entitled to a fair and due process, and that right extends to Congressman Rangel as well," Ms. Lee said.

The prospect of a trial for Ms. Waters has come to light only in recent days. Investigators are looking into whether she used her position on the Financial Services Committee to help secure $12 million in federal funds for a lender, OneUnited Bank, in which she and her husband owned stock. OneUnited couldn't be reached for comment Sunday.

She and lawyers for the ethics panel had been in negotiations attempting to reach a plea agreement. But no deal was reached by the time the House adjourned Friday for a six-week summer break, according to people familiar with the investigation. The ethics panel could announce formal charges against Ms. Waters as soon as next week.

House rules generally permit lawmakers to write bills and vote on legislation that benefit their financial interests, according to Robert Walker, who has served as top lawyer for both the House and Senate ethics committees. But the rules say lawmakers should "exercise added circumspection" when they urge executive branch officials to take action that would benefit them financially.