Thomas Petzinger, Jr., "Hard Landing: The Epic Contest for Power and
Profits that Plunged the Airlines into Chaos" (Random House, 1995)
As a crusader for regulatory reform, Bakes [Phil Bakes, an
ex-"hippie-radical" who had become a government lawyer working side-by-side
with Stephen Breyer] felt the same kind of win-at-all-costs compulsion that
motivated him Following his expulsion from Brother Rice High School. We’re
gonna win this one, he told himself. We’re gonna deregulate an industry.
Bakes threw himself into a manic research effort. There were details and
intricacies to nail down. Everything had to be perfect. No one was asking
to abolish the CAB, other than a few academics in Cambridge and Ithaca.
Deregulation —--the word itself was just being born. It was a concept
without a constituency. Nobody had ever written his congressman asking for
it. This was policy making from whole cloth. Every small advantage had to
be seized, every tiny argument mustered.
For instance, had the CAB formally declared a route moratorium, or had it
simply discontinued approving route requests? Bakes had to know; it would
make a difference in how villainous the CAB could be portrayed at the
hearings. Monte Lazarus would know, Bakes suddenly realized.
It was late at night when Bakes tracked Lazarus down at the Continental
Plaza Hotel in Chicago. Lazarus picked up the phone just as the hotel fire
alarm began blaring.
"Monte, was there a formal route moratorium or not?" Bakes demanded. Bakes
was the kind of person who talked loudly, in exclamation points, when he
was charged up.
‘‘Phil, I can’t talk now! I think I smell smoke!’’
"If there’s a fire you might as well stay in your room!" Bakes snapped
impatiently, demanding more details of the route moratorium.
When the Subcommittee on Administrative Practice and Procedure finally came
to order in the Dirkscn Senate Office Building on February 6, 1975, SENATOR
KENNEDY made himself the lead-off witness. "Regulation," he began, "has
gone astray either because they have become captives of regulated
industries or captains of outmoded administrative agencies, regulators all
too often encourage or approve unreasonably high prices, inadequate
service, and anticompetitive behavior. The cost of this regulation is
always passed on to the consumer. And that cost is astronomical.’’
For eight days, spread over the months of February and March 1975, a parade
of witnesses came forth, carefully arranged by Breyer and Bakes to cast the
regulators and the industry as evildoers. Proponents of deregulation
generally got the chance to make their case first, putting the
beneficiaries of the status quo on the defensive. RALPH NADER, an ardent
deregulation advocate, was sworn in to lend his populist imprimatur to the
cause. Ford Administration officials were carefully chosen to make sure
they personally favored and fully understood deregulation, even if their
agencies had taken no official position. Among the academic theorists,
ALFRED KAHN of Cornell was chosen to testify because of his rapier
intellect. ("I have been asked to hold my testimony to ten minutes,’’ he
began, ‘‘which means that I will have to talk terribly fast.") Computer
studies and other evidence were introduced establishing how lack of
regulation had created low fares within Texas (thanks to Southwest
Airlines) and California (thanks mainly to Pacific Southwest Airlines).
As the hearings continued, Bakes felt that something was missing. There was
too much emphasis on routes and rates and such inaccessible concepts as
price elasticity. ‘‘We‘ve got to find a scandal!’’ he said.
Watergate-—perhaps it provided an opening. From their work on the staff of
the special prosecutor, Bakes and Breyer probably knew more than anyone
else on Capitol Hill about the airline angle in Watergate. American's
off-the-books contribution to the Nixon campaign had violated not only
federal election laws, they knew, hut possibly CAB regulations as well in
particular, a law requiring the airlines to notify the agency when they
paid fees or gave gifts to anyone. If American had violated this
regulation, then the CAB was obliged to investigate. Had it clone so, or
had the Republican-controlled agency swept the case under the rug?
With the subcommittee hearings still under way, the Kennedy staffers
launched a muckraking expedition. Sure enough, they discovered, a few CAB
officials had begun looking into the matter. But the internal investigation
had been scuttled; the investigation files of the CAB staffers had even
been taken away and locked in a safe. ‘The only word that was flashing
through my mind was cover-up," a CAB lawyer named Stephen Alterman would
later say. Bakes was ecstatic. Here at last was a handle on a scandal.
The subcommittee immediately called on William Gingery, the head of the
CAB’s enforcement division, to appear as a witness. Gingery had nothing to
hide; on the contrary, he was among the CAB staffers who had been trying to
get to the bottom of the industry’s Watergate role. But Gingery was
humiliated at having been duped by his bosses and frightened at having to
appear publicly. He wrote a long, rambling letter to Bakes and other
Kennedy staffers, expressing dread at earning "the dishonor of the fool." A
short time later, a few days before he was scheduled to testify, William
Gingery shot himself dead.
Louis Proyect
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