• Marc Johnson

A Montanan at the Gates of Reform – Again


Max Baucus (right), the current chairman of the powerful Senate Finance Committee, is on the verge of making history by writing (and perhaps passing) a sweeping reform of the nation’s health care system.

The Montana Senator – he was elected to the Senate in 1978 – is walking a path that one of his progressive Montana political forefathers – Burton K. Wheeler (on the left, above) -blazed nearly 75 years ago.

Baucus has been catching some grief in Montana – the Great Falls Tribune rounded up some of the opposition – and from those farther to the left on the political spectrum for not pushing harder for the so called “public option” provision in his health care bill. Baucus says, with some political logic, that he is trying to produce a bill that will actually pass the Senate.

Reforming Utility Law in 1935

Wheeler, a New Deal-era Senator, faced some of the same criticism in 1935 when he was attempting to push a sweeping piece of regulatory reform legislation – the Public Utilities Holding Company Act – through the Senate. The legislation was designed to address a variety of abuses by the handful of major utility holding companies that dominated the industry at the time.

Wheeler’s major decision was whether to include in the bill – also know as the Wheeler-Rayburn Act (future House Speaker Sam Rayburn was the House sponsor) – a so called “death sentence” provision that would mandate the dissolution of most of the nation’s powerful utility holding companies. Wheeler chaired what was then called the Senate Interstate Commerce Committee.

No doubt, like Max Baucus dealing with health care, Wheeler received thousands of letters, hundreds from Montana, opposed to his utility legislation. Montana Power Co. organized a letter writing campaign among its shareholders to press the case that Wheeler’s proposed legislation would “destroy” utility company investors.

At the height of the debate, Wheeler went on nationwide radio to defend the legislation and attack the lobbying effort. He began his half hour talk by saying that as the Senate sponsor of the holding company legislation he had received more mail from Philadelphia in the last month than he had received from Montana in the last two years.

“Nice chummy letters, too,” Wheeler said. “They call me everything from such high-class terms as ‘rogue’ and ‘rascal’ on down the scale. Most of them show the fine hand of the United Gas Improvement Company. The best of them must have come from Gertrude Stein. It consists of this: ‘It makes me sick to think how sick I get when I think about you.'”

Like Barack Obama’s support for health care reform, Wheeler knew that Franklin Roosevelt supported the broad sweep of utility reform, but on the core issue of the “death sentence” (or in Baucus’ case, the “public option”) no one knew for sure how far the president would go to fight for the provision.

Wheeler eventually succeeding a getting a letter from FDR voicing his support for the “death sentence” provision and the Montanan waited for exactly the right moment to make the letter public.

The president wrote that “while clarifying or minor amendments to section 11 [the death sentence] cannot be objected to nevertheless any amendment which goes to the heart of major objective of section 11 would strike at the bill itself and is wholly contrary” to what he would support.

To wavering Senate Democrats, the President’s message was blunt: Burt Wheeler is doing the White House’s bidding in pushing hard for the “death sentence.” A vote against the provision would be vote against Roosevelt. Wheeler added his own reminder that the real advocates of deleting the death sentence from the holding company legislation where the holding companies themselves, who had fought so hard from the beginning to weaken his bill.

“When they vote for this amendment [to eliminate the ‘death sentence’] they vote to kill the bill,” Wheeler said. “When they vote for this amendment they are voting as the lobbyist up in the galleries; representing the Power Trust, want them to vote, because the lobbyists want them to vote to kill the bill.”

The amendment to strike the “death sentence” from the Public Utilities Holding Company Act failed – by a single vote. For a moment it looked as though the vote would end in a 44-44 tie, but then Senator Peter Norbeck, a once-in-a-while progressive Republican from South Dakota, broke the tie and voted with Wheeler to keep the “death sentence” in the bill.

Wheeler had won, but the bitter fight highlighted the deep fractures among Senate Democrats. The holding company legislation passed the House – “death sentence” in place – and was signed into law by Roosevelt. In different times and under different circumstances, the Congress in 2005 repealed the remaining elements of the law that Wheeler (and FDR) fought to put in place nearly 75 years ago, but in the 1940’s and beyond the Public Utilities Holding Company Act remade an American industry.

Legislative Parallels – and Now

The historic parallels in these two reform efforts are numerous. Beyond the fact that Baucus and Wheeler share some obvious political history – Montanans, self styled independent Democrats, not infrequently at odds with their national party leadership – the two pieces of legislation have interesting similarities.

In 1935, Wheeler, like Baucus today, was dealing with a president who wanted legislation passed, but until pretty late in the game declined to be completely engaged or say exactly what he would settle for. Democrats in both cases were divided with conservative to moderate Democrats being slow to embrace reform. In 1935, presidential action pushed enough of the wavering Democrats to get a sweeping bill passed.

The charges and counter-charges flew then as now. Proponents were accused – you guessed it – of wanting to usher in socialism. The utilities were labeled as greedy, with no regard for the little guy. The lobbying – then as now – was fierce. (The 1935 lobbying practices actually prompted a congressional inquiry chaired by Alabama Senator – later Supreme Court Justice – Hugo Black.)

One thing that was very different in Wheeler’s day. Several progressive Senate Republicans – Norbeck, George Norris of Nebraska and William Borah of Idaho, among others – supported the utility reforms. Baucus, by contrast, appears to have a chance to get Maine Senator Olympia Snowe’s support for a Senate bill, but additional GOP votes appear mighty hard to come by.

Reforming utility practices in the 1930’s was a huge undertaking that reshaped a major piece of the American economy. A tough Montanan pulled it off. Another Senator from Big Sky County, three-quarters of a century later, is knocking at the gate of health care reform.

Stay tuned. If the utility regulation battle of 1935 is any historic guide, we will see many more twists and turns before any health care legislation is on the president’s desk. Then as now, a Montana Senator is calling many of the plays.

 

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©2019 by Marc C Johnson