The major media overlooked Communist spies and Madoff’s fraud. What are they missing today?
illustration by Michael Hogue
By Ron Unz
illustration by Michael Hogue
By Ron Unz
In mid-March, the Wall Street Journal carried a long discussion of the origins of the Bretton Woods system, the international financial framework that governed the Western world for decades after World War II. A photo showed the two individuals who negotiated that agreement. Britain was represented by John Maynard Keynes, a towering economic figure of that era. America’s representative was Harry Dexter White, assistant secretary of the Treasury and long a central architect of American economic policy, given that his nominal superior, Secretary Henry Morgenthau Jr., was a gentleman farmer with no background in finance. White was also a Communist agent.
Such a situation was hardly unique in American government during the 1930s and 1940s. For example, when a dying Franklin Roosevelt negotiated the outlines of postwar Europe with Joseph Stalin at the 1945 Yalta summit, one of his important advisors was Alger Hiss, a State Department official whose primary loyalty was to the Soviet side. Over the last 20 years, John Earl Haynes, Harvey Klehr, and other scholars have conclusively established that many dozens or even hundreds of Soviet agents once honeycombed the key policy staffs and nuclear research facilities of our federal government, constituting a total presence perhaps approaching the scale suggested by Sen. Joseph McCarthy, whose often unsubstantiated charges tended to damage the credibility of his position.
The Cold War ended over two decades ago and Communism has been relegated to merely an unpleasant chapter in the history books, so today these facts are hardly much disputed. For example, liberal Washington Post blogger Ezra Klein matter-of-factly referred to White as a “Soviet spy” in the title of his column on our postwar financial system. But during the actual period when America’s government was heavily influenced by Communist agents, such accusations were widely denounced as “Red-baiting” or ridiculed as right-wing conspiracy paranoia by many of our most influential journalists and publications. In 1982 liberal icon Susan Sontag ruefully acknowledged that for decades the subscribers to the lowbrow Readers Digest had received a more realistic view of the world than those who drew their knowledge from the elite liberal publications favored by her fellow intellectuals. I myself came of age near the end of the Cold War and always vaguely assumed that such lurid tales of espionage were wildly exaggerated. I was wrong.
The notion of the American government being infiltrated and substantially controlled by agents of a foreign power has been the stuff of endless Hollywood movies and television shows, but for various reasons such popular channels have never been employed to bring the true-life historical example to wide attention. I doubt if even one American in a hundred today is familiar with the name “Harry Dexter White” or dozens of similar agents.
The realization that the world is often quite different from what is presented in our leading newspapers and magazines is not an easy conclusion for most educated Americans to accept, or at least that was true in my own case. For decades, I have closely read the New York Times, the Wall Street Journal, and one or two other major newspapers every morning, supplemented by a wide variety of weekly or monthly opinion magazines. Their biases in certain areas had always been apparent to me. But I felt confident that by comparing and contrasting the claims of these different publications and applying some common sense, I could obtain a reasonably accurate version of reality. I was mistaken.
Aside from the evidence of our own senses, almost everything we know about the past or the news of today comes from bits of ink on paper or colored pixels on a screen, and fortunately over the last decade or two the growth of the Internet has vastly widened the range of information available to us in that latter category. Even if the overwhelming majority of the unorthodox claims provided by such non-traditional web-based sources is incorrect, at least there now exists the possibility of extracting vital nuggets of truth from vast mountains of falsehood. Certainly the events of the past dozen years have forced me to completely recalibrate my own reality-detection apparatus.
Thoughtful individuals of all backgrounds have undergone a similar crisis of confidence during this same period. Just a few months after 9/11 New York Times columnist Paul Krugman argued that the sudden financial collapse of the Enron Corporation represented a greater shock to the American system than the terrorist attacks themselves, and although he was widely denounced for making such an “unpatriotic” claim, I believe his case was strong. Although the name “Enron” has largely vanished from our memory, for years it had ranked as one of America’s most successful and admired companies, glowingly profiled on the covers of our leading business magazines, and drawing luminaries such as Krugman himself to its advisory board; Enron Chairman Kenneth Lay had been a top contender for Treasury secretary in President George W. Bush’s administration. Then in the blink of an eye, the entire company was revealed to be an accounting fraud from top to bottom, collapsing into a $63 billion bankruptcy, the largest in American history. Other companies of comparable or even greater size such as WorldCom, Tyco, Adelphia, and Global Crossing soon vanished for similar reasons.
Part of Krugman’s argument was that while the terrorist attacks had been of an entirely unprecedented nature and scale, our entire system of financial regulation, accounting, and business journalism was designed to prevent exactly the sort of frauds that brought down those huge companies. When a system fails so dramatically at its core mission, we must wonder which of our other assumptions are incorrect.
Just a few years later, we saw an even more sweeping near-collapse of our entire financial system, with giant institutions such as Fannie Mae, Freddie Mac, Bear Stearns, Lehman Brothers, Wachovia, and AIG falling into bankruptcy, and all our remaining major banks surviving only due to the trillions of dollars in government bailouts and loan guarantees they received. Once again, all our media and regulatory organs had failed to anticipate this disaster.
Or take the remarkable case of Bernie Madoff. His colossal investment swindle had been growing unchecked for over three decades under the very noses of our leading financial journalists and regulators in New York City, ultimately reaching the sum of $65 billion in mostly fictional assets. His claimed returns had been implausibly steady and consistent year after year, market crashes or not. None of his supposed trading actually occurred. His only auditing was by a tiny storefront firm. Angry competitors had spent years warning the SEC and journalists that his alleged investment strategy was mathematically impossible and that he was obviously running a Ponzi scheme. Yet despite all these indicators, officials did nothing and refused to close down such a transparent swindle, while the media almost entirely failed to report these suspicions.
In many respects, the non-detection of these business frauds is far more alarming than failure to uncover governmental malfeasance. Politics is a partisan team sport, and it is easy to imagine Democrats or Republicans closing ranks and protecting their own, despite damage to society. Furthermore, success or failure in public policies is often ambiguous and subject to propagandistic spin. But investors in a fraudulent company lose their money and therefore have an enormous incentive to detect those risks, with the same being true for business journalists. If the media cannot be trusted to catch and report simple financial misconduct, its reliability on more politically charged matters will surely be lower.
The circumstances surrounding our Iraq War demonstrate this, certainly ranking it among the strangest military conflicts of modern times. The 2001 attacks in America were quickly ascribed to the radical Islamists of al-Qaeda, whose bitterest enemy in the Middle East had always been Saddam Hussein’s secular Baathist regime in Iraq. Yet through misleading public statements, false press leaks, and even forged evidence such as the “yellowcake” documents, the Bush administration and its neoconservative allies utilized the compliant American media to persuade our citizens that Iraq’s nonexistent WMDs posed a deadly national threat and required elimination by war and invasion. Indeed, for several years national polls showed that a large majority of conservatives and Republicans actually believed that Saddam was the mastermind behind 9/11 and the Iraq War was being fought as retribution. Consider how bizarre the history of the 1940s would seem if America had attacked China in retaliation for Pearl Harbor.
True facts were easily available to anyone paying attention in the years after 2001, but most Americans do not bother and simply draw their understanding of the world from what they are told by the major media, which overwhelmingly—almost uniformly—backed the case for war with Iraq; the talking heads on TV created our reality. Prominent journalists across the liberal and conservative spectrum eagerly published the most ridiculous lies and distortions passed on to them by anonymous sources, and stampeded Congress down the path to war.
The result was what my late friend Lt. Gen. Bill Odom rightly called the “greatest strategic disaster in United States history.” American forces suffered tens of thousands of needless deaths and injuries, while our country took a huge step toward national bankruptcy. Economics Nobel Laureate Joseph Stiglitz and others have estimated that with interest the total long-term cost of our two recent wars may reach as high as $5 or $6 trillion, or as much as $50,000 per American household, mostly still unpaid. Meanwhile, economist Edward Wolff has calculated that the Great Recession and its aftermath cut the personal net worth of the median American household to $57,000 in 2010 from a figure nearly twice as high three years earlier. Comparing these assets and liabilities, we see that the American middle class now hovers on the brink of insolvency, with the cost of our foreign wars being a leading cause.
But no one involved in the debacle ultimately suffered any serious consequences, and most of the same prominent politicians and highly paid media figures who were responsible remain just as prominent and highly paid today. For most Americans, reality is whatever our media organs tell us, and since these have largely ignored the facts and adverse consequences of our wars in recent years, the American people have similarly forgotten. Recent polls show that only half the public today believes that the Iraq War was a mistake.
Author James Bovard has described our society as an “attention deficit democracy,” and the speed with which important events are forgotten once the media loses interest might surprise George Orwell.
Consider the story of Vioxx, a highly lucrative anti-pain medication marketed by Merck to the elderly as a substitute for simple aspirin. After years of very profitable Vioxx sales, an FDA researcher published a study demonstrating that the drug greatly increased the risk of fatal strokes and heart attacks and had probably already caused tens of thousands of premature American deaths. Vioxx was immediately pulled from the market, but Merck eventually settled the resulting lawsuits for relatively small penalties, despite direct evidence the company had long been aware of the drug’s deadly nature. Our national media, which had earned hundreds of millions of dollars in advertising revenue from Vioxx marketing, provided no sustained coverage and the scandal was soon forgotten. Furthermore, the press never investigated the dramatic upward and downward shifts in the mortality rates of elderly Americans that so closely tracked the introduction and recall of Vioxx; as I pointed out in a 2012 article, these indicated that the likely death toll had actually been several times greater than the FDA estimate. Vast numbers Americans died, no one was punished, and almost everyone has now forgotten.
Or take the strange case of Bernard Kerik, New York Mayor Rudolph Giuliani’s police commissioner during 9/11, later nominated by President Bush to be America’s first director of national intelligence, a newly established position intended to oversee all of our various national-security and intelligence agencies. His appointment seemed likely to sail through the Republican-controlled Senate until derailed by accusations he had employed an undocumented nanny. With his political rise having been blocked, the national media suddenly revealed his long history of association with organized-crime figures, an indictment quickly followed, and he is currently still serving his federal prison sentence for conspiracy and fraud. So America came within a hairbreadth of placing its entire national-security apparatus under the authority of a high-school dropout connected with organized crime, and today almost no Americans seem aware of that fact.
Through most of the 20th century, America led something of a charmed life, at least when compared with the disasters endured by almost every other major country. We became the richest and most powerful nation on earth, partly due to our own achievements and partly due to the mistakes of others. The public interpreted these decades of American power and prosperity as validation of our system of government and national leadership, and the technological effectiveness of our domestic propaganda machinery—our own American Pravda—has heightened this effect. Furthermore, most ordinary Americans are reasonably honest and law-abiding and project that same behavior onto others, including our media and political elites. This differs from the total cynicism found in most other countries around the world.
Credibility is a capital asset, which may take years to accumulate but can be squandered in an instant; and the events of the last dozen years should have bankrupted any faith we have in our government or media. Once we acknowledge this, we should begin to accept the possible reality of important, well-documented events even if they are not announced on the front pages of our major newspapers. When several huge scandals have erupted into the headlines after years or decades of total media silence, we must wonder what other massive stories may currently be ignored by our media elites. I think I can provide a few possibilities.
Consider the almost forgotten anthrax mailing attacks in the weeks after 9/11, which terrified our dominant East Coast elites and spurred passage of the unprecedented Patriot Act, thereby eliminating many traditional civil-libertarian protections. Every morning during that period the New York Times and other leading newspapers carried articles describing the mysterious nature of the deadly attacks and the complete bafflement of the FBI investigators. But evenings on the Internet I would read stories by perfectly respectable journalists such as Salon’s Laura Rozen or the staff of the Hartford Courant providing a wealth of additional detail and pointing to a likely suspect and motive.
Although the letters carrying the anthrax were purportedly written by an Arab terrorist, the FBI quickly determined that the language and style indicated a non-Arab author, while tests pointed to the bioweapons research facility at Ft. Detrick, Md., as the probable source of the material. But just prior to the arrival of those deadly mailings, military police at Quantico, Va., had also received an anonymous letter warning that a former Ft. Detrick employee, Egyptian-born Dr. Ayaad Assaad, might be planning to launch a national campaign of bioterrorism. Investigators quickly cleared Dr. Assaad, but the very detailed nature of the accusations revealed inside knowledge of his employment history and the Ft. Detrick facilities. Given the near-simultaneous posting of anthrax envelopes and false bioterrorism accusations, the mailings almost certainly came from the same source, and solving the latter case would be the easiest means of catching the anthrax killer.
Who would have attempted to frame Dr. Assaad for bioterrorism? A few years earlier he had been involved in a bitter personal feud with a couple of his Ft. Detrick coworkers, including charges of racism, official reprimands, and angry recriminations all around. When an FBI official shared a copy of the accusatory letter with a noted language-forensics expert and allowed him to compare the text with the writings of 40 biowarfare lab employees, he found a perfect match with one of those individuals. For years I told my friends that anyone who spent 30 minutes with Google could probably determine the name and motive of the likely anthrax killer, and most of them successfully met my challenge.
This powerful evidence received almost no attention in the major national media, nor is there any indication that the FBI ever followed up on any of these clues or interrogated the named suspects. Instead, investigators attempted to pin the attacks on a Dr. Steven Hatfill based on negligible evidence, after which he was completely exonerated and won a $5.6 million settlement from the government for its years of severe harassment. Later, similar hounding of researcher Bruce Ivins and his family led to his suicide, after which the FBI declared the case closed, even though former colleagues of Dr. Ivins demonstrated that he had had no motive, means, or opportunity. In 2008, I commissioned a major 3,000-word cover story in my magazine summarizing all of this crucial evidence, and once again almost no one in the mainstream media paid the slightest attention.
An even more egregious case followed a couple of years later, with regard to the stunning revelations of Pulitzer Prize winner Sydney Schanberg, one of America’s foremost Vietnam War reporters and a former top editor at the New York Times. After years of research, Schanberg published massive evidence demonstrating that the endlessly ridiculed claims of America’s Vietnam MIA movement of the 1970s and 1980s were correct: the Nixon administration had indeed deliberately abandoned many hundreds of American POWs in Vietnam at the close of the war, and our government afterward spent decades covering up this shameful crime. Schanberg’s charges were publicly confirmed by two former Republican House members, one of whom had independently co-authored a 500 page book on the subject, exhaustively documenting the POW evidence.
Although a major focus of Schanberg’s account was the central role that Sen. John McCain had played in leading the later cover-up, the national media ignored these detailed charges during McCain’s bitter 2008 presidential campaign against Barack Obama. One of America’s most distinguished living journalists published what was surely “the story of the century” and none of America’s newspapers took notice.
In 2010 Schanberg republished this material in a collection of his other writings, and his work received glowing praise from Joseph Galloway, one of America’s top military correspondents, as well as other leading journalists; his charges are now backed by the weight of four New York Times Pulitzer Prizes. Around that same time, I produced a 15,000-word cover-symposium on the scandal, organized around Schanberg’s path-breaking findings and including contributions from other prominent writers. All of this appeared in the middle of Senator McCain’s difficult reelection campaign in Arizona, and once again the material was totally ignored by the state and national media.
An argument might be made that little harm has been done to the national interest by the media’s continued silence in the two examples described above. The anthrax killings have largely been forgotten and the evidence suggests that the motive was probably one of personal revenge. All the government officials involved in the abandonment of the Vietnam POWs are either dead or quite elderly, and even those involved in the later cover-up, such as John McCain, are in the twilight of their political careers. But an additional example remains completely relevant today, and some of the guilty parties hold high office.
During the mid-2000s I began noticing references on one or two small websites to a woman claiming to be a former FBI employee who was making the most outlandish and ridiculous charges, accusing high government officials of selling our nuclear-weapons secrets to foreign spies. I paid no attention to such unlikely claims and never bothered reading any of the articles.
A couple of years went by, and various website references to that same woman—Sibel Edmonds—kept appearing, although I continued to ignore them, secure that the silence of all my newspapers proved her to be delusional. Then in early 2008, the London Sunday Times, one of the world’s leading newspapers, ran a long, three-part front-page series presenting her charges, which were soon republished in numerous other countries. Daniel Ellsberg described Edmonds’s revelations as “far more explosive than the Pentagon Papers” and castigated the American media for completely ignoring a story that had reached the front pages of newspapers throughout the rest of the world. Such silence struck me as rather odd.
Philip Giraldi, a former CIA official who regularly writes for this magazine, suggested he investigate her charges. He found her highly credible, and his 3,000-word article in TAC presented some astonishing but very detailed claims.
Edmonds had been hired by the FBI to translate wiretapped conversations of a suspected foreign spy ring under surveillance, and she had been disturbed to discover that many of these hundreds of phone calls explicitly discussed the sale of nuclear-weapons secrets to foreign intelligence organizations, including those linked to international terrorism, as well as the placement of agents at key American military research facilities. Most remarkably, some of the individuals involved in these operations were high-ranking government officials; the staffs of several influential members of Congress were also implicated. On one occasion, a senior State Department figure was reportedly recorded making arrangements to pick up a bag containing a large cash bribe from one of his contacts. Very specific details of names, dates, dollar amounts, purchasers, and military secrets were provided.
The investigation had been going on for years with no apparent action, and Edmonds was alarmed to discover that a fellow translator quietly maintained a close relationship with one of the key FBI targets. When she raised these issues, she was personally threatened, and after appealing to her supervisors, eventually fired.
Since that time, she has passed a polygraph test on her claims, testified under oath in a libel lawsuit, expanded her detailed charges in a 2009 TAC cover story also by Giraldi, and most recently published a book recounting her case. Judiciary Committee Senators Chuck Grassley and Patrick Leahy have publicly backed some of her charges, a Department of Justice inspector general’s report has found her allegations “credible” and “serious,” while various FBI officials have vouched for her reliability and privately confirmed many of her claims. But none of her detailed charges has ever appeared in any of America’s newspapers. According to Edmonds, one of the conspirators routinely made payments to various members of the media, and bragged to his fellow plotters that “We just fax to our people at the New York Times. They print it under their names.”
At times, Congressional Democratic staff members became interested in the scandal, and promised an investigation. But once they learned that senior members of their own party were also implicated, their interest faded.
These three stories—the anthrax evidence, the McCain/POW revelations, and the Sibel Edmonds charges—are the sort of major exposés that would surely be dominating the headlines of any country with a properly-functioning media. But almost no American has ever heard of them. Before the Internet broke the chokehold of our centralized flow of information, I would have remained just as ignorant myself, despite all the major newspapers and magazines I regularly read.
Am I absolutely sure that any or all of these stories are true? Certainly not, though I think they probably are, given their overwhelming weight of supporting evidence. But absent any willingness of our government or major media to properly investigate them, I cannot say more.
However, this material does conclusively establish something else, which has even greater significance. These dramatic, well-documented accounts have been ignored by our national media, rather than widely publicized. Whether this silence has been deliberate or is merely due to incompetence remains unclear, but the silence itself is proven fact.
A likely reason for this wall of uninterest on so many important issues is that the disasters involved are often bipartisan in nature, with both Democrats and Republicans being culpable and therefore equally eager to hide their mistakes. Perhaps in the famous words of Benjamin Franklin, they realize that they must all hang together or they will surely all hang separately.
We always ridicule the 98 percent voter support that dictatorships frequently achieve in their elections and plebiscites, yet perhaps those secret-ballot results may sometimes be approximately correct, produced by the sort of overwhelming media control that leads voters to assume there is no possible alternative to the existing regime. Is such an undemocratic situation really so different from that found in our own country, in which our two major parties agree on such a broad range of controversial issues and, being backed by total media dominance, routinely split 98 percent of the vote? A democracy may provide voters with a choice, but that choice is largely determined by the information citizens receive from their media.
Most of the Americans who elected Barack Obama in 2008 intended their vote as a total repudiation of the policies and personnel of the preceding George W. Bush administration. Yet once in office, Obama’s crucial selections—Robert Gates at Defense, Timothy Geither at Treasury, and Ben Bernake at the Federal Reserve—were all top Bush officials, and they seamlessly continued the unpopular financial bailouts and foreign wars begun by his predecessor, producing what amounted to a third Bush term.
Consider the fascinating perspective of the recently deceased Boris Berezovsky, once the most powerful of the Russian oligarchs and the puppet master behind President Boris Yeltsin during the late 1990s. After looting billions in national wealth and elevating Vladimir Putin to the presidency, he overreached himself and eventually went into exile. According to the New York Times, he had planned to transform Russia into a fake two-party state—one social-democratic and one neoconservative—in which heated public battles would be fought on divisive, symbolic issues, while behind the scenes both parties would actually be controlled by the same ruling elites. With the citizenry thus permanently divided and popular dissatisfaction safely channeled into meaningless dead-ends, Russia’s rulers could maintain unlimited wealth and power for themselves, with little threat to their reign. Given America’s history over the last couple of decades, perhaps we can guess where Berezovsky got his idea for such a clever political scheme.