The attorney general of the United States, William French Smith, is confused. Just before taking office, he accepted a $50,000 fee when he left the board of a company controlled by a friend. The next year, he invested $16,500 in a tax shelter of dubious legality and reduced his taxes by $66,000. The poor man has things backward. He continues to control some of his money but has put his ethics in blind trust.
When it comes to the tax shelters, Smith took about $60,000 over three years and threw it at two different tax shelters. The idea was to generate about $175,0000 in tax losses--overall almost three times more than what he had invested. So questionable is this scheme that the Internal Revenue Service is almost certain to look into it and, according to some tax experts, to disallow it.
The word frequently used to describe Smith's tax shelters is "legal"--at least until the courts say otherwise. But that is not the same as "proper" or--bite your tongue--"moral." In the world in which the attorney general operates, though, morality is what tax lawyers say it is. They have become the moral arbiters of our day, able to decide by looking at the tax code from underneath and sideways where the loopholes exist. In this way, Smith bought himself, at least temporarily, the contemporary equivalent of an indulgence.
But even the tax specialist for one of the shelters felt obliged to warn that this particular investment was "adventurous." "There are risks and uncertainties on a number of tax issues," the prospectus warned. It didn't seem to bother Smith at all that he would meet himself coming and going in court on this one--as both private citizen and attorney general. When forced to choose between the two roles, he chose private citizen. After all, anyone can be the AG. But not anyone can make a patsy out of the government.
The ironic thing is that Smith in this instance is the operative equivalent of the sort of people the Reagan administration has vowed to get. These are the shifty ones, the ones who take government programs and use them in ways that were not intended. This, for instance, is what is behind the reduction in student loans. Money is not the only issue here. Also at issue is the propriety of people using student loans who do not need them--people who use the government to supply money at a low interest rate instead of using savings that are earning a high interest rate. This administration finds that reprehensible.
Similarly, this administration finds reprehensible people who choose to go on welfare rather than work. This mocks the notion that welfare is what the government provides to those who could not--absolutely could not--survive any other way.
If Smith and his soul mates in the administration think that people who take advantage of government programs are wrong, why is it not wrong when they do the same thing? The same principle is at work here, the only difference being that in one case the money comes directly from the government (welfare, student loans) while in the other the money is simply lost to the government. But, in the end, it adds up to the same thing. After all, Smith's $175,000 in tax deductions have to be made up somewhere--maybe by cutting welfare some more.
From the beginning, the nation's chief law enforcement officer has been over his head in ethical ambiguities. As attorney general-designate, he took an unprecedented $50,000 gift from a company controlled by Earle M. Jorgensen, a friend and fellow member of the Reagan "kitchen cabinet," just for having served on he board. No other board member ever received anything like that--but no other board member was about to become attorney general.
The questions here have nothing to do with Smith's personal integrity. Instead, they have to do with his welfare queen's sense of entitlement and his inability to see that what he could do as a private citizen, he can no longer do. He has a new set of clients now--the people of the United States. He cannot represent both them and himself when the interests are not the same--for instance, challenging the government on tax shelters when he is, for the time being, the government. He might not like that, but for once he is not alone. Neither do lot of others.