Two and a half years after the fact, the departure of a little-known assistant secretary of commerce may rate little more than a historical footnote. But the ouster of Carlos C. Campbell as head of the Economic Development Administration (EDA) tells a great deal about the interests that clash when the president tries to eliminate a small agency.
Some members of Congress said that Campbell was dumped as one of the administration's highest-ranking blacks because he carried out the Reagan revolution too well, forgetting that Congress had refused President Reagan's repeated attempts to eliminate the EDA. Others said the hard-charging Campbell displayed a special talent for alienating lawmakers in his crusade against wasteful spending.
The former author and screenwriter has a different view, and he wants it publicly known. "The reason I was fired is that members of the House Public Works Committee wanted their grants approved," Campbell said. "The administration clearly and unquestionably capitulated on the issue of getting rid of EDA when they got rid of me."
But a few members of Congress countercharged that Campbell himself showed favoritism in giving out some EDA grants.
EDA was established in 1965 as a Great Society program aimed at helping depressed rural areas. It quickly mushroomed into a public works grant machine, financing factories, shopping centers, hotels, and even cemeteries in 80 percent of the nation's congressional districts.
From a high-water mark of $500 million during the Carter administration, the EDA's budget under Reagan dwindled to $180 million this year. The agency has more than $1 billion in outstanding loans and guarantees with a default rate around 40 percent.
Campbell said he angered many lawmakers by putting a halt to pork-barrel grants and shaky loans. "There are ghost projects all over the country," he said. "This has been covered up for years. The unwritten rule is that EDA gives the Hill staffers what they want, and the Hill staffers protect EDA jobs."
But EDA officials said Orson G. Swindle, the new assistant secretary of commerce for economic development, has been "very aggressive" in blocking bad loans and grants. For example, the EDA has refused to award $1 million for a marina development in Racine, Wis., even after Sen. Robert W. Kasten Jr. (R-Wis.) protested by holding up a key Commerce Department nomination for weeks.
Deputy Assistant Commerce Secretary William Dohr said the EDA has tightened credit standards, cut the default rate and targeted more aid for rural areas. Unlike Campbell, he said, Swindle "has gone out of his way to consult members of both parties on the Hill. He under no circumstances wants to have the confrontational relationship we had in the past. It's still widely talked about here."
Campbell cited a $3.1 million award to the North Carolina School for the Arts as evidence that the EDA is dragging its feet on problem grants.
The 1979 grant enabled the state school to renovate the Stevens Center concert hall in Winston-Salem. But despite his repeated warnings, Campbell said, the school leased the center to a group of wealthy investors -- including C. Boyden Gray, counsel and deputy chief of staff to Vice President Bush -- who later collected substantial tax credits from the project.
The lease was made final on Dec. 30, 1982. To qualify for tax credits for the year, the school's chancellor and several faculty members walked on stage New Year's Eve and gave a brief concert. There was no audience.
Campbell demanded repayment of the grant, but President Reagan vetoed a bill by Rep. Stephen L. Neal (D-N.C.) that would have nullified the school's agreement with the EDA. Two years later, the EDA is still negotiating with the school for repayment.
What all parties agree on is that members of Congress were indeed angry at Campbell. "There was a good bit of unhappiness with Carlos Campbell among members of Congress," a former House member said. "They were monumentally ticked off at him. They viewed Campbell as undertaking to dismantle EDA in the face of congressional refusal to do so."
Campbell's most controversial initiative occurred when he ordered the EDA to begin selling delinquent loans to private investors, generally for 10 to 20 cents on the dollar. Campbell saw this as a way to reduce the agency's troubled loan portfolio, but companies complained that investors were forcing them out of business by demanding exorbitant payments.
One business in danger of losing its $550,000 loan was the Maine Fence Co. Company officials went to Rep. Olympia J. Snowe (R-Maine), who called Campbell.
"He began to holler at me and attack me," Snowe said. "He was attacking my credentials as a Republican and asking how I could question the policies of the administration. He accused me of being a disloyal Republican. It was just an unbelievable conversation."
Campbell said the account was "an overblown exaggeration," saying he spoke to Snowe "firmly but politely." He said that Snowe's district, which had $1.2 million in EDA grants in his last year, got $3 million the following year.
The immediate result, though, was that Snowe and other Republican lawmakers urged Edwin Meese III, then White House counselor, to dump Campbell. Congress also put language in an EDA appropriations bill that continues to bar the agency from selling delinquent loans.
Soon afterward, there were charges that Campbell was granting exceptions to his tight-fisted policy. In one case, Campbell helped arrange a $250,000 grant to a California institute run by an acquaintance for a productivity seminar in Washington for himself, two other federal officials and 50 corporate executives. The institute later enrolled Campbell in a $24,000 private computer course at no charge and provided him with a home computer for course work.
Lawmakers also criticized Campbell for inviting an acquaintance from Hollywood to apply for a $156,000 noncompetitive grant to produce a film on Nigerian trade opportunities.
Campbell defended the grants as worthwhile and maintained that no favoritism was involved. But then-Rep. Elliott H. Levitas (D-Ga.), at the behest of other members, scheduled a hearing on the allegations before an investigative subcommittee.
Commerce Deputy Secretary Clarence J. Brown blocked Campbell's plans to testify and urged Levitas to postpone the hearing. According to sources, Levitas agreed to cancel the hearing after Brown assured him that Campbell would be removed from the EDA.
"Brown was knowledgeable enough about Washington and Congress to know that this guy was a liability," said one lawmaker involved in the controversy.
Commerce Department spokesman B. Jay Cooper denied that Campbell was fired in November 1983. "No one here forced him to leave," he said.
On Nov. 29, 1983, after Levitas postponed Campbell's appearance, a Commerce Department spokesman announced that Campbell would be moving on "to another responsible position" for reasons of "career enhancement." Six weeks later, Campbell was named alternate executive director of the Inter-American Development Bank.
Campbell said White House officials told him this was a temporary post until the right promotion could be arranged. It never came, and he resigned last year