BUSINESSWEEK ONLINE : JUNE 12, 2000 ISSUE
GOVERNMENT

Should Business Fear Charlie Rangel?
If the Dems win the House, it will have to deal with him

It's a warm spring morning in Washington, and despite 30 years as a Democratic representative, Charles B. Rangel of New York finds himself on unfamiliar turf--the overstuffed Eisenhower Room of the Capitol Hill Club, a GOP hangout two blocks from the Rotunda. With him are about three dozen business executives and lobbyists--and they're not there for the eggs and muffins. Just days before the May 24 House vote on China trade, they want to know where Rangel stands. More important, they're already wondering what this old-style liberal from Harlem would be like as chairman of the House Ways & Means Committee, which oversees tax and trade legislation.

For most, this is not a happy thought. The current chairman, Houston Republican Bill Archer, is staunchly pro-business. But there is a better-than-even chance that the Democrats will retake the House in November putting Rangel in the chairman's seat. The question that hangs as heavy as pollen in the air: What would Charlie Rangel mean for Corporate America?

If his record is any guide, he won't exactly be a pal. His lifetime rating with the Chamber of Commerce, for instance, is 18%. He's opposed nearly all of the big GOP tax cuts of recent years. And his trade record is mixed. ''He is a liberal,'' grouses one lobbyist. ''But you are going to have to deal with him.''

That, it turns out, may not be so hard. Affable, plainspoken, and, if not exactly the golfing-buddy type, Rangel is still willing to do business. Asked if he would support cuts in capital-gains taxes, Rangel seems to have the deal half worked out already. ''I have no problem reducing the tax burden for people who take risks,'' he says. ''Let's have a package. Let's do something about education, health care. If we're going to have a substantial tax cut, it has to look like it's good not for some Americans, but for all the American people.'' Not a bad approach, concede the skeptical execs and K Street lobbyists as they file out.

Rangel has always been a pragmatist. A decorated Korean War veteran, he got involved in politics to help his grandfather keep a patronage job as an elevator operator. He eventually became an assistant U.S. attorney and, later, a state assemblyman. His mentor was J. Raymond Jones, the first black Tammany Hall boss. And Rangel--the son of a seamstress--is driven by Jones's ethic: ''Work within the system, but never lose your sense of outrage.''

For most of the past three decades, Rangel has been promoting the need for economic development for the poor, but he's also gone to bat for banks, brokers, and insurance companies--key hometown businesses. Citigroup Chairman Sanford I. Weill says business' fear of Rangel ''is a bunch of baloney.'' Adds one corporate lobbyist: ''Rangel is not anti-business. But he's going to demand a lot more out of business.''

Right now, what he's demanding is campaign money for Democratic congressional candidates. And he's getting great gobs of it. Rangel says he hates the shakedown and talks about the need for major campaign-finance reform. But to help his party regain control of the House, the 70-year-old lawmaker has become a master fund-raiser. So far this election cycle, he has brought in more than $3 million for House candidates. On June 5, the Democratic Congressional Campaign Committee will throw a birthday party for him. Party officials say they expect to collect $1 million. ''Hell,'' says Rangel, ''we're over $2 million already.''

BUILDING BRIDGES. That money translates into IOUs from fellow Democratic lawmakers. But Rangel is also building bridges across party and ideological lines. His approach to the China trade bill was classic Rangel. He made himself into a key player by first staying neutral for months, then announcing his support just a week before the vote. Business lobbyists credit him with helping to turn the tide in favor of permanent normal trade relations for China. ''He brought along a number of colleagues who respect his judgment,'' says Calman J. Cohen, who represents a coalition of 63 big pro-trade companies.

The vote also built Rangel's credibility among conservatives on both sides of the aisle. Over the past few years, he has reached out to such lawmakers, including Democrat Charles Stenholm (D-Tex.). And one of his closest friends on the Hill is House Rules Committee Chairman David Dreier (R-Calif.), a strong free-marketer from suburban Los Angeles. ''He's a great pal,'' says Dreier, who nonetheless adds, ''I cringe at the prospect'' of him becoming Ways & Means chairman.

Rumpled and raspy-voiced, quick with a laugh and a wisecrack, Rangel jokes that he'll talk to anybody. But he knows those conservative connections will be critical if he's going to get anything done as committee chairman. ''If you have an idea,'' he says, ''you've got to run it by the people who've got the votes.''

But while Rangel will accommodate his enemies, he can also be tough on his friends. He blasts President Clinton for bringing up the China bill this year and putting House Democrats at risk. At the same time, he is furious at Big Labor for threatening black Democratic lawmakers who backed the China measure: ''That shows a lack of respect,'' he says coldly.

His support for China trade may have won Rangel more than kudos from business. One benefit: It probably made it easier for him to broker a deal to expand tax breaks and other incentives for economic development in poor neighborhoods. That's a scheme he's been promoting since the early 1990s, and one likely to be worth tens of millions of dollars to New York.

After he came to Congress in 1971, Rangel was one of the first urban lawmakers to realize that the key to local power was controlling the flow of federal dollars. So he positioned himself to get a huge chunk for Harlem and made sure he had plenty to say about how it was spent. In the 1980s, he won federal loan guarantees on $750 million in bonds to renovate two big hospitals. In 1993, Rangel acted as godfather to a plan that would create a handful of tax-advantaged empowerment zones. And he made sure Harlem got the first one.

Those tax breaks have helped leverage $300 million in federal, state, and city development money for Rangel's district. And after a half-century of decline, Harlem has begun to make a comeback. The empowerment zone has brought in national retail chains such as Old Navy, as well as a multiscreen movie complex and aid for 60 small businesses. ''I don't think anything has happened here in the last eight years that doesn't have his imprint on it,'' says Bill Lynch, once a top political operative for former New York Mayor David Dinkins.

APOLLO CONTROVERSY. As a result, Rangel has maintained a solid grip on local power. But he hasn't escaped controversy. Perhaps the sharpest involved his role as chairman of the Apollo Theater Foundation. Percy E. Sutton, a political power in New York and an old Rangel pal, allegedly made millions of dollars running shows at the Apollo but failed to return an agreed-upon share of the profits to the theater. Last year, following a state investigation, Rangel resigned as chairman, though he still sits on the Apollo board.

Fred Siegel, a historian at the Cooper Union for Science & Art who has written extensively on empowerment zones, says the Apollo was a typical Harlem development deal. ''Rangel saw business as a means of extracting money for his political allies,'' he says. Still, even Siegel concedes that Rangel--who has few personal assets--made nothing from the arrangement. And, he says, the current boom might not have happened without him: ''Development occurred in Harlem despite Charlie Rangel and because of Charlie Rangel.''

The New York infighting has had little impact beyond the Hudson River. And if Democrats take the House, Rangel will be the man business will have to see. He would be the panel's first African American chairman--and Rangel relishes the prospect: ''It's amazing,'' he says, ''how the power of the chairmanship can cause people to become color-blind right in front of you.''

By Howard Gleckman in Washington

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