BUSINESSWEEK ONLINE : JULY 10, 2000 ISSUE
GOVERNMENT

The Maverick on Bush's Short List
Business loves Hagel--even if the GOP doesn't always

In a closed-door strategy session on the second floor of the U.S. Capitol, Republican senators were coldly calculating how to maximize their leverage over the White House. They wanted to hold up passage of the President's top priority: legislation to grant China permanent normal trade relations. The GOP senators sought to delay action until Clinton gave ground on numerous spending bills. But at the mid-June meeting, a persistent dissenter spoke out. Nebraska Senator Chuck Hagel argued that the China vote was too important for partisan warfare. The former CEO warned the others that they were playing a ''very dangerous'' game that could jeopardize support for free trade in America and ''further destabilize'' U.S. relations with Asia.

Senate Republicans politely listened to Hagel's advice--and promptly ignored it. And as usual, undaunted, he vowed to fight on. ''I'm here to get things done,'' says the 53-year-old freshman. ''I'm not in this business to be the most popular senator up here.''

On that score, Hagel has little to worry about. In his four years in the Senate, he has won some enthusiastic friends--and an army of enemies. But his blunt talk, pro-business record, and foreign-policy credentials have captured the attention of Texas Governor George W. Bush and rocketed Hagel onto the list of contenders for the Republican Vice-Presidential nomination. ''I know he's on the short list,'' says Fredric V. Malek, a longtime Bush family friend and now chairman of the venture-capital firm Thayer Capital Partners. That worries Hagel's foes, some of whom already are sharpening their knives. Yet even if Bush eventually looks elsewhere, his flirtation with Hagel has only reinforced the perception that the maverick Midwesterner is a comer on Capitol Hill.

SEVERAL CAREERS. Why would the nominee-in-waiting want as his No. 2 an outspoken backbencher despised by some in the GOP leadership? To start with, Hagel has the kind of bio that Presidential candidates covet. He's a war hero, twice awarded the Purple Heart and Bronze Star for service in Vietnam. He served in the 9th Infantry Div. with his brother Tom, whose life he saved in combat.

Hagel, the son of a lumberman, also is a self-made millionaire. He co-founded Greensboro (N.C.) Vanguard Cellular Systems Inc., which became the second-largest independent cell-phone company in the country. He left the company in 1987 and went on to several other careers, including one as head of the USO and later as a venture capitalist. As a young man, he worked as a disk jockey, newscaster, and radio talk-show host--which helped to make him a good communicator. Washington experience? He's covered there, too: He spent seven years as an aide to Representative John Y. McCollister (R-Neb.) and one stormy year as the outspoken deputy chief of the Veterans Administration during the Reagan years.

Corporate America loves Hagel. Business execs see him as an articulate advocate of internationalism and free trade. He has a 100% rating from the Business-Industry Political Action Committee and tops all senators in the U.S. Chamber of Commerce's lifetime scorecard. ''He is a man of strong convictions who's willing to fight for what he believes in,'' says Lonnie Taylor, the Chamber's chief congressional lobbyist. ''He looks like a President or Vice-President.''

But detractors see Hagel as a man in too much of a hurry. ''He's very ambitious, and he's over-anxious, which is a bad combination,'' says one Republican close to Hagel's nemesis, Senate Majority Leader Trent Lott. Hagel ruffled GOP leadership feathers in 1998 by running against Lott ally Mitch McConnell (R-Ky.) for chairmanship of the National Republican Senatorial Committee. Hagel was crushed, 39 to 13, but does not rule out another shot at a leadership post.

SURPRISE LANDSLIDE. It's no coincidence that Hagel sounds a lot like Arizona Senator John McCain: They're good friends and comrades-in-arms. They met two decades ago, when McCain was the Navy's congressional liaison and Hagel, then a lobbyist for Firestone Tire & Rubber Co., was helping raise money for the Vietnam Veterans Memorial. ''Our paths crossed constantly,'' says Hagel, ''and we grew very close, personally and professionally.''

After Hagel was elected to the Senate in an unexpected 1996 landslide victory over Ben Nelson, Nebraska's popular Democratic governor, Hagel and McCain became frequent allies on issues ranging from fiscal policy to defense. Still, McCain's late-starting Presidential campaign took Hagel by surprise. Hagel, who already had committed to Bush, promptly told his friend in Austin that he had to switch camps. ''When I called Bush, he told me, 'I understand loyalty, and I understand relationships,''' Hagel recalls. ''I told him I would never take a shot at him [or] do anything to hurt him.''

Now, with McCain out of the race, some GOP strategists argue that adding Hagel to the ticket would help Bush grab McCain's independent-minded backers. A social conservative and strong abortion foe, Hagel also would be acceptable to Religious Right leaders who have warned Bush not to name a pro-choice running mate, such as Pennsylvania Governor Tom Ridge. And Hagel's frayed relations with Senate GOP leaders could be an asset. ''It would help Bush establish his independence from Congress,'' argues University of Nebraska political scientist John Comer. ''No one has more pluses than Hagel.''

Hagel's detractors disagree. Senate sources say that GOP leaders hope to blackball him, stressing that he shoots from the lip and isn't a team player. Also, he makes little sense from a geographic standpoint: Nebraska is a small, reliably Republican state. And some GOP insiders worry that Hagel is relatively new and untested on the national scene.

What's more, Hagel's political foes--particularly environmentalists--are set to label him an extremist and a tool of Big Business. Across the nation, he has given speeches to business and conservative groups condemning the ''suspect science'' of the yet-to-be-adopted 1997 Kyoto Accords on global warming. ''He is a persuasive spokesman for a ridiculous argument,'' says John Passacantando, executive director of Ozone Action. ''Eventually, this will be a huge liability for him.''

Along with others mentioned on various Veep lists, Hagel says he's not angling for the job and isn't paying much attention to the fuss. Instead, he's spending his time trying to craft a compromise on campaign-finance reform. His proposal: Cap soft-money donations at $60,000 (his friend McCain would outlaw them), triple the individual contribution limit to $3,000, and toughen disclosure requirements. He also continues to press the Senate leadership to permit a final vote on China trade.

As he keeps battling uphill, Hagel seems undeterred by the Senate leadership. ''The poison and the partisanship and the bitterness have to be bled out of Washington,'' he says. That sounds like something George W. might say.

By Richard S. Dunham, with Nicole St. Pierre, in Washington

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