The Real Story of the Making of Nancy Pelosi

With the news Thursday that House Speaker Nancy Pelosi will step down as Democratic Party leader next term, but remain in Congress, I wanted to share an excerpt from my book, “We’ve Got People,” that takes a close look at her unique career and rise in politics. There’ll be plenty of time to talk about her legacy in Congress, but most people only have a thumbnail idea of what she did before Congress. The story is that her dad was the mayor of Baltimore, she was a housewife who raised five kids, and then she jumped into politics late in life. But there’s so much more to it than that.

In Chapter 3 of the book, called “Pelosi’s Party,” I explore Pelosi’s relationship with California’s “Fightin’ Liberal” Phil Burton, the OG money man Tony Coelho, the Reagan-era Democratic Party that shaped her politics, and how she first won election by fending off a Democratic Socialists of America-backed insurgent. — Ryan Grim

The Democratic Party’s approach to winning elections is rooted in decisions party leaders made in the immediate aftermath of Ronald Reagan’s White House win in 1980. That year saw not just Jimmy Carter’s surprise loss but a generation of liberal lions wiped out in the Senate. A net loss of 12 senators — many of whom had been liberal heroes for decades — from the Democratic caucus flipped the chamber to Republicans.

It’s hard to overstate just how politically traumatizing that election was for Democrats. It came just two years after the rise of the New Right, the class of ’78 right-wingers led by firebrands like Gingrich, and it felt like the country was repudiating everything the party stood for, which was — which was what, exactly?

And Democrats hadn’t just been rejected for a moderate Republican like a Gerald Ford, but the nation had said it would rather be led by a radical like Reagan. The party that had saved the world from the Nazis, built the modern welfare state, gone to the moon and overseen the longest stretch of economic prosperity in human history was being routed by an actor.

Yet if they had to look closer, they couldn’t help but admit that things had been rocky. Inflation felt out of control, wages were flat, gas lines were long and the new Islamic Republic of Iran was holding 52 Americans hostage.

The liberals of the day argued that Reagan’s victory came because Carter was too conservative to deliver what people had demanded of the party, particularly to the working class in general and organized labor in particular.

It was the losses in the Senate, though, that particularly rocked the party, as the slow-moving realignment jerked forward. Longtime Sens. Frank Church and Birch Bayh, recent contenders for the White House, lost reelection. Mike Gravel, the anti-war hero from Alaska, didn’t even win the Democratic nomination. Presidential candidate George McGovern, who’d been in the Senate since 1962, fell. Warren Magnuson and Gaylord Nelson, who had collectively served for 54 years, both lost. “My timing was terrible,” complained Barney Frank in his memoir, recounting his 1980 election to the House. “I had arrived at the party just when the curfew went into effect.”

It wasn’t just liberals who got wrecked. In North Carolina, Georgia, Florida and Alabama, Democratic incumbents — some populist, some conservative — either lost their primary or the general election. Democrats sifting through the wreckage could pick and choose data points to fit whatever analysis they wanted to make.

On the one hand, longtime liberal champions had been massively outspent, with Republicans deploying big money and negative television advertising for the first time on a mass scale. On the other hand, Southern conservatives had been wiped out too, so maybe the problem wasn’t that the party was too liberal. But wait: Democratic senators in Kentucky, Arkansas, South Carolina, Missouri and Louisiana had won reelection, so maybe the party was too liberal.

And then there was the House, where Republicans picked up 35 seats — more than Democrats would subsequently flip in their wave year of 2006. But the southern wall was too high, and the wave crashed back to the sea. Democrats came into 1981 still in control of the House.

Democrats were so confident that they would never lose the House, that the losses were easy to ignore. John Lawrence arrived in Washington as a congressional aide in 1974, washed in by the Watergate wave. After serving as Nancy Pelosi’s longtime chief of staff, he authored a book on the class of ’74. He noted that it took Republicans 10 years to get back in the House to where they were after the losses of ’74, which still put them a long way from a majority. “That masqueraded the realignments that were occurring in the electorate, and the rise of really strong conservative cultural/financial/grassroots organizations that really made the conservative movement much more formidable, but not necessarily more visible in an electoral way,” he said.

The party had no fear, and no drive. “There was still a sense, even after the Reagan election, even after the Senate went Republican, that the majority in the House was secure. If they had had a longer view,” he said, “they would have seen that they needed to be a lot more tactical than they were.” The result was “an institutional weakness in terms of building and maintaining the kind of political apparatus in the states and the districts.”

The House majority, though, was constructed with Southerners who were Democrats in name only — a term that is overused today, but held real meaning then. Rep. Richard Shelby, for instance, won reelection in Alabama as a Democrat with 73 percent of the vote that year. Shelby would later be elected to the Senate twice as a Democrat, and then switch parties after the 1994 wave, going on to become the top Republican on the Banking Committee and the lead opponent of Wall Street reform. His politics never changed.

Reagan was able to ram through the bulk of his economic agenda in the first 200 days of the new Democratic Congress, which necessarily required scores of Democratic defections, and the cooperation of House Speaker Tip O’Neill, who allowed Reagan’s agenda to hit the floor. In other words, Democrats controlled the House thanks to Democrats who would later become Republicans themselves or lose to Republicans eventually, most of them in the ’94 Gingrich revolution. “In the House, a narrow Democratic majority included enough Southern conservatives to give the right effective control of the agenda,” Frank recalled.

Harry Reid was elected to the House in 1982, a Democratic midterm as the economy slumped. Like many of his colleagues, he got along well with Reagan. “I was not a big shot at the time in the Congress, but he was easy to work with,” he told me. “I can remember the first time I ever went to the Oval Office. We were there fighting about aid to the Contras and went down with three House members to the Oval Office and [Paul] Kanjorski from Pennsylvania asked, Mr. President, I’m afraid you’re going to invade Nicaragua, and Reagan, without hesitating a second said, Don’t worry about invading Nicaragua. I’m not going to, but I want those sons of bitches going to bed every night thinking I’m going to. That was kind of Ronald Reagan. He was so easy to deal with. Every [Republican today] wants to be a Reagan Republican. I wish they were because he was one of the finest, easiest people to work with. He was a dealmaker.”

The party had a few paths before it: Follow the lead of progressives, who had warned that Carter had abandoned the party’s natural base, and write off the right-wing Democrats who were no longer a part of a progressive coalition, or appeal to their populist natures and try to rally them to the left. A related version of that strategy, whose lead proponent had been California Democrat Phil Burton, was to disempower the conservatives but get serious about fundraising — preferably from the least objectionable sources possible — with an eye toward building real progressive power that could match the right. Or — as the party ultimately did — try to defend the party to the last incumbent, matching Republicans dollar for dollar, while going into a defensive crouch to protect the most basic elements of the New Deal, along with newer programs for the needy Reagan was targeting, such as Head Start.

Making the case for a robust corporate fundraising strategy was a young congressman from California, Tony Coelho, who was named head of the Democratic Congressional Campaign Committee, at the time a political backwater. Coelho, later Rahm Emanuel’s mentor, immediately began reaching out to business interests that Democrats had previously not targeted for contributions with a simple proposition: Democrats are in power in the House, so they had better pay up.

“Tony saw Democrats were not playing the aggressive game on fundraising that Republicans were developing under the rules as they emerged, following the ’74 campaign finance reform act and subsequent rule changes, and felt the Democrats were simply going to get outgunned if they didn’t develop a different fundraising model,” said John Lawrence.

“Tony really bears a fair amount of responsibility — whether that’s credit or blame, depends on where you stand — for pointing Democrats to the need for a PAC-based industry strategy for fundraising.”

“With that came a lot of problems,” Lawrence added. “Nobody told me they felt beholden, but obviously there were plenty of times where it was very tough to pass some of the legislation the more progressive parts of the caucus would have liked.”

Pelosi was in the camp that recognized the need for conservative Democrats to keep the majority, but wanted them disempowered within the caucus. But more importantly, she was a preternatural fundraiser. The legend of Pelosi is that after raising her five children, she decided to become involved in politics. The reality is that even amid that impressive feat of childrearing, she was already heavily involved.

Phil Burton, upon seeing the San Francisco mansion she shared with her husband, investor Paul Pelosi, noted that it would make a tremendous location for political fundraisers. Pelosi, it turned out, had a gift for just that, and her fundraising prowess would eventually turn her into a power center in California politics in her own right. In 1976, more than a decade before entering Congress, she was elected as a member of the Democratic National Committee. Over the next five years, she would become chair of the Northern California Democratic Party and then the statewide Democratic Party. In 1985, she lost a bid for DNC chair.

Burton, who served in Congress for 19 years, was a transformative political figure both in California and in the education of Pelosi. Labor reporter Harold Meyerson once called him “the single most important member of the House of Representatives in the ’60s and ’70s.”

Pelosi is often lauded for her uncanny ability to count votes, something that was also said repeatedly of Burton. He was a role model for Pelosi, someone who was enthusiastic about fundraising and took politics seriously, rather than a purist who stood aloof from what many on the left saw as a corrupt endeavor. “I’m a fighting liberal,” Burton would famously say. His biographer, John Jacobs, agreed: “A ruthless and unabashed progressive, Burton terrified his opponents, ran over his friends, forged improbable coalitions, and from 1964 to 1983 became one of the most influential Representatives in the House. He also acquired more raw power than almost any left-liberal politician ever had.”

Fighting meant getting your hands dirty. Burton pioneered gerrymandering in California (“My contribution to modern art,” he called it; he even drew a district so that his brother John could have a House seat too) and began what is now a common practice of spreading political action committee money around to colleagues in tough races in order to build power within the caucus. He helped shape the House floor process so that lobbyists would have more ability to tweak individual pieces of legislation, uncorking contributions from K Street and helping to create the Washington ecosystem we know today. Burton encouraged Pelosi to run in one of the new districts he had drawn, but she demurred.

First elected in 1964, he took on the power of the Southern bulls, who had used seniority and one-party rule in the South to lock down control of key committee chairmanships. The sooner the party could crush its Dixiecrat wing, he argued, the better. Burton organized his liberal colleagues and reformed the process for selecting chairs, replacing it with a secret vote, which was the beginning of the end of Southern dominance of the House Democratic caucus.

In 1976, he fell one vote short in a bid for majority leader in a three-way race he had been expected to win. The progressive vote was split between Burton and Richard Bolling, allowing Texas populist Jim Wright to speak through. Had Burton been in leadership during the rise of Reagan, the Democratic response may have been far different and more effective.

In Pelosi, Burton had a ready student. If your knowledge of her comes from Republican attack ads, you know her as a “San Francisco liberal” or even “radical,” but she was raised in Maryland by her father Thomas D’Alesandro Jr., the boss of the Baltimore political machine, who was by turns a congressman and mayor of Charm City. D’Alesandro’s operation, like most big-city machines of the era, was linked in public to local Mafia figures, according to his FBI file.

Burton rightly saw in Pelosi that rarest of breeds, a liberal born to fight. In Burton, Pelosi found someone who knew how to make progressive change actually happen. His list of legislative achievements was long — Supplemental Security Income, a higher minimum wage, compensation for black lung, food stamps for striking workers, the abolition of the House Un-American Affairs Committee — despite or, in part, because of his legendary ruthlessness and rage.

Jim Shoch, a prominent radical activist in the 1970s, told me about the first time he met with Burton. “I think he was actually yelling into two phones at the same time when we entered his office,” he said. “Part of our conversation included his recent success in favorably gerrymandering California for the Democrats. With a deeply satisfied expression on his face he exclaimed, We fucked ’em! We fucked ’em!”

John Burton, Phil’s brother and himself a former congressman, said that Phil never quite mentored Pelosi. “I mean, Christ, this is a woman who was brought up in Baltimore politics. He wasn’t working with some neophyte that all of a sudden he had to explain, Well, here’s how it works. They got along because even though she was an ‘amateur’ at that time, she was still a pro,” Burton told author Vincent Bzdek for the book “Woman of the House.” He acknowledged, though, that Phil helped “hone her skills.”

They differed greatly in their outward demeanor, but internally had much the same drive. “Nancy is tougher than nails, but she’s a gentle person. Phillip was just hard-ass and hard charging. He could be charming sometimes, but I can’t quite remember when,” said John Burton.

Pelosi said that her Baltimore education made Burton easy to handle. “Actually, my family really prepared me for Phil Burton. One of the reasons I got along with Phil is because I wasn’t afraid of him. I knew a lot of people like him,” she told Bzdek.

It was always expected that the relatively young Burton would take another shot at leadership, and this time win, but in April 1983, at the age of 56, he died of a heart attack. Burton’s untimely death cut off the potential of a counter-history for Democrats. At the time, said John Lawrence, Burton was one of the few Democrats who understood that the party did not have a permanent lock on the House of Representatives, and it was that overconfidence that stunted the party’s ability to think strategically about what kind of a coalition it wanted to be a post-civil rights era. Instead, Coelho strip-mined the majority for every corporate dollar it was worth — until it collapsed. “Would Gingrich have been as effective if Phil Burton was the foil, and not Jim Wright? There’s a fair case to be made that Phil would not have been caught sleeping,” he said.

Burton’s wife Sala Burton won the special election to replace him. But four years later, she lay dying herself and made a parting endorsement: “Nancy.”

The nod helped, but the special election was anything but a coronation. The left — made up of young people, the gay activist community, and the city’s various social movements — coalesced behind city Supervisor Harry Britt, who’d been appointed by Mayor Dianne Feinstein to fill the seat made vacant by the assassination of Harvey Milk.

Britt was also vice chair of the city’s chapter of the Democratic Socialists of America, noted Jim Shoch, who was also a member. “Pelosi’s experience in dealing with the city’s many Democratic clubs and factions was good practice for leading the often fractious House Democratic caucus,” Shoch said.

The Los Angeles Times reported it as an establishment versus insurgent candidate. “The Democratic establishment backed Pelosi, a 46-year-old mother of five who has raised large sums for her party’s candidates. Younger, more liberal activists and the city’s powerful gay community backed Britt,” the paper wrote.

Pelosi ran on the prophetic and on-brand slogan “a voice that will be heard,” and on election night she beat Britt 36 to 33 percent, with the rest of the votes scattered among lesser candidates. In the top-two system California uses today, both Pelosi and Britt would have moved to the general election. That electoral innovation, for better or worse, was 25 years away, and Pelosi’s total was enough to move her to the general against a hapless Republican. Big money and establishment power, in her first race, had beaten grassroots, leftwing energy.

When she arrived back in Washington, Steny Hoyer was waiting for her, as he’d already won a crowded special election in 1981. The turn toward big-money fundraising came as there was more big money around. The new tax policies enacted by Reagan and Democrats in Congress made it so there were many people that had the means to pay up big. When the highest income tax rate was first introduced in the early 20th century, it applied to just a few families. It’s often said that, yes, sure, marginal tax rates were in the 90s and even as high as the 70s up through the 1970s and into the 1980s, but that’s largely irrelevant because almost nobody paid that high rate. But that misunderstands the purpose of those high rates as raising revenue. The real upside was that it discouraged earning stratospheric amounts of income.

In the 1980s, the phrase “greed is good” began making the rounds. But that’s not because greed was a new phenomenon. For the first time since the Gilded Age, greed was rewarded. Greed, with a 90 percent marginal tax rate, is pointless. Central to the policy goal of discouraging extreme incomes is the belief that making that much money that fast is almost always antisocial and destructive behavior. In other words, there’s no genuine value a person can add to the world that is worth a million dollars a week, every week. The only way to make that kind of income is to take it from other people, leaving wreckage behind. That’s why the 1980s saw the birth of corporate raiders — now renamed private equity investors — who used leveraged debt to take a controlling stake in a company, liquidate its assets and pension fund, then file for bankruptcy protection and lay off the workers.

The real purpose of a high marginal tax rate is not to seize money from the rich, it’s to discourage the rapid accumulation of wealth, to set up disincentives that stop private equity investors from even thinking about, say, taking over Sears and syphoning the value from it before killing it. Sure, they could do it, but with a 90 percent marginal rate on extreme incomes, what’s the point?

The new policy of the 1980s was to encourage extreme incomes and rapid wealth accumulation. Top rates were cut by Reagan and the Democrats from 70 down to 50 and down under 30 percent by the end of the decade. Just as campaigns were becoming exponentially more expensive thanks to the dominance of television, a new class of super-rich were available to tap for the needed funds. Those super-rich were simultaneously using their new power to demolish organized labor — looting their pensions in the process — which exacerbated the Democratic funding gap. Political scientist Daniel Schlozman of Johns Hopkins has done some of the best research on precisely how the Democrats went from a party of workers and people to one dominated by Wall Street. His conclusion is at once surprising and intuitive. As Democrats went hunting for corporate cash, most of the industries they flirted with created backlash elsewhere in the coalition, often from labor or environmentalists. But Wall Street in the early 1980s wasn’t the beast it is today, and so the finance industry was a relatively inoffensive source of party cash. Like any addiction, it seemed harmless at first. Low tax rates today don’t just lead to yawning inequality, but they also produce the supply of cash that is destroying our politics. The Supreme Court for now is ruling out what you could call demand-side policing of corruption. But we shouldn’t ignore the supply side.