by John M. Curtis
(310) 204-8700

Copyright July 25, 2002
All Rights Reserved.

ripping on his shoelaces, California gubernatorial candidate Bill Simon Jr. staged an amateurish publicity stunt, releasing 11-years of tax returns, designed to allay growing concerns about financial secrecy. Though not required by law, candidates for public office—from the presidents to city clerks—typically release tax returns as an article of faith. When Simon refused to conform, Davis pounced on a lucky windfall, making his taxes a major campaign issue. Now dominating the headlines, Simon had no choice but an abrupt back-flip or face almost certain liquidation at the polls. "I changed my mind because I believe that . . . this issue has become a distraction," said Simon, backpedaling on his unrealistic wish to maintain privacy in a public campaign. Simon's real problem is not his tax returns but his inability, so far, to set the agenda, stay on the offense and put Davis on his heels. With limited resources other than his own piggy bank, Simon finds himself reacting to unending attack ads, calling into question his competence—and now his integrity.

      Deciding to keep his taxes private, Simon defied an arsenal of costly consultants, pleading with him to open the books. It's difficult to coherently attack your opponent when you're busy shooting yourself in the foot. Whether there's anything impeachable in Simon's tax returns is anyone's guess. But making taxes the focus of intense media scrutiny ranks among the top no-nos for anyone seeking public office. Giving the media six hours to pour over voluminous inscrutable tax forms invites more questions than it settles. "I think for the people of California, it's necessary to focus attention on what the issue really ought to be," Simon told reporters, trying to refocus the press back on key campaign issues. Willing to take the risk, Simon obviously felt that his tax returns would paint a different picture than the glossy image of a "successful businessman." Indeed, his tax returns between 1998 and 2000 revealed $13 million in investment losses, during a period of unprecedented returns—leaving the uninitiated wondering whether he's really as successful as advertised.

      Simon's tax problems hit the headlines when it became known that he was in a dispute with the Internal Revenue Service over a questionable tax shelter. Before it made the nightly news, Simon asserted his right to privacy, accusing Gov. Gray Davis of acting like "Karl Marx and Big Brother." Only after his beef with the IRS hit the news did Simon finally capitulate and go public. Disclosing his tax returns with restrictions and time limits opened up another can of worms. Reporters have little expertise in analyzing tax returns, especially when they're restricted to only scribbling down notes. "The campaign has engaged in a slow inflicted water torture," said GOP strategist Arnold Steinberg, utterly stunned that the Simon campaign allowed such useless distractions. Antagonizing the press fosters unwanted friction, usurps precious energy and sabotages a candidate's message. Controversial line-items can be easily explained away, but it's difficult to undo self-inflicted wounds.

      Consultants that counsel open disclosure must not forget that there's value to playing cards close to the vest—especially if revelations prove disastrous. Simon's stunning defeat over former Los Angeles mayor Richard Riordan might have fizzled had he shared his true views on his taxes. Getting defensive, "You've got plenty of time to take a look at it," barked Simon to reporters, concerned that they didn't have enough time to digest reams of incomprehensible documents. Looking like he's over his head, Simon appears like a candidate seeking an exit strategy, namely, how to end the race. "I made some good money during the 1990s, so I am a successful businessman," Simon said, responding to recent ads saying he "inherited a fortune, but on his own, he's had losses, bankruptcies, lawsuits and even allegations of fraud." There's nothing wrong with Davis going for the jugular. But it's up to Simon to set the record straight with energy, conviction and persuasiveness. Vetting candidates in the media is the best test that they can hold up under intense pressure.

     Overcoming considerable baggage, Davis began his campaign on his heels, dealing with endless bad news about California's power crisis and growing budget deficits. Simon—and Riordan before him—clobbered Davis with repetitive charges of mismanagement, incompetence and excessive political calculation. Releasing 15 years of tax returns proved, if nothing else, that Davis is truly a public servant. In the wake of unending corporate scandals, Simon's credibility looks scathed. Withholding his taxes and, more recently, staging a questionable publicity stunt didn't help matters. Heading into the fall, he looks more like Ken Lay than the next Ronald Reagan. With his income averaging $3.6 million over the past 10 years, Simon disappointed some Republicans, expecting him to pony up big bucks for his own campaign. Judging by his anemic fund-raising, it's becoming clear that GOP smart-money already looks beyond November.

      Simon's tax issues represent only one of many missteps facing the political novice, testing a conflicted GOP political machine against a disciplined incumbent. While Davis has his share of negatives, an ambivalent electorate isn't going to go for a lackluster Republican prone toward slipping on the campaign trail. Against Davis, Simon hasn't shown the kind of passion needed to mobilize crossovers and independents. With $50 million in the bank, Davis can continue to hammer away, building on his already double-digit lead. Baring rolling black-outs or an unforeseen catastrophe, Democratic voters should opt for the status quo come November. Simon—as he did in the primary—counts on his conservative base but not much more. Had Simon disclosed his tax issues in the primary and had Riordan not roiled his party's conservative base, we'd have a real horse race heading into November. "It's quite clear now to everybody—contrary to what Gray Davis said—that I've paid a lot of taxes," said Simon, scoring points with the IRS but not California voters.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in the news. He's a consultant and expert in strategic communication living in Los Angeles. He's author of Dodging The Bullet and Operation Charisma.

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