Woodward and Bernstein discover that Hugh Sloan was the treasurer of the Committee to Re-Elect the President. They are left decoding the initials given to them. P, M, L. P - Porter? L - Liddy? Who does that make M? They work on a way to fake out the woman who gave them the initials, by pretending they've already figured out who M is and forcing her to admit whether they're right or wrong. They decide to return as a duo.
They return to the accountant's house, and eventually they get her to admit the initials stand for Porter and Macgruder. When they guess how much they both received in the slush fund, she says they both got greater sums of money than Woodward and Bernstein anticipated. Upwards of millions. This is big news for the duo.
Woodward and Bernstein then go to find out answers from the finance side of CREEP. They go to the house of Hugh Sloan. His pregnant wife emphasizes that theirs is an honest house. Woodward and Bernstein persuade him to talk to them and he guesses that there was a slush fund of about 1 million dollars for CREEP, and that it was controlled by 5 men controlled slash fund at CREEP, including a man named Kalmbach. Sloan and his wife both warn him about the effect that the story could have on many lives.
Bernstein calls Mitchell to confirm the story. He gets Mitchell on the phone and tells him that he will report that Mitchell controlled a secret slush fund for CREEP. Mitchell absolutely refuses to comment, getting very agitated at the accusation. Mitchell then seemingly threatens Washington Post publisher Katherine Graham, saying " You tell your publisher—tell Katie Graham she's gonna get her tit caught in a big fat wringer if that's published."
Bernstein goes to Bradlee and relays the gist of his conversation with John Mitchell. Bradlee understands the scope of the conversation––Mitchell is the attorney general and Nixon campaign chairman. Bradlee tells them to take the word "tit" out of the story and run it; it's a family newspaper after all.
Bernstein gets a tip about a former Nixon administration lawyer named Donald Segretti and goes to visit him in Los Angeles. He arrives at Segretti's home and Segretti is very wary of answering any questions. He basically admits that he and his friends at USC had been involved in college politics before they started working for the administration, and they had invented a type of sabotage for their enemies.
Segretti then introduces him to the idea of "rat-fucking." ("Rat-fucking" is the infiltration and sabotage of the Democrats.) Segretti spent the past year crisscrossing around the country to the locations of the Democratic primaries in order to create chaos to sink potential Nixon challengers. Segretti defends himself: what would you do if you just got out of the army "then one day you got a call from an old friend asking you to go to work for the President of the United States?"
Woodward learns that the FBI and Justice Department both know about rat-fucking, but they haven't done anything about it because it doesn't directly link to the Watergate break-in. Woodward gets a piece of advice from Deep Throat: don't focus on Segretti. "What's the overall?"
Woodward and Bernstein now must team up and use their skills as a pair to get answers. They return to the accountant and pretend that they've already figured out some of the initials, prompting her to accidentally confirm the three men in charge of the slush fund: Liddy, Porter, and MacGruder. They then further this investigation, visiting CREEP finance employee Hugh Sloan, who adds Kalmbach to the list.
Calling up John Mitchell to confirm his involvement, he makes an extremely sexist threat against one of the first female publishers in the country: Kay Graham. The story clearly upsets him, and Woodward and Bernstein sense that there is more where this came from. Now the question is: there's this slush fund for the Committee to Re-Elect the President. What's the money going towards?
The answer comes from another tip-off of a man named Donald Segretti. This visit enters into different territory. It's not just about money here; it's about strategy. If all of this has seemed like complicated finance jargon so far, this is where the big picture comes into play. Segretti and his friends at USC came up with a term called "rat-fucking" or sabotaging political opponents so they self-destruct. Since he is an expert, he was hired and paid by CREEP to travel around to different Democratic primaries, spreading rumors and planting bombs in the way of possible Nixon challengers. But this money, it's now clear, was paying not only for efforts like Segretti's, but the Watergate break in. They wanted to bug the DNC's headquarters so they can find out how to best rat-fuck them and use their secrets.
The lesson from Watergate isn't just about a burglary. It's not just about money. It's about the basic premise that those in power should not be able to use surveillance and information that comes from running the federal government to silence or shut down political opponents. The fact that employees of the campaign feel threatened and silenced adds an extra layer of fright to the plot. If people feel their lives are in danger for spreading information about potential illegal activity, this is more than a crime. It's a constitutional crisis. Considering the historical context of the 1970s, people had been angry at their politicians before, but there was certainly less of an assumption that there were in any way crooked or trying to be more than simply public servants. This is the significance of what Woodward and Bernstein are discovering: the government could be (and in fact is) engaging in illegal and corrupt behavior.
So, at this point in the investigation, we've put together some important pieces of the puzzle. There is a SLUSH FUND is run by 5 men, including those in the Nixon White House. The SLUSH FUND is paying people to RAT-FUCK (sabotage) opponents and BUG (wiretap) and STEAL STRATEGIES to embolden and empower the Nixon administration. These actions are not unlike the tyrannies of Soviet Europe. This is why it is so significant that it occurred in America.