Baker was born in Pickens, South Carolina, the son of the town postmaster, and lived in a house on Hampton Avenue. He attended Pickens Elementary and Pickens High School, until he achieved an appointment when he was 14 years old as a U.S. Senate page with the help of Harold E. Holder.
In 1942, Baker became a page for Senator Burnet Maybank, and quickly became friends with several important Democrats. When Lyndon Johnson was elected to the Senate in 1948, he was told that Baker knew "where the bodies are buried," and established a close relationship with him. Baker quickly became Johnson's protégé.
Baker was eventually promoted to the position of the Senate's Secretary to the Majority Leader, who at the time was a Democrat; this was his highest-ranking official position, as well as the position from which he would later resign. Prior to resigning, Baker had been a major power on Capitol Hill. He resigned eventually due to allegations of misconduct and a well-publicized scandal involving government contracts, and served 18 months in prison for tax evasion.
In 1978, he coauthored a memoir entitled Wheeling and Dealing with Larry L. King.
Baker frequently mixed politics with personal business. He was one of the initiators and board-members of the Quorum Club located in the Carroll Arms Hotel adjacent to a Senate office building. The society was alleged to have been a place for lawmakers and other influential men to meet for food, drink, and ladies. Baker and one of his colleagues, lobbyist Bill Thompson, are said to have arranged for Quorum Club hostess Ellen Rometsch to meet John F. Kennedy. Rometsch was of German origin. As a youth, she had been a Communist Party member in East Germany before fleeing with her parents and then coming to the United States.
In 1962, Baker established the Serv-U Corporation with his friend, Fred Black. The company was designed to provide vending machines for companies working for programs established under federal grants. Though a part of numerous other deals involving both politics and private financial affairs, this particular business venture would cause a scandal. In November 1962 bugs in Ed Levinson's office at the Fremont Hotel in Las Vegas picked up references to Baker. The FBI agent notified FBI chief J. Edgar Hoover of the references early in 1963 because, "I thought it was important for Washington to be aware of the possible political influence of Ed Levinson." Levinson and Benjamin Seigelbaum arranged with an Oklahoma City bank for a $400,000 start-up loan for the Serve-U Corporation to buy equipment and supplies. The Serv-U Corporation deal became the subject of allegations of conflict of interest and corruption after a disgruntled former government contractor, represented by David Carliner, sued Baker and Black in civil court. That lawsuit eventually generated a great deal of press.
In September 1963, an investigation was begun by the Republican-led Senate Rules Committee into Baker's business and political activities. Baker was investigated for allegations of bribery using money allocated by Congress and arranging sexual favors in exchange for votes and government contracts. Criticized increasingly, Baker resigned as Secretary to the Majority Leader on October 7, 1963.
According to author Evan Thomas, Attorney General Robert Kennedy, President Kennedy's younger brother, was able to arrange a deal with J. Edgar Hoover to quell mention of the Rometsch allegations in the Senate investigation of Bobby Baker. Hoover successfully limited the Senate investigation of Baker by threatening to release embarrassing information about senators contained in FBI files. In exchange for this favor, Robert Kennedy assured Hoover that his job as FBI Director was secure. Robert Kennedy also agreed to allow the FBI to proceed with wiretaps that Hoover had requested on Martin Luther King to try to prove King's close confidants and advisers were communists. Although Kennedy only gave written approval for limited wiretapping of King's phones "on a trial basis, for a month or so," Hoover extended the clearance so his men were "unshackled" to look for evidence in any areas of King's life they deemed worthy.
Even though Lyndon Johnson was not involved in Baker's business dealings after 1960, the Senate investigation looked into their questionable financial activities in the 1950s. This was such a problem for Johnson that there were rumors he would be dropped from the 1964 presidential ticket. After word of the assassination of John F. Kennedy reached Washington on November 22, 1963, the Senate investigation was delayed. Thereafter, any investigation of Lyndon Johnson as part of the Baker investigation was dropped. Baker, however, was convicted of tax evasion and spent 18 months in prison.
In the 1964 Presidential Election, Republican candidate Senator Barry Goldwater in speeches and campaign materials brought up the Bobby Baker scandal as an issue against Johnson, demanding that Johnson bring the issue out into the open.