Alas, Poor Dubya
Why won't the media -- and the market -- stop picking on the prez?
Don't you feel sorry for poor President Bush?
He's been doing his darndest to keep everyone's eye on the Great Game -- you remember, the war on terrorism? -- while uppity reporters and weak-kneed investors keep asking impertinent questions and selling off their holdings.
He dispatched John "the Fighting AG" Ashcroft to inform us that terrorist "sleeper cells" snooze among us -- he's not sure just where -- but that bought the administration only one day's headlines.
He stood in front of banners proclaiming "Corporate Responsibility" and "Strengthening Our Economy," and delivered speeches right out of the Salvation Army handbook: "America must get rid of the hangover that we now have as a result of the binge, the economic binge we just went through. We were in a land of endless profit. There was no tomorrow when it came to the stock markets and corporate profits. And now we're suffering a hangover for that binge."
The next day, stocks plunged like a drunk off a barstool.
He brought out the heavy artillery -- Federal Reserve head honcho Alan Greenspan -- to admit that the market is not always infallible. "My view was always that accountants knew or had to know that the market value of their companies rested on the integrity of their operations," and that therefore federal regulation of accounting is "unnecessary and indeed most inappropriate," mourned Big Al. "I was wrong."
At this unprecedented revelation, the earth did not shake -- but neither did the market rise.
As if all this were not enough, reporters are sticking their noses directly into Dubya's own business. Goaded by documents obtained by the Center for Public Integrity (www.publicintegrity.org), they're asking questions about the deals that made Bush a millionaire: his 1990 sale of Harken Energy stock to pay off his loan to buy in to the Texas Rangers, and his lucrative flip of that purchase from $606,000 (representing a 1.8% interest) to a miraculous 12% interest and a $14.9 million payoff. Beyond the sweetheart bonus generously provided by Bush's partners, critics are pointing out that the Rangers ownership used government muscle -- the power of eminent domain -- to condemn land not only for a city-subsidized ballpark, but for additional properties that the partnership wanted for development. Not the sort of thing you'd expect from an apostle of free-market entrepreneurship, but then Bush on fair dealing sounds remarkably like Bill Clinton on chastity: "In the corporate world, sometimes things aren't exactly black and white when it comes to accounting practices."
Shadows of Enron
That gnomic pronouncement was in response to questions about a 1989 Harken transaction: the sale of Aloha Petroleum Ltd. to a group of insiders funded by the company in order to polish its earning statements. (Harken's accountants? Arthur Andersen, natch.) The markup was eventually disallowed by the SEC, but only after Bush had made a tidy profit on the sale of his stock. Charles Lewis of the Center for Public Integrity described the Aloha deal to the Boston Globe: "The transaction -- a phony transaction to hide losses involving a partnership -- is eerily reminiscent of Enron."
It all seems terribly unfair to the White House, which insists the president's business deals were all on the up-and-up. The administration says Harken and the Rangers are nothing but "old news," thoroughly worked over by Bush's political opponents and the Texas press. The latter charge is true, to a degree -- a few Texas reporters did try to call attention to Bush's business dealings during the presidential campaign, only to be met with indifference by the national press corps.
That Was Then, This Is Now
What's changed? Enron, Global Crossing, WorldCom, and the precipitous slide of the Dow.
"It's a little disheartening that it takes a meltdown of Wall Street," says Robert Bryce, "before the mainstream press considers how the big corporate and political players abuse common property holders." A former Chronicle reporter, Bryce broke the story of the Rangers' abuse of eminent domain in May of 1997, first in The Texas Observer and then here. He calls the deal "the quintessential example of crony capitalism. Bush and his cronies, very purposefully and in a very organized fashion, used [Arlington's] power of eminent domain to seize land that they wanted for development that had nothing to do with the stadium itself."
It was amusing and distressing last week to read New York Times columnist Nicholas Kristof -- five years later -- recounting the Rangers story as though it had just been discovered, and then calling it "a sordid tale of cronyism, of misuse of power, of cozy backroom money-grubbing -- a more pressing threat to American business than outright criminality." Where were these guys when the bank was robbed?
Bryce is completing a book on the Enron scandal, Pipe Dreams (PublicAffairs, October), and the experience has made him savvy in the curious accounting habits of multinational corporations -- especially as represented by Enron's phantom partnerships, designed to fraudulently pump the company's stock price and enrich insiders in daisy-chain Ponzi schemes destined for inevitable collapse. "It's remarkable," Bryce says, "how much the Harken story and [Dick Cheney's] Halliburton story imitate Enron. The [Harken] Aloha transaction is virtually identical to the Enron phony partnership transactions -- they sold a subsidiary company to a set of insiders at an inflated price, with money that they borrowed from the company."
As columnist Paul Krugman pointed out in the Times a few weeks ago, if Enron's stock had not plummeted, we would never have learned about either the phony partnerships or the California energy scams or the shameless profit-taking by insiders while the company, its employees, and the ordinary stockholders took the long goodbye. And if the market in general had not continued its current slide, poor Dubya would not be glowering at the White House press corps or delivering hapless pep talks to increasingly skittish investors.
No doubt we will all be caught in the backwash, as the pension funds of ordinary working people continue to go fluttering away faster than Bush and his pals can say "privatization."
But in the meantime, it couldn't happen to a nicer guy.