Ten Things Your Politician Won't Tell You ("Enron" Rubin/"Global Crossing" McAuliffe watch

Ten Things Your Politician Won't Tell You
Tuesday October 15, 5:26 pm ET
By Roben Farzad
SmartMoney.com

1. "Cooked books? Forget Enron. Look what we're up to."
With investors steaming over fraud-related market losses, Congress has declared open season on corporate executives for reckless accounting. But the bookkeeping at agencies under congressional purview is open to skewering too. The General Accounting Office recently revealed that many federal agencies can't prepare a basic financial statement that clearly assesses the value of their assets and expenses. Worse yet, an Office of Management and Budget report charges that numerous agencies are rife with waste and fraud. Reportedly, 2,300 computers have been misplaced at the IRS, and insiders say the Pentagon doesn't know how many refueling planes it has on inventory. The OMB says erroneous payments cost taxpayers $20 billion in 2001.

Not even the national debt is safe from off-balance-sheet shenanigans. Bill Frenzel, a governance specialist with the Brookings Institution, says the public would get a truer picture of the national debt if the money owed to both Social Security and pension trust funds were actually included in the total. The figure would jump by at least $2 trillion. And all this as the Securities and Exchange Commission is requiring companies to certify their numbers. "Politicians have more tricks than the CFO of Enron," says Frenzel.

2. "I don't feel your 401(k) pain."
Lawmakers looking to win the support of irate voters are getting extra mileage out of assailing 401(k) abuses by corporate bosses. But do these politicians really know what it's like to see retirement savings turn to rubble? Capitol Hill pensions, you see, are uncommonly generous — shielding politicians from much of the 401(k) anxiety that plagues their constituents.

According to the nonpartisan National Taxpayers Union, a lawmaker retiring at age 60 who has 15 to 20 years of service can expect to pocket at least $1 million in lifetime pension benefits. All told, congressional pensions are typically two to three times more generous than those in the private sector. Plus, the benefit is inflation-protected with a cost-of-living adjustment (less than 10 percent of private plans have that). But for all their outrage at rogue executives over neglected employee retirement plans, lawmakers still extend pension benefits to politicians in jail. James Traficant, the recently imprisoned ex-congressman from Ohio, remains eligible for an annual pension beginning at $37,120. "Talk about criminal," stews Ilene Davis, a Cocoa, Fla., financial planner who is petitioning legislators to reform government pension plans.

3. "HMO? Can't say I ever tried one..."
If congressmen seem hesitant about enacting health care reform, you can partly blame the comfy health benefits they enjoy. The Federal Employees Health Benefits Program covers approximately 9 million government workers and dependents, with generous provisions that typically can't be found in the private sector.

Under the Fair Share provision that took effect in 1999, for instance, taxpayers pay 75 percent of the total premium for whatever plan a politician selects. In addition, for an annual fee of as little as $350, lawmakers enjoy free lab tests and clinical work at the Attending Physician's Office — a collection of area clinics. They also get exclusive outpatient care at the Walter Reed Army and Bethesda Naval hospitals for what Hill watchdogs say is a fraction of the real cost.

"It's as if Congress has removed itself from the real-world consequences of what they're debating for the rest of us," says Pete Sepp of the National Taxpayers Union. "The changes they make on HMOs or a prescription drug benefit won't [even] apply to them."

4. "...but check out our cool gym next time you're in town."
While employees of religion Web site Beliefnet now clean their own bathrooms in order to watch costs during these unholy economic times, House members still enjoy lucrative bennies paid for partially by your tax dollars. There's everything from free parking to access to a House gym that comes with a swimming pool, sauna, steam bath and 11 physical therapists on duty (and all for just $100 a year).

And don't forget about those donor junkets. This summer both Democrats and Republicans took part in all-expense-paid weekend retreats — riding corporate jets furnished by the likes of FedEx, U.S. Tobacco and Eli Lilly. Struggling constituents aren't exactly happy. "It undermines their moral authority when so many people are hurting," says Beliefnet founder and editor Steven Waldman. "Companies who had a bad year are making lots of sacrifices; Congress helped wipe out a rather large budget surplus. Why aren't they cleaning bathrooms on the Hill?"

5. "Now, now, I didn't really mean term limit."
Washington state's George Nethercutt Jr. built his 1994 congressional campaign on the vow of doing his job in three terms — and getting out. So when he beat longtime incumbent Thomas Foley, constituent Mike Fagan was sold on the Republican. Too bad Fagan was sold on a lemon. By 1999 Nethercutt, claiming his work wasn't finished, ran for and won a fourth term. "We approached him on numerous occasions to ask him why the change of heart, and we got snubbed," says Fagan, whose frustration led him to found the Eastern Washington Term Limits Action Committee. "George did not do us proud."

According to U.S. Term Limits, a Washington, D.C.-based electoral watchdog, 75 percent of Americans support term limits, but they get only nominal support from legislators. "Candidates talk the talk about term limits," says Stacie Rumenap, the organization's executive director. "But they so love the perks and influence, they want to make it a lifetime job."

6. "You don't pick me. I pick you."
Every 10 years elected officials in nearly every political jurisdiction divide the map into new legislative districts — in theory, to reflect new census trends. But in reality, incumbent legislators use polling and demographic data to carve out one-party districts that all but lock in their reelections and/or party gains. As Larry J. Sabato, professor of politics at the University of Virginia, puts it, "Redistricting has become so corrupt and incumbent-friendly that congressmen pretty much draw their own lines after every census."

Indeed, in the past two election cycles, roughly 98 percent of all incumbents who ran for reelection won. Even in the watershed 1994 cycle, when Republicans took control of both Houses, more than 90 percent of incumbents won reelection. Needless to say, the surest way to win is to be the only name on the ballot. Looking to the 2002 election, the American Enterprise Institute predicts that at least 75 House members will face no opposition, thanks largely to redistricting. Add that figure to congressional races that are technically up for grabs — but whose outcomes are all but certain — and only 10 percent of available House seats are in play this fall.

7. "Good luck reaching me."
David Keeney, a junior high school band director in suburban Chicago, has sent dozens of e-mails to congressional leaders in recent months complaining about their pay raise — and now wonders why he bothered. "I don't think anyone saw [my letters]," says Keeney. He charges that the actual e-mail addresses of senators are usually hard to decipher, making it tough for citizens to get through.

What with unsolicited junk mail and the anthrax scare overwhelming congressional mailboxes, Beltway insiders say that the vast majority of constituent letters never get anything more than a cursory read by a secretary or intern and an obligatory form response. And there is often no tallying of phone calls received from constituents. So how do you get through? "There's strength in numbers," says one high-level Hill staffer. "The best thing to do is to become active with a nonprofit that represents your issue."

8. "The old way is the only way."
In the bipartisan spirit that followed Sept. 11, politicians raced to swear off business as usual. "Yesterday we were attacked, but today we stand united," declared Sen. Patty Murray (D-Wash.). "As chair of the Transportation Appropriations Subcommittee, my top priority is the safety of the traveling public."

Nice sound bite. Too bad it lacked much bite. Sen. Murray consulted the pre-Sept. 11 playbook to push through a sweetheart $30 billion deal for Boeing, whose aviation base is in Washington state. The deal calls for the Air Force to lease 100 Boeing 767s and charge taxpayers to convert them twice so Boeing can resell them in 10 years. Murray spokesman Todd Webster cited the "need to protect the homeland and project force globally." Nonsense, says Sen. John McCain (R-Ariz.), who points out it would be a much better deal to buy them outright. He calls the arrangement "war profiteering in the name of patriotism. It's an egregious example of the disgraceful behavior that has become so prevalent in Congress."

9. "State government is more than just a labor of love."
In 1999 two-term Oregon State Senator Ted Ferrioli successfully sponsored a bill making it a Class-A misdemeanor for activists to chain themselves to trees or otherwise interfere with agricultural operations, namely logging. Ferrioli knows a thing or two about the timber industry: He serves as executive director of Malheur Timber Operators, a trade association representing Oregon's foresting industry. "All the different societal roles are represented in our legislature," says Ferrioli. "Idon't feel any conflict at all."

State lawmakers, who mostly work part time on local issues affecting their neighbors, will point to their small salaries as proof of their self-sacrifice. But that doesn't tell the whole story. According to the Center for Public Integrity, financial disclosure reports filed in 1999 show that one of every five lawmakers sat on a legislative committee that regulated at least one personal financial interest. At least 18 percent had a financial tie to a business or organization that lobbied state government. That's critical access: In 2001, state legislatures passed more than 40,000 bills.

10. "I have to raid Social Security."
For all the talk from lawmakers about getting Social Security under control, Congress and the White House don't necessarily want to do so. How come? Just as pro forma accounting lets hapless tech companies convey a false sense of well-being to shareholders, Social Security surplus reporting lets Washington mask just how bad our budget situation really is.

According to the Congressional Budget Office, the Social Security program is expected to run a surplus of $2.5 trillion over the next decade, while the rest of the federal government will incur a deficit of $1.5 trillion. In terms of federal fiscal year 2002, the CBO sees a $157 billion deficit. Conveniently, that figure includes a $157 billion surplus in Social Security receipts. "It's very misleading," says Michael Tanner, a Social Security expert with the Cato Institute. "The government doesn't bury Social Security money in a box behind the Treasury building. And yet it pretends to set aside this money for the future."

Top Democrats complain about Bush economic plans; Gephardt proposes tax cut
Tue Oct 15,10:16 PM ET
By WILL LESTER, Associated Press Writer

WASHINGTON - Congress' two top Democrats criticized the Bush administration's economic policies Tuesday and called for action to spur recovery, including help for strapped state economies, better pension programs for retirees and a higher minimum wage for workers.

House Democratic Leader Dick Gephardt proposed a $200 billion stimulus package including $75 billion in tax cuts — an idea described as an "interesting proposition" by President Bush's spokesman.

Senate Majority Leader Tom Daschle urged an extension of unemployment benefits and strong enforcement of corporate accountability.

While taking issue with Bush, some of the most prominent Democrats have declined to call for a rollback of his tax cut.

"The last thing you do when you're going into a recession is raise taxes," Gephardt said at a briefing sponsored by the Economic Policy Institute, a Washington think tank. "You cut taxes."

Gephardt added that the president "has said he will discuss the tax issue over his dead body. I understand those words."

The Missouri Democrat proposed his tax cuts "to help working families and encourage company investment in the short term." And he urged $125 billion in new spending — $25 billion for school construction, $25 billion to help states pay for protecting key facilities and $75 billion to help provide health care for unemployed workers and to bolster Medicaid.

While some Republicans immediately criticized Gephardt's plan as another Democratic "tax and spend" proposal, Bush's spokesman, Ari Fleischer, said, "It's interesting that he's talking about tax cuts."

Fleischer added that while he disagreed with the political points in Gephardt's speech "we'll take a look at what the congressman said."

Republican national Chairman Marc Racicot said: "All of the initiatives laid out by Minority Leader Gephardt today have already been proposed by Republicans."

Gephardt said, "We have serious economic job problems now and on the horizon and this administration is acting like everything is hunky-dory."

Whatever their position on tax cuts, Democrats agree that focusing on the economy could help their chances in the upcoming congressional elections.

Still, Republican pollster Mathew Dowd wrote GOP leaders this week that "Democrats do not have the voters' overwhelming trust on the economy and have no real solutions from their leaders." If voters do feel that way, Gephardt's proposals could be a response.

Polls have shown Democrats with a slight edge on the economy, or both parties even among prospective voters.

Gephardt said he's found in his travels in his St. Louis-area district that "people are feeling this economy very much. I went door to door in my district a week ago, and all I got was 'I'm worried about my job, worried about my 401(k).'"

Both Daschle and Gephardt urged the White House to work with both Republicans and Democrats to come up with a new approach to the economy.

"These are all ideas that deserve a fair hearing," Daschle said on the Senate floor, "and we should have a real discussion about these and other ideas to help our economy in the short term. But we also need to focus on the long term."

Gephardt said a bipartisan approach was the only chance for a change in direction.

Democrats are on a full-scale offensive to focus the political debate on the economy in the remaining weeks before the Nov. 5 election. Al Gore, the 2000 Democratic nominee, was in Iowa on Tuesday saying voters are longing to hear about the economy prior to the election.

Some Democrats considering a run for the White House have proposed changes in the Bush tax cuts.

Vermont Gov. Howard Dean said he opposed the sharp tax cuts he thinks are sapping the strength of the country. North Carolina Sen. John Edwards and Connecticut Sen. Joseph Lieberman have called for steps to trim back future tax cuts for the wealthiest Americans.

Massachusetts Sen. John Kerry hasn't directly called for rolling back the tax cuts but has called for "a return to the fiscal responsibility we gave this country in 1993 when we passed the Deficit Reduction Act."

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