Posted on 07/13/2002 8:47:22 AM PDT by Lessismore
Since President George W. Bush travelled to Wall Street on Tuesday to reassure investors that Washington would crack down on corporate abuses, the Dow Jones industrial average has fallen by about 500 points.
After one of the worst weeks of his presidency, the question now is whether Mr Bush' own political fortunes will take a similar trajectory.
With mid-term congressional elections less than four months away, Democrats have seized on the issue of corporate irresponsibility to embarrass Mr Bush and his once unabashedly pro-business Republican party. That has forced Republicans into a desperate strategic retreat to show that they too are serious about cracking down on corporate abuses and restoring confidence in the markets.
This week, Senate Democrats won unanimous support for amendments to a corporate reform bill that included a plethora of measures long opposed by the White House and congressional Republicans, including the creation of an accounting oversight board, protection for corporate whistleblowers, and strong criminal penalties for fraud. Passage of the final bill is expected on Monday after the Senate voted on Friday with only two dissenters to limit debate and push the measure through.
In the House, Dennis Hastert, the Republican speaker, said he would probably back the harsher Senate version of the bill, overriding a more measured series of responses passed by the House in April.
At the same time, Bill Thomas, the House ways and means committee chairman and a fiercely partisan Republican leader, heaped praise on his Democratic colleagues in introducing a bill to crack down on US companies evading taxes. Lloyd Doggett, a Texas Democrat whose three-year-old proposals on curbing corporate tax shelters were included in the Thomas bill, said that until the recent scandals his ideas were ridiculed by the Republicans.
Norman Ornstein, a political analyst at the American Enterprise Institute, says the current backlash against corporate malfeasance may mark the beginning of a larger reshaping of politics akin to the backlash against political malfeasance that cost the Democrats control of Congress in 1994.
Then, the Democrats were swept away in a wave of popular revulsion after a Congress they controlled voted itself a generous pay raise, and many politicians were later revealed to have abused their congressional banking and postal privileges.
The economic fallout of the corporate scandals - which for the moment have culminated in the collapse of WorldCom - has already touched a majority of voters.
About half of US families now own stock, up from just over 30 per cent a decade ago. And more than half of the average family's financial assets are tied up in stockholding, much of that in retirement plans that were supposed to be a secure nest egg. And despite a surprisingly buoyant economy, unemployment rates are continuing to creep up as companies shaken by the current pessimism continue to shed workers.
Daniel Yergin, author of "The Commanding Heights", a historical study of the clash between free markets and government regulation, said: "The sound of WorldCom collapsing is the sound of the end of an era. The reverberations are being felt across the country, and very strongly in Washington."
The White House, despite repeated attempts, has so far failed to calm the markets or reassure investors. Mr Bush's Tuesday speech, in which he announced a new corporate crime taskforce, was seen as a tepid response. It looked even more embarrassingly weak when the Senate on Wednesday unanimously approved a tough series of measures to strengthen regulatory oversight of corporate accounting and severely penalise fraudulent behaviour.
On Friday, Mr Bush convened a White House meeting of that newly formed corporate "swat team" led by Harvey Pitt, who heads the Securities and Exchange commission, and Larry Thompson, deputy attorney-general. Ari Fleischer, the president's spokesman, warned: "If you've engaged in wrongdoing, this task force is going to swat you."
But unlike the war against terrorism, where Mr Bush brushed aside charges of inexperience to emerge as a strong and trusted leader after September 11, he has been unable to shake allegations that he and some of his senior officials have profited from the very corporate manipulations they are now denouncing.
The White House acknowledged this week that Mr Bush had received two low-interest loans for $180,000 when he was a director of Harken Energy, one of the practices he said on Tuesday should now be outlawed because of revulsion over the $400m in company loans taken by the discredited WorldCom chief Bernie Ebbers.
Vice-President Dick Cheney also faced fresh charges that he had engineered questionable accounting changes when he was chief executive of Halliburton, the oil services company, that led to revenues being overstated by hundreds of millions of dollars. Halliburton has denied the allegations, made in a lawsuit filed by shareholders this week.
For the White House, the fear of economic malaise overshadowing foreign policy triumphs in the mind of voters is an ever-present worry. Mr Bush's aides have above all else been determined to steer the president away from the fate that befell his father, when his record political popularity following the 1991 Gulf war with Iraq was squandered by his limp response to an economic recession.
The failure to restore confidence in the stock markets now could have equally damaging consequences for Mr Bush and the Republicans. "Whenever Bush speaks now, the audience is everyone who has a 401(k)," says Mr Yergin, referring to the popular US retirement savings plan.
It is not an audience the president can afford to disappoint.
When the government does accounting for auto sales, do they discount the sale price by the present value of things like 0% loan incentives or lease deal incentives?
If not, consumer spending on autos may be several percentage points less than reported?
How about this for a campaign theme:
1. Character matters.
2. These abuses occurred during the Clinton years. They were uncovered during the Bush years.
This is truth. Do the Republicans have the cajones to say it?
they do this acting up thingy every election time - with the, we are for the poor and suffering - the repubs are only for the rich and scandalous, line - you know you've heard it before, too...
it usually works but, GW is way ahead of 'em this time, and specifically, expected this wall street thing to happen...
this will get messy!
What exactly were the other worst weeks?
When are the media hounds going to realize that the average person cares more about national security and defense right now over money. What good is the money if we are killed over and over again due to terror?
Interesting thought...
After this crapola bill is pushed through, and it does nothing to aid the economy in the long run (short term, the Democrats are banking on "relief" trading to make Wall Street pick up) ...who will Senate Democrats to have to blame it on? How will the Senate blame the president when their partisan legislation fails? With the exception that the left will crucify the president, guaranteeing he really does become a one-term president like his father, which precludes the possibility of presidential veto....the legislation was written by Congress and will be passed in the Senate by BOTH sides of the isle.
That means that responsibility for the economy will fall squarely on the Senate. I see big potential for this to blow up in the faces of the Senate...and I pray that it does. I can't see how the Senate hopes to reinflate the Monopoly money tech stock bubble of the crooked '90's through legislation ostensibly meant to control the crooks.
On the other hand, since I'm sure the Senate bill has enough hundred-acre-wide loopholes for even the most CROOKED CEO to slip through...that relief (that they're now in the clear) trading is likely to be significant. Daschle will jump in and take credit for "fixing the economy"...which will be untrue because all he will have done was protect his contributers, and a Wall Street crash is at the end of the supply/demand spectrum, not the beginning.
I doubt that this is true -- the media are highly sensitive to writing about what the average person cares about.
Besides, if we don't take care of the balance of trade deficit, military superpower status won't matter.
And neither did the Republican congress.
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