Thursday, Jul 24, 2008
Did a Republican "climate" or Democratic "tone" cause corporate malfeasance?
Jul 4, 2002 | As concern over corporate fraud at companies like WorldCom and Enron grows, the race is on in Washington to assign political blame. The targets aren't just the regulators and politicians who failed to prevent these debacles or the executives who deceived investors, however. Both Democrats and Republicans are now throwing around vague accusations that the other side created a "climate," set a "tone," or contributed to an "atmosphere" that allowed the crimes to happen.
These claims allow politicians and pundits to assign blame for the scandals without bothering to explain how, exactly, their political opponents are responsible. In short, it's yet another cynical game of pinning blame on the other guy.
The Democratic attack was launched by House Minority Leader Dick Gephardt, D-Mo., in his weekly press conference on June 26, the day after WorldCom announced that it had improperly reported ordinary expenses as capital expenditures: "It is, I think, telling that in 1995, when the Republican leadership came in, both Newt Gingrich and Tom DeLay made statements that the main goal of their effort was to try to deregulate corporate America. Well, they did a lot of that in the last years, and now we see some of the results of that."
But during the press conference and a later appearance on "Inside Politics," in which he said that DeLay and Gingrich "contributed to the environment" in which corporate malfeasance has occurred, Gephardt offered little evidence to back up his assertions, saying to the press corps that "we are going to lay this out in detail for you" at some unspecified later date. He did say that Congress has "done things to affirmatively unwind regulations that should not have been unwound," but his evidence was a vague list of those regulations -- accounting, tax, corporate governance -- and of blocked legislation. If Republicans stymied reforms that would have prevented recent scandals or supported reforms that caused them, Gephardt should say so specifically and offer clear supporting evidence.
Senate Majority Leader Tom Daschle, D-S.D., also offered lots of rhetoric and not much substance. In his press conference Friday, he criticized the "laissez-faire attitude" of the Bush administration, saying that it "helped create the kind of environment that exists today, an environment that ... all that is required is self-policing." He also said the Republicans in Congress "dismantled the regulatory environment that we had and in large measure created this sense of laissez-faire, of just total unwillingness on the part of enforcement or regulatory agencies to play a role. And I think that is the price we're now paying for the difficulties that we've experienced." According to the New York Times, he also pontificated about Republicans creating "a deregulatory, permissive atmosphere": "It's as if the line between right and wrong, legal and illegal, acceptable and unacceptable, was so little enforced that it became blurred." Again, if there are specifics to be offered, Daschle should offer them. Isn't the SEC responsible for most enforcement of securities law? Wasn't it part of the Clinton administration until January 2001?
These accusations are being refined into overheated jargon -- here's the Associated Press yesterday on controversy over Bush's sales of stock in Harken Energy Corp., which resulted in an SEC investigation: "Democratic National Committee spokeswoman Jennifer Palmieri called the 1989 transactions by Harken and Bush 'very Enron-esque' and said they were symbolic of how Bush and Vice President Dick Cheney, whose former employer Halliburton is also now under SEC investigation, had helped create a business climate ripe for accounting fraud."
But few people even knew of the Harken case until this week. Had WorldCom executives researched the president's business history and decided to take their inspiration from him? This argument by analogy is a cheap attempt to pin the blame on Bush. His past actions aren't proof that his administration encouraged or allowed illegal accounting since he took office.
"Crossfire" co-host Paul Begala, however, was undeterred from setting up Bush's Harken experience as part of a trend leading up to the recent scandals.
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