Enronomics Explained
The Washington Post
By Richard Cohen
Tuesday, January 29, 2002; Page A19
The principle that the government can and should run a deficit to stimulate
a sick economy was first propounded by
John Maynard KeynesThis is called Keynesian Economics.
The principle that the government can and should run a
deficit when it does not have to was developed by George W. Bush.
This is called Enronian Economics.
It should not be surprising that Enronian Economics has taken over Washington.
Both the Texas-based firm and the
Texas-based president have so much in common
For one thing, the president was once a friend of Enron's former
chairman, Ken Lay. He called him Kenny Boy, but since the collapse of the
firm, he doesn't call him at all.
But more than that personal connection between the two
was -- and remains -- a shared business philosophy.
Bush recently expounded the doctrine that a tax cut postponed
is the same as a tax hike. In other words, a bird in the
bush is worth two in the hand, or something like that. Or, to put it
another way, a chicken that is unhatched can be
counted -- especially if the hatching occurs in the out years.
This, of course, is Enronian in both its essence
and conception. Enron, too, counted things that didn't
exist as if they did. I am referring now to profits.
And it counted things that did exist as if they didn't.
I am referring now to losses.
By counting one and not the other, Enron was able
to present itself as the seventh-largest corporation in
America. This assertion, as Bush himself would tell
you, was entirely faith-based.
And so, as luck would have it, is the president's tax plan. He has managed,
in a way that would make Kenny Boy
green with envy, to make a projected $4 trillion budget
surplus disappear. In this case, the money has not been
parked in some offshore tax haven. Nosiree.
Bush did it by giving tax breaks to the rich and
the poor alike over a 10-year period.
This plan, as brilliantly counterintuitive as Keynes's,
would give 37.6 percent of the tax cut to the top 1 percent
of the population. In other words, the very rich would
get the most. (Who could argue with that?) So that, just for
instance, Kenny Boy would have received an annual tax break
of $53,123 -- had his company not collapsed at his
very feet.
So, if that had not happened -- and as far as Bush and
Lay are concerned what doesn't happen happens -- the
chairman of Enron, who earned $8.3 million in salary
and bonuses in 2000, would have saved more from the Bush
tax plan than what the average American earns in an entire year.
Stop right there! I know what you're going to say: But Lay
earned his money. It's his, not the government's. Indeed. I
could not have put it better myself. Moreover, he earned
the money because his company didn't earn any money at
all. So he gets a rebate on money he made by his
company's not making any money and deceiving its
employees and stockholders. Is this a great country or what?
Sen. Edward M. Kennedy apparently doesn't think so.
He has proposed postponing tax cuts for people such as
himself -- the very wealthy. His plan would not affect
95 percent of American families -- those making less than
$130,000 a year. But for reasons I have already made
perfectly clear, the administration has -- fairly and justly --
characterized the Kennedy plan as a tax increase.
Lest you think there is anything political in all this,
let me point out that on "Meet The Press" recently,
the new chairman of the Republican National Committee,
a certain Marc Racicot, even called Bush's brother, Jeb, a dirty
tax-increaser for postponing a tax break for Floridians.
"I think the argument could be made, in all fairness, yes," he
said. It was that "in all fairness" that convinced me of his utter sincerity.
Alas, we are approaching the end of this particular column.
Too bad, because there was so much more I wanted to
say -- maybe something about George Orwell and how
politics abases language and, with it, thought. But, instead,
I will tip my hat to George W. Bush, who has combined Orwell with
Keynes to propound The Anticipation Theory of
Taxation.
It's as plain as the nose on your foot.
© 2002 The Washington Post Company |
