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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?


To: Raymond Duray who wrote (1935)7/12/2002 2:12:37 AM
From: T L Comiskey  Read Replies (1) | Respond to of 89467
 
rd...are you Jim Willies evil twin..?..<g>
t



To: Raymond Duray who wrote (1935)7/12/2002 2:15:03 AM
From: stockman_scott  Respond to of 89467
 
The Insider Game

By PAUL KRUGMAN
Editorial / Op-Ed
The New York Times
July 12, 2002

The current crisis in American capitalism isn't just about the specific details — about tricky accounting, stock options, loans to executives, and so on. It's about the way the game has been rigged on behalf of insiders.

And the Bush administration is full of such insiders. That's why President Bush cannot get away with merely rhetorical opposition to executive wrongdoers. To give the most extreme example (so far), how can we take his moralizing seriously when Thomas White — whose division of Enron generated $500 million in phony profits, and who sold $12 million in stock just before the company collapsed — is still secretary of the Army?

Yet everything Mr. Bush has said and done lately shows that he doesn't get it. Asked about the Aloha Petroleum deal at his former company Harken Energy — in which big profits were recorded on a sale that was paid for by the company itself, a transaction that obviously had no meaning except as a way to inflate reported earnings — he responded, "There was an honest difference of opinion. . . . sometimes things aren't exactly black-and-white when it comes to accounting procedures."

And he still opposes both reforms that would reduce the incentives for corporate scams, such as requiring companies to count executive stock options against profits, and reforms that would make it harder to carry out such scams, such as not allowing accountants to take consulting fees from the same firms they audit.

The closest thing to a substantive proposal in Mr. Bush's tough-talking, nearly content-free speech on Tuesday was his call for extra punishment for executives convicted of fraud. But that's an empty threat. In reality, top executives rarely get charged with crimes; not a single indictment has yet been brought in the Enron affair, and even "Chainsaw Al" Dunlap, a serial book-cooker, faces only a civil suit. And they almost never get convicted. Accounting issues are technical enough to confuse many juries; expensive lawyers make the most of that confusion; and if all else fails, big-name executives have friends in high places who protect them.

In this as in so much of the corporate governance issue, the current wave of scandal is prefigured by President Bush's own history.

An aside: Some pundits have tried to dismiss questions about Mr. Bush's business career as unfair — it was long ago, and hence irrelevant. Yet many of these same pundits thought it was perfectly appropriate to spend seven years and $70 million investigating a failed land deal that was even further in Bill Clinton's past. And if they want something more recent, how about reporting on the story of Mr. Bush's extraordinarily lucrative investment in the Texas Rangers, which became so profitable because of a highly incestuous web of public policy and private deals? As in the case of Harken, no hard work is necessary; Joe Conason laid it all out in Harper's almost two years ago.

But the Harken story still has more to teach us, because the S.E.C. investigation into Mr. Bush's stock sale is a perfect illustration of why his tough talk won't scare well-connected malefactors.

Mr. Bush claims that he was "vetted" by the S.E.C. In fact, the agency's investigation was peculiarly perfunctory. It somehow decided that Mr. Bush's perfectly timed stock sale did not reflect inside information without interviewing him, or any other members of Harken's board. Maybe top officials at the S.E.C. felt they already knew enough about Mr. Bush: his father, the president, had appointed a good friend as S.E.C. chairman. And the general counsel, who would normally make decisions about legal action, had previously been George W. Bush's personal lawyer — he negotiated the purchase of the Texas Rangers. I am not making this up.

Most corporate wrongdoers won't be quite as well connected as the young Mr. Bush; but like him, they will expect, and probably receive, kid-glove treatment. In an interesting parallel, today's S.E.C., which claims to be investigating the highly questionable accounting at Halliburton that turned a loss into a reported profit, has yet to interview the C.E.O. at the time — Dick Cheney.

The bottom line is that in the last week any hopes you might have had that Mr. Bush would make a break from his past and champion desperately needed corporate reform have been dashed. Mr. Bush is not a real reformer; he just plays one on TV.

__________________________________
Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed Page and continues as Professor of Economics and International Affairs at Princeton University.

Krugman received his B.A. from Yale University in 1974 and his Ph.D. from MIT in 1977. He has taught at Yale, MIT and Stanford. At MIT he became the Ford International Professor of Economics.

nytimes.com



To: Raymond Duray who wrote (1935)7/12/2002 9:26:22 AM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
Hastert OKs Corporate Fraud Measures

By MARCY GORDON 07/12/2002 03:18:46 EST

WASHINGTON (AP) - The leader of the GOP-controlled House has expressed approval of measures adopted by the Democratic-led Senate to create stiff penalties for corporate fraud.

With a series of corporate accounting scandals dragging down the stock market and putting President Bush and the Republicans on the defensive, senators on Thursday weighed strengthening the powers of federal securities regulators to go after executives who violate the law.

House Speaker Dennis Hastert, R-Ill., told reporters Thursday the House was "looking at what the Senate does" with the legislation. "I think they have acted responsibly so far. We'll have to see what the rest of the amendments are on their bill."

Sen. John McCain, R-Ariz., implored his colleagues to adopt his proposal requiring companies to count executives' stock options as an expense against earnings. Otherwise, investors will continue to get misleading information on companies' financial performance, McCain said on the Senate floor.

The debate over stock options has taken on new urgency since the collapse of Enron Corp. in December and the subsequent string of accounting scandals at big corporations. Executives at Enron and other big companies reaped millions of dollars in profits by cashing in their options before the companies' share prices plunged. On the other hand, many ordinary Enron employees who had heavily invested in company stock lost their retirement savings.

Stock options have been "terribly abused by the same people" that a unified Senate targeted in adopting new criminal penalties on Wednesday, McCain said.

Prospects for adoption of his plan - a change urged by Federal Reserve Chairman Alan Greenspan but opposed by the business community - appeared weak. McCain accused Senate colleagues, including some fellow Republicans, of bowing to lobbyists for high-tech companies and using delaying tactics to block a vote on his proposal.

The new criminal sanctions, including 10-year prison terms for securities fraud, were added to an accounting oversight bill inching toward passage amid a crisis of investor confidence. They include, and go beyond, proposals Bush made in a speech Tuesday on corporate responsibility.

Bush has given only qualified support to the bipartisan bill, which would create an independent private body with authority to discipline auditors and establish auditing and ethics rules. A new corporate fraud task force that the president announced Tuesday will hold its first meeting Friday.

An accounting oversight bill passed by the House in April is considered weaker than the Senate version by consumer groups and some Democrats and does not contain the new penalties against corporate fraud and executives who deceive investors. After the Senate passes its bill, it will have to be reconciled with the House version by a committee of lawmakers from both chambers.

Hastert acknowledged that the Senate measure goes further than the House package, but added, "I support it so far. ... We certainly know more now than we did in April when we passed that bill."

But Rep. Michael Oxley, R-Ohio, chief architect of the House bill, suggested a "cooling off period" until the fall before drafting a final compromise.

Oxley, chairman of the House Financial Services Committee, derided the Senate's labors as a "feeding frenzy ... get an amendment out and send out your press release."

"It's not bad to have a cooling off period in August," he said, adding that legislating in haste can produce detrimental results.

The Senate, meanwhile, debated a proposal by Sen. Carl Levin, D-Mich., to strengthen the enforcement powers of the Securities and Exchange Commission, which is investigating dozens of major corporations.

The SEC would get the authority, for example, to impose civil fines on company officials, directors, auditors and lawyers, and ban officials and directors from all publicly traded companies - without having to go to court. Existing fines would be increased.

"We have some ruthless people out there that have lined their own pockets," Levin said.

In another move aimed at preventing future corporate disasters, the Senate Finance Committee approved a bill Thursday to tighten protections on employee 401(k) plans.

The bill, sponsored by committee Chairman Max Baucus, D-Mont., would let workers sell company stock that employers provide as matching contributions after three years. It also would require companies to provide 30 days' notice to employees before they are locked out of their accounts for administrative changes.

The measure competes with a more stringent one by Sen. Edward M. Kennedy, D-Mass., that has already passed the Health, Education, Labor and Pensions Committee.



To: Raymond Duray who wrote (1935)7/12/2002 11:35:28 AM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
We need to talk about the war on Iraq before it begins

If the debate is delayed until the eve of action, it will influence nothing

By Hugo Young
The Guardian
Thursday July 11, 2002
guardian.co.uk

The fiercest debates about war usually take place after the slaughter has begun, and sometimes only when it's over. Vietnam crept up on Kennedy, and then Johnson, and even in 1965 when their private deliberations concluded with American military intervention, the public argument was nugatory. The mainstream media gave it near-total support. Somewhat later, opinion turned, and war fury both ways dominated the whole of politics. By then it was too late to save anyone from catastrophe.

The case of modern Iraq is different. We can see war coming. A better analogy is the second world war, which was preceded by epic argument between appeasers and warriors here, and then by pro- and anti-war debates in America both before and after Pearl Harbor. More telling still is George Bush I's Gulf war against Saddam Hussein in 1991. This too had a long build-up. In the course of it, the American debate was troubled. Despite the obvious pretext supplied by Saddam's invasion of Kuwait, the Senate approved military force by only 52 votes to 47. Among those who voted against Operation Desert Storm was Senator Sam Nunn, the hard-nosed chairman of the armed services committee.

George Bush II's Iraq war is being prepared in different circumstances. The political build-up is intense and almost unchallenged. There are virtually no naysayers in mainstream Washington, though they have plenty of opportunity to speak. Last week the US seized on Iraq's rejection of a new team of UN weapons inspectors, and with electric speed cast aside Kofi Annan's offer of mediation. A detailed battle plan was leaked to the New York Times, evidently by someone who thought it wasn't good enough. The momentum towards war is palpable, and to anyone who read Bush's speeches since he became a national politician it should not be surprising.

The absence of challenge can also be seen in Europe. The other day Jon Snow pressed Tony Blair on this point, and extracted an extraordinary response. Could you foresee yourself committing British troops to a ground war in Iraq, Snow asked. "I suggest we have that discussion when the decisions are actually about to be taken," Blair replied. In other words, when the discussion can influence nothing. Blair's suggested timing is precisely wrong. Any serious debate taking place after Washington has decided where it's about to go can only be destructive to the alliance. The time when a European argument might be useful is now, before the stone is set.

For a start, it would put salutary pressure on the Europeans. European nations need to formulate some positions or, ideally, one position. What do they propose to do about Saddam? How do they think about his weapons of mass destruction? What is their view on the balance between terror and freedom? How do they propose to counter the virulent American voices which remark that Europe is simply failing to address the threats it faces from terrorist-harbouring states? Europe slinks silent in the shadows of this crucial discussion.

But in the absence of any real discussion in America, a more public European debate could perform an urgent service to the world. Major European leaders should be asking these questions in public places, even if one makes the charitable assumption that none of the issues are lost on the American actors. They fall into two categories. Might war work? And is it right?

There's more to hear, for example, about some of the working premises of the warriors. Are they banking on Saddam caving in fast, and his armies disintegrating? Since Washington is signalling scepticism about either an internal coup or an effective local military force of dissidents, the more likely plan envisages some 250,000 US troops, with Britain and few others possibly alongside. Have they worked out the scale of the collateral damage likely in such a big war? "No one can say whether a war will last five days, five weeks or five months," the sceptical Nunn said in 1991. With a smaller alliance to depend on, and a more tenuous casus belli , the question is more urgently worth asking today.

What, then, of the region? Is it the case that Washington, after paying lip-service to a Middle East peace process, will use the failure of its own one-sided approach as justification for the real agenda of the Pentagon hawks, who've been thirsting to devour Saddam ever since Bush I failed to do so? If Saddam is dethroned but not destroyed, what then? How deeply have the consequences of any failure in this enterprise been considered? Are such questions inappropriate for mainstream European politicians to ask or, instead, an essential contribution from allies who will be expected to go along with anything that eventually happens?

Just as pressing are the issues of justice and proportionality. Even if one accepts the contested claim that Saddam has deliverable weapons of mass destruction (WMD), how valid are the scenarios that predicate their use? If he can reach Israel, why would he dare to try if he knew the entire world would then respond in kind? Some say the most convincing explanation of his WMD is, as Tariq Aziz once confided, to prepare for revenge against Iran. It seems at least possible that the only scenario in which these weapons become a threat to America and her allies is in some last-ditch act of desperation as the Iraqi tyrant faces the build-up of an invasion army. Is it not time such perversity broke through the wall of acquiescent silence, and was coolly evaluated by informed public people in the public realm?

More largely, how will the envisaged campaign fit into the frame of international law? How stale is the thread of old UN resolutions that America - and Britain - seem determined not to try to refresh? Where might the unfolding of a long and bloody campaign fit into the doctrines of morality? That question could be as inflammatory as it was at Suez, among both officers and men. John Major, in his autobiography, recalls summoning his Anglican archbishop and Catholic cardinal to secure their approval for the Gulf war. They "gave me their public and private support", he writes, "and in so doing their reassurance that this would be a just war". The same blessing will be far harder to buy in 2003, even if the issues have been properly explored beforehand.

Germany is precluded from such discussion until and perhaps after the September election. France, on anything to do with the Middle East, has no credence in Washington. But Britain has a position and a special voice, and now is the time to make use of them, before these severe anxieties are buried under the juggernaut of a son's revenge for what happened to his father. To say that they're only worth discussing "when the decisions are actually about to be taken" is to say that everything must be left to the leaders. If these then suffer the fate of Lyndon B Johnson, booted out of politics for a war the people decided they didn't want, they will deserve it.