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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: J.T. who wrote (13374)	7/14/2002 9:40:12 AM
From: High-Tech East	Read Replies (1) \| Respond to of 19219

Oliphant is not a columnist I read regularly, but this makes a lot of sense to me ... tell them, John ... Ken Wilson _________________ McCain's reforms irk all By Thomas Oliphant, 7/14/2002 WASHINGTON NOT FOR THE first time since he ran for president, Senator John McCain has managed to take a stand on a major policy issue that makes the Democratic Party as well as President Bush uncomfortable. In one grand gesture last week, McCain put Democrats on the spot by exposing their complicity in the phony accounting that disguises the true cost of massive stock option grants to company insiders and said key parts of their corporate reform agenda do not go far enough. McCain also went after the core of Bush's lead balloon speech in New York - arguing that the issue involves not simply wrongdoing and ethical lapses but deeper ills that are ''systemic and serious.'' He also laid out an agenda that displays a more principled conservatism than Bush's. The Arizona senator is not merely the reformer who reveres Theodore Roosevelt, He remains the conservative reformer who insists that thorough reform of corporate governance is essential to enable the creation of personal investment accounts within Social Security. And he applied the principle behind his corporate reforms to the government he serves, making a connection Bush and most Democrats are terrified to make, but which became obvious the day after McCain spoke and acted. The same kind of dishonesty that permeates financial reporting, he noted, infects the government, whose financial underpinnings are crumbling. The government, McCain insisted, must ''forswear the sleight of hand that we employ in out budgeting and spending decisions.'' The Bush administration promptly showed what the senator was talking about by releasing its rosy projection for the budget deficit, claiming it will decline next year - an estimate that no major figure in the private or public sectors, including Republicans involved in the process on Capitol Hill, believes is honest. If Bush had to do what he says he wants corporate CEOs to do - personally vouch for financial statements - he would be in serious legal trouble. Because so much of the political world likes to focus on the McCain-Bush dance, it is more mischievous to see how he makes Democrats squirm. For starters, McCain said the currently popular reform vehicle, from Banking Committee chairman Paul Sarbanes that the Senate is about to pass, is inadequate. In particular, in a detailed speech here, he noted that there are exceptions and exemptions in its proposed separation of auditing firms' accounting and consulting operations. In McCain's view, the crisis in trust is so serious that this separation must be ''complete and permanent''. In addition, McCain appeared to be looking for ways to poke holes in the proposal, no matter how small. But where he really made Democrats fidget is on a huge issue where his disagreement with Bush is also fundamental - the massive stock options grants that constitute an obvious motive for some of the crimes and misdeeds of recent years. On the Senate floor last Thursday, McCain tried to offer his proposal to require that options be treated as the expense they are - which is why on their tax returns options are a deduction. As McCain and numerous independent experts - like Alan Greenspan - have noted, unexercised options are not merely a motive for cooking books to inflate earnings to inflate stock prices and cash in options; they are one of several noncash expenses (depreciation being the obvious one) that are routinely deducted from gross income because they are just as tangible. On the Senate floor, however, majority leader Tom Daschle blocked McCain's proposal from a vote, sparing his colleagues from the political embarrassment of voting against it. In the past, prominent Democrats, most notably Joe Lieberman, have openly supported the corporate side of this argument. By forcing the issue, McCain demonstrated graphically that this is no mere partisan matter. McCain did not pile on Bush's pointless speech in New York last week, nor did he add to the president or Dick Cheney's woes over the obvious hypocrisy (at a minimum) of advocating the end to practices they themselves benefited from during their time in business. Instead, he made clear that his argument is conceptual, and that while laudable, simply adding to the penalties for abuse only scratches the surface of what is needed. Neither, he added pointedly with Bush in mind, will ''pleas for character building in corporate suites discourage the reckless greed that threatens our prosperity. Unless we require responsible management with sensible regulation, we will suffer future scandals.'' At his most intriguing, McCain still makes both parties nervous. © Copyright 2002 Globe Newspaper Company. boston.com