Here's a major reason the Dems are striving mightily to shift the focus from past record to personalities.
Democrats share the blame for corporate chicanery
By Dick Polman
Inquirer Staff Writer
With the Dow taking a dive and small investors taking a bath, Democrats are hot to tap corporate greed as a campaign issue, to rail against Republican fat cats while portraying themselves as guardians of the little guy.
But this is not your grandfather's Democratic Party anymore. The contemporary party is heavily financed by big business, and during the '90s, many of its lawmakers worked closely with GOP conservatives to create the conditions that inspired the latest generation of corporate buccaneers.
Democrats helped kill some of the earliest attempts to compel accurate accounting practices; helped enact laws making it tougher for aggrieved investors to file lawsuits; and blocked early reform efforts that would have barred the big accounting firms from working as consultants for the clients they audit.
"This is clearly a drag on the Democratic image," said Ruy Teixeira, a liberal polling analyst. "Some elements of our party have been way too cozy with special interests. Under the guise of being 'business-friendly,' they gave away the store. So, with the congressional elections on the way [in November], the big question is: How much of a drag is this for us?"
Even now, with corporate reform all the rage on Capitol Hill as the House and Senate last week approved stiff penalties for corporate fraud, Democrats are pulling some punches. In the Senate July 11, they blocked a major proposal requiring that employee stock options be listed as expenses on the corporate ledger - a proposal that would have compelled a more accurate reporting of income and profits, but opposed nonetheless by the Democrats' high-tech friends in Silicon Valley.
Other alliances undercut the party's attempt to pin blame on President Bush and the GOP. National Democratic chairman Terry McAuliffe enjoyed a sweet stock deal with Global Crossing Ltd., a telecommunications firm that went belly-up in January (the fourth-largest bankruptcy in U.S. history). The deal was legal, but, politically, it's embarrassing that, as a result of an inside favor - he was invited to invest in Global Crossing before it went public - he cashed out $18 million from a $100,000 investment while many small investors ultimately got soaked.
In fact, from 1997 to its demise, Global Crossing gave 55 percent of its campaign donations to Democrats. And Democrats have been attracting more corporate money ever since Bill Clinton steered the party away from interest-group liberalism. In the 2000 election cycle, for example, big business gave 42 percent of its largesse to the party and its candidates.
Larry Noble, a nonpartisan campaign-finance watchdog and a former federal attorney, said: "The reality is, the Democrats are no longer in the clear when they say that 'the Republicans are the party of big business.' This is not a black-and-white issue for Democrats.
"They know it, too. This is why they're trying to keep public attention focused on Bush's personal business dealings - so that people won't look at the corporate donations to the Democratic Party."
Democrats have gotten off easy. Call it a conspiracy of silence: It's tough for voters to track Washington deal-making; liberal Democrats don't want to attack pro-business colleagues, whom they might need in other battles; conservative Republicans don't want to expose Democratic friends, for fear of implying that it's wrong to aid corporate interests.
Yet even a partial record shows:
In 1993, a watchdog panel sought to require that stock options be listed as operating expenses, just like salaries, so that overall earnings would be accurately reported. This effort was thwarted by 88 senators, led by Connecticut Democrat Joseph Lieberman. Experts say this episode inspired accountants to devise ever more creative ways to measure profits.
In 1995, nearly half of Senate Democrats and 89 House Democrats helped enact a law (over Clinton's veto) that hindered aggrieved investors' efforts to win lawsuits against firms and auditors that may have misled them. The law also eased penalties on misbehaving CEOs. A prime backer was Connecticut Democratic Sen. Christopher Dodd, an accounting industry favorite and cochairman of the national party.
In 2000, many key Democrats inveighed against Securities and Exchange Commission Chairman Arthur Levitt when he sought to end the big accounting firms' practice of consulting for lucrative fees with companies on business strategy while auditing their books in a supposedly objective manner. Levitt saw this as a conflict of interest. But prominent Democrats - among them, New Jersey Sen. Robert Torricelli - helped the GOP erect roadblocks, including threats to slash Levitt's budget. Levitt finally gave up. But at a hearing last winter after Arthur Andersen's conflicts with Enron were exposed, Torricelli told Levitt: "We were wrong, you were right."
In 2002, the Democratic chairman is a former corporate insider. McAuliffe acquired his Global Crossing stock before the firm went public, with an assist from founder Gary Winnick. Even Joe Conason, a pro-Democratic commentator, believes that McAuliffe (a party fund-raiser at the time) was granted this perk because of his ties to President Clinton - thus making chairman McAuliffe "an odd spokesman these days for little people screwed over by big bad business."
And pro-business Democrats remain wary of reform. Lieberman says that if stock options are expensed on balance sheets, as Coca-Cola said last Sunday it would do, most firms will stop offering them - thereby hurting the middle-class workers who participate. But his Democratic detractors cite new studies showing that 90 percent of stock-option recipients are top executives.
Yet, despite this evident complicity, some top Democratic activists insist that public perceptions die slowly, and that they'll still reap electoral benefits from their traditional image as the underdog party. As Robert Borosage says, "OK, some Democrats without clean hands have muddied our message, but voters still don't see the two parties as identical."
Maybe. But Larry Noble believes that, at this point, "The man in the street just throws up his hands and says, 'They're all in bed with big business.' It's a reality the Democrats will have to deal with."
philly.com
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