The Democrats' Perfect Storm
BARNES, FRED
The Democrats' Perfect Storm But don't bet on the business scandals' hurting Republicans in November. BY FRED BARNES JACK GERMOND, the great political writer, tells a story about a horse-player....
...Democrats are leading the fight for corporate accountability, says Howard Wolfson, the executive director of the Democratic Congressional Campaign Committee...
...The other part of the Democratic strategy involves President Bush...
...Neither these facts nor simple common sense has deterred Gephardt from promoting his charge...
...For months, they've sought an issue to use against President Bush and congressional Republicans, and they believe they've finally found one...
...Months of criticism have failed to dent his popularity...
...stones and Republicans are sitting ducks...
...Nevertheless, Democrats are trying to make him less attractive as a rallying figure for GOP candidates...
...Their "actions or inactions . . . are the reason we now have come to the threshold of crippling a lot of business, crippling the stock market, crippling the businesses that were doing things the right way...
...There's another factor involved here...
...You never get what you expect...
...In the face of a reasonably strong economy, a market rally, and stiffer corporate regulations on the books—and no new World-Coms—the business fraud scandal is bound to fade...
...The corporate scandal may linger as the dominant issue, but there are several factors working against it, big ones...
...But with the corporate fraud scandal upon us, Democrats believe Republican ties to big business and especially GOP efforts at deregulation make for a perfect campaign issue lasting through the midterm elections in November...
...Productivity is rising at an astonishing rate...
...House Democratic leader Dick Gephardt has gone so far as to accuse House Republicans of actually causing the wave of corporate corruption...
...It's a tale with a political lesson...
...This is ludicrous...
...Terry Neal in washingtonpost.com wrote that Wolfson believes Democrats have actually found a "magic bullet...
...That should ease much of the anxiety over corporate fraud...
...Still, Democratic candidates all over the country have adopted the Gephardt argument or the softer variant of it—Republicans are too lenient on business abuses...
...they are on the side of corporate malfeasance...
...This was not the cause of any of the corporate corruption cases...
...Democrats are on the side of investors...
...Of course Enron's sin was hiding debts and exaggerating earnings, which is different from trading derivatives...
...Suddenly he realizes it's his 55 th birthday, May 5. He's ready to hit the racetrack, but he's a salesman and has to go to a sales stop at the Johnson Building...
...Democrats believe it is a straight line...
...The horseplayer wakes up one morning at 5:55 a.m...
...Except there's that Germond rule to remember...
...Yes, the stock market has tanked, but there's no evidence of a negative wealth effect, prompting consumers to spend less...
...The housing market is booming...
...The document chiefly dwells on things they didn't do, but it cites two affirmative steps...
...It's propaganda...
...Rather than a fleeting moment in politics, they believe the scandal has created a new era in which regulation and business-bashing are the touchFred Barnes is executive editor of THE WEEKLY STANDARD...
...Its assumption is that the quarter-century run of deregulation—airlines, trucking, banks, and so on—has come to an abrupt end and the public's appetite is now for more and more regulation...
...Having played hunches before, he's intrigued...
...House Republicans had very limited power in the 1990s, given their narrow majority, a more liberal Senate, and a Democrat, Bill Clinton, in the White House...
...Last week, he produced a 32-page document that is both a mind-boggling attack on Republicans and a hymn to government regulation...
...But Democrats haven't much else to work with...
...When he arrives, he sees he's at 555 5th Avenue and his meeting is on the fifth floor...
...So the document is not a serious piece of work...
...Then hundreds of billions of dollars sitting on the sidelines may return to the market and spur a rally...
...By early fall, Congress is likely to have passed a corporate responsibility bill for Bush to sign...
...He takes a taxi whose registration number is 5555...
...First, the economy is reasonably strong, growing at roughly a 4.5 percent rate in the first half of 2002...
...The second thing Republicans did was play a role in deregulating the trading of energy derivatives, an Enron specialty...
...And personal income is up...
...The Securities and Exchange Commission long ago cleared Bush of any wrongdoing, making it doubtful the Harken issue will have legs...
...Maybe they're right, but I doubt it...
...Along with dozens of Democrats, they reformed securities litigation, a cash cow for trial lawyers, over Clinton's veto...
...The tax cut, Enron, the deficit, terrorist clues before September 11—those didn't work out...
...Lest anyone miss the point, the document is entitled "Drive to Deregulate: GOP Congress Paved the Way for Enron and Other Corporate Misdeeds...
...They intend to pester Bush about his sale of stock in Harken Energy in 1990 and Harken's sale of another company, Aloha...
...There's another way of putting this: The future in politics is never a straight line projection of the present...
...This is too much...
...It's "the result of [their] drive to deregulate" after capturing Congress in 1994, he told reporters...
...For Bush and Republicans, the best case scenario is for a market rally in the fall...
...Consumers continue to buy at a furious pace...
...Check out the special one-year earnings reports that America's top 1,000 corporations have been ordered to file by August 14...
...The lesson is you don't always get what you expect at the track—or in politics...
...There's one problem: Many Democrats have ties to the business community, too...
...SEC chairman Harvey Pitt has warned corporate heads they're personally liable if the reports aren't scrupulously accurate...
...He rushes to the track, waits until the fifth race and bets $5,000 on horse number 5. The horse comes in fifth...
...with the number 5 in his mind...
...What exactly did Republicans do...
...It could happen...
...As a result, earnings may be down, but investor confidence will be restored...
Vol. 7 • July 2002 • No. 43
