The Running of the Bears

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The Running of the Bears
by James Hall, Associate Editor

July 17, 2002

"Leaning Left"

James Hall Outside of Pamplona, Spain, these days more people are getting gored by the bears of Wall Street than by bulls. Running desperately to keep in front of the charging bears, in a climate of public outrage, even pro-business House Republicans are declining advice from their K Street corporate compadres and are jumping on the bandwagon to support Democratic legislation to crack down on corporate criminals. Will that be enough to fend off disaster, as corporate scandals continue to rock the market, the dollar declines, and the budget deficit grows larger and larger?

It's 1997 all over again, with a Dow below 8500 and a NASDAQ below 1500. Worse, the government just announced that it revised the US budget deficit upward to $165 billion dollars, in part because of falling capital gains tax collections. Not only is this a huge budget deficit after five years of surpluses, it's also the first budget deficit since 1997. Only then the stock markets were rising and the deficit falling.

The conservative punditti are falling all over themselves to blame Clinton once again, but evidence shows that the 1997 economy was Clinton's and the 2002 economy is Bush's. Blaming the corporate crimes of 2002 on the Clinton administration ignores that administration's attempts to strengthen the SEC and make many of the changes made in the Democratic Sarbanes reform bill that just passed the Congress on Monday.

Those past attempts were blocked by a Republican Congress, which has changed its course after smelling bear breath and the stink of corporate corruption that has cost American investors billions while corporate executives walk away with millions in compensation.

Not only did Republicans block SEC reform in the 1990s, they fostered the climate of "anything goes" deregulation that created numerous corporate conflicts of interest. Bush's appointment of Harvey Pitt, a Wall Street lawyer and lobbyist, who as the new Chairman of the SEC promised a "kinder and gentler SEC" created the regulatory climate that gave the green light to corporate criminals.

The same tactics that Enron employed to hide debt were employed by Harken Energy when it created Aloha Petroleum, a move overseen by audit committee member George W. Bush. The same tactics that Worldcom used to inflate earnings were used by the Halliburton Company under CEO Dick Cheney. And former Enron executive Tom White, implicated in an insider trading scandal at Enron, continues to serve as Bush's Secretary of the Army.

Then there is the growing national debt that has become a ticking time bomb for the recovering economy. The $1.35 trillion Bush tax cut was supposed to have stimulated our economy. Instead the debt it created promises to stimulate the upward movement of interest rates which tax middle class and poor Americans with higher interest payments on mortgages and credit card debt and discourages economic development by making it more difficult and expensive to borrow money. We haven't yet seen these interest rate hikes yet, but they are on the way along with every American's share of our national debt, which now totals some $67,000 per American family.

Remember that old campaign saw, "It's not the government's money, it's your money?" Well, "It's not the government's debt -- it's your debt."

The stock market crash has put the brakes on President Bush's plan to privatize a portion of social security, making it look like the risky scheme it always was. A generation of workers who relied on their 401k's to send them to early retirement will now be thankful to have a Social Security pension to keep them from falling into poverty.

The sharp decline of the stock market and the rise in the federal budget deficit has put pressure on the value of the dollar overseas. For the first time in two years, the Euro is worth more than the dollar, and the value of the Yen, the Pound, and many other currencies are beginning to rise against it. If this continues, it will put an end to the days of cheap imports and jump-start inflation.

Given these issues, it's easy to see why President Bush's polling numbers on running the economy are running far lower than his personal popularity figures. The real threat for Bush is one he's faced all along---that he may become like his father, respected for his leadership and foreign policy handling, but not trusted to ensure domestic prosperity. That cost his father his job, and may cost Bush his, because in the end, it IS the economy, stupid. ***

Photo of the author courtesy of staff files