News and Features
As Congress revisits the welfare debate, it's time to look at what the law has wrought.
The rise and fall of the house of Enron should trigger comprehensive investigations--civil, criminal and Congressional. The full scope of relations between Enron and its cronies in the Bush Administration must be dragged out into the sunlight. Miscreants should be prosecuted, and fundamental reforms enacted to bring corporations back to public accountability.
Desperately trying to put a lid on the cascading scandals, White House spokesmen have insisted that since Bush officials did nothing when Enron chairman Ken Lay warned them about its impending collapse, there is no political scandal, only a financial one. Don't fall for that.
The largest scandal, as Robert Borosage suggests on page 4, is not just what was done illegally but what was done legally--for example, the failure of Bush Cabinet members to warn small investors and employees that Enron was going down and that its executives were bailing out. Or the slick way Enron gouged billions from Western energy consumers while its planted head of the Federal Energy Regulatory Commission, Pat Wood, ignored the pleas of Western governors for price controls. Or Treasury Secretary Paul O'Neill's torpedoing of the Clinton Administration's attempt to regulate offshore tax havens, a direct benefit to Enron, among others. Or Enron officials' six meetings with Vice President Cheney to help shape Bush's energy plan. What is Cheney hiding by refusing to reveal the names of those FERC met with?
Clearly, the full range of Administration contacts with Enron should be probed. This will reveal how crony capitalism works and what must be done to curb it. Congress must begin the hard task of rebuilding the legal framework for corporate accountability. As William Greider writes on page 11, Enron's demise reveals that all the supposed checks on executive plunder--accountants, stock analysts, independent board members, regulatory agencies--were either short-circuited or inactive. We need bold reform now. And Congress should take a close look at pensions, boosting defined-benefit plans and returning 401(k) plans to the supplement they were intended to be. And of course Enron once again illustrates the corrosive corruption of big-money politics.
With the House and the White House in Republican hands, Democrats in the Senate, sadly, will have to take the lead in ferreting out the facts and defining the necessary reforms. "Sadly" because too many Senate Democrats mirror Republicans in pocketing corporate bucks and parroting the deregulation/privatization line that comes with them. The chairman of the Governmental Affairs Committee, Joseph Lieberman, was leader of the corporate-funded Democratic Leadership Council and a founder of New Democrat Network, the proud recipient of Enron contributions. Last year Lieberman blew off the probe of Enron's connections to the California energy crisis. He now has another chance to show if he stands with his voters or his contributors.
Enron's bankruptcy is the largest in US history, but it is not unique. It is a product of the conservative offensive to unfetter corporations by dismantling hard-won public protections. Given that freedom, Enron's executives--and their brethren--gouged consumers, fleeced investors, even betrayed their own employees. It's time for Congress and the people to put an end to Enronomics and call corporate marauders to account.
There are more Enrons out there; the rot is systemic.
The pirate ship has sunk beneath the waves.
The swabs who haven't gone to wat'ry graves
Row desperately, though all of them now know
Their water and their food are running low.
They row their wretched boats and curse their lot.
Receding in the distance is a yacht
That carries all their officers, who knew
The ship was doomed but didn't tell the crew.
The officers stand tall. They saw their duty:
Desert the ship by night and take the booty.
If you believe President Bush, Kenneth Lay--one of his top financial backers and his "good friend"--was merely an equal-opportunity corrupter of our political system, buying off Democrats and Rep
"Not over my dead body will they raise your taxes," George W. Bush cryptically proclaimed. The press dutifully translated what he really meant, but few commented on the tastelessness of a wartime leader with troops in the field saying he was willing to die for the cause of lower taxes for the wealthy.
Never mind. The President's speech had no high public purpose or occasion. It was a political document, intended to undercut Senate majority leader Tom Daschle's prescriptions for economic recovery the previous day; it had more to do with gearing up for the 2002 Congressional elections than with speeding up the economic recovery. Bush's riposte signaled that the not-so-great debate of '02 is on.
Besides standing foursquare against any tax hikes, Bush offered only the same prescription for economic recovery as he has in the past: Let those at the top of the heap keep more of what they've got. Despite a stratospheric approval rating and a nation united behind him, he reaffirmed his fealty to his corporate underwriters and offered tax cuts for the rich at a time of obscene inequality. His partisan posturing on the stimulus plan showed that he thinks the economy will recover on its own, leaving the swelling ranks of jobless folk on their own.
Although superior to Bush's package, Daschle's was securely in the lineage of Bill Clinton's efforts to be both fiscal conservative and compassionate centrist. It positioned Democrats to campaign, amid economic recession, as the hair-shirt party of "fiscal responsibility," blaming Bush's tax cuts for the vanished (and largely notional) budget surpluses and evoking public nostalgia for the giddy boom of the late 1990s, which actually began heading south before Bush came to town. Daschle's minimalist list of stimulus measures shows a party leader out of touch with real conditions who thinks this downturn is a nonthreatening event that will soon be over, just as the stock-market cheerleaders are forecasting. Wiser heads on Wall Street, however, warn that any recovery will be weak and perhaps transient.
Even if the recession proves less serious than feared, the Democrats should be advocating spending on badly needed long-term projects, from schools to railroads, while pushing for extended and expanded unemployment compensation and health insurance and aid to states hard hit by new national-security costs.
Along with this expansive agenda the Dems should overcome their timidity and make the case for repeal of the bulk of last year's Bush tax cuts, particularly those provisions that benefit the wealthiest Americans. Those cuts will do little to stimulate the economy (even if they operate as promised--a dubious assumption), since they don't take effect for another three to six years. Instead, by assuring a greater stream of revenue from those who can best afford to pay, the Democrats can help forestall inevitable GOP efforts to claim that social programs must be cut to allow for military needs, while at the same time providing funds to address housing, hunger and poverty.
Teddy Roosevelt, whose biography is on Bush's bedside table, may have been less a foe of the malefactors of great wealth than his rhetoric claimed, but he did espouse a progressive agenda of reform, which included antitrust, financial regulation, the eight-hour workday, even a living wage. And Franklin Roosevelt in 1944 outlined an economic bill of rights that would redeem wartime sacrifices and secure the gains in income of the working class. All Bush can come up with is a thank-you note for his campaign donors.
On terrorism and the new democratic realism.
Last spring Richard Pollak asked in these pages, "Is GE Mightier Than the Hudson?" (May 28, 2001). Given the Environmental Protection Agency's December 4 decision to dredge the PCB-contaminated river, it is tempting to ring in the new year with a resounding No. Despite the company's multimillion-dollar blitz of lawyering, lobbying and PR, the Bush Administration, in the person of its EPA Administrator, Christine Todd Whitman, has come down squarely on the side of those in New York's historic Hudson River Valley who have been agitating for years to make GE clean up the lethal mess it created by dumping more than a million pounds of polychlorinated biphenyls in the river from the 1940s into the 1970s. This pollution has turned 200 miles of the Hudson, from just above Albany south to New York Harbor, into the biggest Superfund site in the nation; EPA law requires that GE pay the cost of removing the toxic chemicals, which the agency estimates at $460 million. More than once, the company has told its stockholders it can well afford this sum, as a multinational with a market value of some $500 billion surely can.
Still, it may be premature to pop the champagne corks. This past fall, fearing that Whitman might follow the lead of her Clinton Administration predecessor, Carol Browner, and endorse the cleanup, GE filed a federal suit attacking as unconstitutional a Superfund provision that allows the EPA, if the company refuses to dredge, to do the job itself and bill GE for three times the final cost plus penalties of $27,500 a day. GE has plenty of time (and cash) to pursue this and other maneuvers against dredging, which is needed to remove some 150,000 pounds of PCBs still in the Hudson. The EPA estimates it will take at least three years to work out the project's engineering and other details--e.g., what kind of equipment is needed, how much stirred-up sediment is acceptable and what landfills can safely handle the contaminated mud. Many residents along the banks of the river are divided--sometimes angrily--on these and several other issues. During the EPA's 127-day comment period in 2001 it received about thirty-eight boxes of letters and 35,000 e-mails, many spurred by GE's scare campaign--on billboards, in newspaper ads and on TV infomercials--warning that dredging will destroy the river.
The EPA has pledged that the public will have even more of a voice in the project's design decisions over the coming months--a welcome process but one that GE is likely to exploit with more propaganda. At its enviro-friendly-sounding website (hudsonwatch.com), for example, the company continues to insist, on no hard evidence, that the citizens of the Hudson River Valley oppose dredging "overwhelmingly." Some residents do resist dredging and the inevitable inconvenience it will bring to their communities, and not all have arrived at their view because of GE's PR tactics. But after almost two decades of review by the EPA, the burden of scientific evidence shows that the remaining PCBs, which cause cancer in laboratory animals and probably in humans, continue to poison the river a quarter-century after their use was banned and GE stopped dumping them.
The EPA's December 4 order could be the precedent that requires the company to clean up forty other sites where it has dumped PCBs. This would cost several billion dollars, a hit not so easy to reassure shareholders about. Even with GE master-builder Jack Welch retired and busy flogging his bestselling How-I-Did-It book, don't look for the company to roll over anytime soon.
Talk about rebuilding New York, and sooner or later someone will pipe up that out of crisis comes opportunity. It depends on where you stand. Right now what poor and working-class New Yorkers have got is crisis, and unless a force of historic proportion develops to shift the course of things, what will follow is more of the same.
Taking the crisis part first, it's well-known that New York has lost 95,000 jobs since September 11, less well-known that it lost 75,000 in the twelve months prior, and that even in boom times 1.5 million people, most of them with jobs, were turning to soup kitchens. Now those kitchens have had to turn people away for lack of food, and grassroots community agencies, to which for at least ten years government has outsourced a whole range of human services, are themselves against the wall. This past autumn Mayor Giuliani ordered every city department other than fire, police and the board of education to cut its budget by 15 percent, meaning nonprofit groups with city contracts took a similar cut. Governor Pataki froze state money at a cost to nonprofits of more than $200 million. Meanwhile, foundations warned they'd make fewer grants, smaller grants, their capital having been clobbered on the stock market. And in fashioning end-of-year appeals, every group strove to connect to 9/11, because that's the trigger for charitable giving. September 11 relief funds are bulging with $1.1 billion. There's so much cash available for grief counseling that the big charities are fairly begging to give it away, but for tackling the material sources of grief-as-everyday-life among people who can claim no direct link to the twin towers--that's trickier.
At the Good Old Lower East Side, a tenants' rights and neighborhood preservation organization, we are looking at a worst-case loss of $200,000 out of our $500,000 annual budget. Meanwhile, the work goes on--only now we worry because one of our organizers has had asthma attacks from the air downtown while at housing court, because a lot of people we work with are depressed and scared, because the supposed era of good feeling ushered in by the tragedy hasn't stopped landlord harassment or evictions, because gentrification steams forward in the Lower East Side, because low-income people never just have housing problems; they have employment problems and health problems and family problems and immigration problems, and all of those are getting worse. From our counterparts in other groups, in areas from children's rights to prisoners' rights, we hear the same story of too little money and too much need. Drug and alcohol abuse is up, domestic violence is up, homelessness is way up (30,000 adults and children in city shelters, an all-time high). In December some 30,000 New York City recipients of public assistance hit federal time limits for welfare; in 2002 19,000 more will lose their benefits, left to compete with 95,000 displaced workers for jobs and services that are barely there.
One has to be a keen shopper for silver linings to see opportunity in all this, but for the past months, in a variety of venues, groups like ours have been meeting with legal services agencies, immigrant groups, unions, community activists, progressive politicians, economic policy analysts and others to discuss a people's agenda for rebuilding. For years politicians have been pronouncing on the value of work; now the state's commitment to work, but also to a living, must be tested. And if there are to be tax incentives to private companies, there must be a return in jobs, environmental safety, an expanded economic infrastructure--transportation, housing, communications, health, education. People are asking, Can we think of rebuilding that enhances all of New York's boroughs? Can we look at those holes where the towers stood and boldly imagine a different city, a better city? And can we mobilize an army to fight for that vision?
Even in the best of times that would be difficult. Now there's recession, and unless some major revenue sources are tapped, State Senator Eric Schneiderman says, "we're looking at something that makes the New York fiscal crisis of the 1970s look like a picnic in Coney Island." Only a fraction of the $20 billion that Bush promised to the city in September has materialized. The state and city are both running many billions of dollars in deficits; when the governor and mayor come out with their budgets in January and February, they are likely to strike at every social program, the better to impress Washington with their resolve to shoot the wounded. Again, the nonprofit service contractors, which are small and diffuse but account for about 15 percent of the city's budget, will be an attractive target. So will the city's civilian work force, already shrunk by 20 percent since 1993.
Schneiderman, for one, is calling for a freeze on about $4 billion in state tax cuts scheduled to go into effect in 2002; for reinstatement of the city's commuter tax; for repeal of the Rockefeller drug laws, which, he says, would save the state hundreds of millions a year. There are other ideas, including exacting sacrifices from the top 10 percent of New York's population, who doubled their wealth in the boom, and from city property holders, whose average tax rate has been frozen for ten years. The point is for New York's social justice forces to be organized, ready to struggle for every dollar and demand every good. Some of the bigger unions are saying they might want to give Mayor Mike Bloomberg a "honeymoon." Some in the media are still flogging the idea that there's a "new" New York, more generous, more one-for-all. It's the same New York, just worse. Only the rich have opportunity by right. The rest of us have to fight for it.
Finally, a reporter had the temerity to question Bush on Friday regarding the ignominious collapse of Enron Corp. run by Kenneth L. Lay, a Bush family intimate and top campaign contributor.
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