Capital crimes, Capitol cronies

Culture & Ideas 1/20/03 - U.S. News & World Report

"No more easy money for corporate criminals, just hard time," the president said when he signed the corporate-reform bill in July 2002. The bill was supposed to usher in anew era of corporate responsibility, but the new-era message is only a Madison Avenue gimmick–a "new and improved" label slapped on the same old package of deceit.

How else to explain the brazen hypocrisy exhibited by the president after the ceremonial signing of the new bill? Less than eight hours after warning corporate crooks "you will be exposed," he furtively issued an interpretation of the law that undercuts a provision designed to make it easier for employees to–you got it–expose corporate crooks. According to the White House, whistleblowers would be protected only if their inside information is provided during the course of a formal congressional investigation.

When the president's action was harshly criticized by the provision's bipartisan cosponsors, White House spokesman Ari Fleischer puffed out his chest and sniffed: "Welcome to the statutes. That's why statutes are often complicated, and that's why somebody created lawyers." In other words: "Forget it, Jake, it's Chinatown."

The mad stampede of greed that coincided with the waning of the bull market and the bursting of the tech balloon would not have been possible without an unholy alliance between the CEOs and their lawmaker buddies on Capitol Hill.

Sure, for a few weeks last summer, when the WorldCom bomb made them fear for their political lives, our leaders actually passed a set of reforms. But don't be fooled. Both political parties have a richly vested interest in corporate corruption. Over the past 10 years, corporations have doled out more than $1.08 billion in soft-money contributions. This down payment on preferential public policy has extended across party lines, with $636 million going to Republicans and $449 million to Democrats.

Indeed, what makes the corporate crime wave not just a business scandal but a political one is precisely the fact that there is simply no consistent institutional opposition to the corporate takeover of our politics–certainly not from the Democratic Party. It was, after all, Tom Daschle who blocked the stock option amendment proposed by John McCain. And all but two Democratic senators have accepted campaign contributions from WorldCom, Enron, or Arthur Andersen.

With the bull market a distant memory and over 8 million people out of work, those who play by the rules are finally demanding justice. But the harsh and infuriating reality is that at the top of the economic heap, despite scandal after scandal, little has changed. Although the reform law was presented as a big win for the public interest, corporate lobbyists actually succeeded in fighting off a whole slew of potential reforms: Stock options still don't have to be treated as a corporate expense, offshore tax havens continue to flourish, and there's been no pension fund reform. What's more, industry lobbyists were able to water down many of the provisions that actually made it into the bill, including those affecting the ability of accounting firms to offer consulting services to the companies they audit–the fountainhead of so much dishonest bookkeeping.

Meanwhile, the orgy of money-grubbing by the corporate cabal has inflicted real, long-lasting pain on deceived Americans, emptying their wallets, pillaging their 401(k) plans, and dashing all their expectations for a comfortable retirement. The have-nots found themselves on the opposite side of an ever widening economic Grand Canyon from the have-way-too-muches. How can there be talk of a shared destiny in a nation where, between 1990 and 2000, average CEO pay rose 571 percent while average worker pay rose 37 percent? Where just over 1 percent of the population (170 billionaires, 25,000 decamillionaires, and 4.8 million millionaires) controls approximately 50 percent of the entire country's personal wealth? Where the richest 20 percent earns 48.5 percent of the income and the poorest 20 percent merely 5.2 percent? Where, since 1980, real income for the bottom fifth of families fell by $800 while for the top fifth, it rose by $56,800?

The excesses of America's corporate pigs have become more than just a social crime; they are a direct threat to the well-being of our society. The bottom line is that the United States can no longer hold its head up as the world's standard-bearer of capitalist virtue. Even as our country has taken steps to abolish welfare, forcing the poor to sink or swim, we've allowed the high-end corporate class to weave a giant safety net for its members. Is this corporate welfare really any different from or less costly than the kind most of these people inveigh against? To use their own argument, how are we ever going to get them to act responsibly when we keep rewarding them for irresponsibility? To say nothing of criminality.

Unfortunately, no public interest group is able to match the relentless lobbying and contributing by corporate heavy hitters. And until we have such a populist countervailing force, we are doomed to live in a less and less democratic society.

Adapted from Pigs at the Trough by Arianna Huffington, published by Crown Publishers, a division of Random House. Pigs at the Trough will be available in bookstores this month.

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