EMAIL PAGE EIGHT
COLUMN SEVENTY-EIGHT, NOVEMBER 1, 2002
(Copyright © 2002 The Blacklisted Journalist)
BY PAUL KRUGMAN
1. THE BULLY'S PULPIT
(THE BUSH CREDIBILITY GAP)
NYTimes.com Article: The Bully's Pulpit
Date: Fri, 6 Sep 2002 11:07:06 -0400 (EDT)
article from NYTimes.com has been sent to you by firstname.lastname@example.org
is peace. Freedom is slavery. Ignorance is strength. Colin Powell and Dick
Cheney are in perfect agreement. And the Bush administration won't privatize
Fleischer's insistence that Mr. Powell and Mr. Cheney have no differences over
Iraq seems to have pushed some journalists into facing up, at least briefly, to
the obvious. ABC's weblog The Note described it as a
"chocolate-is-vanilla" claim, admitting that "The Bush team has
always had a credibility problem with some reporters because of their insistence
on saying 'up is down' and 'black is white.'"
the administration needn't worry; if history is any guide, many reporters will
soon return to their usual cringe. The next time the administration insists that
chocolate is vanilla, much of the media---fearing accusations of liberal bias,
trying to create the appearance of "balance"---won't report that the
Bush team's Orwellian propensities have long been apparent to anyone following
its pronouncements on economics. Even during campaign 2000 these pronouncements
relied on doublethink, the ability to believe two contradictory things at the
same time. For example, George W. Bush's plan to partially privatize Social
Security always depended on the assertion that 2-1=4 - that we can divert
payroll taxes into high-yielding personal accounts, yet still use the same money
to pay benefits to retirees.
Orwellian tactics don't stop with doublethink; they also include newspeak, the
redefinition of words to rule out disloyal thoughts. Again, Social Security is a
perfect example. Republican political consultants have found that in an era of
plunging stocks and corporate scandal the word "privatization" has
taken on negative connotations. The answer? Deny that personal accounts
constitute privatization, and bully the press into going along. A Republican
National Campaign Committee memo lays out the new strategy: "It is very
important that we not allow reporters to shill for Democrat demagoguery by
inaccurately characterizing 'personal accounts' and 'privatization' as one and
it inaccurate to say that personal accounts equal privatization? We could argue
on the merits. Under the Bush plan, a worker's personal account reflects any
gains or losses on the stocks it represents. When risks and rewards accrue
entirely to the individual, isn't that privatization?
wait, we can do better. The push to convert Social Security into a system of
personal accounts has been led by the Cato Institute. The Bush plan emerged
directly from Cato's project on the subject, several members of Mr. Bush's
commission on Social Security reform had close Cato ties, and much of the
commission's staff came straight from Cato. You can read all about Cato's role
on the special Web site the institute set up, http://www.socialsecurity.org.
what's the name of the Cato project to promote personal accounts? Why, the
Project on Social Security Privatization, of course.
brings us back to the issue of intimidation. The R.N.C.C. doesn't really think
it can convince people that privatization isn't privatization. But that's not
the intimidation will probably succeed. Indeed, it's already working. As Mr.
Marshall notes, in a recent interview of the House minority leader, Richard
this isn't just a question of Social Security policy. Once an administration
believes that it can get away with insisting that black is white and up is
down---and everything in this administration's history suggests that it believes
just that---it's hard to see where the process stops. A habit of ignoring
inconvenient reality, and presuming that the docile media will go along, soon
infects all aspects of policy. And yes, that includes matters of war and peace.
The trouble is that eventually reality has a way of asserting itself. And in case you are wondering, ignorance isn't strength. ##
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CRONIES IN ARMS
(AN ADMINISTRATION OF CORPORATE CROOKS)
NYTimes.com Article: Cronies in Arms
Date: Tue, 17 Sep 2002 08:36:55 -0400 (EDT)
This article from NYTimes.com has been sent to you by email@example.com.
September 17, 2002
Cronies in Arms
By PAUL KRUGMAN
In February 2001 Enron presented an imposing facade, but
insiders knew better: they were desperately struggling to keep their Ponzi
scheme going. When one top executive learned of millions in further losses, his
e-mailed response summed up the whole strategy: "Close a bigger deal. Hide
the loss before the 1Q."
The strategy worked. Enron collapsed, but not before
insiders made off with nearly $1 billion. The sender of that blunt e-mail sold
$12 million in stocks just before they became worthless. And now he's secretary
of the Army.
Dick Cheney vehemently denies that talk of war, just weeks
before the midterm elections, is designed to divert attention from other
matters. But in that case he won't object if I point out that the tide of
corporate scandal is still rising, and lapping ever closer to his feet.
An article in yesterday's Wall Street Journal confirmed
what some of us have long argued: market manipulation by energy companies "
probably the same companies that wrote Mr. Cheney's energy plan, though he has
defied a court order to release task force records " played a key role in
California's electricity crisis. And new evidence indicates that Mr. Cheney's
handpicked Army secretary was a corporate evildoer.
Mr. Cheney supposedly chose Thomas White for his business
expertise. But when it became apparent that the Enron division he ran was a
money-losing fraud, the story changed. We were told that Mr. White was an
amiable guy who had no idea what was actually going on, that his colleagues
referred to him behind his back as "Mr. Magoo." Just the man to run
the Army in a two-front Middle Eastern war, right?
But he was no Magoo. Jason Leopold, a reporter writing a
book about California's crisis, has acquired Enron documents that show Mr. White
fully aware of what his division was up to. Mr. Leopold reported his findings in
the online magazine Salon, and has graciously shared his evidence with
me. It's quite damning.
The biggest of several deals that allowed Mr. White to
"hide the loss" " a deal in which the documents show him intimately
involved " was a 15-year contract to supply electricity and natural gas to the
Indiana pharmaceutical company Eli Lilly. Any future returns from the deal were
purely hypothetical. Indeed, the contract assumed a deregulated electricity
market, which didn't yet exist in Indiana. Yet without delivering a single watt
of power " and having paid cash up front to Lilly, not the other way around
" Mr. White's division immediately booked a multimillion-dollar profit.
Was this legal? There are certain cases in which companies
are allowed to use "mark to market" accounting, in which they count
chickens before they are hatched " but normally this requires the existence of
a market in unhatched eggs, that is, a forward market in which you can buy or
sell today the promise to deliver goods at some future date. There were no
forward markets in the services Enron promised to provide; extremely optimistic
numbers were simply conjured up out of thin air, then reported as if they were
real, current earnings. And even if this was somehow legal, it was grossly
If outsiders had known Enron's true financial position when
Mr. White sent that e-mail, the stock price would have plummeted. By maintaining
the illusion of success, insiders like Mr. White were able to sell their stock
at good prices to naive victims " people like their own employees, or the
Florida state workers whose pension fund invested $300 million in Enron during
the company's final months. As Fortune's recent story on corporate
scandal put it: "You bought. They sold."
It was crony capitalism at its worst. What kind of
administration would keep Mr. White in office?
A story in last week's Times may shed light on that
question. It concerned another company that sold a division, then declared that
its employees had "resigned," allowing it to confiscate their
pensions. Yet this company did exactly the opposite when its former C.E.O.
resigned, changing the terms of his contract so that he could claim full
retirement benefits; the company took an $8.5 million charge against earnings to
reflect the cost of its parting gift to this one individual. Only the little
people get shafted.
The other company is named Halliburton. The object of its generosity was Dick Cheney.
Copyright 2002 The New York Times Company ##
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