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COLUMN SEVENTY-EIGHT, NOVEMBER 1, 2002
(Copyright 2002 The Blacklisted Journalist)

BY PAUL KRUGMAN

1. THE BULLY'S PULPIT
(THE BUSH CREDIBILITY GAP)

Subject: NYTimes.com Article: The Bully's Pulpit
Date: Fri, 6 Sep 2002 11:07:06 -0400 (EDT)
From: info@blacklistedjournalist.com
To: info@blacklistedjournalist.com

This article from NYTimes.com has been sent to you by info@blacklistedjournalist.com .

The Bully's Pulpit

September 6, 2002

By PAUL KRUGMAN

http://www.nytimes.com/2002/09/06/opinion/06KRUG.html

War is peace. Freedom is slavery. Ignorance is strength. Colin Powell and Dick Cheney are in perfect agreement. And the Bush administration won't privatize Social Security.

Ari 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.'"

But 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 stuff is actually brown; at best they'll report that some Democrats claim that it's brown.

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.

The 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 the same."

Is 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?

But 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.

And what's the name of the Cato project to promote personal accounts? Why, the Project on Social Security Privatization, of course.

Which 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 goal. The memo doesn't talk about how to communicate with the public; it's a list of demands to place on journalists. As Joshua Marshall put it at http://www.talkingpointsmemo.com , the goal is to "mau-mau reporters out of using the word 'privatization' in this context."

And the intimidation will probably succeed. Indeed, it's already working. As Mr. Marshall notes, in a recent interview of the House minority leader, Richard Gephardt, Judy Woodruff of CNN duly echoed the R.N.C.C.'s memo.

Unfortunately, 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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2. CRONIES IN ARMS
(AN ADMINISTRATION OF CORPORATE CROOKS)

Subject: NYTimes.com Article: Cronies in Arms
Date: Tue, 17 Sep 2002 08:36:55 -0400 (EDT)
From: info@blacklistedjournalist.com
To: info@blacklistedjournalist.com

This article from NYTimes.com has been sent to you by info@blacklistedjournalist.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 unethical.

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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