Is George Bush about to get lucky again?
White House political adviser Karl Rove has positioned Bush as the champion of corporate reform, even though Bush's own history epitomized the kind of corruption that Enron and Global Crossing raised to new heights. Last week Congressional Republicans, long obstructionist on this issue, quickly reversed course, too. By the endgame the House Republican leadership -- after proposing much weaker legislation -- has embraced the reform bill proposed by Democratic Senator Paul Sarbanes of Maryland and then some. And the financial markets helped with the biggest one-week rally since 1933.
So President Bush -- Mr. Education, Mr. Drug Benefit -- is now Mr. Corporate Reform. Is the latter any more believable than the former? This will depend on two factors -- the economy and the Democrats.
At this writing, despite the market comeback, a lot of real damage has been done to the real economy by the same abuses that caused the market slide. And it is unlikely that the economy is headed back into a boom any time soon -- certainly not before the November midterm elections.
However, despite their exemplary leadership on corporate reform, it is difficult for the Democrats to define the corporate scandals in purely partisan terms. Just enough Democrats were complicit in the financial and corporate deregulation of the 1980s and 1990s that caused the scandals. Nor can the shackling of the Securities and Exchange Commission be laid squarely at the feet of the Republicans. However, it is possible to pin the blame squarely on conservative ideology. So any partisan gains by the Democrats would need to be ideological gains -- faulting the ideology of market worship whose main vehicle is the Republican Party.
The Sarbanes bill on corporate and accounting reform was only a modest first step. There are other kinds of abuses still at work. Yet as soon as Democratic progressives try to press for broader reform, they run into allies of corporate abuse right in their own party. Michigan Senator Carl Levin's efforts to compel stock options to be treated as ordinary expenses is Exhibit A. Democrats, as well as Republicans, have grown dependent on fat campaign contributions from the technology industry. The very week that both parties were outdoing each other to champion accounting reform, corporate lobbyists managed to isolate Levin and options reform.
The fact is, it's possible to reward corporate executives for performance in a variety of ways that neither compromise balance sheets nor invite manipulation the way options do. It is possible to base executive pay on performance so that bonuses vary with bona fide earnings or market share. It's also possible to compensate executives with ordinary grants of stock rather than options to purchase stock that have value only at a certain price. The fact that many Democrats have flinched from embracing even the Levin reforms suggests how compromised the party still is.
The other day Senator Joe Lieberman, looking for a way to wriggle out of his promise not to run for president against Al Gore, scolded Gore for abandoning the New Democrat faith by actually promising in the 2000 campaign to fight for those left behind by the late economic boom. That was about the only thing Gore did right.
Even at a time when the corporate sacking of the economy is demonstrating why ordinary people need both government and a progressive party that believes in government's necessary role, this New Democrat undertow will compromise Democrats' ability to seize the moment. Gore will contest Lieberman and the others based on a money primary in which fund-raising pays for polling and media and the actual voters are spectators. Democrats could well be whipsawed, as in previous elections, between wealthy donors and their apologists warning that ''growth'' (being soft on business abuse) rather than ''class warfare'' (championing the pocketbook interests of the nonrich) is the winning recipe for the party.
Despite this split, the corporate abuses and the peculiarly Republican odor emanating from them improve the Democrats' prospects both in this November's midterm elections and in 2004. But this is an opportunity that Democrats themselves can squander if they let their own corporate wing call the tune.
There also remains the issue of George W. Bush's own personal vulnerability (not to mention Vice President Cheney's). The Harken Energy abuses, like Cheney's reign at Halliburton, cry out for further investigation. They are certainly a far bigger deal, on the merits, than Whitewater. Whether they turn into serious political liabilities for the White House depends on whether the opposition party has the stomach to demand a full investigation.
