Democratic Underground

You Can Enron, But You Can't Hide
December 5, 2001
by Richard Prasad

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Enron, one of the largest energy trading companies is on the verge of economic bankruptcy. Given George W. Bush's failures as a private businessman, and his current economic policies, is it any wonder that this virtual collapse took place on his watch?

Enron had recently been the 7th largest US Corporation in terms of revenue, but it's fall was mighty and swift. After rival company Dynergy did not follow through on a buyout proposal, the value of the stock tumbled. Enron stock was 85 dollars a share a year ago. Of course, Bill Clinton was still President a year ago. George W. Bush came into office and put his anti-Midas touch on the economy, and Enron's stock can be had at 65 cents a share today.

George W. Bush entered the White House with the reputation of a confident and competent CEO type. A man who would run the White House like he ran a corporation, delegating authority to his board of directors (or cabinet) and then making the final decision as Chief Executive Officer of the country. Or so the mythology went.

But a careful examination of President Bush's record as a private businessman shows that he was a lousy businessman, who couldn't even keep his head above water in the business world.

In the late 70's Bush merged his oil company with another oil company, called Spectrum 7. He was named CEO of the new company. By 1985, with oil prices plummeting, Bush's oil company was on the verge of collapse, when it was acquired by a Dallas firm. Not only did Bush not have to face bankruptcy, he wound up with a seat on the board of directors of the new company and $300,000 dollars in stock. If this situation sounds eerily familiar to the current state of Enron, it is - except Enron could not engineer the buyout that Bush's faltering company did.

In 1989, Bush and a bunch of investors bought the Texas Rangers for $86 million. Even though the President only invested $606,302 he was named managing partner of the team. A position he earned, no doubt, more by his family name, than financial status in the ballclub. I have written previously in Democratic Underground of the failures of the Texas Rangers during his tenure.

Given this spectacularly bad track record in the private sector is anyone really surprised that Bush's first round of tax cuts did nothing for the economy except push us dangerously close to the precipice of deficit spending? We have now fallen over the edge of that precipice, in no small part due to the events of September 11th, but had it not been for the tax cuts pushed by Bush et al we would have had a lot more money to spend on homeland security and other pressing needs. And maybe we could have seen balanced budegets in the near future, a key to Clinton's economic boom. But forget about balanced budgets for the next four years, and that's according to Mitch Daniels, the President's Budget Director.

President Bush made the same mistake with his first set of tax cuts that Enron made to their stockholders. Bush overstated the stimulative effects of his tax cuts, just like Enron overstated its profits for the last four years. Both Bush the CEO of the USA and the CEO of Enron basically lied to the American people. In the business world lying about profits eventually has a negative effect on a corporation. Let's see what lying means in the political world, so far it means 85% job approval for the President. Time will tell.

Ironically, Enron is based in Houston, Texas, the President's old stomping grounds. Bad business models must be as big a part of the Texas landscape as bad football teams currently are, but I digress.

The point here is this. If Bush ran his private sector companies into the ground and he ran the country into the ground economically with his first round of tax cuts, why should he be given another chance with another round of tax cuts? In this round of tax cuts the President wants to cut the A.M.T., or alternate minimum tax, which would allow corporations to pay almost no corporate tax. Therefore corporations like Enron could reap the benefits of such a tax cut, overstate its profits and then turn around and declare chapter 11, like Enron surely will have to do. It's throwing good money after bad.

Furthermore, if Bush's initial tax cut was so stimulative, why do we need more corporate tax cuts? The lack of logic in the President's argument is astounding.

A year ago, the people of Texas were understandably proud. Enron was one of the largest corporations in the US, and George W. Bush was President Elect. One has to wonder, if, after a year of misrepresentations, Texas will have anything to be proud of in the future.