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