July 13, 2002
By Mike McArdle
economy was tanking. A new corporate scandal seemed to be
erupting every day. High profile big shots from Ken Lay to
Martha Stewart were cooking books, lining their pockets, destroying
the retirement plans of ordinary people and suffering little
or nothing in the way of consequences. The entire economic
culture seemed to be drowning in ugly corruption. A great
ballplayer died and the headlines were dominated by his sons
to plan to get rich by freezing the old man's body and peddling
his DNA over Ebay. All the while the average guy sat around
wondering when he was going to get a layoff notice.
Politically, of course, this is a "do something, anything"
situation. So the confused little man who is, at least, supposed
to be in charge of it all gave a speech that was supposed
to at least take the heat off for a while and restore some
public confidence. Led to a podium, symbolically located on
Wall Street, he mouthed a half-hearted denunciation of the
kind of practices that he himself had profited mightily from
in the days before he decided to donate his talents to the
rest of us. The stock market responded by going into a two
day tailspin from the minute the teleprompter stopped running.
The blame game is in full swing. An attempt was made by some
on the far right to blame clintonspecker but since those people
tend to blame everything from terrorism to tattooed teenagers
on clintonspecker, that rings rather hollow. We needn't look
to transcendent concepts or Bubba's crotch for the answer.
As much as anyone, the person at the heart of the current
scandal is a certain aggressive, chubby guy with white hair.
To most Americans, the 1994 Contract with America is largely
forgotten. The high profile proposals like Term Limits and
the Balanced Budget Amendment never passed and most of the
other proposals were watered down in typical Washington fashion.
But the Republican pseudo-revolutionaries managed to succeed
in two things, making the lives of the poorest, weakest Americans
just a little more difficult than they already were and giving
the richest, most powerful Americans the license to steal
that created the current environment.
The abrasive, overreaching Newt Gingrich, who in the heady
days of early 1995 seemed to see himself as Americas legislative
Bonaparte, was exiled to the Elba of Fox News by his own party
after the GOP's disastrous performance in the 1998 mid-term
elections, but not before he left his mark on the America
The trashing of the poor under the guise of "welfare
reform" remains Newt's proudest achievement. Its defenders
herald it as a huge success based solely on the idea that
there are fewer people on welfare. They don't talk about what
happened to the people that were there because, frankly, the
"reformers" didn't care. The poorest people in our
society are largely invisible anyway and whether they left
the welfare rolls for minimum wage jobs, a jail cell, or a
vent on the street corner didn't matter. All that mattered
was that they collected no more government money. The economic
boom of the late nineties undoubtedly softened the effect
of the new regulations, but although it's a matter of sacred
doctrine on the right that poor people are only poor because
such people have "bad character" the number of people
lacking in character always increases dramatically during
an economic downturn. Now as the economy is finding new depths
every day there are reports that street crime, the eternal
by product of poverty, is way up in the past year.
But Newt also brought us "securities reform," a
proposal that passed over Clintons veto. Under the battle
cry of deregulation, Newt, in effect, deregulated crime. Now,
of course, we're not talking about the kind of crime that
those people who lack character commit. This kind of crime
is committed with a laptop and a lawyer. Newt's reform shielded
law and accounting firms like the now infamous Arthur Anderson
from liability for false corporate reporting, and made it
a good deal more difficult for investors to bring suit when
they have been deceived. In other words, this isn't the kind
of deregulation that helps you do business. This deregulation
helps you avoid the consequences of running a crooked business.
Previously this kind of "Get out of Jail Free" card
was available only to those whose father might happen to be
President at the time. So it should surprise no one that there
was a mad rush through the huge loophole that Newt had pried
open. Nearly a thousand US companies have had to "restate"
their earnings in the past five years, and they're just the
ones who got caught. ("Restate" by the way appears
to be a business euphemism for admitting to and correcting
a lie). But the people who bought the lie and bought the stock
were left with little or no recourse.
The chasm between rich and poor has widened enormously in
recent years, but the guys who stick guns in your ribs to
take your pay envelope and the guys who stick you with thousands
of worthless shares of stock have something in common. They're
all Newt's children.