Democratic Underground

King Midas in Reverse
December 18, 2001
by William Rivers Pitt

I met a traveler from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert . . . Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed.
And on the pedestal these words appear:
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. that colossal wreck,
boundless and bare
The lone and level sands stretch far away.

- 'Ozymandias' by Percy Bysshe Shelley

Once upon a time, a person's ability to effectively manage a budget, whether it be personal or business-oriented, was an essential aspect of the character analysis performed if said person wished to seek political office. Financial records would be disclosed and examined by a wide array of eyes. If said person appeared unable to handle his money, or the money of others, that person stood little chance of getting elected.

Take the failed candidacy of Massachusetts Governor Michael Dukakis as a working example. His 1988 Presidential run was hamstrung almost immediately by the staggering economy of Massachusetts, and it reflected poorly on him throughout the campaign. A variety of other factors helped lead him to his inevitable slaughter at the polls, but the question of his fiscal abilities played no small role. The sluggish late-80s economy of Massachusetts was not entirely Dukakis' fault, any more than the foul state of Boston Harbor was. Since he was the Governor, however, the buck stopped with him.

Somewhere between then and now, we seem to have lost the ability to effectively analyze the fiscal responsibility level of our candidates. The Presidency of George W. Bush is the newest, and perhaps most fearsome, example of this phenomenon. If the election game in 2000 had been played by 1988 rules, Bush would have never gotten out of Texas.

The sad and sorry story of Arbusto Energy provides the first of what has become a long litany of evidence that suggests George W. Bush should on no account be allowed to handle other people's money in any capacity.

Arbusto was created by Bush in 1978 in the wake of his failed congressional campaign using start-up money collected from well-to-do family friends. All in all, he raised some $4.7 million for his enterprise between 1979 and 1982, an astounding figure when one realizes that Bush was a total neophyte in the oil business. Astounding, that is, until one considers that his father was either running for President or sitting as Vice President at the time. His investors, clearly, were looking to get in good with the son of a man who would have considerable pull on their behalf in Washington, D.C.

Over the course of the next several years, Arbusto traveled a snarled trail of near-bankruptcy before finally exploding in a cloud of dry Texas dust. Before the deal went down, Arbusto had its name changed to Bush Exploration in 1982, at which point its stock value cratered. Two Bush family friends who owned an oil business called Spectrum 7 came in and bought him out, making him the third-largest shareholder in that company.

By 1986, Spectrum 7 also began to sink. In the best tradition of the deus ex machina, however, yet another angel descended to rescue the son of the sitting Vice President. A Republican Party fundraiser named Alan Quasha swooped in and acquired Spectrum 7, incorporating it into his bizarre little oil business, Harken Oil. Bush and his partners were given $2 million in Harken stock for the deal, and named as special 'consultants.'

At this point, the story gets strange.

Harken was anything but a big player on the world stage. Few had heard of the company before 1990, when Harken landed an impressive deal to drill for oil in the Persian Gulf emirate of Bahrain. Petrochemical business analysts were surprised, to say the least, as Harken had never before played with the big boys on the world stage. How, then did they land this contract? The answer likely lies somewhere along the hallways of power that led to Vice President Bush's White House office.

It's nice to have friends in high places. Apparently, it's even nice to have family members there. Several months after landing this deal, all hell broke loose in the Gulf. Iraq invaded Kuwait, and the international oil community's financial situation was roiled. This did not bode well for Harken's new arrangement, but somehow George W. Bush managed once again to escape unscathed. I quote:

"On June 22, 1990, George Jr. sold two-thirds of his Harken stock for $848,560-a cool 200 percent profit. The move was well timed. One week after Junior sold his stock, Harken announced a $23.2 million loss in quarterly earnings and Harken stock dropped sharply, losing 60 percent of its value over the next six months."

In short, it seems clear that Bush knew Harken was in deep financial trouble, so he bailed on the stock before it became devalued, but failed to alert his investors of the impending calamity. Somehow he escaped SEC penalties for what appears to be nothing less than opportunistic profiteering at the expense of those who helped him get his businesses off the ground, a place they found themselves on several occasions.

The rest, of course, is history. Bush got into baseball, and then into politics, never once getting called to task for the calamitous financial history he left in his wake.

If asked today, Bush would likely respond that none of the circumstances behind the demise of Arbusto, Spectrum 7 or Harken were his fault. These things happen when one chooses to go wildcatting for oil with other people's money. He should not be held responsible for it, and indeed he has not.

Yet today, as investigators and regulators sift through the shattered remains of the energy giant Enron Corporation, which last week flamed out in what will be recorded as the biggest business catastrophe in the history of human enterprise, fingerprints matching those of the sitting President are being discovered in all sorts of strange places.

Enron, the enfant terrible of energy companies in the 1990s, spent the last several years hiding the fact that it was losing billions of dollars in revenue. They managed to obscure this by setting up a variety of hidden boxes controlled by Enron executives, into which were piled as much bad financial news as possible. This served to keep the losses off the books, until a few weeks ago, when a $1.2 billion shortfall was revealed.

Enron stock plummeted, and some 4,000 Enron employees were shown the door, their pockets stuffed with stock options no longer worth the paper they were printed on. People who had depended on these stocks to fund their retirement are now investigating the requirements needed to sign up for Food Stamps, while the executives parachuted to the streets of Houston with millions of dollars to show for their deceit.

Merry Christmas.

This is the news you can read on the financial pages of every major newspaper in the country, but the back pages prove far more fascinating. Enron chairman Kenneth Lay, architect of this disaster, has for years been the single most important patron of George W. Bush. The two have been friends for years, and Lay is listed prominently as one of Bush's Pioneers, a title given to anyone who raised $100,000 or more for the 2000 Bush campaign.

Bush was given the use of Enron corporate jets during the campaign. Karl Rove, consigliere to Bush, is a former Enron employee. Harvey Pitt, Bush's chairman of the SEC, was hand-picked by Ken Lay and Enron because of his business-friendly ideas on regulation. Most importantly, Enron was the primary player in the closed-door energy policy meetings run by Vice President Dick Cheney. Cheney has been stonewalling the GAO and Congress on providing details about these meetings, and was about to be served subpoenas about the matter when the September 11th attacks took place.

How far did Enron's tentacles reach into the Bush administration before it vaporized will likely be a hot topic in the upcoming Congressional investigations into the matter. At best, the situation is uncomfortable for Bush. At worst, it is a political scandal that dwarfs the picayune Whitewater deal. Among certain circles, the name 'Enrongate' has already begun to circulate.

If the worst is true, Bush will have a hard time getting out from under. This is not a situation where the illegal destruction of evidentiary documents will do the trick. The chain of evidence has names, and it will prove a messy affair if Bush tries to stuff Rove or Pitt into a document shredder.

When the fact that there are thousands of former Enron employees walking the streets feeling betrayed and frustrated is added to the equation, the chances that someone will spill the beans rise exponentially. Bush may try at some point to resort to his favorite new toy, the Executive Order, in an attempt to stuff any investigation that gets too close, but it is doubtful that the increasingly fractious Democratic majority in the Senate will allow such a thing to stand for long.

That, however, is the future. In the present we must attend to the central truth: any time George W. Bush gets within shouting distance of a company, it collapses. This is a troubling fact when one considers that Bush is currently at the helm of the American economy. In this, the axiom once again holds. Since the beginning of his tenure, the economy has begun to fall apart.

While the September 11th attacks certainly play a part in this, the fact that economists announced recently that the country has been in recession since last March can not be ignored. Democrats will tell you that Bush's massive and ill-advised tax giveaway to rich people, an act that gutted the Clinton surplus and left little maneuvering room for the Federal budget, is the central factor in the economic slowdown. They are quite correct in this.

Bush sees himself more as a corporate CEO than as a President. If his past and present management history holds any mirror to his soul, it can be said without qualification that he is the worst CEO in modern history, perhaps second only to lifelong chum Ken Lay. Everything he touches turns to dust.

Perhaps, in 2004, the remarkable financial record of George W. Bush, Arbusto, Spectrum 7, Harken and Enron will stand as a warning when we consider the qualifications of those who stand for the office of President. People who lose vast amounts of other people's money while turning a tidy profit for themselves probably shouldn't be given the keys to the Treasury. Once upon a time, this was just common sense.

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