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Jewish World Review July 10, 2002 / 1 Menachem-Av, 5762

David Limbaugh

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Consumer Reports

The system isn't broken | I'm really not trying to be provocative here, but is it not reasonable to wonder whether Democratic political leaders are exploiting the current wave of corporate scandals for partisan political purposes?

Remember in the early days of the George W. Bush presidency when Mr. Bush warned, "A warning light is flashing on the dashboard of the economy… You know better than me that the economy is slowing down"?

Better yet, do you recall Senator Daschle and Congressman Gephardt's reaction to Bush's statements? They said that Bush was causing a downturn in the economy by undermining consumer confidence.

I realize Emerson quipped that a foolish consistency is the hobgoblin of little minds, but Daschle's recent about-face is far more than a trifling inconsistency. If you hold him to the standards he demanded of Bush, he is guilty of stunning hypocrisy.

On "Face the Nation," Daschle charged that the Bush administration, "from top to bottom," has been too permissive of corporate misconduct because of its relationships with the business sector. He said the "lack of real sensitivity to this concern for integrity is something that I think we've got to be concerned about." He hinted that S.E.C. Chairman Harvey Pitt should resign because of his ties to business. And he cajoled Bush to release his S.E.C. records concerning his sale of stock in Harken Energy in an effort to resurrect an allegation that Bush, based on insider information, sold his stock in the company in 1990 to avoid losses. The S.E.C long ago investigated and cleared Bush of any wrongdoing.

Let's compare Bush's earlier remarks to Daschle's. Bush was simply telling the truth about the problematic state of the economy. Yet Daschle and Gephardt said that Bush's after-the-fact statements caused the downturn in an economy that had already gone south. As it turned out, by the way, the economy began its recovery around the time Bush made his honest appraisal, putting the lie to the charge that Bush's statements damaged the economy.

Again today we have an economy that appears to be in recovery, but the market is lagging behind due to widespread consumer distrust and the lurking threat of terrorism. So what does Daschle do? Does he follow his own prescription -- now that he is the influential Senate Majority Leader -- that high-profile politicians should not, through their public pronouncements, sabotage consumer confidence?

No. At a time when restoring consumer trust is imperative to ending this bear market, he and his ilk are fanning the flames of shareholder fears and insecurities. At a time when it is critical that Americans have a modicum of confidence in their political leaders, Daschle and company are telling us that President Bush and his team are knee-deep in the scandals and too intimate with the corporate culture to be trusted to take remedial action against the wrongdoers. At a time when our leaders should be assuring Americans about the health of our economy (which is warranted, in fact), the Daschle brigade is telling us not merely that we need strongly to enforce the law against corrupt corporate chieftains but that the system itself is broken.

I realize that these allegations are designed to work wonders for an ailing Democratic Party gearing up for November's midterm elections, but what about the economy that Daschle claims to care so much about?

There is no question that we have had too many major corporate scandals in recent months, but it's irresponsible to suggest that this proves that corporate America, in its entirety, is corrupt.

The Democrats have been among the first to complain about the administration's counter-terrorism measures as a threat to our civil liberties. If they weren't so allergic to capitalism, wouldn't they be similarly concerned about the threat to our economic liberties that an overreaction to these corporate scandals represents?

By all means we should adopt reasonable reforms in addition to vigorously pursuing those actually guilty of misconduct. But we must remember that the purpose of these reforms is to enhance the proper functioning of the market by guarding against corruption -- not to constrict free enterprise through draconian regulations.

Democrats tend to propose comprehensive legislative solutions as panaceas for most problems -- from gun control and campaign finance to regulating business -- instead of focusing on individual wrongdoers.

President Bush has correctly resisted political pressure to indict all of corporate America. Holding to this course is the right thing for the economy and the prudent path for America.

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David Limbaugh, a columnist and attorney practicing in Cape Girardeau, Mo., is the author of the just-released exposé about corruption in the Clinton-Reno Justice Department, "Absolute Power." Send your comments to him by clicking here.