An Economic Snow Job
AUSTIN, Texas — Gosh, I'm feeling ever so much better about the economy with the new Bush team on the job. William H. Donaldson to head the Securities and Exchange Commission: just the man to take on the Establishment! Founder of the Wall Street investment firm Donaldson, Lufkin and Jenrette, former chairman of the New York Stock Exchange and former chairman of insurance giant Aetna. A veritable Ralph Nader.
The media report "Wall Street is delighted" that 71-year-old Donaldson, a longtime friend of the Bush family, will be their new regulator. Of course it is all-important that Wall Street should be delighted. Who do you think we're running this game for?
Some of you may have thought that the problem was unnerved investors, profoundly uneasy about putting money into a stock market so rigged by Wall Street it is an open, running scandal. But GeeDubya clearly sees beyond such petty concerns and so has named as his top regulator the man who advocates looser accounting standards for foreign firms doing business here.
Now just because he had that little problem at Aetna, don't worry about a thing. According to The Wall Street Journal, "In Dec. 2000, nine months after he took over, Mr. Donaldson told investors that the company's problem with skyrocketing medical costs were finally under control and projected rosy 2001 earnings, driving Aetna's stock price up.
"It turned out that Aetna's system for calculating costs was out of whack (oops!). In April, four months after Mr. Donaldson's upbeat predictions, Aetna announced that earnings would be 'significantly lower' than expected, driving its stock price down by 18 percent in one day. Mr. Donaldson had retired 10 days before the profit warning. Aetna's board months earlier had set his compensation for his 10 months of service as CEO in 2000 at a $1 million salary, a $6 million bonus and more than $11 million in restricted stock and options." Our kind of guy.
Donaldson was also on the board of a dot.com that went public in 1999, after a reported loss of $13.5 million in the previous year, but the stock shot up $271 per share. It is now trading at under a dollar. At least Donaldson, unlike some people we could name (the president) didn't unload his stock on insider information.
And the new treasury secretary, what a record we have here! John Snow, chairman of a champion corporate tax-dodger. According to Citizens for Tax Justice, Snow's company, CSX Corp., a railroad, paid no federal income tax at all in three of the past four years. Instead of paying taxes, CSX supplemented its over $1 billion in pretax profits (Los Angeles Times) over the four years with a total of $164 million in tax rebate checks from the federal government. Just the guy we need at Treasury — makes a profit, pays no taxes and gets tax rebates on the taxes he didn't pay. During the same period, CSX gave Snow $36 million in salary, bonuses, stock and options, and forgave a $24 million loan so he would not lose money along with other shareholders as the company's stock price declined. Lends a whole new meaning to "Snow job."
Snow's appointment also enthused our friends at Public Campaign, who found that under Snow's leadership, CSX became one of the 100 biggest overall campaign contributors from 1989 to the present. "The company consistently ranked in the top 10 among transportation companies in influence-buying, giving $5.9 million in that period. Republicans got 72 percent of the total."
But what a payoff on the investment! A mere $5.9 million in campaign contributions over 13 years and they got $164 million in the last four years in tax rebates without ever paying taxes. I'm telling you, this guy Snow is a genius, and I have perfect faith that as the Bush team moves ahead to cut more taxes for the rich — because we already have deficit — fight a $200 billion war and increase defense spending, the books at Treasury will balance nicely.
Hey, it worked for Reagan, didn't it? Except for that $2 trillion deficit.
Copyright 2002, The Daily Camera