George W. Bush

The dying giant

With a growing market share and high-level political connections, Service Corporation International is fighting off lawsuits and government regulators.

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The dying giant

In 1993, funeral baron Robert Waltrip told the New York Times that people who don’t buy his company’s stock “just don’t like money.” For a time, Waltrip, the founder and CEO of the world’s largest funeral company, Service Corporation International, was right.

SCI was the darling of Wall Street. Analysts praised it as a recession-resistant company with a great financial outlook and huge profit margins. After all, just as baby boomers shook the culture with every developmental milestone, soon they’ll be dying in record numbers, and the titan of “death care,” as SCI describes its business, seemed poised to profit from that long goodbye.

But over the past eight months, SCI’s fortunes have faltered. In January, the company’s stock price tumbled 44 percent in one day after it announced it wouldn’t meet its quarterly revenue projections. A year ago, SCI’s stock was trading at about $45 per share. On Tuesday, it closed at $11.25 and Wall Street analysts are decidedly bearish.

In recent months, SCI stumbled into the national media spotlight thanks to the presidential race. In March, Waltrip and SCI were named as defendants in a whistleblower lawsuit in Texas that involves allegations that presidential front-runner George W. Bush intervened on SCI’s behalf to help stop an investigation by the state’s regulatory agency. Waltrip and SCI are big financial contributors to Bush, and Waltrip is also a personal friend of former President Bush, endowing the Bush library with $100,000.

SCI has powerful friends in both political parties. Former Rep. Tony Coelho, chairman of Al Gore’s presidential campaign, sits on SCI’s board of directors. It’s a lucrative job. According to the company’s proxy statement, SCI pays Coelho $21,000 per year just to sit on the board and an additional $6,000 for each meeting he attends. Coelho also owns more than $450,000 worth of SCI stock.

Despite those influential friends, a number of troubling specters are creeping up on the company. Tort lawyers, consumer advocates and regulators are all taking aim at the Houston-based death care giant. Plaintiff’s lawyers in Florida are suing SCI, claiming the company sold an exorbitantly expensive funeral to an elderly, mentally incompetent widow. In Washington state and Texas, lawyers are suing the firm, maintaining it has mishandled corpses. Company shareholders have filed a class-action lawsuit, alleging SCI officials withheld troubling earnings data that caused the stock price to dip.

Consumer advocates are constantly taking swipes at the company. Karen Leonard, the head of the Sebastopol, Calif.-based Redwood Funeral Society, who worked as the late Jessica Mitford’s research assistant on her last book, “The American Way of Death Revisited,” has become one of the country’s leading critics of SCI. She claims SCI has “made price gouging state of the art.

“They’ve been able to take the emotions that make people spend more — guilt and fear of death — and have played those like an orchestra and have made tremendous amounts of money. They are taking advantage of consumers on all fronts, by secrecy, by their ability to control regulations and their ability to give money to politicians.”

Lamar Hankins, the president of the Funeral & Memorial Societies of America, says the company routinely engages in “price gouging.” Pierson Ralph, the president and director of the Memorial Society of the Southwest says “SCI’s prices, generally, are obscene. They are clustered at the very top of the comparative prices. They are exorbitant everywhere you look.”

SCI may be a target because it is the biggest funeral provider on earth,
and it owns many of the most prestigious funeral homes in the world. In Washington, it owns Gawler’s, the firm that buried John F. Kennedy. In London, it owns Kenyon’s, the funeral home that handled Winston Churchill’s funeral. Over the years, it has buried other famous people including John Lennon, Howard Hughes and Jacqueline Kennedy Onassis.

When I interviewed Waltrip for a magazine feature three years ago in his gigantic 12th floor office on the outskirts of downtown Houston, he expressed pride in the company he has built, and disdain for people who express too much interest in it. The reason for their morbid fascination with SCI, he said, is that “death has an aura about it.” Sitting behind a massive desk, in a black suit and shiny black tassel loafers, Waltrip said he didn’t care whether he got noticed by the press.

“Notoriety’s not my bag,” he said. “Getting a story written about me don’t mean shit to me.”

Some of SCI’s detractors are individual clients who say their loved ones’ funerals went awry. In Spokane, Wash., for instance, two families are suing the company, claiming that an SCI funeral home switched their loved ones’ bodies, and cremated the wrong one. The lawsuit says that when the family of George Thiele went to see his body at the funeral home, they “immediately concluded that, although the gentleman on display was wearing Mr. Thiele’s suit, and was in the casket that the family had selected for Mr. Thiele, the remains were not those of George R. Thiele.” According to the suit, the funeral home cremated Thiele’s body and put the body of Glenn V. Gossman in his suit and then showed it to Thiele’s family.

According to the lawsuit, after the family insisted the wrong body was in the casket, a staff member told them the funeral home would “spend whatever money it takes to prove you are mistaken.” In 1996, Washington’s Department of Licensing reprimanded the SCI funeral home and fined it $4,000 for mixing up the two bodies. In the lawsuit, SCI has blamed the body switch on a company that transported the two bodies to the funeral home. The case will go to trial sometime next year.

In Texas, the company faces a lawsuit brought by the parents of television anchor Tres Hood, whose body was allegedly mishandled while it was being embalmed at an SCI funeral home in Dallas. Hood’s mother Gayle Johnson, assumed his body was going to be embalmed in her home town of Wichita Falls. Instead, the procedure was done in Dallas at an SCI funeral home that had been investigated by state regulators for allegedly using illegal embalming practices.

According to the lawsuit, Hood’s body began leaking embalming fluid shortly after the procedure was done and when his casket was put into a mausoleum, “problems with odors, gnats and fluid seepage began to occur.”

In central Florida, lawyers filed suit against an SCI funeral home after an aggressive salesman apparently took advantage of an elderly widow who had been mentally impaired by a stroke. After several visits over a two-month period, the salesman obtained a series of checks and a pre-paid funeral contract for funeral goods and services costing more than $125,000.

According to the lawsuit, filed in Polk County, Fla., the funeral package included a casket costing $39,785 and a mausoleum costing $52,738. The suit says the widow was “not mentally capable to understand the contractual arrangements” and that she relied “solely upon the representations made by the Defendants.” SCI denies the allegations. The suit goes to trial in November.

SCI general counsel James Shelger refused to comment on the
lawsuits in Washington and Texas. In the Florida case, Shelger said SCI is “confident that our position will be favorably viewed in the course of litigation.”

Perhaps most worrisome for the company is a massive class action lawsuit filed on behalf of shareholders in February, shortly after the company’s stock price plummeted. The suit claims that Waltrip and other SCI officials hid relevant facts from stockholders.

SCI blamed the revenue shortfall on “reduced mortality rates in the Company’s major markets resulting in fewer funerals performed at the Company’s locations.” The announcement caused a massive sell-off of SCI’s stock, causing its stock price to fall from $34 7/16 to $19 1/8 in one day.

Lawyers for the shareholders claim that Waltrip and other officials at SCI knew for several months that the company’s revenues would be lower than expected, but did not tell shareholders all of the bad news — a fact that the lawyers contend cost SCI’s regular shareholders millions of dollars. The suit claims that Waltrip and six other SCI executives essentially bailed out, selling nearly 2.5 million shares of SCI stock in the months before the company announced the reduced revenues. According to press releases issued by the lawyers shortly after the suit was filed, Waltrip alone sold 1 million shares in the company, a move that brought him slightly more than $39 million.

Perhaps the most serious allegation in the lawsuit pertains to SCI’s management of billions of dollars worth of prepaid funeral contracts. The suit alleges that SCI did not tell investors that it was losing money on many of its prepaid funerals. The suit alleges the company has a “multi-million dollar backlog of unprofitable preneed funeral contracts” and that SCI has kept the monies consumers have paid on those contracts in bank certificates of deposit and “other under-performing investments unable to grow sufficiently to cover the costs of performing the funeral services in the future.”

In its annual report, SCI said “the lawsuits do not provide a basis for the recovery of damages because the Company has made all the required disclosures on a timely basis.” The company also says it “has initiated aggressive action to defend these lawsuits.” James Shelger, SCI’s general counsel, refused to comment on the class action lawsuit, saying only that all the information on the case is “a matter of record.”

Regulators are also nipping at the company’s heels. New York City’s commissioner of consumer affairs, Jules Polonetsky, has launched a frontal assault on SCI. Last February, Polonetsky’s office released a scathing report about SCI’s activities in New York, particularly in the Jewish funeral home business. According to the report, SCI owns 14 of the 28 Jewish funeral homes in New York. Prices at those SCI funeral homes are, on average, 50 percent higher than a Jewish funeral at an independently owned funeral home.

“SCI is gobbling up funeral homes all over the City and consumers are paying the price,” said Polonetsky in a press release. “Instead of passing on the economies of scale to their customers, SCI is seeing its growing dominance as an opportunity to both reduce costs and raise prices.”

Polonetsky said the New York attorney general has begun looking at SCI and added that he believes “there’s a compelling case to take antitrust action and force them to divest some of their New York funeral homes.” However, Sonya Sanchez, a spokesperson in the New York attorney general’s office said the agency can “neither confirm or deny an investigation at this time.”

On Aug. 25, Polonetsky’s agency tried to implement four new regulations, including one requiring all of the city’s funeral homes to disclose their ownership to the public. (SCI has consistently fought moves by various regulatory entities to force it to disclose which funeral homes it owns). The agency was promptly sued in state court by the Metropolitan Funeral Directors Association, which obtained a restraining order on the new regulations. Asked if SCI’s consolidation of the funeral industry has been good for consumers, Polonetsky responded that SCI’s efforts have “led to higher prices for consumers and less service.”

In Texas, the company still must resolve a $445,000 fine that was recommended against the company last year by state regulators. So far, the company hasn’t been required to pay a dime. Federal regulators are also examining the death care business. Last month, the Federal Trade Commission closed its comment period on its funeral regulations. The agency had been pressured by consumer advocates to toughen its policies on funeral homes in general and consolidators like SCI in particular. Last week, the General Accounting Office delivered to the U.S. Senate its report on the funeral business and the efforts by federal and state authorities to regulate it.

While Polonetsky and other state regulators can cause problems for SCI, the biggest threat to their dominance is the Federal Trade Commission, which enforces the nation’s antitrust laws. On several occasions, the FTC has forced SCI to sell properties to ensure that the company doesn’t become too dominant in a given market.

Despite the lawsuits and regulatory headaches, SCI remains the corporate giant that nobody has ever heard of. But then, anonymity is Waltrip’s way. Although SCI buries more people than any other company on earth, few consumers ever know that they are dealing with SCI because the company, like most other large chains, doesn’t change the names of the funeral homes it acquires.

While funeral directors pride themselves on their ability to soothe the emotions of the bereaved, the physical aspects of the job are really quite simple: Pick up a corpse, refrigerate it, embalm it (if needed), dress it, take it to the service, then cremate or bury it. And just as Ray Kroc, the founder of McDonald’s, brought efficiencies of scale to the fast food business, Waltrip saw similar opportunities in the funeral business.

“Things about this business are the same as in McDonald’s,” Waltrip told me during our 1996 interview. Both businesses, he said, have a set of fixed costs. By buying in quantity and warehousing commodities — like coffins and embalming fluid — SCI reduces costs and increases profits. Once the company covers its fixed costs at a given location, up to 80 percent of additional revenues go straight to the bottom line.

“What we are able to do is very simple,” says Waltrip. “And it didn’t take a genius to figure it out.”

As the son of an undertaker who grew up in a house connected to the family funeral home, Waltrip knew all of the facets of the business at an early age. In the late 1950s, he began to realize that he could streamline many of the tasks that had always been done by people like his father. He began building his empire with his family’s funeral home in the Heights neighborhood in north-central Houston.

By 1957, Waltrip owned three funeral homes and was beginning to see the profit-making potential of owning lots more. And he began refining the business model that SCI uses today: cutting costs by centralizing operations. Rather than have an embalmer at each funeral home, SCI sends corpses to a central location where one embalmer can process multiple corpses. They also use a centralized delivery system to dispatch hearses, limousines and drivers to the company’s funeral homes. Thus, one hearse and one driver can work two or more funerals in one day.

Waltrip’s method proved profitable almost immediately. By 1974, SCI owned 132 funeral homes and its stock was trading on the New York Stock Exchange. Since then, the company has grown at a torrid pace. In 1990, SCI owned 512 funeral homes. Today it owns more than 3,800. It also owns 520 cemeteries and 198 crematoriums, and operates in 20 countries on five continents. The company’s revenues topped $2.8 billion last year and it looks to remain perpetually profitable.

Indeed, Waltrip’s business has advantages other capitalists would die for: the logistics and cost of entering the market keep competitors — particularly foreign competitors — at bay; customers rarely, if ever, shop for prices; everyone eventually needs the service; and as America ages, increasing numbers of people are dying.

Better still, many customers pay in advance. According to the company’s latest annual report, SCI has more than $3.752 billion worth of prepaid funerals on the books.

Waltrip, 68, has taken home paychecks to die for. In 1996, Graef Crystal, the corporate compensation expert who wrote “In Search Of Excess,” named Waltrip as the 12th most overpaid executive in the United States. In a study he did for Texas Monthly, Crystal determined that Waltrip was paid $20.3 million in 1997. That year, Crystal said “an average company of that size and performance, would be $2.259 million per year.” Last October, Crystal hammered Waltrip again. The corporate pay analyst summarized Waltrip’s pay package by saying he was “not worth it.” Finally, in a June 20, 1999 analysis published in the New York Times, Crystal listed the SCI CEO as the third most overpaid CEO relative to stock performance.

In addition to his hefty paychecks, Waltrip is SCI’s largest individual stockholder. According to the company’s 1999 proxy statement, Waltrip owns 3.2 million shares of SCI. He likes horses and vintage warplanes and he spends lots of money on both. His collection of warplanes, housed at the Lone Star Flight Museum in Galveston, is estimated to be worth $17 million.

Waltrip has also been vigilant in protecting his public image. In 1996, his lawyers threatened to sue me after I wrote an article on Waltrip and SCI that appeared in Texas Monthly magazine. His lawyers also made veiled threats to sue the late Jessica Mitford while the famed muckraking journalist was writing her final book, “The American Way of Death Revisited.”

In 1997, Waltrip did sue a critic, when he slapped former funeral home owner Darryl J. Roberts with a lawsuit. Waltrip claimed that Roberts’ 1997 book, “Profits of Death: An Insider Exposes the Death Care Industries,” defamed Waltrip and SCI. What was Roberts’ sin? In his book, he quoted Waltrip as saying he wanted to turn SCI into “the True Value hardware of the funeral service industry.” In their lawsuit, SCI said “the statement attributed to Waltrip is entirely false. Waltrip never made such a statement. The false attribution of the statement to Waltrip is defamatory and highly offensive to SCI and Waltrip.”

Maybe it is. But then why didn’t Waltrip sue Business Week magazine? After all, Roberts got the Waltrip quote directly from an Aug. 25, 1986, article in Business Week titled, “Bob Waltrip is Making Big Noises in a Quiet Industry.” Nevertheless, SCI’s lawyer claimed in court documents that the quote “suggests that Waltrip desires to create a company that projects itself to its industry and to the public as a mass market appeal firm devoid of personal, individualized identity and service.”

A year ago, SCI and Waltrip suddenly dismissed their lawsuit against Roberts. But the suit cost the author $25,000 in legal expenses. Charles Babcock, Roberts’ lawyer, said SCI didn’t say why they were dropping the lawsuit. “Sometimes it’s an effort to get somebody to shut up,” Babcock said. “Typically libel litigation is an inhibiting factor on speech. It chills speech.”

Wall Street analysts have soured on SCI stock. John Ransom, the director of health service research at Raymond James and Associates, has a neutral rating on SCI and the other big funeral home consolidators. “If you are an investor, you look for companies that are growing rapidly or are generating lots of free cash flow. With these companies I found neither. I’m not very bullish.” Ransom says SCI is being hurt by competition from discount funeral providers and the growing popularity of cremation.

Josh Rosen, an analyst at Credit Suisse First Boston in Chicago, says that SCI is going through a major transition that will take time to resolve. But he believes the company will eventually work through its financial problems: “Fundamentally the death services industry is an attractive industry.”

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Guess who’s coming to dinner?

George and Laura Bush dine with the Obamas

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Judy Gold

Emmy Award-winning actress and comedian Judy Gold is best known as the star of her two critically acclaimed off-Broadway shows, "The Judy Show - My Life As A Sitcom," and "25 Questions For A Jewish Mother." Judy has had her own comedy specials on HBO, Comedy Central and Logo. She appears regularly on Tru TV's World"s Dumbest. Check out www.JudyGold.com and follow her on Twitter at @JewdyGold.

Using Bush’s playbook

"Karl Rove politics" aren't quite dead: Obama's strategy in 2012 will mirror W's in 2004

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Using Bush's playbookGeorge W. Bush and Barack Obama (Credit: Reuters/Larry Downing)

Barack Obama’s presidency was born from nothing so much as his repudiation of George W. Bush’s administration — its policies and politics, its style and tone. One of Obama’s most effective 2008 stump speech refrains was his promise to end the era of “Scooter Libby justice, ‘Brownie’ incompetence and Karl Rove politics.”

But the political dynamics for winning a second presidential term often differ markedly from winning the first. So don’t be surprised by many eerie parallels between Obama’s 2012 reelection bid and Bush’s 2004 campaign. The president may not rely upon “Karl Rove politics” in the strictest sense, and nobody would confuse David Axelrod with Rove. But Obama’s reelection route and rhetoric may bear more than a few Rovian hallmarks.

Now that Mitt Romney has won the Republican nomination, two key features prevail over the 2012 campaign — and both were also plainly evident in 2004. First, the incumbent president’s reelection fortunes are far from certain; and, second, the incumbent faces a decent but nevertheless weak challenger who is further hampered by internal problems within his party’s coalition.

Because incumbents can’t run for reelection promising “change,” and because “hope” during a lingering recession was also off the menu, the Obama campaign’s 2012 theme of  “forward” — a word that often follows “plow,” mind you — was the best available alternative. That said, and substituting the economy for terrorism, Obama is implicitly if not explicitly advancing the same theme Bush did in 2004: America suffered a tough blow, but the situation could have been worse and, more to the point, under my stewardship the nation is steadily regaining its footing.

This counterfactual campaign theme — vote for me not because of what happened, but what might have but didn’t — is a common thread for Bush and Obama. It’s not an uplifting message, but it sufficed in 2004 and Obama is counting on it working again in 2012.

Politics 101 further dictates that when an incumbent’s reelection is in doubt, he must go negative against the challenger. Obama political operatives in the White House and at the Democratic National Committee long ago made it abundantly clear they were willing to do just that. Team Obama may not go negative against Romney to the degree the Bush camp did against John Kerry in 2004. (By mid-summer 2004, 75 percent of Bush’s TV ads were negative attacks on Kerry.) But don’t be surprised if attacks on Romney’s record and even character are plentiful, harsh and relentless. In 2008, America saw candidate Obama’s toothy grin; four years later, expect to see President Obama’s fangs.

Expect the Obama camp to emphasize two major critiques of Romney: that he is a flip-flopper willing to say anything or reverse any position to win; and that he is an economic royalist whose personal and public life suggest a person incapable of understanding the lives and struggles of average Americans. Again — note the unusual parallels with 2004.

Although Romney is a Republican former governor and Kerry was at the time his state’s Democratic junior U.S. senator, the two Massachusetts pols make for similar targets. Each man is an extraordinarily rich preppie and Ivy Leaguer. Each represents the liberal wing of his respective party. Each has shown a propensity for ruining an otherwise valid point with sloppy, backfiring language. And each has a reputation for lacking political spine.

The flip-flop frame is candidate character assassination of the first order. Like the lone negative number in a string of multiplied positives, the critique that nobody can trust any statement or claim made by a politician has the potential to negate every accomplishment or promise. If it sticks, it can be fatal, as Kerry learned in 2004.

Obama and the Democratic National Committee know their electoral history and, sure enough, last November — a year before the election and two full months before a single Iowan had caucused — the DNC released a four-minute “Mitt vs. Mitt” ad and its accompanying website with the damning tag line, “the story of two men trapped in one body.” The site is a brilliant homage to the Bush campaign’s 2004 windsurfer attack ad and the devastating, 11-minute ad the Republican National Committee produced chronicling Kerry’s “evolution” on Iraq.

And then there is what might be called “the Willard factor”: Romney as Richy Rich, the Monopoly Guy with the Bain Capital background and the Swiss bank account. His bio would be political gold to Romney’s opponent any election cycle, but it’s gold-plated platinum in the first full presidential campaign following the biggest economic crisis since the Great Depression, the rise of the Occupy Wall Street movement, and the long overdue national debate over income inequality.

Again, the wealth-personified line of attack mirrors the out-of-touch, Martha’s Vineyard yoke the Bush team put around Kerry’s neck in 2004. Right on cue, in the first public event of his reelection campaign, last week Obama attacked Romney by name and invoked the economic disconnect card with relish. “He sincerely believes that if CEOs and wealthy investors like him make money the rest of us will automatically prosper as well,” said Obama of Romney, adding that “corporations aren’t people – -people are people.” (For the record, Kerry is actually wealthier than Romney, who would become one of the richest men ever to occupy the White House, should he win.)

Obama will also try to shift the national debate toward areas of strength, as Bush did. Historically, this meant the same strategy, but with inverse implications for each party: The so-called mommy party Democrats would encourage voters to focus on more favorable kitchen-table economy issues — healthcare, jobs, education — and away from less favorable “daddy party” Republican issues surrounding foreign wars abroad and culture wars. Because Obama is net-positive in foreign policy approval and net-negative on the economy, rather than mirroring by inversion, Obama will try to duplicate Bush’s shift-in-emphasis in 2004. GOP complaints that Obama is politicizing the killing of Osama bin Laden reveal Republican fears that Obama is going to play the terrorism card in 2012 just like Bush did eight years ago.

The 2004 parallels extend beyond message. Obama will be amply resourced and enjoy a field technology by virtue of his campaign’s state-of-the-art Web, donor, volunteer and social media innovations. Remember the Bush reelection campaign’s vaunted “72-hour” voter turnout model? That seems like an Edsel compared to the Ferrari the Obama team will be sporting this summer and fall. Among the perquisites modern presidential incumbents enjoy is the option to test-drive the best mobilization machines before anyone else.

Finally, what most connects Obama 2012 to Bush 2004 is the stability of the electoral map itself. Only three states — two net to Bush — flipped from one party to the other between 2000 and 2004; only nine states flipped between 2004 and 2008. Split the difference and a good, back-of-the-napkin over-under for number of states likely to flip between 2008 and 2012 is six. And thus, like the lead sailboat during a windless race, Obama doesn’t need or want conditions to change much from 2008: He merely has to replicate the map that swept him into office, with the burden of figuring out how to shake up the Electoral College falling to Romney, just as it did for Kerry against Bush. Even Karl Rove’s mapping of the 2012 election concedes this reality.

The 2008 election was memorable; to borrow the title of one best-selling chronicle, it was a “game changer.” But 2012 will not be. In many respects, it will be a game repeater, with Obama playing Bush to Romney’s Kerry of 2004. The president may be asking Americans to look “forward” in 2012, but the best preview of his reelection campaign can be found by looking backward eight years.

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The Bushies are back

Missed the neocons? Don't worry: Mitt Romney's getting the band together again

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The Bushies are back (Credit: Reuters/Win McNamee)

There was good reason for Republicans to cry foul over the Obama campaign’s advertisement highlighting the president’s killing of Osama bin Laden; the GOP has lost its decades-long edge on national security. According to a Washington Post poll, “By a margin of more than 2 to 1, Americans say the president’s handling of terrorism is a major reason to support rather than oppose his bid for reelection.”

Republicans lost their popularity on security issues for one reason: George W. Bush’s foreign policy was a disaster. And yet, the party’s nominee, Mitt Romney, has assembled a foreign-policy team composed almost exclusively of individuals with the same war-always mentality and ideology that served Bush — and the United States — so poorly. In some cases, the exact same men responsible for Bush’s catastrophic national security policies are advising Romney. The former Massachusetts governor could have included some of the pragmatists and realists from the George H.W. Bush administration. Instead, a Romney presidency seems like it would be Bush 43 all over again.

Richard Grenell, who served as United Nations spokesman under Bush, may be gone from the Romney campaign after an uproar over his sexuality, but there are plenty more former Bushies. First off, there are Romney’s “special advisors.” There’s Michael Chertoff, W.’s Homeland Security director. Chertoff oversaw DHS’s failures during Hurricane Katrina, and amassed unprecedented powers of secrecy. Next up is Eliot Cohen, counselor to the State Department for Bush’s last two years and on the Defense Policy Advisory Board for the president’s entire term. Cohen was an adamant supporter of the Iraq War and advised Bush directly on the issue. Or take Cofer Black, the man who infamously said to Bush in September 2011 about al-Qaida that “When we’re through with them they will have flies walking across their eyeballs.” Black went on to become chairman of Blackwater, where he resigned after the company illegally bribed Iraqi officials.

Then there are the 13 “working groups” composed of equally worrisome individuals. The Middle East and North Africa Working Group is co-chaired by Bush’s Assistant Secretary of Defense Mary Beth Long, and Meghan O’Sullivan, Bush’s special assistant and deputy national security advisor for Iraq and Afghanistan. The remaining co-chair is Walid Phares, who never worked for Bush but advised Lebanese warlords in the 1980s. Romney has reportedly promised Phares a top job in his administration, despite his virulently anti-Islamic views.

All told, Romney lists 37 holdovers from the George W. Bush administration — the very same administration he and all other Republican candidates barely referenced during their many debates because it was so discredited and toxic, even to the Republican base.

It didn’t have to be this way. There are, in fact, people in Republican circles who are sensible on international affairs. The Cato Institute, in particular, has experts that could dramatically change the direction of American foreign policy. Men like Justin Logan and Christopher Preble were prescient on Iraq and a host of other issues. Similarly, the Center for the National Interest (formerly the Nixon Center) has a host of solid scholars, including ones like Dimitri Simes and Geoffrey Kemp, who have valuable government experience in the Nixon and Reagan administrations, respectively, and a history of perceptive analysis. Richard Haass, president of the Council on Foreign Relations, would have been another good pick.

So why aren’t guys like this being tapped? Why is the GOP sticking with a discredited foreign-policy approach rather that looking to its own past for wiser counsel? “Most of the realists and pragmatists have simply been driven out of the Republican Party,” says Stephen Walt, who writes a blog at Foreign Policy and teaches at Harvard. “The neoconservatives have been driving the agenda since Bush was elected and they remain well-entrenched.”

Another factor is that the Republican Party’s base remains strongly militaristic and reluctant to recognize limits on American power. Jon Huntsman’s failed presidential campaign illustrated that problem. The good news is that nobody seems to be calling for nation-building and occupying foreign countries in the mold of Iraq and Afghanistan. But that’s the only lesson that seems to have been learned from the last decade of foreign-policy debacles.

Finally, it may just be that the United States has too much power to change course. While the Unites States has undoubtedly made disastrous decisions in the last decades, it is so powerful that it is largely insulated from the consequences of them. If Romney’s foreign-policy advisor list is anything to go by, a Romney administration would have to teach the U.S. all over again about the problems with trying to police the world. Prepare for Bush redux.

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Jordan Michael Smith writes about U.S. foreign policy for Salon. He has written for the New York Times, Boston Globe and Washington Post.

Bush aide blasts torture

Philip Zelikow tried to warn Bush on interrogations. Now he's penned an authoritative article on how he was ignored

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Bush aide blasts torture (Credit: Reuters/Jim Young)

The Bush administration hasn’t heard the last from Philip Zelikow. After the rediscovery last week of his long lost 2006 anti-torture memo, Zelikow, a former State Department official, has written arguably the most damning article yet about U.S. government’s interrogation policies from 2001 to 2009. The article, called “Codes of Conduct for a Twilight War,” will be released in a forthcoming issue of the Houston Law Journal, and was obtained exclusively by Salon. Says Zelikow in an email: “I’m not aware of other accounts that combine historical, policy and legal approaches to” the subject of the Bush administration’s interrogation methods.

Based on published histories and his firsthand observations, and adapted from a lecture delivered in November, the article calls the administration’s rationale for its use of torture — which he nonetheless insists only on calling “extreme interrogation” and “coercive methods” — “radical,” “an amazing contention,” “untenable and extreme,” “unsustainable,” “an unprecedented program of coolly calculated dehumanizing abuse and physical torment,” and, finally, simply a “mistake.” He concludes: “This was a collective failure of American public leadership, in which a number of officials and members of Congress (and staffers) of both parties played a part, endorsing a CIA program of physical coercion without any precedent in U.S. history.”  In fact, “The only defense against criminal prosecution would be that officials acted in good faith reliance on the advice of their government lawyers.”

Part of what makes Zelikow’s analysis so damning and definitive is its judiciousness. The article is deeply empathetic of the uniquely fearful situation under which the Bush administration was initially operating. Zelikow calls the Sept. 11 attacks a “collective trauma” and a “shoc[k] to mass beliefs.” He notes that Bush and others spent time in burn units, morgues and with survivors of the attacks. One traumatic experienced often overlooked — overlooked because it appeared in Stephen Hayes’ stenographic biography of Dick Cheney — was that the vice-president’s daughter was (falsely, it turns out) told that her house with her children in it had tested positive for anthrax. Similarly, Cheney and National Security Advisor Condoleezza Rice were told that they and others had been exposed to an extremely lethal toxin in a particular area of the White House — and might soon die as a result. “The alarms did not stop and they too were not abstract … The pressure on Bush and his senior advisers was so direct because so much of the response had to be invented and improvised,” the article reads.

An additional factor in the power of the article is Zelikow’s credibility and history. Before entering government, he was a civil rights lawyer in Texas battling the Ku Klux Klan and then a highly esteemed Harvard historian specializing in U.S. foreign policy — he co-authored one book with Rice. He then served on the National Security Council under President George H.W. Bush and directed the 9/11 Commission before becoming counselor to Rice at the State Department from 2005 to 2007. He currently volunteers part-time on the President’s Intelligence Advisory Board under President Obama.

Such bipartisan, establishment credentials render the breakdown and conclusion of this article all the more damning. He believes that what should have been a political and moral question — should the United States torture captives? — became strictly a legal matter left up to government lawyers, few of whom had any experience with these issues, and who had to take the necessity of extreme measures as a given. “These lawyers then became secular priests, granting absolution to the supplicant policymakers,” Zelikow writes.

The problems began when the Office of the Vice President and the CIA took central roles in policymaking. Cheney felt himself above the rest of the National Security Council, bypassing Rice and other traditional channels of national security policymaking. Ad-hoc decision-making and improvisation became “a habit of thought,” which seemed initially to pay off in the security of the nation, as well as in Bush’s political standing and self-confidence.

With Cheney and CIA head George Tenet “the key entrepreneurs in setting codes of conduct for the War on Terror,” it was essentially left to their obsequious lawyers to decide, in secret, on the interrogation methods America should employ. Bush even told the Senate’s Intelligence Committee chairman that “the vice president should be your point of contact … [He] has the portfolio for intelligence activities.” Decisions were made to jettison international treaties. By December 2001, the CIA was already interested in reverse-engineering methods “heretofore used only to treat Americans to resist enemy torture.” When a senior al-Qaida member was captured in March 2002, the prototype for the administration’s torture policies was already developed. “So, for the first time in American history, leaders of the U.S. government carefully devised ways and means to torment enemy captives.”

Zelikow notes that “None of the policy or moral issues connected with these choices appear to have been analyzed in any noticeable way.” Perhaps worst of all, no serious consideration was given to weighing the costs of benefits of the torture program, with reference to relevant historical precedents and/or examinations of the respective French, British and Israeli experiences in dealing with captured terrorists. “Bush and Rice should have insisted on this,” Zelikow writes.

The 52-page article observes the successes of Obama’s counterterrorism policies after repudiating the use of torture. On the basis of the empirical evidence then, “[t]here is no evident correlations between intelligence success and the available of extreme interrogation methods,” no matter what Bush and Cheney claim. Finally, “The program’s costs — which include the high-level effort expended in order to establish, maintain, and defense the program — appear on the evidence so far to have well outweighed any unique value the program might have had as a method of counterterrorism intelligence collection.” This is apart from the damage to America’s international standing and corrosion of its traditional values.

Zelikow concludes his analysis by arguing that, although the Obama administration has the right to wage war and use extralegal methods to defeat al-Qaida, its claim of that authority to defeat “associated forces” is unwarranted. “The U.S. government should publish and explain any overarching policy and legal documents that guide and confine the conduct of deadly operation against its foreign enemies … the executive branch of the U.S. government has a duty to articulate the scope of its warfare to the Congress and the public.” The Bush administration’s unprecedented elevation of torture to national policy may be history, but the job to get U.S. foreign policy in line with its constitutional and moral obligations is far from over.

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Jordan Michael Smith writes about U.S. foreign policy for Salon. He has written for the New York Times, Boston Globe and Washington Post.

Thomas Kinkade, the George W. Bush of art

The rise and fall of Thomas Kinkade, the Painter of Light™ in a decade of bad faith

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Thomas Kinkade, the George W. Bush of art

News of Thomas Kinkade’s death arrived on the same day I received in the mail a vintage teacup on which I had spent a ridiculous amount of money. It has a cottage painted on it. Kinkade, whose work has long exerted a morbid fascination for me (to the concern of all my friends), specialized in cottages. So some part of me understands the appeal, I guess, but, damn: Those paintings make my corneas hurt. And yet, I could barely stop looking at them.

Kinkade was only 54, and his family told the media that he died of “natural causes.” This comes after years of reports of drunken public misbehavior: cursing at people who tried to save him from falling off bar stools, heckling Siegfried & Roy, grabbing a woman’s breasts at a publicity event and, most memorably, urinating on a Winnie the Pooh statue at the Disneyland Hotel while proclaiming, “This one’s for you, Walt!” There were DUI arrests. Also, his manufacturing company declared bankruptcy two years ago, and former franchisees of the once-ubiquitous Thomas Kinkade Signature Galleries won settlements against him for fraud.

That’s quite a fall for a man who frequently spoke of his Christian faith and family values when asked to comment on the mammoth success of his brand in the early 2000s. “When I got saved, God became my art agent,” Kinkade explained in a 2004 video. He went from a childhood in Placerville, Calif. (invariably characterized as “hard-scrabble”) to an apprenticeship selling his work in supermarket parking lots to his apotheosis as the nation’s “most profitable” artist, the Painter of Light™, and multimillionaire. He was profiled in the New Yorker by Susan Orlean.

I first learned about the dark side of the Painter of Light™ — sorry, couldn’t resist that one — when I reviewed “his” novel, “Cape Light,” in 2002. The novel, first in a series, was produced much as his paintings are: by a semi-industrial process in which low-level apprentices embellish a prefab base provided by Kinkade. He wasn’t the only artist to work in this way; he wasn’t even the only novelist. To the best of my knowledge, his novels — heartwarming, fuzzily pious tales of small-town life — have been coming out ever since, one more facet of a lifestyle brand that, at its most ambitious, included an entire Thomas Kinkade-themed housing development.

My review was just a goof intended to amuse Salon’s readers, but after it appeared, I began to receive emails from people who had sunk their life savings in Thomas Kinkade Signature Galleries (essentially, mall and shopping-district outlets for his prints) and been fleeced. I didn’t really understand how the financial architecture of Kinkade’s gallery empire worked, and I sure didn’t share their taste in wall art, but these people struck me as decent and sincere. They’d believed in Thomas Kinkade — not just in the man or the company, but in the ethos supposedly represented by his work, one in which (to quote Kinkade’s introduction to “Cape Light”) “people have the time to savor life’s simple pleasures” and lead “deep, satisfying lives.”

My conversations with these victims made me uneasy. Was there some relationship between the franchisees’ naivete, perhaps even their willful self-delusion, and their terrible taste? Was it hopelessly snobby to wonder that? What about Kinkade himself? He seemed to be at best a hypocrite and at worst a crook. Was there a meaningful connection between his bad conscience and his bad art? German thinkers of the 1930s would have said so, and they had plenty of opportunity to observe bad fascist art up close. Hermann Broch maintained that someone who chooses to make kitsch is “ethically depraved, a criminal willing radical evil.” The novelist Milan Kundera believes kitsch to be the natural expression of totalitarianism. That’s a lot of moral weight to place on a bunch of garish cottage paintings, but Kinkade was always the first to present his work as a form of ideology.

I felt compassion for the ripped-off gallery operators, and at the same time I was aware that quite a few of them had probably also fallen for the similarly sanctimonious, bogus folksiness of George W. Bush, thereby subjecting our nation to one of the worst presidents in its history. Kinkade and Bush struck me as of a piece, probably because they had both borrowed from Ronald Reagan in promising that we could get back to a better way of life that never existed in the first place. In nearly every encounter with the press, Kinkade delivered a diatribe against the art-world “establishment” that had shut him out. They were “elites” touting unfathomable, downer junk to hardworking people who needed uplift instead. Art snobs were the aesthetic counterparts of the so-called liberal elites, a group that surely included me.

At the same time, I must admit that I, too, like a cottage. Granted, I like the stylized, art-deco kind painted on bone china, rather than the insanely detailed and phosphorescently lit specimens in Kinkade’s pictures. And I’m in little danger of equating my new teacup with a Brancusi just because it’s cheerier. Nevertheless, I suspect that my idea of what’s pleasing about a cottage isn’t too different from that of Kinkade’s fans: an aura of harmless coziness, of modest domestic beauty and comfort not too cut off from the past. It’s as if we’re speaking the same word, but in different languages.

I suspect this is why Kinkade’s paintings have exerted their weird, hypnotic effect on me. They are so preposterous (especially the stream-side ones; he really needed to sit down with an architect and go over the basics of drainage), so awful. And yet I can still detect — beneath that cacophony of hollyhocks and cobblestones and snapdragons — the whisper of something intelligible. I’m pretty sure I know why the hordes of Kinkade collectors love his work, even if I don’t like it myself. Kinkade’s paintings are irredeemably false, like all kitsch, but through them you can just barely glimpse the honest desires they seek to exploit, sinking under the dreck.

Kundera defined kitsch as “the absolute denial of shit,” meaning it offers an airbrushed, sterilized, sentimentalized view of the world. From that, it doesn’t necessarily follow that art wallows in shit, but art doesn’t exist for the primary purpose of denying it, either. Kitsch is, first and foremost, a lie; its very existence is founded on bad faith.

Kinkade, like Bush, peddled a falsely simplified image of the world — one without mildew or flooded basements, for one thing — which, no surprise, turned out to be plastered over a whole lot of stinky stuff. The true believers, the ones who bought into these men the most during the 2000s, ended up paying some of the highest prices, from the Kinkade acolytes who invested in his gallery Ponzi scheme to the working-class red-staters who sent off their kids to die in a pointless war. Bad taste, harmless as it may seem, can end up costing you a lot.

Further reading

Los Angeles Times obituary for Thomas Kinkade

Susan Orlean’s 2001 profile of Thomas Kinkade for the New Yorker

A 2006 Los Angeles Times story documenting Kinkade’s business problems

Salon’s Janelle Brown visits Hiddenbrooke, a Kinkade-theme housing development in Northern California

Laura Miller reviews “Cape Light,” a novel by Thomas Kinkade and Katherine Spencer

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Laura Miller

Laura Miller is a senior writer for Salon. She is the author of "The Magician's Book: A Skeptic's Adventures in Narnia" and has a Web site, magiciansbook.com.

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