Looking for a silver lining

Republicans: Democrats want the economy to fail! Democrats: Republicans made it fail! They're both wrong.

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Based on a single disputed story about House Minority Leader Dick Gephardt, D-Mo., and how he thinks his party might take back the House of Representatives in November, Republicans are accusing Democrats of intentionally trying to hurt the economy. Democrats, in return, are taking the anti-regulatory bent of the GOP’s 1994 “Contract with America,” and one related statement by Rep. Tom DeLay, R-Texas, to claim that Republicans caused the current corporate problems.

Both are guilty of overreaching.

According to an article in Roll Call, Gephardt recently “told senior Democrats that the party could pick up as many as 40 House seats if the continuously unfolding corporate scandals can be kept on the political radar screen until November.” One attendee characterized his remarks as follows: “He said if this thing plays out right, we could pick up 30 to 40 seats.” Gephardt has since disputed the report, calling it a “misunderstanding.”

Regardless, a fair conclusion can be drawn that Gephardt wants to keep media and public attention on the corporate scandals. This may be a bit crass, but it’s basic political strategizing. It is also true that continuing economic difficulties, more corporate scandals, or further declines in the stock market would likely benefit Democrats in the November election.

Some Republicans, however, have seized on this report and twisted it to claim that Gephardt is actually trying to make the economic downturn worse. The Washington Times reported on Friday that House Speaker Dennis Hastert said in response, “Hoping — for political reasons — that the stock market continues to slide or that scandals continue to hit major American companies is simply wrong. People’s livelihoods are at stake here.” It also quoted DeLay, in a new twist on the phrase “politics of personal destruction” as saying, “In a time when we as leaders should be helping to restore confidence in our economy and the free-market system, Dick Gephardt is practicing the politics of economic destruction.”

DeLay was even more explicit on CNN’s “Saturday Edition”: “The Democrats are working to extend America’s misery for their own political gain, and we just think that’s just outrageous.”



Radio host Rush Limbaugh has broadened this line of attack , accusing the entire Democratic Party of trying to bring the economy down. “They’re talking down the economy, which is up, and they’re making a big deal out of these corporate scandals, and they’re gonna keep doing it until November,” he said on his show on Thursday (Windows Media Player audio file). “They want you to get hurt, folks, so that you’ll vote for them to fix it … These guys are praying for mass economic failure.”

On Friday, Republican National Committee chairman Marc Racicot even implied that Democratic positions on issues ranging from taxes to trade represent an attempt to disrupt the economy rather than sincere disagreement over policy: “It seems to me that Democrats are so eager to win that they aren’t really interested in helping the economy grow by making the tax cut permanent, controlling spending, expanding trade with [trade-promotion authority], passing the energy bill, providing terrorism insurance, or quickly coming to agreement on a sensible corporate governance bill because they feel the only way they can win is if the economy is disrupted. Shame on them.”

Gephardt himself, though, has attacked the Republican Party’s position on government regulation, even claiming that the GOP caused recent corporate fraud and misconduct.

“Too many times in the last seven or eight years, the special interests and extremist voices that would like to get rid of almost all regulations have triumphed in the face of common sense and the sentiment of the majority of the American people,” he said in his opening statement at a Democratic hearing on corporate accountability.

Appearing on NPR’s “Morning Edition” last Monday, Gephardt said, “The Republican leadership in the House — after they won the House back in ’95 — made clear statements that the No. 1 goal of the Contract with America and the No. 1 goal of taking the House back was to totally deregulate American business and to get government out of the way” (RealPlayer audio file).

In a press conference last week, Gephardt even directly alleged that the Contract caused the current corporate crisis. “If you connect the dots, it’s 1995 they said what they were going to do; they did it between 1995 and now; and now the third dot is you see the result, which is Enron on down the line, Adelphia, WorldCom, on down the line.”

As we’ve noted, Gephardt and other Democrats have previously made vague accusations of how Republicans created a “climate” that made the scandals possible and promised evidence to back them up would come at a later date. This came on July 11 in a report from the Democratic Policy Committee.

When it comes to Gephardt’s accusations that some Republicans wanted to “get rid of almost all regulations” and “totally deregulate American business,” the report has only a single quote as evidence. It notes that DeLay, when asked whether there were any federal regulations he would like to keep, said, “Not that I can think of.” The other quotes reflect a general anti-regulation sentiment held by some Republicans along the lines of a statement by former Speaker Newt Gingrich that “clearly it’s not business that needs more regulation and limitation — but government itself.” Republicans also tried to create a cost/benefit analysis requirement for new regulations and to pass a moratorium on new regulations, but those hardly constitute evidence that the GOP wanted to eliminate all regulation.

Like Gephardt, the DPC report goes on to posit a causal relationship between the Contract and the current scandals: “The unfortunate legacy of the Republican ‘Contract’ and their overzealous drive to obliterate common sense laws and regulations safeguarding pension security, investor rights, and public health and safety has so far resulted in thousands of Americans losing their retirement savings and millions more investors seeing their investment portfolios evaporate at the same time that unscrupulous opportunists walk away with bloated golden parachute packages.”

But only one piece of anti-regulatory legislation proposed by the Contract — a bill that made it harder to bring securities fraud suits — was passed into law. While some have argued that this law contributed to the current problems by reducing executives’ exposure to shareholder lawsuits, it’s absurdly simple to blame the entire wave of corporate scandals on it.

Furthermore, note how the DPC tries to jam together several different issues as the alleged GOP “drive to obliterate common sense laws and regulations regarding pension security, investor rights, and public health and safety.” Even if all of these are relevant, none of the bills it cites became law except for the securities fraud legislation. The DPC is thus reduced to the weak argument that “even just the threat of these efforts to eviscerate regulations created an anti-regulatory, anti-government, wild west culture,” citing as its only evidence a single article about government agencies pulling back on regulations as a result of pressure from congressional Republicans. It fails to note that the agencies cited in the article do not regulate securities.

The DPC continues, “Not only did the comprehensive GOP deregulatory assault influence the Administration, it sent loud and unmistakable signals to some in corporate America that you could do as you please and that Republicans would wink at corporate misdeeds.”

Even if this is true, winking is a far cry from trying to “totally deregulate American business.” In this election year blame game, both parties are likely to score points with some less attentive, more partisan voters. But both of these efforts are losers.

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