The White House's credibility problem

His company evaded taxes while feeding at the federal trough and doing business with the axis of evil -- no wonder Dick Cheney is still in hiding.

Published August 6, 2002 8:00AM (EDT)

By now, you'd think the Bush White House would be pretty adept at responding to the rising tide of corporate scandals washing over the White House lawn.

Clearly, though, Team Bush had an off day last week when, in the space of 12 hours, it was revealed that both Harken Energy, while President Bush was on its board, and Halliburton, while Vice President Cheney was its CEO, had created subsidiary shell companies in offshore tax havens. The administration's attempt at what was presumably damage control did more harm than good.

First, Bush and Cheney's reps tried to argue that even though setting up shop in the Caymans is a favorite ploy of companies looking to avoid paying their fair share of taxes -- Enron had 692 subsidiaries there -- that wasn't the reason Harken or Halliburton had done it. Well, pray tell, what was? A desire to rack up frequent flier miles checking on the company headquarters/P.O. box? A desperate longing for a bitchin' tan? Cheaper umbrella drinks for company meetings?

As if this halfhearted evasion weren't lame enough, White House spokesman Dan Bartlett fell back on the classic Plan B: trying to make friends and win arguments by splitting hairs. Harken's offshore entity wasn't designed to evade taxes, explained Bartlett, it was meant to enhance "tax competitiveness." And to his credit, Bartlett didn't even break out laughing after this claim. Probably waited until he got back to his office. Oh yeah, and, also, oral sex isn't -- well, you know the drill.

White House press secretary Ari Fleischer even tried the ol' "No Harm, No Foul" defense, arguing that the reason Bush's company went Caribbean was a "moot question" because Harken never made any money on the Cayman venture. Memo to Fleischer: Arguing that the crime didn't pay isn't a defense. And by the way, thank you, Ari, for further evidence that our first MBA president was an exceedingly poor businessman.

These wobbly spin doctors' task was, admittedly, made much harder by the fact that on the same day these tax dodge disclosures came to light, President Bush had spoken out with his usual Dudley Do-Right forthrightness against the very same practice. "We ought to look at people who are trying to avoid U.S. taxes as a problem," he said. Indeed we ought. So why don't we?

Let's start by looking at the problem of the vice president and Halliburton. During the No. 2's time as the company's No. 1, the number of Halliburton subsidiaries registered in tax-friendly locations ballooned from nine in 1995 to 44 in 1999. The result? A dramatic drop in Halliburton's federal taxes, which fell from $302 million in 1998 to less than zero -- to wit, an $85 million rebate -- in 1999.

At the same time they were hard at work stiffing U.S. taxpayers, Cheney and Halliburton were happily feasting at the public trough -- the company received $2.3 billion in government contracts and another $1.5 billion in government financing and loan guarantees.

During the vice presidential debate, Cheney scored points responding to a Joe Lieberman zinger about the millions Cheney had made during the Clinton-Gore years by boasting that "the government had absolutely nothing to do" with his burgeoning bank account. Only someone fully immersed in the corporate culture of our day could view $3.8 billion as "absolutely nothing."

It would be nice to hear what Mr. Cheney has to say about all of this, but, unfortunately, the V.P. has been making himself very scarce as of late -- especially when it comes to the media. He hasn't spoken to reporters, given a press conference or made the rounds of the political chat shows since, coincidentally, right around the time in May when reports that the Securities and Exchange Commission was looking into Halliburton's Cheney-era accounting practices first surfaced.

His vanishing act has been so effective that many have started to wonder if Cheney has returned to his secure, undisclosed location. If he has, it's only because the mountain hideaway is filled with fat cat donors. It turns out that the vice president has been talking after all -- but only to those ready to write a hefty check to the GOP.

Cheney recently headlined his 47th fundraising event of the year, and he plans to make at least two dozen more of these coffer-cramming appearances before Election Day. At one such event, donors who ponied up $25,000 per couple were allowed to take part in a 45-minute roundtable discussion with Cheney. So it seems that if the White House press corps is ever going to get any face time with the vice president, it's gonna cost them. $555 per minute. I wonder if Connie Chung and Chris Matthews can team up and get the couples discount?

Of course, Cheney's reluctance to talk to reporters is understandable, given what has been coming to light about his heretofore highly touted tenure at Halliburton, including the questionable accounting, the offshore subsidiaries and the revelation that the company did business with Iran, Libya and -- despite Cheney's denials -- Iraq. Call this his "Axis of Profits."

But, to be fair, under Cheney, Halliburton did end up giving a little something back to America -- in the form of $2 million worth of fines for consistently overbilling the Pentagon. In one case they charged $750,000 for work that actually cost them only $125,000. Despite all this, the company has continued to be awarded massive government contracts, including a new 10-year deal with the Army that, unlike any comparable arrangement, comes with no lid on potential costs. I guess it really does help to have friends -- and ex-CEOs -- in very high places.

During a fundraising appearance last month, Cheney lauded the White House's commitment to "more accountability for corporate officials." But what kind of accountability can we expect when corporations are not only allowed to walk away with little more than a slap on the wrist for defrauding taxpayers but continue to be richly rewarded with government contracts?

Congress is currently considering legislation that will bar the Pentagon and the new Homeland Security Department from doing business with companies that have set up offshore tax-cheat havens since January. Which means that all the corporations that had the foresight to profit early from their disloyalty, depriving the government of $70 billion a year, are A-OK. If something is so wrong on Jan. 1, what made it right on Dec. 31?

We should bar the government from signing contracts with any corporation that has moved offshore to avoid paying U.S. taxes. Period. And we should go further and not enter into any contracts with any company that has been fined for ripping off taxpayers. Like the president said last year, you're either with us, or you're against us.

I'd love to know if this is the kind of "accountability" Dick Cheney was referring to. If you happen to find yourself at a GOP fundraiser, would you mind asking him?

By Arianna Huffington

Arianna Huffington is a nationally syndicated columnist, the co-host of the National Public Radio program "Left, Right, and Center," and the author of 10 books. Her latest is "Fanatics and Fools: The Game Plan for Winning Back America."

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