WASHINGTON, July 11 (UPI) -- This week's events have finally revealed who taught President George W. Bush business ethics at the Harvard Business School. It was Capt. Louis Renault in the movie "Casablanca."
The president of the United States, like Capt. Renault, proclaimed to the American people in his Wall Street speech on business ethics Tuesday that he was "shocked ... shocked to find that gambling is going on in here."
Yet only the day before, Bush was grilled at a White House news conference over the profits he made more than a decade ago from the sale of his shares, then worth $848,560, in the Harken Energy Corporation in 1990. Harken's share value plummeted only two months later when the company revised its quarterly earnings report and revealed a large loss for the period.
As the croupier tells Capt. Renault in the very next line after the Vichy French police chief expresses his moral outrage at the discovery that gambling is taking place in Rick's Cafe Americaine, "Your winnings, sir."
And just as Bush did 12 years ago, when he sold his Harken shares and somehow neglected to inform the Securities and Exchange Commission, Capt. Renault pocketed his winnings and blandly replied "Oh, thank you ... very much. Everybody out at once!"
The Securities and Exchange Commission cleared Bush of any improprieties in its 1990 probe into the failure to report the stocks sale, but its investigation was clearly halfhearted at best. And Bush clearly did not comply with the letter of the SEC regulations. The president's only explanation of why it took him 34 weeks to file the required documents on his sale of the shares was, "I still haven't figured it out completely."
The profits Bush made on that sale were, as columnist and noted economist Paul Krugman pointed out in the New York Times, several dozen times as much money as former President Bill Clinton and his wife Hillary made from their involvement in the Whitewater real estate deal. They also would have represented at least a thousand times what Capt. Renault would have cleared in any night playing the gaming tables at Rick's.
Yet the Whitewater affair was used to paint the Clintons as crooks and was aggressively investigated by a Republican-controlled Congress through most of the Clinton administration. Why should not at least the same scrutiny and skepticism now be applied to Bush's Harken dealings?
So far, they have not been, and the president's spin control on Harken, as on the Enron corporate scandal half a year ago and the WorldCom collapse in recent weeks, continues to work almost flawlessly with the American public according to the most recent opinion polls. CNN reported one poll this week that still puts the president at an awesome 76 percent approval rating. A USA Today poll conducted on June 28-30 found a whopping 78 percent of Americans still found him honest. Landslide presidential election victories are won on such numbers.
There are many curious aspects to this. First, the president continues to walk on water with the American public, even when major scandals explode that would have sunk previous administrations.
Second, the longtime Republican shibboleth of an American press and electronic media that is in the grip of extreme and biased liberals is no longer true and has not been for quite some time. The op-ed pages of major newspapers and news magazines, the dominant and most popular radio talk show pundits and TV stars, who regularly roasted Clinton over infinitely smaller financial allegations with far less hard evidence, have rallied with the impressive discipline of a Macedonian phalanx or a Roman legion to close shields and defend Bush against these far more serious barbs.
Third, this remarkable phenomenon provides further evidence to something we -- in United Press International Analysis -- pointed out far ahead of the pack nearly two years ago while covering the Republican National Convention in Philadelphia, Pa. When it comes to tactical politics and damage control, Bush is one sly old Texas fox. He is a master at all the fancy footwork.
This president is clearly not the dyslexic dummy that Democrats and many others complacently assumed he was during much of the presidential election campaign, and even up to the catastrophe of Sept. 11. But nor is he the towering, heroic, wise and idealistic neo-Churchillian figure that his skilful spinmeisters, political allies and servile media pundits have relentlessly portrayed since then.
Fourth, however, even though the president appears to have succeeded in reassuring most of the people most of the time, there is one very important group of people whom his supposedly tough talk on Wall Street Tuesday did not reassure, or convince. They were the investors of Wall Street itself.
There was no significant Wall Street rally on Tuesday following the president's supposedly reassuring tough talk about cracking down on corporate malefactors. And on Wednesday the New York Times and the Washington Post ran news analyses concluding that none of the measures Bush had proposed would actually have any significant impact in punishing past corporate financial wrongdoing or deterring it in the future.
The New York Times Page A1 news analysis was entitled "Hard Talk, Softer Plans: President Offers Few Detailed Remedies and Many of Them are Less Than Severe." A New York Times business section analysis was headlined "Bush's dance: Moral outrage without pain to loyalists." The Washington Post one was entitled "Measures not likely to end abuses."
Despite this skepticism among analysts and informed opinion about the likely efficacy of the Bush reform initiative, so far, the president has maintained his excellent poll ratings through every major corporate scandal and collapse. His ratings remain high even as the Wall Street stock indices continue to relentlessly fall. Sober analysts believe the DowJones Index could fall as low as 8,000. UPI's business editor and Bear's Lair columnist Martin Hutchinson has repeatedly warned it could slump far below that.
Will the president remain immune?
As long as unemployment does not rise and inflation does not soar out of control, he will. And he is doing his utmost, even at the risk of setting off a potentially catastrophic inflationary spiral, to make sure unemployment does not rise significantly before the midterm congressional elections in November. Right now, it appears that he may well win that gamble in the short term, though the outcome could go either way.
But the wolf cannot be kept from the door forever. Eventually, the relentless stock market plunge must result in recession, economic implosion and significant loss of jobs. Bush's failure to allow interest rates to rise, curb government spending -- even though his party still controls the House of Representatives -- and his determination to persevere with his kamikaze $1.35 trillion taxes cut could all too easily trigger a potentially catastrophic capital flight that could then collapse the dollar.
The strategy of going through the motions of looking for Maj. Strasser's killer worked for Capt. Renault in "Casablanca." He was able to deflect suspicion from the real killer, his friend Rick Blaine, by telling his gendarmes to "round up the usual suspects." That was what Bush did in his Wall Street speech Tuesday.
But if -- or when -- economic hard times hit, the American people will no longer be satisfied with rounding up the president's "usual suspects." And his expressions of shock will no longer be enough either.
