After a defensive recitation of his economic policy record, the president endorsed several common-sense corporate reform measures that have been bouncing around Washington for some time. He called for tougher criminal penalties on those convicted of corporate fraud, supported more money and enforcement resources for the Securities and Exchange Commission, and urged the stock exchanges to better police corporate boards and shareholders' rights.
The speech, along with Monday's hastily arranged presidential press conference, provide fresh examples of this Administration's highly reactive approach to national leadership.
Just as he did three weeks ago with his sudden realization that a cabinet-level Department of Homeland Security was a good idea after all, the president, after months of inaction in the face of scandal after scandal, is trying to place himself at the head of the posse moving towards action against corporate malfeasance.
It's hard to imagine an unlikelier figure to play the role of corporate crime-buster. Unless you go all the way back to Warren Harding, it's hard to remember an administration that has more systematically identified with corporate interests.
By this I do not mean just their natural and appropriate desire for the opportunity to compete and produce on a level playing field at home and abroad, but their dangerous temptation to use political pull to cut corners, squeeze competitors, evade public responsibilities, and maximize their personal bottom lines at the expense of their own shareholders, investors and workers.
In its appointments, its policies, and its priorities -- from trade and taxes to energy and the environment-- the Bush Administration has in a very short period of time richly earned a reputation for excessive coziness with big business, often at the expense of the public interest.
But there is much more at stake in the current drama than the success or failure of the Administration's efforts to improve its reputation for even-handed treatment of corporate wrongdoers and shore up the President's and the Republican Party's slumping approval ratings.
The ongoing wave of scandals are sure to produce more criminal indictments, and have severely damaged investor confidence in publicly traded companies at the worst possible time, threatening a capital flight at the very moment when our economy most needs new capital to restore business investment and economic growth.
For all the talk of over-valued stocks in recent months, the fact remains that equity markets served as the indispensable source of investment capital fueling the entrepreneurial explosion that produced the longest period of full-employment, low-inflation, and stable economic growth in U.S. history.
Regenerating that growth absolutely requires quick, firm action to convince investors that corporate financial reports are as sound as the dollars they invest.
More broadly, the scandals are a timely reminder that the economic life of the nation is not the private property of the business community.
Aside from fiscal and monetary policies, government has an important role to play in creating the conditions in which competition can flourish and genuine free enterprise can work. As Franklin D. Roosevelt memorably said, sometimes capitalism must be saved from its own excesses.
At present, it's critical that we act decisively to restore the integrity and transparency of the marketplace as the backbone of confidence in our economic future.
The Sarbanes legislation pending in the Senate is a good first step, but it is only a first step toward restoring confidence in the system.
You can quibble with some of the bill's provisions, such as the mandatory requirement that companies choose new auditors every five years, which might actually undermine incentives for good auditing practices. But focusing on the auditors is not enough. We must soon address the broader issues of corporate governance to fully restore public confidence, beefing up federal oversight of publicly traded companies, restoring the independence of corporate boards, and ensuring that executives do not profit by betraying investors and workers.
The president touched on some of these issues today, though his prescriptions depend heavily on self-policing by corporations, future actions by the stock exchanges, and above all, more aggressive action by an SEC whose leadership has the same credibility problems as the administration as a whole.
As we have seen on many other issues, administration policy does not always follow presidential rhetoric. The proof of the president's late-life conversion to the cause of corporate responsibility will be in the pudding: whether his administration takes an entirely different, and appropriately objective, view of government's proper role in creating and overseeing a neutral marketplace that rewards enterprise, not special privilege.
* Ed Kilgore is policy director of the Democratic Leadership Council, a moderate group whose mission it is to promote public debate within the Democratic Party and the public at large about national and international policy and political issues.
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