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(9/3/02) - Round up the usual suspects! George W. Bush's new "Healthy Forests" plan reads like a parody of his administration's standard operating procedure. You see, environmentalists cause forest fires, and those nice corporations will solve the problem if we get out of their way.

Am I being too harsh? No, actually it's even worse than it seems. "Healthy Forests" isn't just about scrapping environmental protection; it's also about expanding corporate welfare.

Everyone agrees that the forests' prime evil is a well-meaning but counterproductive bear named Smokey. Generations of fire suppression have led to a dangerous accumulation of highly flammable small trees and underbrush. And in some -- not all -- of the national forests it's too late simply to reverse the policy; thanks to growing population and urban sprawl, some forests are too close to built-up areas to be allowed to burn.

Clearly, some of the excess fuel in some of the nation's forests should be removed. But how? Bush asserts that there is a free lunch: allowing more logging that thins out the national forests will both yield valuable resources and reduce fire risks.

But it turns out that the stuff that needs to be removed -- small trees and bushes, in areas close to habitation -- is of little commercial value. The good stuff, from the industry's point of view, consists of large, mature trees -- the kind of trees that usually survive forest fires -- which are often far from inhabited areas.

So the administration proposes to make deals with logging companies: In return for clearing out the stuff that should be removed, they will be granted the right to take out other stuff that probably shouldn't be removed. Notice that this means that there isn't a free lunch after all. And there are at least three severe further problems with this plan.

First, will the quid pro quo really be enforced, or will loggers simply make off with the quid and forget about the quo? The Forest Service, which would be in charge of enforcement, has repeatedly been cited by Congress' General Accounting Office for poor management and lack of accountability. And the agency, true to Bush administration form, is now run by a former industry lobbyist. (In the 2000 election cycle, the forest products industry gave 82 percent of its contributions to Republicans.) You don't have to be much of a cynic to question whether loggers will really be held to their promises.

Second, linking logging of mature trees to clearing of underbrush is a policy non sequitur. Suppose New York City Mayor Mike Bloomberg announced that Waste Management Inc. would pick up Manhattan's trash free, in return for the right to dump toxic waste on Staten Island. Staten Island residents would protest, correctly, that if Manhattan wants its garbage picked up, it should pay for the service; if the city wants to sell companies the right to dump elsewhere, that should be treated as a separate issue. Similarly, if the federal government wants to clear underbrush near populated areas, it should pay for it; if it wants to sell the right to log mature trees elsewhere, that should be a separate decision.

And this gets us to the last point: In fact, the government doesn't make money when it sells timber rights to loggers. According to the General Accounting Office, the Forest Service consistently spends more money arranging timber sales than it actually gets from the sales. How much money? Funny you should ask: Last year the Bush administration stopped releasing that information. The measured costs of timber sales capture only a fraction of the true budgetary costs of logging in the national forests, which is supported by hundreds of millions of dollars in federal subsidies, especially for road-building. This means that, environmental issues aside, inducing logging companies to clear underbrush by letting them log elsewhere would probably end up costing taxpayers more, not less, than dealing with the problem directly.

So as in the case of the administration's energy policy, beneath the free-market rhetoric is a plan for increased subsidies to favored corporations. Surprise.

A final thought: Wouldn't it be nice if just once, on some issue, the Bush administration came up with a plan that didn't involve weakened environmental protection, financial breaks for wealthy individuals and corporations and reduced public oversight?

(9/3/02) - Somewhere I read about a conference on optimal economic planning, some years before the fall of Communism. The Soviet delegate declared that his planning agency always did the best it could under the circumstances. Hence, Soviet planning was always optimal.

The man from Gosplan would have gotten along fine with Alan Greenspan. Mr. Greenspan disclaims any responsibility for the immense market bubble that inflated on his watch: his policy was right, he says, because he did the best he could.

In his keynote speech at last week's Jackson Hole conference, Mr. Greenspan offered two excuses. First, he claimed that it wasn't absolutely clear, even during the manic market run-up of 1999, that something was amiss: "it was very difficult to definitively identify a bubble until after the fact — that is, when its bursting confirmed its existence." Second, he claimed that the Fed couldn't have done anything anyway. "Is there some policy that can at least limit the size of a bubble and, hence, its destructive fallout? . . . the answer appears to be no."

I wasn't alone in finding this speech disturbingly evasive. As The Financial Times noted, policy makers always have to act on limited information: "The burden of proof for a central bank should not be absolute certainty." The editorial also reminded readers that while Mr. Greenspan may now portray himself as skeptical but powerless during the bubble years, at the time many saw him as a cheerleader. "The Fed chairman . . . may well have contributed to the explosion of exuberance in the late 1990's with his increasingly bullish observations."

Moreover, there is evidence that Mr. Greenspan actually knew better. In September 1996, at a meeting of the Federal Open Market Committee, he told his colleagues, "I recognize that there is a stock market bubble problem at this point." And he had a solution: "We do have the possibility of . . . increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it."

Yet he never did increase margin requirements, that is, require investors to put up more cash when buying stocks. Indeed, aside from giving one speech about irrational exuberance, followed by a small rise in the Fed funds rate, Mr. Greenspan did nothing at all. He now says he could not have done more, but how does he know when he never even tried? What really happened, one suspects, was that in early 1997 Mr. Greenspan discovered that his tentative efforts to deflate the emerging bubble made investors furious, and lost his nerve.

Worse, he then began giving ever more euphoric speeches about the wonders of the new economy. Surely he must have known that these speeches were interpreted by investors as a retraction of his own previous warning, as a signal that soaring stock prices were justified after all.

Still, what's most important about Mr. Greenspan's defensiveness is not what it says about the past, but what it implies about the future.

You see, Mr. Greenspan is the only economic policy maker we have. Fiscal policy is effectively off the table, partly because of long-run deficits worsened by Mr. Greenspan's own bad advice. Funny how he wasn't sure that Nasdaq 5,000 was a bubble, but believed that 10-year surplus projections were reliable enough to justify a huge tax cut. In any case, serious fiscal action is ruled out by the Bush administration's relentless opportunism; every proposal for short-run economic stimulus turns into an attempt to lock in permanent tax cuts for corporations and the wealthy. So if the recovery continues to lose momentum, it's up to the Fed to take matters in hand.

Yet Mr. Greenspan's remarks reinforce a worry I've had for the past few months: that Fed officials will respond to continuing economic weakness not with action but with excuses.

We've seen the process all too clearly in Japan. First officials at the Bank of Japan denied that they had any responsibility to fight economic stagnation; their mandate, they said, was solely to ensure price stability. Then, as inflation gave way to deflation, even price stability was no longer their business. In other words, rather than risk trying to solve Japan's problems and failing, the bank has repeatedly redefined its mission so that it doesn't even have to try.

I never thought the Fed would go down the same path. But after listening to Mr. Greenspan explain why he couldn'ta and shouldn'ta, I'm starting to wonder.

(9/1/2002) - The Congressional Budget Office forecast of federal deficits for the next five years points out the folly of the tax cuts pushed by the Bush administration. The money lost to the government will prevent it from planning adequately for the baby boomers' retirement.

Only last year, the CBO was projecting a combined surplus of $5.6 trillion over the next 10 years, enough to pay down the national debt and prepare for the new spending that will be needed to pay Social Security and Medicare benefits to the millions of people who will retire in the next several decades.

Now that surplus has largely evaporated, leaving deficits for five years and a gradual return to small surpluses through 2012 - but only assuming the Bush tax cuts are not reenacted when they expire in 2010. This budget estimate also includes more than $2 trillion in surpluses from the Social Security trust funds, which ought to be used to shore up the retirement system instead of being diverted to ordinary government expenses.

In hindsight, last year's $5.6 trillion estimate was overly optimistic, a product of the same mentality that inflated the stock market. But the fiscal policies that produced it, adopted by bipartisan consensus in 1997, gave the government the resources to plan for Social Security while allowing money for unforeseen expenses.

The CBO estimates that the biggest cause of deficit expansion is the drop in expected government tax revenue - up to $2.3 trillion over 10 years, thanks to the economic downturn - but the Bush tax cut is a strong second at $1.2 trillion. Another big factor is an increase of $500 billion in expected interest payments on the national debt. This unproductive spending could be cut substantially if the tax cuts were repealed.

Bush supporters argue that federal long-term interest rates are unchanged, so the deficits have little economic impact. They are right in the short run, in part because investors are fleeing stocks for safer government bonds. It would be better, however, if political leaders planned for the long term. The government has long defrayed ordinary expenses with money generated by Social Security bond purchases. This money counts as a debt the government must gradually repay to Social Security when the baby boomers retire. By 2017, when the system will first need some of the money to pay benefits, this debt will amount to more than $5 trillion.

President Bush tried to partially privatize Social Security last year. Fortunately, the plan was derailed amid the stock market collapse. With privatization out of the way, the best solution, as it was in 1997, is to pay down the national debt in anticipation of the government issuing new debt to repay the Social Security system. Costly and inequitable, Bush's tax cuts stand in the way of this policy. They should be repealed.

This story ran on page D6 of the Boston Globe on 9/1/2002.

(8/31/02) - President Bush's summer idyll in Texas, which comes to a close this weekend, has been interrupted more than once by bad economic news. As a result, the White House says Mr. Bush may present yet another package of tax cuts when he returns to work after Labor Day. Some of the proposals are said to be based on ideas proposed at the stage-managed economic "forum" in Waco, including new tax incentives to encourage stock market investments and expanded tax breaks for investors who have suffered losses. Details are skimpy, but based on what officials are saying, it looks as if Mr. Bush's proposals would do little to help the economy while deepening federal deficits over the long term.

The White House's urgent desire to offer a second round of cuts is understandable in political terms. So far, Mr. Bush's strategy has consisted entirely of actions whose impact will not be felt for years. They include extending or expanding tax cuts toward the end of this decade, pursuing trade agreements in coming years and permitting more drilling for oil and gas on federal lands, another step that — even if it were desirable, which it is not — would have no short-term impact. Mr. Bush is thus said to be intrigued with the idea of tax incentives aimed at boosting the stock market right away. In addition to new breaks for gains and losses, there is some thought of allowing Americans to contribute more to their 401(k) retirement plans or reducing taxes on dividends.

Some of these ideas have kicked around for years, and there are respectable economists who think they could help. But history shows that it is very risky to craft a tax-cut package to influence the stock market. Some steps, such as letting investors deduct their losses from their taxes, might actually encourage more selling of stocks. Besides, it is unacceptable for the administration to push for more tax breaks for wealthy investors when it has opposed the extension of unemployment benefits for those thrown out of work in the recession.

But the overriding problem with more tax cuts is the cost. The proposals Mr. Bush is looking at are expensive. This week the bipartisan Congressional Budget Office reported that the recession, combined with increased spending and the cost of the 2001 Bush tax cuts, had vaporized all but $1 trillion of the 10-year, $5.6 trillion surplus projected less than two years ago. It would be unconscionable for Mr. Bush to propose any tax cuts without explaining how they will be paid for over the long term. A case can be made for some tax-cutting now, but only if the huge tax cuts scheduled to take effect several years from now for the wealthiest Americans are repealed.

(8/30/02) - The story so far:

Summer 2000: Candidate George W. Bush assures voters that his tax cut is affordable. He illustrates his point with four $1 bills. One bill, he says, represents the tax cut; one represents new programs, such as prescription drug coverage; the other two are funds set aside to pay down debt, strengthening Social Security. He pledges, without qualification, not to dip into the Social Security surplus.

Spring 2001: The Bush administration pushes its tax cut through Congress. Officials dismiss concerns that projections of a huge surplus may be excessively optimistic, assuring Congressmen that the projections are actually on the low side. Mr. Bush also claims that his budget includes a trillion-dollar reserve, enough to deal with any contingency.

Summer 2001: Just weeks after the tax cut passes, officials reveal that tax receipts have been coming in far below expectations. Budget projections are revised sharply downward, but the administration still claims that it will run an overall surplus greater than the Social Security surplus, that is, more than $150 billion per year. The administration also claims that the tax cut, conceived at a time of runaway boom, is exactly the right medicine for an ailing economy.

October 2001: "Lucky me: I hit the trifecta." So remarks Mr. Bush, claiming that recession, national emergency and war have let him off the hook on his budget promises. Though some think that it's in bad taste, the trifecta joke becomes part of Mr. Bush's standard stump speech. He claims to have made this exception to his budget pledges during the 2000 campaign, but there is no record of his having done so. November 2001: Budget director Mitch Daniels admits that the overall budget — not just the budget outside Social Security — will actually be in deficit for fiscal 2002.

July 2002: The White House admits that the deficit for fiscal 2002, which ends in September, will be $165 billion — a non-Social-Security deficit of $322 billion. But it still says that the budget will be back in surplus by 2004.

August 2002: The nonpartisan Congressional Budget Office issues a much grimmer projection, with a 2003 deficit twice that predicted by the administration, and deficits persisting until 2006. Moreover, the C.B.O. is required by law to make unrealistic assumptions that cause it to understate future deficits. A new analysis by Goldman Sachs, which is not under these constraints, predicts deficits well over $100 billion each year for the rest of the decade.

This $7 trillion reversal of fiscal fortune has received remarkably little public attention; it has been crowded off the front page by talk of war. But its consequences will be immense.

Where did the surplus go? The "trifecta" is not the main story; recessions have only a small impact on long-run projections, and the Center on Budget and Policy Priorities calculates that increases in military and homeland security spending account for only 16 percent of the 10-year deterioration in the C.B.O. projection. In fact, it's clear that we would be facing large deficits outside Social Security, and probably significant deficits in the budget as a whole, even if neither the recession nor Sept. 11 had happened. The two main culprits are the tax cut and "technical changes" in the estimates: perhaps because of the end of the bull market, a given level of G.D.P. is yielding much less revenue than it did during the late 1990's. Or to put it another way, our brief era of big surpluses seems to have been a fluke.

Despite assurances that the tax cut would promote recovery, the economy seems to be sputtering. Early indications are that the administration will propose another round of tax cuts, all of them aimed at stock market investors. It's important to notice that such measures as increased deductions for capital losses provide no benefit to those whose investment takes place through 401(k) plans; so these tax breaks are mainly for the very affluent. A careful analysis by William Gale and Peter Orszag — experts at Brookings who have consistently, and correctly, warned that administration budget projections were overoptimistic — shows that these measures will be ineffective as stimulus, and will further worsen the budget outlook. Of course, administration officials will brush this aside, assuring us that their proposals are just what the nation needs. Can anyone think of a reason not to trust them?

(September 2002 Issue) - Remember the old saying about how to get the mule's attention? First you hit it upside the head with a heavy plank, then you gently say, "Hey, mule." The American people have just been hit upside the head with a plank: $7 trillion of what people thought they were worth disappeared in a giant "earnings restatement." And now it is time to gently suggest what can be done to fix this.

Or maybe not so gently, since failure to fix it is likely to cost so much that $7 trillion will look like chump change. Our political system is so broke it took seven years to react to the savings and loan crisis, which was caused by the political system in the first place. That cost us only $500 billion. If they take seven years to stop this hemorrhage, we'll be totally sunk.

Step Numero Uno: public campaign financing. This mess is not just about corporate greed; it is just as much about political corruption.

Perhaps the least edifying sight so far is that of politicians pointing their fingers at the CEOnistas and clucking over their greed. First and funniest was President Junior, whose entire business career was this very same corporate scandal writ small. The man is the mascot of crony capitalism. Listening to his lecture to Wall Street about their need for moral rearmament and better business ethics was first-rate entertainment.

Years of covering politics have given me a cast-iron stomach, but the sight of Representative Billy Tauzin, Republican of Louisiana, posing as a born-again populist is enough to gag a maggot. This is the same Billy Tauzin who led the charge on every sell-out to corporate special interests of the last ten years.

Then there's Mr. Morality, the oh-so-pious Senator Joe Lieberman, well watered by campaign contributions from the Big Five accounting firms to make sure they weren't regulated. Whew, what a stench!

The pols need to turn those pointing fingers right at themselves. Starting in 1994, when the Financial Accounting Standards Board was preparing to rule that stock options must be treated as a company expense--a step that would have reduced corporate earnings and thus deflated stock value--the high-tech and securities industries vehemently opposed the move. Lieberman leaned on the board to back down, and it did. Lieberman is number thirteen in the Senate for contributions from the securities and investment industry. That move set up the explosion in executive compensation and gave CEOs a huge incentive to artificially inflate their stock prices.

The next step was in 1995, when Congress passed the Private Securities Litigation Reform Act, which makes it harder for shareholders to sue corporations. This act also allowed executives to make absurd claims about future earnings by scrapping the old prohibition against forward-looking statements.

There are basically only two ways to control capitalism: One is by government regulation, and the other is through the courts. Wave after wave of "tort reform" made corporations increasingly sue-proof. The much maligned trial lawyers and their so-called frivolous lawsuits actually functioned like the sharks they are so often compared to. If a corporation stuck a hand outside the law, a shark would swim by and bite it off, as it were, by suing for lots of money, a lovely incentive for decorous corporate behavior. But the politicians have been killing off the sharks.

Bill Clinton vetoed the '95 Litigation Reform Act, but it was passed over his veto with help from Senator Chris Dodd of Connecticut, among other Democrats.

The third horror was the successful efforts in both 1999 and 2000 to prevent the SEC under Arthur Leavitt from forcing accounting firms to separate their auditing and consulting functions. Forty-six Senators and Representatives wrote Leavitt in protest. They received, on average, $93,000 in campaign contributions from the Big Five.

All of this is not the fault of corporate greedheads; it is the fault of a corrupted political system. It is a consequence of legalized bribery. It is about campaign finance. That is the "without which" nothing will come out of this mess.

(8/21/02) - An investment advisory on the Internet notes that if you had bought $1,000 worth of Enron stock a year ago, you'd now be down to $16.50. If you'd bought $1,000 worth of WorldCom stock, you'd only have $5 left from your investment. But . . . if you'd bought $1,000 worth of Budweiser (the beer, not the stock), drank all the beer, and cashed in the cans for the 10-cent deposit, you would have $214. So, the prudent investment strategy is clear: Drink heavily and recycle.

Yet, George W. Bush continues to put on his "What, me worry?" face and insist that the prudent strategy for us Americans is to privatize our Social Security funds. In July –– even as George was in full political howl about the spreading corporate crime wave that has turned highly-touted stocks into trash –– he blithely said again that our retirement money should be entrusted to such Wall Street finaglers and to a market that recently has frittered away trillions of dollars of people's investment capital. It's as though reality is a complete stranger in W's head.

Bush's privatization scheme would require that you funnel your Social Security funds into the stock market through a handful of private investment groups owned and managed by such massive outfits as Citigroup, Merrill Lynch, and Goldman Sachs. Hello. These are the very firms now in the headlines and appearing before Congressional investigators for having been in cahoots with Enron, WorldCom and the other ponzi schemes that bilked workers and investors out of billions of dollars.

George might be a fuzzy-headed market ideologist who still believes in laissez-faire fantasies, but these fund managers are cold-eyed opportunists who know that they would reap huge annual fees if only they can get their hands on our Social Security funds.

This is Jim Hightower saying . . . Bush's privatization push is stupid, but stupid is no barrier to this president. To stop his stupidity, call Campaign for America's Future: 202-955-5665.

PORTLAND, Ore. - Riot police used pepper spray and struck some demonstrators with batons after ordering hundreds of people to leave a protest near a hotel where President Bush attended a fund-raiser.

Protesters hammered on the hoods of police cars as pepper spray wafted through the air. Protesting Bush's foreign policy, they chanted "Drop Bush, Not Bombs."

Bush supporters in formal attire were jostled and taunted by protesters as they arrived for a fund-raiser for the re-election campaign of U.S. Sen. Gordon Smith. After elbowing through the demonstrators, they were checked by Secret Service agents before they were allowed inside the hotel.

Brian Schmautz, spokesman for the Portland Police Bureau, said protesters threw things at the police.

Protesters at one point pushed down a barricade and a female police officer who was standing behind it, Groepper said. The officer sprained or broke her wrist falling down, and two patrol cars were damaged, Groepper said.

Police ordered about 500 protesters to move. Riot police wearing helmets then walked into the area, pushing activists with their batons. Some activists fell. Police then fired aerosol canisters of pepper spray at the protesters.

Police also used pepper spray after about 150 demonstrators blocked vehicle access to Morrison Bridge.

Five protesters were arrested through the afternoon, police spokesman Henry Groepper said.

Many of the protesters criticized a new forest initiative announced earlier in the day by Bush that would make it easier for timber companies to cut wood from fire-prone national forests.

"The new policy is classic doublespeak," said Kenneth Kreuschu, 24, of Cascadia Forest Alliance. "It has been shown time and again that more cutting leads to more fire. The new policy is a hoax."

Some of the activists were worried about a possible war with Iraq.

"I don't think any American boys' lives are worth a barrel of oil," said Rob Moitoza, 57, who carried a sign that said: "Vets Against Bush."

Moitoza said he served two years in the Navy aboard an aircraft carrier during the Vietnam War and fears a much worse conflict if U.S. troops are sent to Iraq.

"If he (Bush) starts a war against Iraq, it will be to get re-elected. All he cares about is wealth and power," Moitoza said.

Before flying to Portland from Medford, Bush was taken to a still-smoldering fire.

About a dozen protesters dotted Bush's motorcade route. Some waved signs saying, "No attack of Iraq. You can't fix Daddy's mistake" and "More forests, less Bush."

The demonstrators along the route were far outnumbered by people waiting at the ends of their driveways who held signs saying "We love you" and "We support you."

Don't tell, maybe they won't ask. That was the message of a July memo from an official at the Department of Veterans Affairs, posted by Joshua Marshall at talkingpointsmemo.com. Citing "conservative OMB budget guidance" for spending on veterans' health care, the memo instructed subordinates to "ensure that no marketing activities to enroll new veterans occur within your networks." Veterans are entitled to medical care; but the administration hopes that some of them don't know that, and that it can save money by leaving them ignorant.

It's not the sort of thing you'd expect from an administration that wraps itself so tightly in the flag — not, that is, unless you've been paying attention. For stories like this are popping up more and more often.

Take George W. Bush's decision last week to demonstrate his resolve by blocking $5.1 billion in homeland security spending. This turned out to be a major gaffe, because the rejected bill allocated money both to improve veterans' health care and to provide firefighters with new equipment, including communication systems that could have saved lives on Sept. 11. Recalling those scenes at ground zero that did so much to raise Mr. Bush's poll numbers, the president of the International Association of Firefighters warned, "Don't lionize our fallen brothers in one breath, then stab us in the back."

Or what about the trapped coal miners? After their rescue, Mr. Bush made a point of congratulating them in person — and Michael Novak, writing in National Review Online, declared Somerset, Pa., the "conservative capital of the world."

But Mr. Novak didn't mention the crucial assistance provided by the federal government's Mine Safety and Health Administration. That would have raised some awkward questions: although the Bush administration's energy plans call for major increases in coal mining, its spending plans cut funds for mine safety. More conservative budget guidance.

The point is that there is an inexorably growing gap between the image and the reality of the Bush administration's policies.

Mr. Bush is a master of photo-op populism; his handlers seek out opportunities to show him mingling with blue-collar workers. But the reality is that this administration loves 'em while the TV crews are around, then leaves 'em when it comes to actual policy. And that reality is becoming ever harder to conceal.

The federal budget is now deep in deficit, and everyone except the administration thinks it will remain there — not because of runaway spending, but because most of last year's tax cut has yet to take effect. And as my colleague Frank Rich points out, to offset the revenue losses from his tax cut, Mr. Bush would have to veto a $5 billion spending proposal every working day for the next year. Mr. Bush can no longer pretend, as he did during the 2000 campaign, that there is enough money for everything. Now, to justify that tax cut, he must hack steadily away at programs that matter to ordinary people.

Still, don't tax cuts also matter to ordinary people? It depends. Last year's rebate went to a lot of families. But the items still in the pipeline are income tax cuts for upper brackets — especially the top bracket — and elimination of the estate tax. For a married couple, only income in excess of $297,000 falls in the top bracket, and only an estate larger than $2 million pays any inheritance tax. Firefighters and coal miners don't make that kind of money.

In other words, behind the photo-ops, the administration is busy squeezing programs that benefit firefighters, police officers, coal miners, veterans and other "humble people of America" (Mr. Novak's phrase), in order to make room for tax cuts that mainly help a handful of not at all humble people. That's not demagoguery, it's the plain truth. And it's a truth that will become ever harder to disguise.

What are the political implications? When Al Gore wrote an Op-Ed article condemning the elitist policies of the Bush administration, pundits — and many Democratic politicians, including his former running mate — jumped on him with both feet. Populism, everyone insisted, doesn't work in American politics.

Yet conservatives enthusiastically rely on populism — fake populism, based on staged shmoozing with ordinary Americans and attacks on the imagined cultural elitism of the liberal media. Why shouldn't liberals, who actually have the facts on their side, try engaging in the real thing?

(8/15/02) - President Bush's efforts to clean up corporate America were dealt an embarrassing blow last night when the man charged with leading his new anti-corruption task force was sued for alleged fraud.

Larry Thompson, who is also deputy attorney general, was accused of dubious accounting practices and insider trading while on the board of Providian, a credit card issuer that also operates in Britain.

Judicial Watch, the self-styled watchdog that is also suing vice-president Dick Cheney for alleged accounting malpractice when he was chief executive of oil group Halliburton, filed the suit on behalf of a Texan shareholder in a San Francisco court.

The suit alleges that Mr Thompson and other directors conspired to hide Providian's mounting losses in 2001, inflating the company share price.

Mr Thompson sold more than £3 million of shares before the financial problems became public, it is claimed. He was a board director for four years from 1997.

Mr Thompson's office was not available to comment last night.

(8/18/02) - Like most folks, I usually require an act of God to change my mind on a topic once I am convinced of my rightness. So when I began to rethink my position favoring the privatization of Social Security, no one was more surprised than I.

My conversion began in early 2000 when I traveled to Baltimore to interview a top official in the Social Security Administration. I had gone to see a deputy commissioner to discuss a planned article on Al Gore's efforts to eliminate government waste. But at the end of our talk, I couldn't resist the urge to needle my host with the privatization issue, suspecting full well what his bureaucratic response would be.

"Why should I, a relatively young man, be forced to pay into an antiquated retirement system that holds my money for years and gives me back peanuts when I am old?" I asked. "Anyone with a brain could get a better return by investing the same money in long-term government bonds, let alone stocks."

I wanted out, I told my host.

But instead of growing irritated, he leaned back in his cushioned chair and smiled. It was a genuine smile, the kind that made me suspect immediately that I had bitten off more than I could chew.

"You're a lot like my son," he said, motioning toward a photo on the credenza. "He graduated from college a few years ago. He likes to dabble in the stock market, too."

The official went on to explain that I was right, and that smart young men like his son and me probably would end up miles ahead financially were we allowed to take our Social Security contributions and go it alone. But Social Security was never meant to produce financial windfalls, he said.

Over the next half hour or so, the official gave me a history lesson, as well as a crash course on how the program works. He explained that only a part of the agency's payouts go to retirees. The rest goes to cover survivors' benefits and disability payments.

"Suppose you were to take your money and invest it in the stock market," the official continued, "then on the way home you were hit by a bus. Remember, you've opted out. Who would take care of your family? Certainly not the federal government."

Sitting there, I thought of my oldest nephew. When he was 12, his father went to sleep one July night in 1991 and never woke up -- dead of a heart attack at 46.

For my sister raising her son alone, the monthly Social Security check they received, though hardly enough to make up for her husband's lost income, was a godsend.

But what if my brother-in-law had been allowed to opt out of the program just before he died, or been allowed to reduce the amount he contributed? What would have become of my sister and her son?

The importance of a sound Social Security system was further driven home last year when my mother, suffering from Alzheimer's disease, handed over her finances to me. After decades of working in a York, S.C., cotton mill, her monthly pension would barely buy a steak dinner at one of Charlotte's uptown restaurants. That leaves her to depend on personal savings and Social Security.

Some months, her medical bills alone run close to $1,000, vaporizing her personal savings at a rate much faster than any of her children would like. So Social Security remains her only dependable source of income. Without it, my siblings and I would suffer to pay for the care she now receives.

Last week the Social Security system marked its 60th birthday, and again politicians and would-be politicians are debating various efforts to privatize the program. With the stock market in a funk and the issue of corporate accountability swirling about, few now speak of letting workers opt out entirely. Instead, some of the more popular proposals would allow younger workers to divert a small portion of their Social Security tax to private accounts.

The Bush administration -- or any other administration -- should think twice before radically changing the concept of a program that has worked so well for so many for so long. Granted, the Social Security system is running out of cash and needs fixing, but it should be fixed in a way that maintains its basic integrity -- and that, for now, does not mean private accounts.

If the current Wall Street turmoil has taught us anything, it is that financial markets expand and financial markets contract. We also have come to see all too well that not everyone attempting to manage a retirement account is equipped to do so.

A monthly Social Security check was never meant to provide luxury in retirement. Private pension plans and personal savings should play that role.

No, Social Security was created as a safety net against old-age poverty, disability and the unexpected death of a family breadwinner. Let's not destroy the net by turning it into another boom-and-bust, get-rich-quick scheme.

Glenn Burkins

George W. Bush tossed the nation's press a softball and they hit it out of the park. There was not a single good review, not even from his minions at The Wall Street Journal editorial page, for the White House's feel-good-about-your-401(k) jamboree at Waco. It was a "forum," the critics suggested, in the sense that the Politburo was a "legislature." Only Mr. Bush, who is on record as having loved "Cats," pronounced the event a "great show."

But it's Mr. Bush who was right. What his critics miss is that by this administration's standards of governance, Waco was a triumph. It was expressly designed to be content-free (rather like "Cats," in fact). The goal was never to produce policy but solely to serve up a video bite of Mr. Bush looking engaged by the woes of what his chief of staff, Andrew Card, referred to on CNN as "so-called real Americans." If the White House wanted anyone to listen, it would not have staged eight separate panels simultaneously on a Tuesday morning in the dog days of August, assuring that complete coverage would be available only on C-Span.

For those few viewers who dipped in, the spectacle was not unamusing. On one panel, Mr. Bush could be found in mutual fawning with his campaign contributor "Chuck" Schwab — Charles to us — no doubt oblivious to the fact that Chuck had just placed a nose behind Enron's Ken Lay and Global Crossing's Gary Winnick on Fortune's "Greedy Bunch" list of those executives who cashed out the most stock before their companies' shares tanked by 75 percent or more. Yet even this touching tableau, on a day when Schwab was laying off nearly 400 employees, did not stop CNN, MSNBC and Fox News from switching to such alternative programming as a picturesque natural gas explosion in a suburban California house.

What makes the morning-after outrage of the nation's commentariat seem a bit over the top is that the preordained hollowness of the Waco show is not news. This is how this administration always governs. Mr. Bush has two inviolate, one-size-fits-all policies (if obsessions can be called policies): the tax cut (for domestic affairs) and "regime change" in Iraq (foreign affairs). Everything else is a great show designed to provide the illusion of administration activity when it has no plan.

The show takes the form not only of the Orwellian slogans emblazoned on the backdrops ("Small Investors/Retirement Security" loomed above the president and Chuck in Waco) but also of bogus announcements of muscular action. At the forum's final curtain, the president declared that he would teach Congress a tough lesson about fiscal responsibility by holding back $5.1 billion it had appropriated for such low-priority items as equipment for firefighters and health monitoring at ground zero. But what about the $190 billion in wasteful farm subsidies he has already thrown to the winds? Besides, he would have to cut spending by $5 billion five days a week for more than a year to compensate for the red ink of his $1.35 trillion tax cut.

Though the president's harshest critics think he's stupid, I've always maintained that the real problem is that he thinks we are stupid. He never doubts that his show will distract us from bad news. Waco was supposed to make us forget the latest round of economic headlines: stagnant wages, slowed growth, new all-time records in personal bankruptcies and consumer borrowing. All this is on top of a falloff in the Dow that The Economist measures as identical in percentage to that of Herbert Hoover's first 18 months, which included the crash of '29.

Well, the economy is only money. It's when the same governance technique is applied to life-and-death matters like war and domestic security that the farce curdles. Here, too, there are new headlines the administration wants us to forget. At the F.B.I., a Los Angeles Times investigation revealed, the prehistoric computer system remains in disarray even as the agency's top executives are either pushed out or flee for private employment (as the counterterrorism chief abruptly did on Thursday). The Wall Street Journal discovered that when the federal government issued a terrorist warning to shopping centers four months ago, the Mall of America learned about it only by watching CNN. Not only are our airlines collapsing but, according to Thursday's USA Today, so is the undercover air marshal program that was supposed to be strengthened after Sept. 11. One marshal called it "a laughingstock."

And what does the administration propose as a solution? Last week John Ashcroft went on TV to announce what he calls the "first ever White House conference on missing and exploited children." It takes an exploiter to know one. F.B.I. figures show a decline in the kidnapping of children — except on cable TV. But if you can't crack the anthrax case, why not create some distracting hysteria by glomming onto a local law enforcement issue that is the biggest showbiz phenomenon since shark attacks? The administration loves the bait-and-switch. It hyped the cases of "the American Taliban," John Walker Lindh, and the "dirty bomber," Jose Padilla, to cover for its failure to snare the actual Taliban leader, Mullah Omar, and the actual bomber, Osama bin Laden, much as it has hyped the perp walks of second-rung executives from WorldCom to make us forget about Halliburton, Harken and Ken Lay.

Next stop: Iraq. Just as a tax cut is billed as the miracle antidote to every possible economic ill — "We've got the best tax policy in the world!" Mr. Bush said at Waco — so we're asked to believe that taking out Saddam Hussein will bring democracy to Iraq and the rest of the Arab world, miraculously repair the chaos wrought by our disengagement from the Middle East and win the war on terrorism all at once. The silver bullet that gets Saddam, it appears, will cure all international ills with the possible exception of the arrogance of the French.

While Saddam is an authentic genocidal monster, there are more plausible links between Al Qaeda and our dear friend Saudi Arabia than between Al Qaeda and Saddam; it could be argued that toppling him would strengthen Al Qaeda. But what the administration is mainly hoping is that a march on Baghdad will make us forget about Al Qaeda, wherever it may be lying in wait. It's not good P.R. for our war on terrorism that Islamic terrorists have been linked to eight attacks abroad since Daniel Pearl's murder in January, including the assassination of the Afghan vice president in Kabul and the slaughter of an American diplomat, among others, at a church in Islamabad.

The White House keeps saying that no decision has been made about Iraq, but of course a decision has been made. Richard Perle, an administration Iraq hawk, gave away the game in yesterday's Times: "The failure to take on Saddam after what the president said" would lead to "a collapse of confidence." Translation: If Mr. Bush doesn't get rid of Saddam after all this saber rattling, he will look like the biggest wimp since — well, his father. Democrats, as timid in challenging Mr. Bush on Iraq as they were in letting his tax cut through Congress, keep calling for a "debate." What world are they living in? Mr. Bush is no sooner going to abandon his pursuit of Saddam than his crusade to eliminate the estate tax. These are his only core beliefs.

The questions left to be debated now are who's going to pay for the war, who's going to be killed in it, who's going to police what could be a decade-long cleanup. (So far the answer to all three seems to be first and foremost: the go-it-alone Americans.) The loudest voices asking these questions are almost exclusively Republican: Brent Scowcroft, Chuck Hagel, Henry Kissinger, even Dick Armey. "If you think you're going to drop the 82nd Airborne on Baghdad and finish the job," said Senator Hagel, a Vietnam war hero, two weeks ago, "I think you've been watching too many John Wayne movies."

What's been most remarkable about the Iraq project so far is how an administration as effectively secretive as this one could spring so many leaks of invasion scenarios to the press. It strains credulity to assert that this is all an ingenious conspiracy to fake out Saddam. The leaks fake us out instead, inuring us to the new war to come.

The only mystery is when D-Day will be. Given the administration's history, I'd guess that it will put on the big show as soon as its political self-preservation is at stake. Certainly the White House's priorities are clear enough. It has guarded the records of Dick Cheney's energy task force and the S.E.C. investigation of Harken far more zealously than war plans that might endanger the lives of the so-called real Americans who will have to fight Saddam.