Saturday, August 28, 2004

So Let's All Smear John Kerry?

Saturday, August 28, 2004

by Greg Palast

In 1968, former Congressman George Herbert Walker Bush of Texas, fresh from voting to send other men's sons to Vietnam, enlisted his own son in a very special affirmative action program, the 'champagne' unit of the Texas Air National Guard. There, Top Gun fighter pilot George Dubya was assigned the dangerous job of protecting Houston from Vietcong air attack.

This week, former Lt. Governor Ben Barnes of Texas 'fessed up to pulling the strings to keep Little George out of the jungle. "I got a young man named George W. Bush into the Texas Air Guard - and I'm ashamed."


That's far from the end of the story. In 1994, George W. Bush was elected governor of Texas by a whisker. By that time, Barnes had left office to become a big time corporate lobbyist. To an influence peddler like Barnes, having damning information on a sitting governor is worth its weight in gold , or, more precisely, there's a value in keeping the info secret.

Barnes appears to have made lucrative use of his knowledge of our President's slithering out of the draft as a lever to protect a multi-billion dollar contract for a client. That's the information in a confidential letter buried deep in the files of the US Justice Department that fell into my hands at BBC television.

Here's what happened. Just after Bush's election, Barnes' client GTech Corp., due to allegations of corruption, was about to lose its license to print money: its contract to run the Texas state lottery. Barnes, says the Justice Department document, made a call to the newly elected governor's office and saved GTech's state contract.

The letter said, "Governor Bush ... made a deal with Ben Barnes not to rebid [the GTech lottery contract] because Barnes could confirm that Bush had lied during the '94 campaign."

In that close race, Bush denied the fix was in to keep him out of 'Nam, and the US media stopped asking questions. What did the victorious Governor Bush's office do for Barnes? According to the tipster, "Barnes agreed never to confirm the story [of the draft dodging] and the governor talked to the chair of the lottery two days later and she then agreed to support letting GTech keep the contract without a bid."

And so it came to pass that the governor's commission reversed itself and gave GTech the billion dollar deal without a bid.

The happy client paid Barnes, the keeper of Governor Bush's secret, a fee of over $23 million. Barnes, not surprisingly, denies that Bush took care of his client in return for Barnes' silence. However, confronted with the evidence, the former Lt. Governor now admits to helping the young George stay out of Vietnam.

Take a look at the letter yourself - with information we confirmed with other sources - at

Frankly, I don't care if President Bush cowered and ran from Vietnam. I sure as hell didn't volunteer ... but then, my daddy didn't send someone else in my place. And I don't march around aircraft carriers with parachute clips around my gonads talking about war and sacrifice.

More important, I haven't made any pay-offs to silence those who could change my image from war hero to war zero.


By the way: I first reported this story in 1999, including the evidence of payback, in The Observer of London. US media closed its eyes. Then I put the story on British television last year in the one-hour report, "Bush Family Fortunes." American networks turned down BBC's offer to run it in the USA. "Wonderful film," one executive told me, "but Time Warner is not going to let us put this on the air." However, US networks will take cash for advertisements calling Kerry a Vietnam coward.

The good news is, until Patriot Act 3 kicks in, they can't stop us selling the film to you directly. The updated version of "Bush Family Fortunes," with the full story you still can't see on your boob tube, will be released next month in DVD. See a preview at

For more on our president's war years and the $23 million payment, read this excerpt from the New York Times bestseller, The Best Democracy Money Can Buy.

Subscribe to Greg Palast's reports at

New York Times Editorial on the Financial Reality of the United States

August 28, 2004
Economic Reality Bites

If anyone required further evidence that President Bush's fiscal policies have not worked the way he says they have, this week's report from the Census Bureau provided it. In brief, from 2001 through 2003, poverty increased, income stagnated and the ranks of the uninsured grew, while the United States spent some $400 billion on tax cuts, which mainly benefited wealthy families. The Bush administration seemed intent on minimizing the political impact of the report, releasing the data on Thursday, instead of the usual date in late September, to get it done before the convention. But the numbers spoke for themselves. Since Mr. Bush came to power, 4.3 million people have fallen below the poverty line, set at $18,660 for a family of four in 2003, bringing the total number of people living in poverty in 2003 to 35.9 million, or 12.5 percent of the American population.

The poor will always suffer most from recession and job losses. But one sure way to stem the slide into poverty is by bolstering state programs that directly benefit the poor, like job training, health care and child care. The administration devoted only 3 percent of its stimulus spending to aid for state governments. Congress and the administration have also done nothing to enhance the Temporary Assistance for Needy Families program. As a result, while the number of children living in poverty increased by 11 percent over the past three years, the number of children receiving welfare declined by 10 percent over the same period. Adding to the gloom, median family income - $44,853 in 2000 - fell by $1,535 during the administration's first three years, while the number of Americans without health insurance, according to the Census Bureau, grew by 5.2 million, to 45 million in 2003. The president and Congress have largely ignored this problem, while leaving little room to address it later by ballooning the deficit with tax cuts.

A Bush campaign official suggested that the census report was misleading because it did not reflect the economic growth of the past 11 months. In fact, the report covers all of 2003. And in three of the seven months of 2004 for which data is available, job growth has not been strong enough to even keep up with population growth. Moreover, a Commerce Department report released yesterday showed that economic momentum slowed in the spring, with the economy expanding at a rate of only 2.8 percent, the slowest advance in more than a year, versus 3.0 percent as originally reported. The downward revision reflects June's record trade deficit of $55.8 billion.

It remains to be seen whether this week's bad economic news turns out to be bad political news for Mr. Bush. But for tens of millions of Americans, it is already old news.

Copyright 2004 The New York Times CompanyAugust 28, 2004
Warning Anew About Retiree Expectations

ACKSON HOLE, Wyo., Aug. 27 - The chairman of the Federal Reserve Board, Alan Greenspan, warned on Friday that the federal government might have to scale back promises to the elderly in programs like Social Security and Medicare.

"As a nation, we owe it to our retirees to promise only the benefits that can be delivered," Mr. Greenspan told a conference here sponsored by the Federal Reserve Bank of Kansas City.

"If we have promised more than our economy has the ability to deliver to retirees without unduly diminishing real income gains of workers, as I fear we may have, we must recalibrate our programs," he said.

Mr. Greenspan has expressed similar views many times in the past, but he went further on Friday by warning political leaders that they cannot count on continued rapid rises in productivity and faster economic growth to solve the problems ahead.

Economists have warned for years that retirement and health care costs will soar as the baby boom generation reaches retirement age and as the number of workers shrinks as a share of total population.

Mr. Greenspan's message was almost equally uncomfortable for Democrats as Republicans.

By implicitly calling for reductions in future benefits to the elderly, Mr. Greenspan attacked a basic tenet of Democratic vows to protect benefits come what may.

But Mr. Greenspan conspicuously avoided any mention of the solution eagerly proposed by President Bush and many other Republicans: to partly privatize the Social Security system by letting people divert some of their payroll taxes to individual savings accounts that they would control.

Noting that the share of the American population older than 65 will climb from 12 percent to 20 percent by 2035, the Fed chairman said the United States needed to increase savings, increase spending on education and maintain the pace of productivity growth.

Heightened productivity growth of workers "offers the greatest potential" for allowing the country to support its aging population without lowering the overall standard of living, he said.

But higher productivity will require continued investment, and the United States' savings rate remains very low. Federal deficits, which have hit records under President Bush, have also depressed the national savings rate and increased the nation's need to borrow money from abroad.

"The decade-long acceleration in productivity and economic growth has seemingly muted the necessity of making such choices" between reduced benefits or higher taxes, Mr. Greenspan said. But, he warned that "history discourages the notion that the pace of growth will continue to increase."

If the population over 65 years of age doubles by 2035, he continued, federal deficits will substantially increase.

"But how these deficit trends are addressed can have profound economic effects," Mr. Greenspan said. Increasing payroll tax contributions could make the problem worse, by possibly reducing the incentives for workers to continue working.

Without going into details, the Fed chairman said that benefit formulas could be adjusted so that entitlements to retirees in the future climb more slowly than they would under current law.

"Early initiatives to address the economic effects of the baby boom retirements could smooth the transition to a new balance between workers and retirees," he said.

In an implicit attack on the new expansion of Medicare to provide some prescription drug benefits, which is expected to cost more than $530 billion over the next 10 years, Mr. Greenspan said policy makers "must be especially vigilant" to create benefits only when they can truly be afforded.

Mr. Greenspan made his comments at the start of the Federal Reserve Board's annual economic symposium, which is devoted this year to the economic impact of global demographic changes.

But the issue is also a backdrop to the presidential election campaign. President Bush and many Republicans are promoting the idea of replacing part of the traditional Social Security system with private savings accounts.

The Democratic nominee, Senator John F. Kerry, has opposed such plans and has vowed to ensure that benefits are not reduced in the future.

Neither candidate has addressed the long-term challenges in any detail. Most analysts say that the looming financial shortfalls of Social Security are relatively modest and can be addressed by incremental changes to benefit formulas and a gradual delay in retirement ages.

The problems confronting Medicare are expected to be far more severe, because costs have been rising rapidly per person at the same time that the population of retirees has been increasing.

Copyright 2004 The New York Times Company

And Then There's Alan Greenspan!