Frank Rich...on Corruption

September 25, 2005
Bring Back Warren Harding
By FRANK RICH
THERE are no coincidences. On Monday, as L. Dennis Kozlowski was slapped with 8 to 25 years in jail for looting Tyco International of some $150 million, the feds were making their first arrest of a high-ranking member of the Bush administration. The official was David Safavian, the chief of White House federal procurement policy who once worked for Jack Abramoff, the sleazy Republican lobbyist whose disreputable client list, in another noncoincidence, included Tyco. While it's an accident of timing that Mr. Safavian was collared at his suburban Virginia home just as Mr. Kozlowski was sent to the slammer in New York, the two events could not better bracket a corrupt era worthy of the Gilded Age.

Ours will be remembered as the Enron era. Enron itself is a distant memory - much like all that circa 2000 talk of a smoothly efficient C.E.O. presidency led by a Harvard M.B.A. and a former chief executive of Halliburton. But even as American business has since been purged by prosecutions and reforms, the mutant Enron version of the C.E.O. culture still rules in Washington: uninhibited cronyism, cooked books, special-favors networks, the banishment of whistle-blowers and accountability. More than ideology, this ethos has sabotaged even the best of American intentions, whether in Iraq or New Orleans. Unchecked, it promises greater disasters to come.

As recently as 10 days ago, when he resigned before his arrest, Mr. Safavian was the man who set purchasing policy for the entire federal government, including that related to Hurricane Katrina relief. The White House might as well have appointed a contestant from "The Apprentice." Before entering public service, Mr. Safavian's main claim to fame was as a lobbyist whose clients included Indian gaming interests and thuggish African regimes. Mr. Safavian now faces charges of lying and obstructing the investigation of Mr. Abramoff, the Tom DeLay-Ralph Reed-Grover Norquist pal who is being investigated by more agencies than looked into 9/11. Mr. Abramoff's greasy K Street influence-peddling network makes the Warren Harding gang, which operated out of its own infamous "little green house on K Street," look like selfless stewards of the public good.

You know that the arrest of Mr. Safavian, one of three known Abramoff alumni to migrate into the administration, is the start of something big. Alberto Gonzales's Justice Department announced it only after Mr. Safavian had appeared in court and had been released without bail. The gambit was clearly intended to keep the story off television, and it worked.

It won't for long. The Enron odor emanating from Mr. Safavian is of a piece with the rest of the cronyism in the Katrina preparedness package. The handing off of FEMA from President Bush's 2000 campaign manager, Joe Allbaugh, to Mr. Allbaugh's even less qualified buddy, Michael Brown, in 2003 is now notorious. (The two men have been friends for 25 years but were not college roommates, as I wrote here last week.) But that's only the beginning: the placement of hacks like "Brownie" and Mr. Safavian in crucial jobs hasn't been slowed one whit by what went down on their watch in New Orleans.

Witness the nomination of Julie Myers as the new head of immigration and customs enforcement at the Homeland Security Department. Though the White House attacked the diplomat Joseph Wilson for nepotism because he undertook a single pro bono intelligence mission while his wife was at the C.I.A., it thought nothing of handing this huge job to a nepotistic twofer: Ms. Myers is the niece of Gen. Richard Myers and has just married the chief of staff for the homeland security secretary, Michael Chertoff. Her qualifications for running an agency with more than 20,000 employees and a $4 billion budget include serving as an associate counsel under Kenneth Starr; in that job, she helped mastermind the costly and doomed prosecution of Susan McDougal, and was outwitted at every turn by the defense lawyer Mark Geragos.

Ms. Myers is only the latest example of Mr. Chertoff's rolling the dice with Americans' safety during his brief tenure in Homeland Security. After the bombings in London in July, he vowed to maximize his department's "finite human and financial capital to attain the optimal state of preparedness." Yet the very same day, the president nominated Tracy Henke as Homeland Security's new executive director of the Office of State and Local Government Coordination and Preparedness. Ms. Henke, a John Ashcroft political appointee at the Justice Department, has since been unmasked as an Enron-style spinner of numbers. As Eric Lichtblau of The Times reported in August, it was she who ordered the highly regarded nonpartisan head of the Bureau of Justice Statistics, Lawrence Greenfeld, to delete a reference to politically embarrassing data in a government press release for a report on racial profiling. When Mr. Greenfeld complained, he was demoted.

Imagine Ms. Henke, in her Homeland Security job, having sway over press releases about our disaster readiness. There is likely to be nothing but good news until it's too late. But if the hiring of the likes of Ms. Henke, Ms. Myers and Mr. Safavian is half of the equation in Enron governance, the other half is the punishing of veteran civil servants like Mr. Greenfeld for doing their jobs honestly. Even as it fills its ranks with Abramoff golf-junket partners, political flunkies and underemployed relatives, the administration silences those who, like Sherron Watkins at Enron, might blow the whistle on any Kozlowski or Ebbers or Rigas fleecing or betraying the taxpayers. Three weeks before Mr. Safavian's arrest, the Army Corps of Engineers demoted another procurement official, Bunnatine Greenhouse, who was a 20-year veteran in her field. Her crime was not obstructing justice but pursuing it by vehemently questioning irregularities in the awarding of some $7 billion worth of no-bid contracts in Iraq to the Halliburton subsidiary Kellogg Brown & Root.

Ms. Greenhouse and Mr. Greenfeld are only two of the many whistle-blowers done in by this administration so far. (Congressman Rahm Emanuel, Democrat of Illinois, lists nine on his Web site.) Even top government officials who are not whistle-blowers, merely truth-tellers, are axed. Lawrence Lindsey, the president's chief economic adviser, was pushed out after he accurately projected the cost of the Iraq war at $100 billion to $200 billion. Gen. Eric Shinseki, the Army chief of staff, was shunted aside after he accurately estimated the number of required troops ("several hundred thousand") for securing Iraq. Paul Wolfowitz and Donald Rumsfeld, who presented rosy scenarios of getting the job done with Iraqi oil income and low troop deployments, stayed on to bungle the war.

Their errors were compounded when the administration staffed the post-Saddam American occupation with exactly the same kind of appointees it would later bring to homeland security: the two heads of "private sector development" in Iraq were a former Bush fund-raiser in Connecticut and a venture capitalist who just happened to be Ari Fleischer's brother. As The Washington Post reported last year, major roles in the L. Paul Bremer regime were given to 20-somethings with no foreign service experience or knowledge of Arabic simply because they had posted their résumés at the Heritage Foundation, the same conservative think tank where Mr. Bremer had chaired a task force.

The damage done to the mission in Iraq and homeland security alike by Enron governance is immeasurable. Administration apologists who now claim that hurricane relief will bring still more examples of innovative, C.E.O.-style governmental enterprise (Mr. Bush's "Gulf Opportunity Zone," for instance) conveniently sidestep the harsh truth that such schemes are destined to be as empty and corrupt as Andrew Fastow's Raptor partnerships at Enron once they're staffed from the apparently infinite crony talent pool.

YET it's not only the administration that is to blame, any more than it is only the executives who are at fault when a corporation rots. Culpability also belongs to the board that rubber-stamps the shenanigans - to wit, Congress. Republicans in the Senate are led by Bill Frist, who, in the grandest Enron manner, claimed last week that it was to avoid a conflict of interest that his supposed "blind trust" unloaded all of his holdings in a Frist family-founded company just before its stock tanked. (Federal prosecutors and the S.E.C. are investigating.) As for the Democrats, they are nonpareil at posturing about the unstoppable nomination of John Roberts - a conservative, to be sure, but the rare Bush nominee who seems both qualified for his job and unsullied by ethical blemishes. Yet when David Safavian was up for a job involving hundreds of billions of dollars, and much of his dubious résumé was fully known, he was approved by the ranking Democrat, Joe Lieberman, and all his colleagues of both parties on the Governmental Affairs Committee.

Which is to say that the rest of us, the individual shareholders in government who have voted in our Enron-era politicians, are responsible, too.



Copyright 2005 The New York Times Company

Two By Krugman

September 23, 2005
The Big Uneasy
By PAUL KRUGMAN
Although Hurricane Katrina drowned much of New Orleans, the damage to America's economic infrastructure actually fell short of early predictions. Of course, Rita may make up for that.

But Katrina did more than physical damage; it was a blow to our self-image as a nation. Maybe people will quickly forget the horrible scenes from the Superdome, and the frustration of wondering why no help had arrived, once cable TV returns to nonstop coverage of missing white women. But my guess is that Katrina's shock to our sense of ourselves will persist for years.

America's current state of mind reminds me of the demoralized mood of late 1979, when a confluence of events - double-digit inflation, gas lines and the Iranian hostage crisis - led to a national crisis of confidence.

Start with economic confidence. The available measures say that consumer confidence, which was already declining before Katrina hit, has now fallen off a cliff. One well-respected survey, from the University of Michigan, says that consumer sentiment is at its lowest level since George Bush the elder was president and "America: What Went Wrong?" was a national best seller.

It's true that gasoline prices have receded from their post-Katrina peaks. But even if Rita spares the refineries, a full recovery of economic confidence seems unlikely. For one thing, it looks as if we're in for a long, cold winter: natural gas and fuel oil are still near their price peaks. And most families were already struggling even before Katrina. A few weeks ago, the Census Bureau reported that in 2004, while Washington and Wall Street were hailing a "Bush boom," poverty increased, and median family income failed to keep up with inflation. It's safe to assume that most families did even worse this year.

Then there's the war in Iraq, which is rapidly becoming impossible to spin positively: the purple fingers have come and gone, and there are no more corners to turn. As a result, views that people like Howard Dean were once derided for are becoming the majority opinion. Most Americans say the war was a mistake; a majority say the administration deliberately misled the country into war; almost 4 in 10 say Iraq will turn into another Vietnam.

And many people are outraged by the war's cost. The general public doesn't closely follow economists' arguments about the risks of budget deficits, or try to decide between competing budget projections. But people do know that there's a big deficit, that politicians keep calling for cuts in spending and that rebuilding after Katrina will cost a lot of money. They resent the idea that large sums are being spent in a faraway country, where we're waging a war whose purpose seems increasingly obscure.

Finally, fragmentary evidence - like a sharp drop in the fraction of Americans who approve of President Bush's performance in handling terrorism and the failure of large crowds to show up for the Pentagon's "America Supports You" march and country music concert - suggests that the confluence of Katrina and the fourth anniversary of 9/11 has caused something to snap in public perceptions about the "war on terror."

In the early months after 9/11, America's self-confidence actually seemed to have been bolstered by the attack: the Taliban were quickly overthrown, and President Bush looked like an effective leader. The positive perception of what happened after 9/11 has, needless to say, been a mainstay of Mr. Bush's political stature.

But now that more time has elapsed since 9/11 than the whole stretch from Pearl Harbor to V-J Day, people are losing faith. Osama, it turns out, could both run and hide. It's obvious from the evening news that Al Qaeda and violent Islamic extremism in general are flourishing.

And the hapless response to Katrina, which should have been easier to deal with than a terrorist attack, has shown that our leaders have done virtually nothing to make us safer.

And here's the important point: these blows to our national self-image are mutually reinforcing. The sense that we're caught in an unwinnable war reinforces the sense that the economy is getting worse, and vice versa. So we're having a crisis of confidence.

It's the kind of crisis that opens the door for dramatic political changes - possibly, but not necessarily, in a good direction. But who will provide leadership, now that Mr. Bush is damaged goods?



Copyright 2005 The New York Times Company

September 26, 2005
Find the Brownie
By PAUL KRUGMAN
For the politically curious seeking entertainment, I'd like to propose two new trivia games: "Find the Brownie" and "Two Degrees of Jack Abramoff."

The objective in Find the Brownie is to find an obscure but important government job held by someone whose only apparent qualifications for that job are political loyalty and personal connections. It's inspired by President Bush's praise, four days after Katrina hit, for the hapless Michael Brown, the director of the Federal Emergency Management Agency: "Brownie, you're doing a heck of a job." I guess it depends on the meaning of the word heck.

There are a lot of Brownies. As Time magazine puts it in its latest issue, "Bush has gone further than most presidents to put political stalwarts in some of the most important government jobs you've never heard of." Time offers a couple of fresh examples, such as the former editor of a Wall Street medical-industry newsletter who now holds a crucial position at the Food and Drug Administration.

A tipster urged me to look for Brownies among regional administrators for the General Services Administration, which oversees federal property and leases. There are several potential ways a position at G.S.A. could be abused. For example, an official might give a particular businessman an inside track in the purchase of government property - the charge against David Safavian, who was recently arrested - or give a particular landlord an inside track in renting space to federal agencies.

Some of the regional administrators at G.S.A. are longtime professionals. But the regional administrator for the Northeast and Caribbean region, which includes New York, has no obvious qualifications other than being the daughter of the chairman of the Conservative Party of New York State. The regional administrator for the Southwest, appointed in 2002 after a failed bid for his father's Congressional seat, is Scott Armey, the son of Dick Armey, the former House majority leader.

You get the idea. Go ahead, see what - or rather who - you can come up with.

Jack Abramoff is a lobbyist who was paid huge sums by clients such as casino-owning Indian tribes and sweatshop operators on Saipan. Two Degrees of Jack Abramoff is inspired by the remarkable centrality of Mr. Abramoff, who was indicted last month on charges of fraud, in Washington's power structure.

The goal isn't to find important political players who were chummy with Mr. Abramoff - that's too easy. Instead, you have to find people linked by employment. One degree of Jack Abramoff is someone who actually worked for the lobbyist. Two degrees is a powerful Washington figure who hired someone who formerly worked for Mr. Abramoff, or who had one of his own former employees go to work for Mr. Abramoff.

Grover Norquist, the powerful antitax lobbyist, is a one-degree man. Mr. Norquist was Mr. Abramoff's campaign manager when he ran for chairman of the College Republican National Committee, then became his executive director. And don't dismiss this as kid stuff: as Franklin Foer explains in The New Republic, the college Republican organization pays serious salaries and has been a steppingstone for the likes of Lee Atwater and Karl Rove.

Mr. Rove, by the way, is a two-degree man. He hired Susan Ralston, Mr. Abramoff's personal assistant, as his own personal assistant. For those unfamiliar with what that means, Ms. Ralston became Mr. Rove's gatekeeper - the person who determined who got to see the great man.

Tom DeLay, the House majority leader, is also a two-degree man. Tony Rudy, who worked for Mr. DeLay in several capacities, left to work for Mr. Abramoff.

Finally, somebody should be considered a two-degree man on account of the recently arrested Mr. Safavian, who worked for both Mr. Abramoff and Mr. Norquist, then went first to the G.S.A. and on to the White House Office of Management and Budget, where he oversaw procurement policy. But I'm not sure who gets credit for hiring Mr. Safavian.

O.K., enough joking. The point of my games - which are actually research programs for enterprising journalists - is that all the scandals now surfacing are linked. Something is rotten in the state of the U.S. government. And the lesson of Hurricane Katrina is that a culture of cronyism and corruption can have lethal consequences.



Copyright 2005 The New York Times Company