Scandals present dilemma for Bush

President warns firms against fraud and goes on defensive about his past

Seen as potential election issue

July 14, 2002|By David L. Greene | David L. Greene,SUN NATIONAL STAFF

WASHINGTON - George W. Bush had two roles to play last week.

There was the president who was under intense pressure to calm a nation nervous about a plummeting stock market and corporate scandals. He responded by warning executives not to engage in deceitful accounting to inflate profits.

And then there was the former Texas businessman who once served on the board of a company that overstated profits. He responded by going on the defensive.

"It was just an accounting firm making a decision, along with corporate officers, as to how to account for a complex transaction," Bush said at a news conference.

Such was the tightrope Bush walked in one of the toughest weeks of his presidency. Questions about the health of corporate America gripped attention and spooked the financial markets. Bush tried to restore confidence. But the more he made business abuses an issue, the more he was pressed about his actions a decade ago.

In a speech on Wall Street, Bush declared his desire to usher in an era of corporate responsibility. However, he declined to take responsibility for his role in questionable business activities, some of which helped him amass his personal fortune.

Bush's image as a president with close ties to corporate America received scant attention when the war on terrorism dominated headlines. Now, with accounting scandals and economic health topping the nation's agenda, Democrats hope they have found an issue that could leave Republicans vulnerable.

If corporate ethics remains a hot topic, Bush will have to settle on a strategy: Should he continue to play down his corporate past while trying to persuade Americans he won't tolerate business abuses that threaten the economy? Or should he step forward and detail his corporate activities in Texas to solidify his credibility as a reformer?

Senate Majority Leader Tom Daschle said it would be hard for Bush to criticize business executives until his past conduct is explained.

"As long as those outstanding questions are there, it puts the president in a difficult position, an uncomfortable position," said Daschle, a South Dakota Democrat.

To be sure, analysts say, if the economy - and the financial markets - improve, voters in the midterm elections will be less likely to punish the party in the White House. And Bush might suffer little damage from the questions being raised now.

But should ordinary Americans turn fearful about their financial health, Democrats might argue to voters that Bush failed to rescue the economy because he was unwilling to take on his corporate allies.

Judged on performance

"Americans judge presidents not on image, but on performance," said Andrew Kohut, director of the Pew Research Center for the People and the Press. "If things get better, he'll be credited with helping. If the stock market continues to languish, the chances of chipping away at his image get better."

Kohut added: "Any time the condition of the economy is being threatened by scandal, and the stock market reacts, the president is not having a good week no matter what he says."

Making matters worse for the White House is Vice President Dick Cheney's ties to Halliburton Co., an energy services and construction company that is being investigated by the Securities and Exchange Commission and is being sued by shareholders for its accounting practices. Cheney served as chief executive officer of Halliburton before becoming vice president.

"Both Bush and Cheney must be thinking to themselves, `Mother told me there'd be days like this,'" said Jack Pitney, a political science professor at Claremont McKenna College in California.

The president, Pitney said, is unlikely to face political damage from his actions in Texas unless there are new revelations. Bush's standing this year, and his party's success in November, Pitney suggested, will depend mostly on the health of the economy. Still, the professor said, he was surprised that Bush, even if he did nothing unethical as a businessman, did not even acknowledge at his news conference the questionable nature of his dealings then.

"He could have said, `I'm not sure of all the details, but it's my responsibility, and I made a mistake,'" Pitney said. "People like to hear leaders take responsibility."

White House reaction

At the White House, officials scurried all week to explain Bush's business activities and to insist that he was not being hypocritical in scolding those who engage in corporate malfeasance.

Aides argued that Bush's business background was old news that had been put to rest in Bush's previous campaigns and that the SEC had cleared him of any wrongdoing.

"After a week of noise about nothing," said Ari Fleischer, Bush's spokesman, "people are seeing a scandal-seeking Washington that's out of touch with a solution-seeking nation."

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