Money, money, money

July 18, 2002

IF BUSH BACKERS want to understand the populist buzzsaw they may face in this fall's mid-term election, they need not look beyond last Monday:

$50,000: While President Bush was in Alabama touting the economy's strength -- and stock market indexes were sinking to five-year lows -- he also starred at a fund-raiser for the state's Republican gubernatorial candidate. This included a VIP reception for $50,000 donors who were allowed to have photos taken with the president. Who's got that cash? Evidently plenty of folks. Mr. Bush raised $4 million, setting a single-event record for him and bringing his total this year to almost $100 million -- said to eclipse even President Clinton's aggressive fund raising at the same point in his term.

$500,000: Federal Reserve chief Alan Greenspan says greed's not greater nowadays, only "avenues to express" it. A prime example: the growth of stock options. A recent Fed study found that if companies had properly accounted for options' costs, average earnings would drop by a third.

More firms are treating options as expenses; the vast majority still don't. The sweeping corporate regulation bill unanimously passed by the Senate on Monday wouldn't require it -- after pressure on Democrats by big-time contributor John Doerr, a leading Silicon Valley venture capitalist. Mr. Bush agrees.

The winners: relatively few top executives, who get half of all options, averaging $500,000. When hourly employees get options, they're worth $8,000 -- far short of a photo with Mr. Bush. In any case, the losers: millions of investors whose holdings are diluted by every option exercised.

$28.5 million: Also Monday, reports circulated that the Securities and Exchange Commission is investigating Vice President Dick Cheney's business deals. Of course, this follows questions about Mr. Bush's deals.

The president turned a worthless stake in an energy company into a $15 million share of the Texas Rangers baseball club. The vice president reportedly made $45 million as CEO of the Halliburton Co., $28.5 million from stock and stock-option profits after he left -- but before its stock price plunged by 75 percent and it was noticed that Halliburton had been booking projected cost overruns as income.

The vice president isn't talking. The president says his lawyers messed up, and anyway such matters aren't black and white. This isn't much different from WorldCom executives refusing to testify before Congress.

$6 trillion: Monday was the 10th anniversary of Mr. Clinton's nomination by the Democrats, a campaign in which he beat President Bush's father with James Carville's famed advice: "It's the economy, stupid."

True enough, the economy's still sound. Trouble is, investor confidence is in the pits -- for good reason. The market's back to 1997 levels. Since 2000, 80 million stockholders have lost an estimated $6 trillion. A sharp fall in capital-gains tax revenue -- along with uncontrolled federal spending -- has turned Clinton-era budget surpluses into a $165 billion deficit this year.

Mr. Bush entered office vowing not to repeat the sins of his father, who lost immense good will from the gulf war and a second term in the early 1990s recession. He now should fear that, with more days like last Monday, voters will start connecting $50,000 to $500,000 to $28.5 million to $6 trillion.

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