Bush seeks new spending to fight corporate fraud

SEC's budget could jump 73 percent over last year

January 12, 2003|By NEW YORK TIMES NEWS SERVICE

WASHINGTON - President Bush made good on a promise to seek a big increase in spending for the beleaguered Securities and Exchange Commission, saying yesterday that his budget for next year will propose a 73 percent increase from last year's level to help the commission fight corporate fraud.

Bush also disclosed that he would propose spending increases for the Justice Department to expand corporate fraud investigations, as well as more money to help the Labor Department recover pension-fund assets for the employees of companies victimized by fraud.

The announcement continued an effort by the administration to deal with last year's wave of corporate scandals, an issue that has weighed heavily on the stock market, exposed deficiencies at the commission and left Bush vulnerable to criticism from Democrats that he has not done enough to crack down on malfeasance by business executives and their accountants and bankers.

"The SEC and Justice Department are the referees of corporate conduct," Bush said in his weekly radio address. "Under my budget they will have every resource they need to enforce the laws that punish fraud and protect investors."

Democrats said in response that Bush had been slow to address the need for more funding to fight corporate wrongdoing. David Sirota, a spokesman for Democrats on the House Appropriations Committee, said Bush had "no credibility" on corporate responsibility.

"George Bush's promises to fully fund the SEC are about as believable as his Enron buddies saying they balance their books," Sirota said.

Yesterday's announcement was part of a campaign by the White House to highlight the relatively few substantial spending increases in what is sure to be an otherwise tight budget that Bush is scheduled to deliver to Congress early next month.

The president's budget proposal, covering the fiscal year starting on Oct. 1, will seek spending increases for the military and domestic security, but is expected to demand freezes or cuts in many other programs. This reflects the administration's desire to check the growth of government and partly offset the upward pressure being put on the budget deficit by the weak economy, tax cuts, the costs of battling terrorism and the potential bill for a war with Iraq.

Through much of last fall, Bush rebuffed efforts by Congress to win his approval for a large spending increase for the commission. But last month, Bush reversed course and pledged to nearly double the agency's budget.

Yesterday, Bush was specific, saying he would seek $842 million for the commission, 73 percent more than last year's level of just under $487 million. Congress has not yet agreed on a budget for the commission for the current fiscal year.

The president said he would also add $25 million to the Justice Department's budget for fighting corporate fraud: $16 million for the FBI to hire additional staff members, including 56 new agents, and $9 million for 29 new prosecutors and positions to support them.

The White House said Bush's plan would also include additional money to help the Labor Department recover $500 million in pension plan assets looted or lost because of corporate malfeasance.

In his radio address, Bush tied his efforts to combat corporate wrongdoing to the $670 billion tax cut he proposed this week, saying that both were essential to promoting robust economic growth.

"Our country has made great progress in restoring investor confidence and putting the recession behind us," the president said.

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