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Jewish World Review March 22, 2002 / 9 Nisan, 5762

Dick Morris

Dick Morris
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Consumer Reports


Enron scandal will not trigger a wave of economic populism


http://www.NewsAndOpinion.com | In the past 30 years, federal legislators have fallen victim to epidemics that ravage their ranks cyclically. In the 1970s, absenteeism was no big deal - until dozens lost their seats for not occupying them often enough. In 1992, the bounced checks on the House Bank, once a perk, became a deadly issue that swept through Congress like influenza.

As issues rise in public consciousness and voters are forced to grasp the complexities of legislative questions they once ignored, votes that once counted for little, suddenly loom large in election campaigns.

The Enron scandal, deeply seared into public awareness, is likely to produce a crop of reform legislation. The issues these bills will address, once too complex and arcane for political campaigns, may well be the stuff of which the negative ads of the future are made.

This time, voters will be paying attention when Congress votes on the intricacies of securities legislation. Special-interest votes will increasingly matter. The old equation of voting as the industry dictates in return for campaign contributions won't work anymore. On this issue, the money isn't worth the exposure.

The abuses of Arthur Andersen assure that expansion of the liability of accountants and other professionals for the fraudulent acts of their clients will become an increasingly popular cause. The battle between "proportionate" and "joint and several" liability for accounting firms may become as well-known as "mandatory minimum sentences" or "three strikes laws" or "caps on punitive damages" - onetime technical terms that emerged as political issues.

Voters understand that a firm that is called upon to audit the books of a public company cannot be asked, at the same time, to consult for that corporation. They will closely follow legislation to limit the activities of accounting firms. As more and more average people invest in the stock market, they increasingly grasp the invitation to fraud implicit in "safe harbor" clauses that protect those who mislead them into making bad investments.

The proposal to require companies to expense stock options for their executives may once have been too technical for voters to notice. But no more. A politician who casts a vote on this issue with the view that it's too complicated for voters to notice will be surprised when he sees the issue explained lucidly and articulately in a 30-second opposition negative ad.

In a similar vein, voters will strongly support legislation to lower the bar for penalizing corporate executives for the conduct of their companies and will not be forgiving of those who vote the other way.

The Enron scandal will not trigger a wave of economic populism. Too many voters invest too much of their money on Wall Street for that boulevard to become the bogeyman it once was in our politics. But the growing financial sophistication of voters who watch Neal Cavuto on the Fox News Channel and follow MSNBC for hour-by-hour market coverage changes the playing field for Enron issues.

Voters can now follow the complexity of legislative proposals with comparative ease and clearly understand what each vote on each issue really means. Politicians who think they can skate by because the issues are too intricate for voters to follow are in for a shock.

But beyond any specific vote, politicians may find that money from accounting firms and other such industry groups costs more than it is worth. Such donations may become today what utility money was during the energy crisis of the 1970s - too hot to handle. Many a senator and congressman may find, to his dismay, that all the ads he can buy with donations from these sources are not enough to compensate for the negative ads that these very donations bring down upon his head.

Once congressmen justified bouncing checks by saying that everybody does it. Now they say the same thing about taking contributions from Enron and Arthur Andersen.

But the Enron scandal may bring down another crop of legislators, even though "everybody did it."



JWR contributor Dick Morris is the author of, among others, The New Prince. Comment by clicking here.

Up

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02/01/02: They all talk in the end
01/30/01: The odd couple: Chris Dodd and Arthur Andersen
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01/18/01: Dubya & the 'vision thing'
01/14/01: The Rumsfeld Doctrine 01/03/01: A President Gore would have been a disaster
01/03/02: Clinton's priority: Political correctness over fighting terror
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11/14/01: Clinton's failure to mobilize America to confront foreign terror after the 1993 attack led directly to 9-11 disaster
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11/08/01: The death of the white liberal
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© 2001, Dick Morris