WS>>Enronomics Explained

carl william spitzer iv cwsiv_2nd at JUNO.COM
Thu Feb 21 22:58:17 MST 2002


          By Richard Cohen
          Tuesday, January 29, 2002; Page A19

          The principle that the government can and should run  a
     deficit to stimulate a sick economy was first propounded  by
     John Maynard Keynes. This is called Keynesian Economics. The
     principle  that the government can and should run a  deficit
     when  it does not have to was developed by George  W.  Bush.
     This is called Enronian Economics.

          It should not be surprising that Enronian Economics has
     taken  over  Washington. Both the Texas-based firm  and  the
     Texas-based president have so much in common. For one thing,
     the president was once a friend of Enron's former  chairman,
     Ken Lay. He called him Kenny Boy, but since the collapse  of
     the firm, he doesn't call him at all.

          But more than that personal connection between the  two
     was  --  and remains -- a shared business  philosophy.  Bush
     recently expounded the doctrine that a tax cut postponed  is
     the  same as a tax hike. In other words, a bird in the  bush
     is worth two in the hand, or something like that. Or, to put
     it  another way, a chicken that is unhatched can be  counted
     -- especially if the hatching occurs in the out years.

          This,  of course, is Enronian in both its  essence  and
     conception. Enron, too, counted things that didn't exist  as
     if they did. I am referring now to pr ofits. And it  counted
     things that did exist as if they didn't. I am referri ng now
     to losses. By counting one and not the other, Enron was able
     to  present  itself as the  seventh-largest  corporation  in
     America. This assertion, as Bush himself would tell you, was
     entirely faith-based.

          And  so, as luck would have it, is the president's  tax
     plan.  He  has managed, in a way that would make  Kenny  Boy
     green  with  envy, to make a projected  $4  trillion  budget
     surplus  disappear.  In this case, the money  has  not  been
     parked  in some offshore tax haven. Nosiree. Bush did it  by
     giving tax breaks to the rich and the poor alike over a  10-
     year period.

          This plan, as brilliantly counterintuitive as Keynes's,
     would give 37.6 percent of the tax cut to the top 1  percent
     of  the population. In other words, the very rich would  get
     the  most.  (Who could argue with that?) So that,  just  for
     instance, Kenny Boy would have received an annual tax  break
     of  $53,123  -- had his company not collapsed  at  his  very
     feet.

          So, if that had not happened -- and as far as Bush  and
     Lay are concerned what doesn't happen happens -- the  chair-
     man of Enron, who earned $8.3 million in salary and  bonuses
     in 2000, would have saved more from the Bush tax pla n  than
     what the average American earns in an entire year.

          Stop right there! I know what you're going to say:  But
     Lay  earned  his  money. It's  his,  not  the  government's.
     Indeed. I could not have put it better myself. Moreover,  he
     earned  the money because his company didn't earn any  money
     at  all.  So he gets a rebate on money he made by  his  com-
     pany's not making any money and deceiving its employees  and
     stockholders. Is this a great country or what?

          Sen. Edward M. Kennedy apparently doesn't think so.  He
     has proposed postponing tax cuts for people such as  himself
     -- the very wealthy. His plan would not affect 95 percent of
     American  families  -- those making less than  $130,  000  a
     year.  But for reasons I have already made perfectly  clear,
     the administration has -- fairly and justly -- characterized
     the Kennedy plan as a ta x increase.

          Lest you think there is anything political in all this,
     let me point out that on "Meet The Press" recently, the  new
     chairman  of the Republican Nationa l Committee,  a  certain
     Marc Racicot, even called Bush's brother, Jeb, a dirty  tax-
     increaser  for  postponing a tax break  for  Floridians.  "I
     think the argument could be made, in all fairness, yes,"  he
     said.  It was that "in all f airness" that convinced  me  of
     his utter sincerity.

          Alas,  we  are approaching the end of  this  particular
     column. Too bad, because there was so much more I wanted  to
     say -- maybe something about George Or well and how politics
     abases language and, with it, thought. But, instead, I  will
     tip  my hat to George W. Bush, who has combined Orwell  with
     Keynes to propound The Anticipation Theory of Taxation.

          It's as plain as the nose on your foot.

http://www.washingtonpost.com/wp-dyn/articles/A52561-2002Jan28.html

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