March 6, 2003
asks Arianna Huffington:
In her indictment of Bush-style corporate cronyism, Arianna Huffington offers bountiful proof that Gore Vidal was right when he said: "What we have in this country is socialism for the rich and free enterprise for the poor." In "Pigs at the Trough," Arianna argues that greedy incompetents have taken over the free enterprise system and hijacked our democratic institutions to serve their own insatiable financial gluttony.
Most tellingly, these "masters of industry" are really just modern con artists and river boat gamblers, using companies to amass personal fortunes by bleeding them dry and then jumping ship before they collapse. You might say that Arianna's trenchant, droll analysis helps to explain why our "M.B.A. President" represents the seamy side of the business world: Corporate Cronyism Unlimited.
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BUZZFLASH: In your great book "Pigs at the Trough," you wrote, "The economic game is not supposed to be rigged like some shady ring toss on a carnival midway." I think your book pretty well lays out the case that you're not buying the Republican argument that we have a completely free market.
ARIANNA HUFFINGTON: On the contrary, it's very clear that we have a very rigged market and have different rules and laws applied depending on whether you live in what I'm calling the upstairs America or the downstairs America. I give a lot of evidence and examples of that. I start with the latest stock analysts who were caught red-handed defrauding the public, but there are still no indictments, and nobody having admitted any wrongdoing.
Now that's a very different set of rules and laws than apply to the rest of America. If you or I were caught stealing $200 or food from a grocery store, there wouldn't be any plea bargain without admitting wrongdoing. You can defraud the public of millions of dollars, and you get away with a fine. It may sound like a lot of money to normal people, but the fines are very little compared to what banks and analysts and CEOs are making.
BUZZFLASH: One of your chapters is "The Bloodless Coup The Corporate Takeover of Our Democracy." When did this coup occur, or has it been part of the American economy? You have a quote from Theodore Roosevelt back in 1910, that corporate power was a threat to our free market. Or has it just become more prevalent in recent years?
HUFFINGTON: It's become so much more prevalent, and the difference is the magnitude of the corporate takeover of our democracy. Right now, you have 20,000 registered lobbyists. And their whole purpose for existing is to promote the corporate interests that pay them and, in the process, undermine the public interest. That is why you have this public policy fiasco that I write about in the book that does not make sense, unless you know who pays these lobbyists.
I've written a lot about this using SUVs as an example in the book. We have the SUV loophole that allows the largest SUVs not to have to comply with fuel efficiency standards. We give tax credits to very large SUVs. I mean, this is public policy made in a lunatic asylum. And it only makes sense when you look at the millions of dollars in lobbying that the three Detroit automakers pay every year in political contributions.
And that applies in so many areas, including the area of corporate welfare. When you see that we're spending close to $100 billion a year giving corporate welfare in the form of subsidies, credits and loan guarantees to American corporations, that's hardly the free market. Especially when you contrast that with our leaders' concern that no poor person on welfare gets away with anything and the administration's wish to increase the number of hours, for example, that working mothers who are on welfare end up working from 30 to 40 hours at least.
The other thing that I mention in the book is tax havens. The fact that we are allowing American corporations to incorporate in tax havens defrauds the American taxpayer of $70 billion a year. I use the word "defrauding" deliberately. I know it's legal, but my whole point is it should not be legal.
BUZZFLASH: You also quote Gore Vidal who said, "What we have in this country is socialism for the rich and free enterprise for the poor." On that same page, you mention that the orgy of money-grubbing by the corporate cabal has inflicted real long-lasting pain on a host of deceived Americans. And I wanted to ask you about "deceived." I mean, obviously this could only happen - where we have socialism for the rich and free enterprise for the poor - if most of the country is deceived. Americans generally believe we do have a free enterprise system that works. How is this deception accomplished, that most people mistakenly believe that our free enterprise system is not rigged and it rewards the hard working?
HUFFINGTON: Well, most people actually have given up on the beast and most people are not voting. People have become extremely cynical about the way the system works, especially young people. And the reason why I very much wanted to do a college tour is because I believe that there is a way right now to have a populist movement where we can turn the younger and even the cynics into action. We can convince people that they can actually change things.
And that's why I give a lot of examples of where we have been able to change things. Some are small and some are large. The administration proposed an end to salmonella testing and the public outcry led them to reverse the decision. Or the people making sure that Trent Lott is no longer Majority Leader, or that Henry Kissinger is not the chairman of the "truth-finding commission." All these are successes of the people. And I consider what's happening on the Internet part of this populist possibility, because it wasn't the mainstream media that got rid of Kissinger and Lott. It wasn't the Democratic leadership that questioned what was happening.
BUZZFLASH: You have a chapter, "Pigs on Parade: Power, Perks, and Impunity," where you nominate certain people -- for instance, Dennis Kozlowski (CEO of Tyco) -- for boss pig and others with different pig titles. John Rigas (CEO of Adelphia Cable TV) won the "family pig" title. And basically you bring out the hall of rogues among the corporate CEOs. And looking over your accounting of them and how much they earned, one of the things that strikes BuzzFlash is that these people not only made off with millions and will still get millions in golden parachutes and retirement packages, but most of them were involved with companies that lost money. How does this happen?
HUFFINGTON: Well, that's really the key thing, this "de-linking" of performance with reward, which used to be the standard. This problem is so widespread, and it's not just the people that you mentioned. It's also more than 560 companies that have gone bankrupt while their CEOs were getting large compensation packages and severance packages and bonuses. We see that all the way down to John Snow, the new Treasury Secretary, who was making $10 million in 2001, not to mention bonuses and loans, which he never repaid. He also received a huge pension based on 44 years with the company when he was there for 25 while his job was under-performing by two-thirds the competitor's stock.
BUZZFLASH: Well, how does this happen? From a sort of technical standpoint, you have boards of directors for these companies. And normally a board wants performance. And yet these people are being paid hundreds of millions of dollars for companies that are going down the tubes. They're a sham. They're like a house of cards. And there's nothing inside. And isn't anyone checking to see if the motor's running?
HUFFINGTON: Well, that's why I have the other chapter called "The Enablers." The boards of directors have, to a large extent, become enablers. And employees are fired when they become whistleblowers. That's why I find it very moving that TIME magazine chose to celebrate three recent whistleblowers who were successful on the magazine's cover. But on the whole, the job of the board of directors is to oversee what's happening. These boards must see what is going on. And, of course, we know what's happened with accountants -- theyre being bribed through large consulting contracts. Accounting firms are making more from consulting than from auditing.
BUZZFLASH: Well, if we look at the Bush administration, they've sort of been dragged into giving the appearance of making some reform without actually making any changes. They even had to be dragged into getting Harvey Pitt to jump ship, although he's still technically there.
HUFFINGTON: The New York Times had a front-page story a couple of weeks ago revealing that Pitt wasn't just technically there, but that his lobbyist friends were undermining the reform elements of the corporate responsibility bill. And if it hadn't been for that article, we probably would still not have had the confirmation hearings of his successor, which started this week. Not that his successor is actually going to clean house, if you look at his record.
BUZZFLASH: The Bush administration embodies what you call corporate cronyism, which is that these are the Bush family's friends, and they contribute to the Republican Party. Then they get contracts and legislative favors in return.
HUFFINGTON: Well, there is also a mindset that this is okay. And look at who is at the head of it. George Bush and Dick Cheney are two oil men who themselves were involved with a lot of these scandals that they've never been held accountable for. You have Bush and his Harken dealings and the Harken tax havens while he was on the board. You have Dick Cheney while he was at Halliburton; he led the company from having nine tax haven subsidiaries to having 44, and ended up not only paying no taxes, but actually received tax rebates.
So this is the mindset of this administration: It's okay not to pay taxes. It's okay to want, at the same time that you are not paying taxes, massive government contracts and loans and loan guarantees to the tune of billions of dollars. And now Halliburton is under investigation of the SEC for fake accounting tricks. But is Cheney going to be held accountable? Don't you doubt it?
BUZZFLASH: What do you think is going on in their heads? Do they think that they are doing anything wrong? Or do they think they're just lucky, and if you're one of the privileged, you have a right to be privileged? I mean, how do they rationalize this in their own heads?
HUFFINGTON: I cannot entirely get into their heads. But I believe that they do rationalize it. I think they really believe that the people who create wealth, as they would put it, are entitled to basically get away with sheltering the wealth they create for themselves and their companies in the form of tax havens, and getting whatever benefits they can get from the government. Maybe they rationalize that it's the way to "create jobs." But it is so pathetic because it ignores all the evidence that we've lost two and half million additional jobs during the Bush years in office. All the administration's policies that supposedly are going to stimulate the economy have certainly not had that effect.
BUZZFLASH: And it goes back to the issue that we're in a tragically ironic situation with the Bush Cartel: the more you make, the worse your company is in performance. It's almost like you get paid for being a charlatan, as long as you give the image of the stock going up.
HUFFINGTON: And that's where I think the media, especially the financial press, has a big responsibility. They've become cheerleaders rather than investigative reporters. So you have Business Week putting Dennis Kozlowski on the cover and calling him a tax muzzler, kind of celebrating it, and basically he's been caught allegedly committing fraudulent accounting. We need to start calling things by what they are, because that's one of the problems - the kind of euphemisms that are being used, like restatement of earnings. It's so benign, like you made a little mathematical error and you are simply correcting it instead of you lied about your debts and your profits and your costs. And so I think beginning to call things what they are is critical.
BUZZFLASH: Now you have a chart, "All in the Family," on page 95 in your book. And you don't limit this cheerleading and enabling of this corporate corruption and hundreds of million dollars paid to CEOs for incompetence to Republicans. You see it as a two-party enabling. And you particularly have this chart of lobbyists of relatives of both the Republicans and Democrats. And the most notable on the Democratic side is Linda Daschle, who specializes in the airline and aerospace industry. It's safe to say you don't think this is just a problem of the Republicans cheerleading this sort of corporate socialism - that it's a two-party cheerleading squad.
HUFFINGTON: Yes, it definitely is not just the Republicans. Sometimes I just look at what is happening, and my question is just very simply: "Why is this tolerated?" Why is it tolerated that Linda Daschle, who is married to the Senate Minority Leader, can lobby Congress about the airline system or the aerospace industry? If it were not for powerful lobbyists in Washington like her, we would not have had the $15 billion bailout of the airline industry immediately after September 11.
BUZZFLASH: It is certainly the largest act of corporate socialism we've seen in recent months.
HUFFINGTON: What is absolutely stunning is that Democrats did not insist that in the bailout, which was paid for by the people's tax dollars, there would be any worker protection from layoffs. And after this bailout, 150,000 people were laid off in the airline industry and some companies went bankrupt. So what was the point? Why, at a time when we could not properly fund education, health care and all these major social problems we are confronted with, are we giving the airline industry $15 billion to basically go down a black hole? This would not be happening - I cannot stress that enough - without the presence of these very powerful lobbyists, including Linda Daschle. Now elected officials go through the revolving door and become America's lobbyists when they leave office. The drug industry has more lobbyists in Washington than there are members of Congress, if you can believe that.
BUZZFLASH: We had a piece on BuzzFlash about a year and a half ago about the Chairman of the Ways and Means Committee, Congressman Thomas. Thomas was then the Chairman of the subcommittee of Ways and Means that dealt with health care issues. An article in his hometown paper, the Bakersfield, California newspaper, indicated that he had an affair with the lobbyist for the pharmaceutical industry while he was writing legislation that had to do with Medicare coverage for seniors relating to pharmaceuticals.
HUFFINGTON: That is a great example that some of the lobbyists are sleeping with the elected officials because they're married to them, and some, because they're having affairs with them.
BUZZFLASH: Now you also have here that Chet Lott, the son of Senator Trent Lott, is a lobbyist. Joshua Hastert, the son of Dennis Hastert, Speaker of the House, is a lobbyist. It seems, as you say, to be a family affair. The son of Colin Powell heads the FCC.
HUFFINGTON: You mentioned Chet Lott. I mean, Chet Lott went from running a pizza joint to being a powerful Washington lobbyist - not exactly an obvious career leap. And then when he gets asked, "Does the fact that Trent Lott is your dad have anything to do with it?", he says, "No." Which should dramatically increase the number of contributions from pizza delivery people.
BUZZFLASH: You have a chapter, "Wacko in Waco the Brunch Bushians Drink the Kool Aid." Waco, of course, is very close to Bush's Crawford ranch. What do you mean by that?
HUFFINGTON: Well, that referred to President Bush's Economic Forum that Bush had in the summer. And all the political figures at the conference were strangely enough in complete agreement that all you needed to stimulate the economy was a tax cut. And, by the way, they denounced all doubters as heretics. It reminded me of David Koresh in Waco in the way that everybody around him agreed. And the President called the economy "challenged." And there was this hallelujah chorus, you know, determined to drown out any facts with blind faith. And it's been winning the day in Washington, partly because the Democratic leaders at the moment are appearing to be so spineless that they are not really sufficiently challenging the administration.
BUZZFLASH: Well, during the period when the Democrats were in the majority, due to Vermont Senator James Jeffords' defection from the GOP, it was the height of the Enron scandal. And basically it appeared to BuzzFlash that the Democrats did very little. They didn't even lay a glove on the Enron scandal. Particularly Senator Joe Lieberman -- whose committee had the most jurisdiction for an investigation of corporate financial matters -- barely went through the motions of an investigation. I mean, what was going on here? The Democrats had it laid to them on a platter to make an argument for free enterprise as it should be, as compared to this corporate cronyism. And they virtually did nothing but conduct a few sort of show hearings.
HUFFINGTON: In fact, Joe Lieberman, along with Tom Daschle went further than that and blocked John McCain's amendment that would treat stock options as an expense. Also, Tom Daschle got a call from powerful Silicon Valley contributors who told him that this is not going to be acceptable to them. So that's how this country's being run at the moment.
What I want to do with this book is to get people mad enough to want to take action, and to do it in a way that's not didactic but makes them laugh. My favorite quote about the book unfortunately didn't make it to the jacket. It's from Larry David, who created Seinfeld. He said, "I have not been entertained and disgusted at the same time since my last fling with auto-eroticism."
I want readers to come away with that combination of being disgusted while being entertained, because there is an element of surrealism about the stock market scandals. At the same time, I want people to feel they can turn things around, because I'm absolutely convinced that they can. And the good news of having spineless leaders is that they scare easily. When the public is outraged and shows it, you'll be amazed how quickly these leaders will get in the front of the parade.
We saw it happen between Enron and WorldCom, when the Sarbanes (D-MD) bill was declared dead by everybody. Phil Graham had introduced 41 amendments to make sure it was dead. And everybody agreed nothing would happen. And then WorldCom happened, and there was such a huge outcry - the public was so clearly enraged - that politicians knew they had to do something. And they passed that bill unanimously. Even Phil Graham voted for it. And the President, who had never backed it, signed it into law.
And you have all the speeches in front of banners that said corporate responsibility. And the public moved on through their lives, paying their mortgages, sending their kids to school. And behind the scenes, as I predicted on page 225, their response was being undermined. If you think of it, you have all those lobbyists - all those thousands of lobbyists - and that's their job, to protect the status quo.
BUZZFLASH: You close your book on page 258 with a list of different groups that people can become involved with to make a difference. And you preface on page 249 that we're "looking for reformers in all the wrong places." And you say the unfortunate reality is that truly substantive changes are clearly not going to come from our leaders in Washington. Those currently in power have proven themselves chronically unable to bite the corporate hand that feeds and feeds and feeds them. So your solution is grassroots populist outrage and activity to change our economy back to a true market economy and not a corporate socialist economy. What do you recommend to the average person who says, "I'm on board, let's do something about this." What should they do?
HUFFINGTON: Well, first of all, we need to recognize that this is a very important tradition in this country - social change beginning at the grassroots level. Looking back at past movements such as public accommodations for disabled Americans, the whole civil rights movement, the women's movement, the fight to end the War in Vietnam - all these were started at the grassroots level. So there is a great precedent for what I'm proposing, and I'm saying that this is such a populist movement.
When people go to the activist web sites, I want them to see what resonates with their concerns and get involved. Then we will create a critical mass of people. And that's not necessarily a lot of people - it's a strategic minority. And then, suddenly, it will seem like a miracle. A lot of work will be done unnoticed and there will be a fundamental change in this country. I really believe that. I am ultimately optimistic, even though every day there are many reasons to be pessimistic when you read the paper. But I'm ultimately optimistic because I see how many people are really not willing to take it anymore.
BUZZFLASH: And so you see ultimately the pro-democracy forces triumphing over the corporate socialism that controls the government?
HUFFINGTON: Absolutely. It's just a matter of speaking out, taking action and saying enough is enough in large enough numbers.
BUZZFLASH: You've chosen, from a public relations standpoint, to focus on the SUV. You were involved in this commercial that connected driving or owning a SUV with terrorism, which was sort of a satire on the Bush Administration's tax dollar-financed public service ads that equated using drugs with terrorism. And in the proposed tax cuts of the Bush economic plan, there is a clause that someone in the media caught on that would actually increase tax breaks to businesses that owned SUVs - in fact, triple their tax breaks. You're saying that that this is another little inserted piece of proposed legislation that Detroit put there. Why did you choose, of all the issues to focus on, a splashy initiative to focus on SUVs?
HUFFINGTON: You know, actually I didn't choose it. My readers chose it. That's what is so interesting. I wrote a column parodying the drug war ad and making this much more credible link between gas guzzlers and our oil dependence and national security. And I had a one-line rhetorical question at the end of the column, asking, "Is anyone willing to pay for a people's ad campaign to jog our leaders into reality?" And I woke up with a lot of e-mails - over 5,000 e-mails -- saying, "Where do I send my money?" Some of them were really moving: "I'm out of work, but I'm sending $50." Or a student saying, "I'm a student, but I'll send you 10 or $20."
And so I had no intention of anything beyond writing a column. But this outpouring was so amazing and moving that I called three friends - I contacted Lawrence Bender, a movie producer of Pulp Fiction and Good Will Hunting; Laurie David, who's an environmental activist and married to Larry David; and Ariel Bond, who is a talent agent. We created this nonprofit - the Detroit Project. It sort of evolved from the Manhattan project. Nobody was being paid on the set. We made these two ads. It was just amazing. It was a media frenzy. Most of the stations refused to run our ads, even though they had no problem running the administration's ads. But it really didn't matter because we had millions of dollars in free air time.
And most importantly, it isn't just us, because a lot of other things were happening at the same time, such as information coming out about SUV safety. The bottom line is that a lot of changes are happening. Suddenly Senator Barbara Boxer is introducing legislation to close the tax credit loophole. Diane Feinstein took initiative to close the fuel efficiency loophole.
These loopholes have been there since the 1980s. But after the people are outraged and take action, politicians follow. And this happens at the state level, too: Governor Romney in Massachusetts is looking to end the use of SUVs by state employees. So it's kind of exciting to see what happened within the space of three weeks. And, on top of it, you had General Motors telling The New York Times that they can no longer fly in the face of public opinion and we need to introduce hybrid technology.
BUZZFLASH: Well, Arianna, it's a great book. We haven't come across so many pigs at the trough for a long time, since we visited Uncle Charlie's hog farm in Iowa as a matter of fact.
HUFFINGTON: Thank you so much Buzz.
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Arianna Huffingtons book "Pigs at the Trough" from BuzzFlash:
SUVs & Terrorism
Bush & Harken
Cheney & Halliburton
Scandal, and Corporate Layoffs:
otherwise noted, all original