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The Democrats must regroup
Tuesday’s elections are a big loss for reformers

GOVERNOR MITT ROMNEY. Good grief. What have we done?

Romney is no Bill Weld. He’s no Paul Cellucci. He’s not even a Jane Swift. Romney is a social conservative. The type of conservative that voters rejected back in 1990, when Weld was first elected over John Silber. But hostility toward reproductive rights, criminal-justice reform, and civil unions or marriage rights for same-sex couples is not the real danger we face over the next four years.

No, the real danger lies in the state budget and what’s going to happen to it now. Romney has blithely promised to hold the line on taxes. It’s a familiar position for a Massachusetts Republican governor to take. Indeed, it’s what Weld, Cellucci, and Swift used to say. Of course, they ran the Commonwealth during the New Economy ’90s, when state coffers were brimming over with revenue from taxes on higher-than-expected incomes and capital gains. That’s not the case in 2002.

This year’s budget raised taxes by over $1 billion. Even so, it whacked out human services. It decimated the arts. More cuts are going to be needed next year. The only "discretionary" spending left to target is education. On Tuesday, Speaker Tom Finneran told the State House News Service that he is open to cutting education funding next year, if need be. He also said he’d hate to see additional taxes raised over those hiked this year. Bottom line? Expect massive layoffs in public-school systems across the state. Something like what we saw after Proposition 2-1/2 was passed in 1980. Think Governor Romney’s going to be able to stop Finneran? Think he wants to?

WE FOUND it ironic that Election Day brought news from the New York Times that the law-and-order Bush administration has been advocating a less-than-law-and-orderish approach to punishing tax cheats. At least when it comes to "the wealthiest and most sophisticated among them." As midterm elections wound down, we were shown once again that Republicans, despite what they say, are the party of plutocrats.

The paper reported that outgoing IRS commissioner Charles Rossotti was prevented from testifying before Congress last month on the need for additional resources to prop up the agency’s faltering investigative efforts. Estimates of revenue lost to individual tax cheats, who funnel their gains through complicated partnerships, range from $7 billion to $64 billion. In a report to a civilian oversight board, Rossotti wrote: "The I.R.S. is simply outnumbered." Five IRS investigators, interviewed earlier this year by the Times, told of "solid cases against major tax cheats that were not being pursued for lack of money."

The Bush administration was angry with Rossotti for his frank assessment of the IRS’s weaknesses and directed him to stop contradicting the administration’s assertion that wealthy individual tax evaders were, in fact, being pursued by the IRS. The message in all this from the Bushies to the moneyed — usually Republican — classes? We feel your pain.

Based on Tuesday’s results, though, many more voters than just rich Republicans are hearing that message. In a seeming fit of madness, voters gave control of the Senate back to the party of the president. What does this tell us about the electorate? That their votes can be bought with $300 tax-refund checks? Or with promises not to raise taxes?

AMID THE ELECTORAL carnage Tuesday night, Democratic National Committee chair Terry McAuliffe, speaking with CNN’s Larry King, tried to put a positive spin on the news. Americans could be happy, he said, because Securities and Exchange Commission chair Harvey Pitt had resigned. It’s true. Pitt’s resignation was good news. In July, Bush signed a financial-reform law calling for the SEC to create an accounting-oversight board. It fell to Pitt — who, with his close association with the very industry that gave us the paper-shredding Arthur Andersen, is no reform-minded watchdog — to recommend someone to chair the board. Reformers wanted former TIAA-CREF head John Biggs, who strongly supports eliminating the common practice among accounting firms of consulting for the corporations they audit, a state of affairs that offers a working definition of the phrase "fox guarding the henhouse." Finance-industry reformers backed Biggs. But influential congressional Republicans such as Michael Oxley, chair of the House Financial Services Committee, opposed his appointment. So Pitt backed off and last week recommended former CIA and FBI head William Webster instead. The five-member SEC approved him. Webster has an impeccable reputation as a civil servant. But he served as chair of the audit board for US Technologies, a company that is now under criminal investigation for accounting irregularities and shareholder fraud. Not exactly the résumé you want for a finance-industry reformer. After Webster’s appointment, former Vanguard Group chair John Bogle — who may have done more than anyone else to revolutionize stock-market investing for individuals with the creation of index funds, and who strongly supports real reform — told the Times: "I have tears in my eyes. I just don’t see how this can give the markets any reassurance. It’s just more of the same old political stuff."

Democrats had been calling for Pitt’s resignation. But his departure is no victory. He’s merely a scapegoat. As long as powerful Republicans like Oxley are allowed to obstruct real reform, we’ll see no changes in the finance and accounting industries that will make it harder for the next Enron, WorldCom, Tyco, Adelphia, etc. to happen.

What does all this have to do with the results of Tuesday’s elections? A lot. Accounting-industry reform isn’t exactly sexy. It doesn’t get progressives fired up nearly as much as health-care reform, reproductive rights, marriage for same-sex couples, or the war on terror’s trampling of civil liberties. But it’s the big enchilada. Think about it. Enron manipulated the California energy crisis. And Republicans are blocking the reform that might prevent it from happening again.

ALL THAT SAID, maybe national security and war with Iraq were the deciding issues. In Georgia, where incumbent Democratic senator Max Cleland was defeated by Congressman Saxby Chambliss, the race turned on Cleland’s vote against the president’s version of a homeland-security bill. That Cleland, a decorated Vietnam veteran who lost three of his limbs in that war, could be successfully challenged on national-security issues by an opponent who’d never served in the military is, frankly, astonishing.

But September 11 quite obviously changed the world in ways we’re still discovering. President Bush won big on Tuesday. War with Iraq — and all the worldwide political and economic instability that will come with it — is now inevitable. Another big winner Tuesday was, quite obviously, Mitt Romney. The biggest losers? People who care about reform. People who care about civil liberties. People who care about more than their own pocketbooks.

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Issue Date: November 7 - 14, 2002
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