WASHINGTON – Democratic leaders came out swinging Wednesday in a new campaign strategy to depict their party as the most sensitive to the victims of corporate irresponsibility, a strategy that came just as WorldCom announced it had disguised nearly $3.8 billion in expenses and fired its chief financial officer.
"What we have is a crisis of trust," said House Minority Leader Dick Gephardt, D-Mo., who has been privately instructing top Democrats, especially appropriators, to push legislation that will emphasize this new push for corporate responsibility.
"The stock market has plummeted and people seem to think that 'everybody' did it — everybody did not do this. We have to impose some rules so that business will be able to run on a level playing field," Gephardt said.
House Republicans scoffed at the strategy and nearly dared Gephardt to try it.
"I think you can add it to the long list of energy, airline, economy, Enron, Social Security and everything else the Democrats said they were going to be making an election issue of that is now non-existent," charged Carl Forti of the National Republican Congressional Committee.
Republicans point to a study done by the nonpartisan Center for Responsible Politics that shows 17 companies now under scrutiny for questionable business practices have made political contributions totaling more than $5 million over the past 18 months. Yes, Republicans received 57 percent of that total, but that means 43 percent went to Democrats.
They also point to Democratic National Committee Chairman Terry McAuliffe, who made $15 million from Global Crossing, which declared bankruptcy earlier this year and was most recently accused of shredding documents before and after the filing.
"Ah, it's the pot calling the kettle black," said Rep. Tom Davis, R-Va., chairman of the NRCC.
But DNCC campaign spokeswoman Jennie Backus said that the issue is not about campaign contributions but about making clear who is going to bat for the workers and stockholders, and who is going to bat for big business.
"We're talking about specific legislation and solutions to the problem," she said, referring to failed amendments offered recently by House Democrats that included criminal penalties for corporate executives guilty of fraud.
"The Republicans have had control of the House for eight years and we have lost our surpluses and live in a state in which people don't feel like they can invest in the stock market," she said.
The new strategy is aimed at making Democrats the champions of the office-park worker, who often ends up the victim of corporate fraud and mismanagement.
"I was down with the Enron employees a few weeks ago. People say they have had to move back in with their mothers, their kids, because they can't pay their bills," Gephardt said. "These are incredible stories. At the very least you would think these corporate executives would give back the money, just to pay their health insurance."
Gephardt's strategy came to light as the U.S. stock market reacted poorly to the WorldCom news — in early trading, the blue-chip Dow Jones industrial average was down 180 points at 8,946, while the Nasdaq Composite Index was down 45 points at 1,378. Shares of WorldCom, which peaked in 1999 at $64, were halted after they lost nearly all of their remaining value in pre-market trading this morning.
Democrats said Wednesday that the Republican Party has fostered an atmosphere in which corporations feel comfortable engaging in fraudulent practices. But after the Enron crisis, in which thousands of employees were left jobless and with no health insurance because of accounting misdeeds, Democrats say the party is over.
"There has been a sort of madcap rush to deregulation in this country, a sort of belief in the survival of the fittest and the marketplace has all the answers with no checks and balances and that is dangerous," said Rep. John Corzine, D-N.J., the former co-chairman and co-CEO of investment banking firm Goldman Sachs, who joined Senate Majority Tom Daschle, D-S.D., in a press conference Wednesday.
"You need some cops on corners and check and balances in the system that are thoughtful that don't interfere with the progress of business," said Corzine.
Political observers say the Democrats may not get so lucky with this latest strategy. Democrats are just throwing campaign issues against the wall and hoping one sticks. This won't be one of them.
"It sounds a little desperate to me," said Stephen Hess, a political analyst for the Brookings Institution. "The Democrats could have a good issue here if Republicans decided to take a vacation between now and November 5. I hardly think that is going to happen."
Rich Galen, a political consultant who worked for former House Speaker Newt Gingrich when Republicans took over Congress, called the strategy "flat out hypocrisy," on behalf of Democrats, who continue "beating these companies on the head for corporate dollars."
"Every day they go off on one of these tangents," he said. "All this is designed to do is to try and knock around some support where they can. I just don't think they can do it. It's another waste of time and effort."