From: "portside moderator" <moderator@portside.org>
Subject: The Wars of the Texas Succession - By Paul
Krugman
The Wars of the Texas Succession
By Paul Krugman
NY Review of Books, Volume 51, Number 3 · February 26,
2004
http://www.nybooks.com/articles/16911
American Dynasty: Aristocracy, Fortune, and the Politics
of Deceit in
the House of Bush
by Kevin Phillips
Viking, 397 pp., $25.95
The Price of Loyalty: George W. Bush, the White House,
and the
Education of Paul O'Neill
by Ron Suskind
Simon and Schuster, 348 pp., $26.00
1.
Here's a true story that came too late to make it into
Kevin
Phillips's American Dynasty: Aristocracy, Fortune, and
the Politics of
Deceit in the House of Bush, but it fits perfectly with
its thesis. As
all the world knows, Halliburton, the company that made
Dick Cheney
rich, has been given multibillion-dollar contracts,
without
competitive bidding, in occupied Iraq. Suspicions of
profiteering are
widespread; critics think they have found a smoking gun
in the case of
gasoline imports. For Halliburton has been charging the
US authorities
in Iraq remarkably high prices for fuel--far above local
spot prices.
The company denies wrongdoing, saying that its prices in
Baghdad
reflect the prices it has to pay its Kuwaiti supplier.
That's not
quite true; Halliburton's reported expenses for
transporting gasoline
are, for some reason, much higher than anyone else's.
But the real
question is why Halliburton chose that particular
supplier--a company
with little experience in the oil business, mysteriously
selected as
the sole source of gasoline after what appears to have
been a highly
improper bidding procedure. Why did it get the job? We
don't know. But
it's interesting to note that the company appears to be
closely
connected with the al-Sabahs, Kuwait's royal family. And
the al-
Sabahs, in turn, have in the past had close business
ties with the
Bush family, in particular the President's brother
Marvin.
In any previous administration--at least any
administration of the
past seventy years--this sort of incestuous relationship
among foreign
governments, private businesses, and the personal
fortunes of people
in or close to the US government would have been
considered unusual
and prima facie scandalous. What we learn from Kevin
Phillips's new
book, however, is that this kind of intertwining of
public policy and
personal self-interest has been standard operating
procedure not just
for George W. Bush, but for his entire family.
American Dynasty and Ron Suskind's new book, The Price
of Loyalty, can
be seen as a second wave of Bush critiques. The first
wave,
exemplified by Molly Ivins's Bushwhacked, Joe Conason's
Big Lies, and
David Corn's The Lies of George W. Bush, described what
Bush has been
doing these past three years. But they offered only
scant explanations
of how and why the Bush administration does what it
does. (I made a
brief stab at an explanation in the introduction to my
own The Great
Unraveling, but it was no more than a sketch.)
The new books go deeper into the agonizing question of
what is
happening to our country. Ron Suskind--an investigative
reporter with
a knack for getting insiders to tell what they know
--offers a
detailed, deeply disturbing look at how the Bush
administration makes
policy. Kevin Phillips--a former Republican strategist
who feels that
his party has betrayed the principles he
supported--investigates the
history of the Bush clan, and argues that this family
history provides
the key to understanding George W.'s motives and even
his technique of
governing.
Phillips is well aware that some will dismiss his work
as "conspiracy
theory." But as he says, such taunts shouldn't prevent
us from looking
at the family history of the people who now rule us:
Worries about conspiracy thinking should not inhibit
inquiries in
a way that blocks sober examination, which often
more properly
identifies some kind of elite behavior familiar to
sociologists
and political scientists alike.
To that end, Phillips offers
an unusual and unflattering portrait of a great
family (great in
power, not morality) that has built a base over the
course of the
twentieth century in the back corridors of the new
military-
industrial complex and in close association with the
growing
intelligence and national security establishments.
And George W. Bush, as the scion of this dynasty, is the
first
president to, in effect, inherit the office. For four
generations the
Bush family has thrived by exploiting its political
connections,
especially in the secret world of intelligence, to get
ahead in
business, as well as exploiting its business
connections, especially
in finance and oil, to get ahead in politics. And
whatever the public
and the pundits may have thought about the 2000
election, for the
Bushes it was a royal restoration.
The family history of the Bushes helps us to understand
one of the
great tragedies of American political history. After the
disputed
election of 2000, the nation badly needed a president
who would seek
reconciliation. Instead it got a deeply divisive leader,
who made a
mockery of his campaign promise to be a "uniter, not a
divider." It's
all in the family, Phillips tells us:
When Bush took office in 2001, a parallel to Stuart
and Bourbon
arrogance quickly emerged in the new regime's
insistence on
ideological conservatism despite the lack of any
such national
mandate. Restoration drinks from its own special
psychological
well.
So what kind of family has, in its own eyes, regained
its rightful
inheritance? It's a family that has become accustomed to
privilege:
By the mid-twentieth century, connections and crony
capitalism had
become the family economic staple, with emphasis on
the rewards of
finance, and instinctive policymaking fealty to the
investment
business. The Bushes have produced no college
presidents or
stonemasons, no scientists or plumbing
contractors--generally
speaking, their progeny have become almost
exclusively financial
entrepreneurs.
As this quote suggests, the Bush dynasty differs from
other American
families that have mixed wealth with political
prominence. While the
Kennedys and the Rockefellers may have a sense of
entitlement, they
also display a sense of noblesse oblige--what one might
call an urge
to repay, with charitable contributions and public
service, their good
fortune. The Bushes don't have that problem; there are
no
philanthropists or reformers in the clan. They seek
public office but,
if anything, they seem to feel that the public is there
to serve them.
Let's put W. to one side for a moment, and look at how
his brothers
used their political connections to enrich themselves.
Here are a few
highlights:
* Before he was elected governor of Florida, Jeb Bush,
in partnership
with a Cuban refugee whom Phillips suggests had CIA
connections,
bought an office building with $4.6 million borrowed
from a savings
and loan. When the S&L went bankrupt, the loan was taken
over by the
federal Resolution Trust Corporation, which for some
reason allowed
the partners to settle their debt for only $500,000. In
another deal,
Jeb was paid handsomely by a company selling pumps to
Nigeria that
somehow received large-scale financing from the US
Export-Import Bank.
* Neil Bush sat on the board of another S&L, Silverado,
which made
$200 million in loans--subsequently defaulted--to an oil
company that
in turn gave Neil large loans with no obligation to
repay. In recent
divorce proceedings it has emerged that a firm backed by
Chinese
businessmen, including the son of former Chinese
president Jiang
Zemin, paid Neil large sums in return for vaguely
defined services.
* After the first Gulf War Marvin Bush, who went to
Kuwait seeking
business in 1993, served on the boards of several
companies controlled
by the Kuwait-American Company. A member of Kuwait's
royal family is
one of Kuwait-American's major shareholders, and it
seems reasonable
to say that in effect Marvin works for the al-Sabahs.
And then there's the story of how George W. himself
became rich. Many
people now know the tale--the failed companies that
somehow got bought
out at premium prices, the insider stock sale that
somehow was never
properly investigated, the government generosity that
made the Texas
Rangers such a good deal for the businessmen who picked
W. to be their
public face. Several of these deals, like those of
brother Marvin, had
Middle East connections. Bush's first venture, Arbusto,
may have
involved bin Laden family money. The story of George
W.'s stake in
Harken Energy--which he sold two months before it
announced large
losses--involved a puzzling surprise deal with the
government of
Bahrain.
Here's how Phillips summarizes the picture:
All in all, if presidential family connections were
theme parks,
Bush World would be a sight to behold. Mideast banks
tied to the
CIA would crowd alongside Florida S&Ls that once
laundered money
for the Nicaraguan contras. Dozens of oil wells
would run
eternally without finding oil, thanks to periodic
cash deposits by
old men wearing Reagan-Bush buttons and smoking
twenty-dollar
cigars. Visitors to "Prescott Bush's Tokyo" could
try to make an
investment deal without falling into the clutches of
the
yakuza....
But aside from casting some light on the President's
character, why
does this shady family history matter? Phillips makes a
convincing
case that Bush family crony capitalism is closely
intertwined with
Bush administration policy.
In part, it's a matter of values, W.'s "instinctive
policy fealty" to
the activities that made his family rich. Although he
ran in 2000 as a
moderate, his policies, from the tax cuts to the
scrapping of the
Kyoto Protocol, have been relentlessly in favor of both
the rich and
the energy industry. And according to Suskind's The
Price of Loyalty,
W. appears to have a visceral dislike for corporate
reform.
More ominous, perhaps, is Phillips's contention that
family history
has shaped Bush foreign policy. It's a great irony that
George W.
Bush, beloved by red-blooded, red-state Americans for
his down-home
manner, comes from a family with deep political and
business
connections to the Middle East. As someone once pointed
out, it's a
lot easier to document links between the bin Laden
family and the
Bushes than it is to document links between the bin
Ladens and Saddam
Hussein.
I've already mentioned some of the business links. There
are others,
like George H.W. Bush's post-presidential employment by
the Carlyle
Group, the private global investment firm whose Saudi
investors
included members of the bin Laden family.
But perhaps more important is the policy connection. One
way to look
at the younger Bush's confrontational policies in Iraq
is that they
are a rejection of a traditional US strategy of making
alliances of
convenience with some of the area's regimes. And who was
responsible
for that earlier strategy? Few were more involved than
George H.W.
Bush, as CIA director, vice-president, and
finally--until Saddam
overstepped the line--as president. Phillips puckishly
describes the
two Gulf Wars as "the wars of the Texas succession."
Along the way, Phillips reminds us of a series of actual
or potential
scandals surrounding US Middle Eastern policy, all of
which involved
the Bush family in some way. Phillips suggests that
there may be some
substance to old rumors that Republican operatives with
CIA
connections negotiated with Iran's mullahs to delay the
release of the
hostages in 1980--dooming Jimmy Carter's reelection
chances. He also
places the elder George Bush squarely at the center of
the Iran-contra
affair, citing the 1992 indictment of then Defense
Secretary Casper
Weinberger, which claimed that Bush participated in the
arms-for-
hostages swap.
For me, however, the most striking story was his
recounting of
"Iraqgate." In this largely buried scandal, officials of
the Reagan
administration and the first Bush administration not
only supplied
Saddam Hussein with arms and turned a blind eye to his
use of chemical
weapons, but later signaled fairly clearly that it would
be okay with
them if he occupied part of Kuwait--a signal that Saddam
apparently
misunderstood as a license to swallow the whole thing.
This history
sheds an ironic light on the efforts of some of those
same officials,
notably Donald Rumsfeld, to retroactively justify last
year's invasion
of Iraq by a concern for human rights and democracy. 2.
Still, the fundamental question isn't what motivates the
Bush family
and its retainers. It's how such a self-interested clan,
with little
by way of a redeeming record of public service, could
have come to
such a position of power. And here Phillips offers only
a partial
explanation, though it's a good start.
There are three strands to Phillips's thesis. First is
the effect of
surging economic inequality, which has led to a
broad-based
"dynastization of America." To put the matter simply,
the economic
elite has become far more elite than it was a generation
ago. Since
the late 1970s, the top 1 percent of the population has
more than
doubled its share of national income, and the top 0.01
percent has
increased its share by a factor of six. Today there is,
to an extent
not seen since the 1920s, a substantial class of people
wealthy enough
to form their own dynasties. And in a variety of ways,
from political
contributions to more subtle shaping of culture, for
example by
promoting aristocratic values, this class has created an
environment
favorable for dynastic ambitions.
Second is the, um, unholy alliance between the dynastic
class and the
religious right. I found Phillips's explanation of how
Bush uses
religiously charged language to signal his alliance with
fundamentalists revelatory:
Bush's day-to-day language was a veritable biblical
message
center. Besides the ever-present references to
"evil" and "evil
ones," chief White House speechwriter Michael
Gerson, a onetime
college theology major, filled George W. Bush's
delivery system
with phrases that, while inoffensive to secular
voters, directed
more specific religious messages to the faithful....
Biblical scholar Bruce Lincoln's line-by-line
analysis of Bush's
October 7, 2001, address to the nation announcing
the US attack on
Afghanistan identified a half dozen veiled
borrowings from the
Book of Revelation, Isaiah, Job, Matthew, and
Jeremiah. He
concluded that for those with ears to hear a
biblical subtext, "by
the [speech's] end America's adversaries have been
redefined as
enemies of God and current events have been
constituted as
confirmation of scripture."
What Phillips doesn't explain, or at least not to my
satisfaction, is
why crony capitalists have been able to make an
effective alliance
with the religious right, while other groups--say,
Democrats tied to
the labor movement --have not. After all,
fundamentalists in America
are, on average, relatively poor, and tend to be hurt by
right-wing
economic policies. It's true that, as Phillips points
out, modern
fundamentalist doctrine encourages a belief in
self-reliance, with a
corresponding benign attitude toward wealth and
hostility to policies
that redistribute income. But the Bush family does not,
to say the
least, consist of self-made men, and its policies
actually do involve
redistribution--from the have-nots to the haves. What
makes religious
leaders see an elite dynasty as their friend?
Phillips stresses the personal side-- George W. Bush's
ability to
convince many on the religious right that in spite of
his silver-spoon
background he really is one of them, for example in his
born-again
belief in the "power of prayer." I suspect there must be
more to it
than that. Phillips also writes, "Could 75 to 80 percent
of the
believers in Armageddon have voted for Bush? So it
appeared." But in
any case, for now the fact of the alliance with the
religious right
is, as Phillips says, a crucial part of the political
story.
But what about the rest of the population? The third
strand in
Phillips's explanation of the Bush dynasty's success is
its virtuosity
in misrepresenting what it's up to:
If hypocrisy is the tribute vice pays to virtue,
compassionate
conservatism is the policy hypocrisy uses to
disguise economic
vice. While it has been three generations in the
making, its
rhetorical embrace by the Bushes has come to display
less and less
genteel upper-class pretense...and instead to
manifest a higher
and higher ratio of outright deception: saying one
thing and
meaning another.
In describing this deception, Phillips invokes the term
"Mayberry
Machiavellis"--referring to Mayberry, North Carolina,
the fictional
small-town setting of The Andy Griffith Show. This label
for Bush
officials was originally used by John DiIulio, the
former head of the
White House's "Faith-Based and Community Initiatives,"
in a revealing
interview with the freelance journalist Ron Suskind
about the
political opportunism of the White House. And Suskind
has done it
again. His new book, The Price of Loyalty: George W.
Bush, the White
House, and the Education of Paul O'Neill, is based
partly on
discussions with Paul O'Neill, the former Treasury
secretary, partly
on 19,000 documents supplied by O'Neill, and partly on
other, unnamed,
insider sources. And it provides a devastating portrait
of Bush
policymaking that dovetails perfectly with Phillips's
analysis of
Bush's motives.
It was unfortunate, in a way, that so much of the
initial press
coverage of Suskind's book focused on O'Neill's
revelation that the
administration was obsessed with the idea of invading
Iraq from day
one, long before September 11. Not that his point has
been refuted --
in fact, other sources have come forward to confirm it.
But the main
virtue of The Price of Loyalty is what it tells us about
the
administration's values and mode of operation.
Let's start at the end--a discussion of economic policy
in November
2002, shortly before O'Neill was fired. Remember that
2002 was the
year of corporate scandals; for a brief period the
revelations of
chicanery at Enron, WorldCom, and other pillars of the
economy seemed
likely to dominate the midterm election. Instead, the
administration--
after making a few gestures toward corporate reform and
grudgingly
agreeing to a small increase in the SEC's budget--beat
the drums of
war, and drowned the issue out.
Still, officials remained concerned about a sluggish
economy. But what
was the cause of that sluggishness? The President,
according to his
secretary of the Treasury, had a simple answer: "SEC
overreach." That
is, those nasty regulators, in their attempt to crack
down on
corporate malfeasance, were making executives and
investors nervous,
depressing the economy. Here's how Suskind describes the
moment:
O'Neill couldn't quite believe what he was
hearing--SEC overreach?
No wonder the White House had backed off from the
toughest
medicine for crooked executives and eventually ceded
the corporate
governance debate to Congress. How, though, could
the President
believe that the largely overwhelmed SEC had any
significant
effect on the vast US economy?
Kevin Phillips could, of course, have told him:
Bush--whose own
business career had involved some remarkably Enron-like
moments--was
revealing his instinctive, indeed inbred sympathy for
corporate
insiders, and his antipathy toward anyone who might try
to enforce
accountability.
Aside from the report of Bush's amazing outburst, what
we learn from
Suskind's description of that meeting is that, in
private, top
administration officials conceded the very points that
they vehemently
denied when responding to outside critics. They knew
that they were
being fiscally irresponsible. "The budget hole is
getting deeper,"
warned budget director Mitch Daniels. "We are projecting
deficits all
the way to the end of your second term." (And this was
before the 2003
tax cut.)
They also knew that their policies heavily favored rich
people--
indeed, in an uncharacteristic moment Bush himself
seemed uneasy over
the tilt, asking, "Didn't we already give them a break
at the top?"
And when Bush asked, "What are we doing on compassion?,"
no one
answered.
But what they said in public was the exact opposite. In
private Bush
might worry that his tax plan was too friendly to the
rich; in public
he insisted that "the vast majority of my tax cut goes
to the bottom
of the economic spectrum." In private Dick Cheney told
O'Neill that
"Reagan proved deficits don't matter." In public he
described himself
as a "deficit hawk."
So Phillips is right: the Bush administration is deeply
hypocritical
with regard to its core policies; what it says is at
odds not only
with what it does, but with what it really thinks. But
then what does
drive its policy decisions?
Let's flash back to what John DiIulio told Suskind in
late 2002:
There is no precedent in any modern White House for
what is going
on in this one: a complete lack of a policy
apparatus. What you've
got is everything--and I mean everything--being run
by the
political arm. Everything--and I mean everything--is
being run by
the Mayberry Machiavellis.
O'Neill confirms DiIulio's picture, with a vengeance.
Consider, for
example, what may in the long run be considered the
administration's
most fateful decision: to abandon the Kyoto Protocol
and, in effect,
abandon any attempt to face up to global warming.
O'Neill's account
makes it clear that nobody even tried to ask what the
facts were, what
the tradeoffs might involve. Instead, "energy concerns
and the thinly
supported jeremiad by industry lobbyists had eclipsed
considerations
about action on global warming. Period." Or as O'Neill
summarized this
approach to policymaking, "The base [i.e., Bush's
Republican political
base] likes this and who the hell knows anyway."
Or take the steel tariff. The decision to impose a
tariff on steel
imports was a terrible one in every way one can think
of. It was bad
for the economy; it was obviously illegal under
international law. It
squandered US credibility on trade issues; it was a
clear betrayal of
the administration's own rhetorical commitment to free
trade and free
markets. But throwing steel-producing regions a bone
might--just
might--yield some small political gains.
The Clinton administration refused to impose a steel
tariff even
during the 2000 campaign; had it betrayed its
principles, West
Virginia might have gone to Al Gore, who would now be in
the White
House. When the issue arose again in early 2002, Bush
was still
immensely popular. "If you can't do the right thing when
you're at 85
percent approval, when can you do the right thing?"
asked one
official. But politics prevailed, and the tariff went
through. (The
tariff was later rescinded, after the World Trade
Organization--
predictably--ruled that it violated international law.
But the damage
was done: US credibility on trade issues had been
damaged severely.
Partly because of this loss of credibility,
international trade
negotiations--supposedly an administration priority
--have stalled.)
What emerges from Suskind's book is a picture of an
entirely cynical
administration--much more cynical than Nixon's, in which
the
corruption was localized, and large parts of the policy
process
continued to be run by serious, even idealistic people.
(Old hands at
the Environmental Protection Agency describe the Nixon
administration
as a golden age.) Under Bush, it seems, political
rhetoric bears no
relation to reality--what officials say has nothing in
common with
what they do, or what they think. And policy decisions
are driven
almost entirely by politics, by what the political arm
thinks will
play well with "the base."
But in that case, what's it all about? If everything
Bush and his
officials do is political, what is that they want to do
with their
power?
Old-line Republicans that I know cling to the belief
that the
Machiavellianism is only temporary, that it's embraced
in service to a
higher goal. Once the 2004 election is over, they say
Bush will show
his true colors as an idealist, someone who genuinely
believes in
small government and free markets.
But if Phillips is right--and I think he is--there is no
higher goal.
Bush's motivations are dynastic--to secure his family's
rightful
place. While he may have some policy biases--like that
"instinctive
policy fealty" to the investment business--policy is
basically there
to serve the acquisition of power, and not the other way
around.
According to people who observed him in Texas, Karl Rove
is a devotee
of Machiavelli, and particularly of The Prince. And as
Phillips points
out, "Twenty-first-century American readers of The
Prince may feel
that they have stumbled on a thinly disguised Bush White
House
political memo." For Machiavelli's book was all about
how to gain and
hold power, not about what to do with it.
So what is the state of the union? Let Phillips have the
last word:
The advent of a Machiavelli-inclined dynasty in what
may be a
Machiavellian Moment for the American Republic is
not a happy
coincidence.... National governance has, at least
temporarily,
moved away from the proven tradition of a leader
chosen
democratically, by a majority or plurality of the
electorate, to
the succession of a dynastic heir whose unfortunate
inheritance is
privileged, covert, and globally embroiling.
