Predictable Disaster of George W. Bush
In his trademark goofy way, George W. Bush explained why he supported a bailout of the U.S. financial markets, saying he was “a free-market person, until you're told that if you don't take decisive measures then it's conceivable that our country could go into a depression greater than the Great Depression.”
So, with a smirk on his face, President Bush explained the predicament that the United States and the world face after eight years of his incompetence and mismanagement – teetering on the edge of a catastrophe “greater than the Great Depression.”
Yet what is remarkable about American news coverage of this extraordinary moment – and Bush’s strangely light-hearted comment at the end of the Nov. 15 global economic summit – is how little blame is being laid specifically at Bush’s door.
In a pattern typical of the preceding eight years, major U.S. journalists are focusing on almost everything else – from Sarah Palin’s political future to what President-elect Barack Obama should do after he’s inaugurated in two months – not the lessons that should be learned from Bush’s disastrous presidency.
An example was Tom Brokaw’s “Meet the Press” on Sunday, which addressed the financial and energy crises with nary a negative word spoken about Bush.
It was as if everyone else was responsible for the nation’s troubles, from unions and auto executives to Congress and Obama (for not providing immediate answers). Just not the person who is still in charge and who was chiefly responsible for taking the United States from an era of peace, prosperity and budget surpluses to the precipice of endless war, economic devastation and national bankruptcy.
Part of that may be that Brokaw and some of his fellow pundits, such as New York Times columnist Thomas Friedman, were major enablers of Bush’s most harmful decisions. Brokaw and Friedman were among the leading journalists in 2002-03 who didn’t ask tough questions about the Iraq invasion and indeed cheered the war on.
Brokaw, Friedman and company also didn’t recognize the obvious danger to the United States that Bush represented in 2000 when he and his Republican allies ran a down-and-dirty campaign against Al Gore and then blocked the counting of Florida’s votes so Bush could slip into the White House.
The big-name pundits almost all bought into the myth that Bush’s strange ascension to the White House -- as the first popular-vote loser in more than a century -- was a good idea, pushing out Bill Clinton’s crowd and putting “the adults back in charge.”
Beyond the affront that Bush’s “election” represented to American democracy, there also was the troubling fact that Bush had a long history of messing up whatever he touched and then “failing upward,” pulled out of trouble by his father’s rich friends.
However, when this well-born wastrel was elevated to the highest office on earth, there was really no way that daddy or daddy’s friends could either control him or save him from himself. It may be that not even all the central banks in all the world can undo the damage that George W. Bush has done.
That big-name American journalists failed to recognize this danger back in Campaign 2000 represented another example of their professional limitations and moral deficiencies. At the time, it was easier to go with the flow.
But the inadequacies of George W. Bush were well-known during Campaign 2000, although readers often had to search out the facts on the Internet or in a few small-circulation liberal magazines. Bush’s ominous history of business failures -- his reverse Midas touch -- drew far less attention than the bogus stories about “Lyin’ Al” Gore and his “exaggerations.”
Warning the Electorate
At Consortiumnews.com, we were among those small outlets that tried to warn the American electorate about these risks. We also recounted this reality in our book, Neck Deep, an excerpt of which follows:
At times grudgingly, George W. Bush traced virtually every early step his father took. Like his father, George W. went to both Phillips Andover Academy and Yale and joined the secretive Yale fraternity Skull and Bones.
Like his father – when starting out on his own career – George W. exploited both wealthy family connections and the nexus between oil and politics. Like his father, too, George W. joined the armed forces during war time.
But George W.’s early record had the look of a child shuffling around in his father’s oversized shoes. In school, George W. was a C student, while his father graduated Phi Beta Kappa. In sports, George the father was captain of the Yale baseball team while George the son was captain of the cheerleading squad.
George Sr. served under fire as a naval aviator in the Pacific theater of World War II, while George Jr. slipped past other better qualified candidates into the Texas Air National Guard where he would avoid service in Vietnam and leave behind long-term questions about his duty records and premature departure.
Bush’s checkered history with the National Guard coincided with a period of his life when he drank heavily and apparently abused cocaine, although he never exactly admitted to that last fact. During his presidential run in 2000, Bush acknowledged the drinking problem – in the context of saying he had licked the bottle with the help of his Christian faith – but he slid away from the cocaine question.
When pressed, he didn’t confirm or deny that he abused cocaine but asserted that he could have met his father’s White House personnel requirement that set time limits on how far back an applicant would have to admit illegal drug use.
Despite this implicit confirmation of drug abuse, most of the major news outlets, such as The New York Times, took Bush’s side and reported that there was no evidence Bush had ever used illegal drugs.
But what he may have lacked in early accomplishments, he made up for in ambition and charm, two traits that served him well in both business and politics. In 1978, his ambition led George W. Bush to embrace his father’s two career paths, oil and politics.
With almost no political experience, George W. launched an uphill campaign for the U.S. Congress in 1978. He lost badly to the Democratic incumbent. That same year, he incorporated his own oil-drilling venture, Arbusto (Spanish for bush) Energy.
George W. Bush’s oil business venture seemed promising at first. Just as his father had done nearly 30 years prior, George W. sought financial assistance from an uncle, this time, Jonathan Bush, a Wall Street financier. Jonathan Bush pulled together two dozen investors to raise $3 million to help launch Arbusto.
James Bath, one of George W.’s friends from the National Guard, also invested $50,000 for a five percent stake. At the time, Bath was the sole U.S. business representative for Salem bin Laden, scion of the wealthy Saudi bin Laden family and half-brother of Osama bin Laden, who in the 1980s would be heading to Afghanistan to help Islamic fundamentalists resist the Soviet invasion.
Though responsible for investments for Salem bin Laden, Bath insisted that the $50,000 for Arbusto came from his own personal funds. (Salem bin Laden could not be questioned about the investment. He died in a 1988 plane crash in Texas.)
A History of Bailouts
In his subsequent business career, George W. was the beneficiary of three major bailouts.
The first occurred in 1982 when, despite the millions already pumped into Arbusto, the company faced a cash crunch. George W.’s balance sheet showed $48,000 in the bank and $400,000 owed to banks and other creditors.
George W. realized that he had to raise additional cash and decided to take Arbusto public. With the company so deeply in debt, however, George W. would need a new infusion of money to clear the books.
In stepped Philip Uzielli, a New York investor and friend of Bush Family lawyer James Baker III from their days at Princeton University. Uzielli worked out a deal with George W. to purchase a 10 percent stake in Arbusto for $1 million, though the entire company was valued at less than $400,000.
In a 1991 interview, Uzielli recalled the investment as a major money loser. “Things were terrible,” he said.
As bad as Uzielli’s investment turned out to be, George W. now had enough money to seek public investors. But first he decided to make one other change. In April 1982, perhaps realizing the negative connotation of “bust” in Arbusto, George W. changed the name of his company to Bush Exploration. The name change also made better use of Bush’s primary asset, his family name.
In June 1982, George W. issued a prospectus, seeking $6 million in the initial public offering. But he managed to raise only $1.14 million. The shortfall was due in large part to the waning interest in the oil industry among investors. The price for a barrel of oil was falling and special tax breaks for losses incurred in oil investments had been slashed.
Within two years, it was clear that Bush Exploration was in trouble again. Michael Conaway, George W.’s chief financial officer, told the Washington Post, “We didn’t find much oil and gas. We weren’t raising any money.” Something had to be done.
In walked bailout number two in the persons of Cincinnati investors, William DeWitt Jr. and Mercer Reynolds III. Heading up an oil exploration company called Spectrum 7, DeWitt and Mercer contacted George W. about a merger with Bush Exploration. For Bush and his struggling company, the decision wasn’t hard to make.
In February 1984, George W. agreed to a merger with Spectrum 7 in which Dewitt and Reynolds would each control 20.1 percent and George W. would own 16.3 percent. George W. was named chairman and chief executive officer of Spectrum 7, which brought him an annual salary of $75,000.
Even though the merged companies still failed to make any money, the pieces were finally starting to fall into place for George W. Bush.
Spectrum 7 president Paul Rea remembers Bush’s name as a definite “drawing card” for investors. With oil prices collapsing in the mid-1980s, however, it became clear that George W.’s name alone would not save the company.
In a six-month period in 1986, Spectrum 7 lost $400,000 and owed more than $3 million with no hope of paying those debts off. Once more, the situation was growing desperate.
In September 1986, George W. was tossed his third lifeline, this time by Harken Energy Corporation, a medium-sized, diversified company that was purchased in 1983 by a New York lawyer, Alan Quasha.
Quasha seemed interested in acquiring not just an oil company, but a relationship with the son of the then-Vice President, George H.W. Bush. Harken agreed to acquire Spectrum 7 in a deal that handed over one share of publicly traded stock for five shares of Spectrum, which at the time were practically worthless.
After the acquisition in 1986, George W. got a seat on the Harken board of directors, landed a $120,000-a-year job as a consultant and received $600,000 worth of Harken stock options. By any account, this wasn’t a bad deal for an oilman who had never made any money in the oil business and, indeed, had lost lots of money for his investors.
A Political Bonus
But Harken found that its investment at least in George W. appreciated. Though the company had acquired the son of the Vice President, it ended up in 1989 with the son of the President. Harken moved to exploit that upgrade by expanding its operations into the Middle East, where business and family connections are of legendary importance.
In 1989, the government of Bahrain was in the middle of negotiations with Amoco for an agreement to drill for offshore oil. Negotiations were progressing until the Bahrainis suddenly changed direction.
Michael Ameen, who was serving as a State Department consultant assigned to brief Charles Hostler, the newly confirmed U.S. ambassador to Bahrain, put the Bahraini government in touch with Harken Energy.
In January 1990, in a decision that shocked oil-industry analysts, Bahrain granted exclusive oil drilling rights to Harken, a company that had never before drilled outside Texas, Louisiana and Oklahoma – and that had never before drilled offshore.
Nearly two years later, when The Wall Street Journal examined the curious Bahrain transaction, Bush declined to be interviewed but did agree to answer some questions in writing. Some of his responses were snippy, such as his answer to a question about whether his involvement in Dallas-based Harken lent it extra credibility in the Arab world.
“Ask the Bahranis,” Bush shot back.
Nevertheless, the January 1990 deal added to Harken’s stock value, with its shares rising more than 22 percent from $4.50 to $5.50. The run-up in Harken’s stock marked one of George W. Bush’s first successes in the oil business.
That limited success opened the door to Bush’s next step up the ladder, as a popular young owner of the Texas Rangers baseball team.
The beginning of that deal traced back to an idea of George W.’s Spectrum 7 partner, Bill DeWitt, whose father had owned the St. Louis Browns baseball team and later the Cincinnati Reds. DeWitt wanted to pull together a group of investors to buy the Texas Rangers.
To do so, DeWitt understood that he needed a native Texan in his group of investors. George W. fit the bill. The group of investors was missing only one thing – money. To address that need, George W. tapped a Yale fraternity brother, Roland Betts, who brought with him a partner from a film-investment firm, Tom Bernstein, both from New York.
The New York connection became a problem when Major League Baseball Commissioner Peter Ueberroth insisted on more financial backing from Texas-based investors. But Ueberroth was eager to put together a deal for the son of the President, so the commissioner brought in a second investment group headed by Richard Rainwater, who had built a $4 billion empire while working with the Bass family of Fort Worth.
Rainwater agreed to join Betts, Bernstein and George W. in the $86 million deal, but Rainwater imposed a strict limit on George W.’s active participation in the team.
Bush got to be called a “managing partner.” But – under Rainwater’s conditions – George W. would only be the handsome front man for the team; he would have no actual say in how it was run.
To finance his part of the purchase price, Bush decided to sell two-thirds of his holdings in Harken. He pressed ahead with this decision though he knew that Harken was struggling financially and was planning to sell shares in two subsidiaries to avert bankruptcy.
Outside lawyers from the Haynes and Boone law firm advised Harken officers and directors on June 15, 1990, that if they possessed any negative information about the company’s outlook, a stock sale might be viewed as illegal trading. Bush, who had attended a meeting four days earlier on the plan to sell off the two subsidiaries, went ahead anyway.
On June 22, 1990, Bush sold 212,140 shares to a still-unidentified buyer who spared Bush the trouble of selling on the open market, which likely would have tanked Harken’s lightly traded stock and meant less money for Bush.
The sale also preceded Harken’s disclosure in August 1990 of more than $23 million in losses for the second quarter, which caused the stock to fall 20 percent before recovering for a time. To make matters worse, Bush missed deadlines by up to eight months for disclosing four stock sales to the Securities and Exchange Commission.
After the missed deadlines were noted in published reports in 1991, the SEC opened an insider-trading investigation. At the time, Bush’s father was President and the person responsible for appointing the SEC chairman.
George W. Bush denied any wrongdoing in the Harken stock sales. He insisted that he had sold into the “good news” of Harken landing offshore drilling rights in Bahrain. Bush’s lawyers also argued that he had cleared the stock sale with the Haynes and Boone lawyers, a claim that proved to be important in the SEC’s decision to close the investigation on August 21, 1991, without ever interviewing Bush.
But what the SEC didn’t know at the time was that the Haynes and Boone lawyers had sent Bush and other Harken officials that letter warning against selling shares if they knew about the company’s financial troubles. One day after the investigation was closed, Bush’s lawyer Robert W. Jordan delivered a copy of the warning letter to the SEC.
Asked years later about the letter, SEC investigators said they had no memory of reading it.
“The SEC investigation apparently never examined a key issue raised in the memo: whether Bush’s insider knowledge of a plan to rescue the company from financial collapse by spinning off two troubled units was a factor in his decision to sell,” the Boston Globe reported in October 2002, almost two years after Bush gained the presidency.
Bush also was less than forthcoming about why he missed the deadlines for reporting the June 1990 stock sale and three others. For years, he claimed publicly that he had sent the reports in on time and the SEC had lost them, a sort of the bureaucrats-ate-my-stock-sale-reports argument.
The issue resurfaced in 2002 after Enron and other major companies collapsed in accounting scandals. Bush was positioning himself as a friend of embattled shareholders and demanding that corporate officers reveal their stock sales almost immediately.
Asked why he had not lived up to his own admonition, Bush shifted the blame to Harken’s lawyers for the late filings. He then changed his story again to say that he simply didn’t know what had happened. He never apologized for claiming falsely for years that it had been the SEC’s fault.
Nevertheless, on June 22, 1990, Bush made $848,560 on his Harken stock sale. He used $606,000 of his profits to buy a 1.8 percent stake in the Texas Rangers baseball team. Then, after helping engineer public financing for a new baseball stadium in Arlington, Texas, he sold his interest in the Rangers for $14.9 million, more than 20 times his original investment.
The success of his Texas Rangers investment was even more dramatic when compared with what happened to the Harken stock that Bush sold for $4 a share to that unidentified buyer. A dozen years later, each of those shares would have been worth two cents.
George W.’s time with Harken and his part ownership of the Rangers made him a millionaire and a well-known personality in Texas. That measure of success had derived almost entirely from the family’s triangle of oil-political-financial connections, from Texas to Washington to Wall Street.
Though most of Bush’s sordid business history was known during Campaign 2000, it attracted little attention in the mainstream press, especially compared to the news media’s obsession with dissecting every comment by Al Gore for signs of exaggeration.
Even today, as George W. Bush’s crony capitalism, aversion to regulation, and his trillion-dollar war in Iraq have driven the U.S. – and the world’s – economy off the road and into financial quicksand, big-time journalists continue with their Bush deference. They won’t put too much blame on the person who arguably should top the list of those responsible.
While the Brokaws and Friedmans might justify their behavior as a resistance to “piling on” a lame-duck President, they also are contributing to a distorted history – one that fails to identify Bush and his political/media enablers as largely to blame for this global catastrophe.
By averting their eyes from Bush and focusing so much on Obama now, the mainstream U.S. news media also clears space for right-wing media voices like Rush Limbaugh to begin writing another false narrative, blaming the financial collapse on the incoming President not on the one who has held the office the past eight years.
That narrative, in turn, could restrict what an Obama administration can do once in office. That, in turn, could open the way for a possible Republican comeback in 2010, much as the GOP rebounded from Bill Clinton’s victory in 1992 to win both houses of Congress in 1994.
Though the U.S. press corps is loath to examine history, especially when it reflects badly on the Bush Family, the present – and the future – might hinge on the American people finally understanding how George W. Bush and his reverse-Midas touch managed to turn a relatively golden U.S. economy to dross in just eight years.
It was all predictable.
Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & 'Project Truth' are also available there. Or go to Amazon.com.
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