George Bush has decided to do some Clintonian triangulating in the last two years of his presidency on issues outside the war, it now seems. He surprised observers by using a well-received speech on the economy to Wall Street executives to scold them on income inequality, which he acknowledged has grown over the last generation. While speaking to cheers when reviewing the booming economy, Bush warned them to mind the executive compensation packages that have grown exponentially:
President Bush acknowledged Wednesday that there is growing income inequality in the United States, addressing for the first time a subject that has long concerned Democrats and liberal economists.
“The fact is that income inequality is real — it’s been rising for more than 25 years,” Bush said in an address on Wall Street. “The reason is clear: We have an economy that increasingly rewards education and skills because of that education.”
In some respects, Bush’s remarks were an unremarkable statement of what many economists accept as common wisdom. But they appeared to represented the first time Bush has personally addressed an issue on which his administration has found itself under fierce attack from Democrats. The official White House Web site offers no record of Bush uttering the phrase “income inequality” in a speech or remarks, and aides said they could not recollect such an instance.
The comments came during a generally upbeat economic speech outlining Bush’s economic agenda and the state of the economy.
Democrats ate this up, and that seems what Bush intended with the effort. Barney Frank seemed especially pleased that the election delivered this particular message to the White House. The administration pointed out that members of the Bush economic team, Treasure Secretary Henry Paulson and chief advisor Edward Lazear, mentioned the issue in speeches last year.
Bush, though, appears to be taking a page from Bill Clinton’s playbook. After the devastating midterm elections in 1994, many believed Clinton to be largely irrelevant politically. Instead, Clinton started “triangulating”, adopting the most palatable talking points of the Republican opposition in order to make the issues his own and take some steam out of Newt Gingrich and the GOP majorities. The effort allowed welfare reform and balanced budgets to become reality, and Clinton took as much credit as he could for what had been traditionally Republican goals.
On immigration, of course, Bush has always been closer to the Democratic positions and is now expected to finally get his version of comprehensive reform passed. These kinds of economic populism might threaten his earlier work on taxes and economic stimulation, but if he can take the opportunity to offer symbolic paeans like this speech instead of substantive populist positions, then he will certainly do so.
Interestingly, the Washington Post missed one part of the speech that helped create some of the enthusiasm the Post notes. Readers have to go to the Wall Street Journal (subscription required) to know that Bush wants to push back against the Sarbanes-Oxley nightmare that has enriched consultants and auditors but has kneecapped productivity:
In his speech, Mr. Bush repeated his view that the 2002 Sarbanes-Oxley law he signed amid a wave of corporate accounting scandals has been a success. But he gave encouragement to the law’s critics, saying that one section in particular “may be discouraging companies from listing on our stock exchanges.”
He said “we don’t need to change the law; we need to change the way the law is implemented,” and praised efforts by Treasury Secretary Henry Paulson — former head of Goldman Sachs Group Inc. — and Securities and Exchange Commission Chairman Christopher Cox to roll back what they have termed excesses.
Mr. Bush’s comments likely will fuel efforts to relax Sarbanes-Oxley, particularly Section 404, which requires companies to assess whether they have adequate controls over their financial reporting. Business groups, especially smaller companies, say the assessments are costly and burdensome, and focus on minor issues such as who has access to office keys, while placing insufficient emphasis on who has access to financial records.
Mr. Cox has already begun watering down the provision, and Mr. Bush’s remarks provide him with political cover to go further. Mr. Paulson, chairman of the president’s Working Group on Capital Markets, plans to host a conference this spring to examine the competitiveness of U.S. capital markets and may make his own recommendations on some rules.
For those who work for companies that have to undergo Sox auditing, the news comes as hope for blessed relief. The amount of trivial make-work that Sox has created takes weeks out of the year for units of business with no direct responsibility for financial reporting or control. The WSJ’s characterization of having more concern for door keys than financial ledgers is, unfortunately, the exact experience of Sox auditing. It costs a fortune and only benefits the companies hires to conduct the outside inspections. It’s ISO 9000 without the cool logo for advertisements.