SYNOPSIS: More on Bush's unethical Texas Rangers deal
A few people have asked me about that letter from Bush's former business associates, regarding the nature of his deal with the Texas Rangers syndicate. They assert something I didn't know: that he was granted a 12 percent share of the profits despite having put up only 2 percent of the money back in 1989, when the deal was initialized, rather than in 1998, when the franchise was sold. Assuming this is true - it would be nice to see the contract - does this make everything clean and above-board?
Actually, if anything it makes things worse. In fact, I suspect that the peculiarity of that contract, if it exists, is why we're only hearing about it now: had it been public knowledge at the time it would have raised a lot of questions.
The deal, say Bush's partners, was "standard". Um, how standard is it for a businessman with a track record of losing other peoples' money to get a 10 percent share of a $100 million business venture for free? He was, they say, just a private citizen - whose father happened to be President. (Imagine the reaction if someone had given such a deal to Roger Clinton just a few months after his brother took office!) One more thing: as I understand it, by giving Bush an ownership share rather than paying him for his services, the partners ensured not just that he would get rich, but that his income would be taxed as capital gains - i.e., at a relatively low rate.
The rest of the Texas Rangers story remains unchanged. The partners were able to sell out at a large profit because they had acquired a brand-new stadium - paid for with taxpayers' money - and some prime real estate - seized for them at low prices using eminent domain. Those privileges actually become a bit more comprehensible if, as the partners assert, it was already true at the time the syndicate received such amazing favors from Texas officials that the president's son was entitled to 12 cents on every dollar of its profits.
Was any of this illegal? Probably not. Was it crony capitalism? Of course.
Ask the following two questions:
1. Did the young George Bush get opportunities to make himself rich that are unavailable to ordinary people, who don't happen to be scions of a powerful political dynasty?
2. Was his one and only business success due mainly to political favors, rather than because he was a good businessman?
I don't see how anyone can deny that the answer to both questions is yes, or can hear the tale without thinking of Tommy Suharto.
We don't have the full story of Bush's career. I have reason to believe that there is a lot more to the Harken story, and also a lot about cronyism during his years as governor. But this isn't really about finding smoking guns. It's about seeing what lies behind Bush's pose as a regular guy, someone who shares the concerns of ordinary people.
Originally published on the Official Paul Krugman Site, 8.4.02