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Hernando Today

The Perfect Ethical Storm

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By JOHN REINIERS, More Than Words

Hernando Today

Published: February 7, 2009

Updated: 02/07/2009 11:29 am

President Barack Obama ran into the perfect ethical storm — probably due to a failure in his vetting process. His nominees — Timothy Geithner for Treasury; New Mexico Gov. Bill Richardson for Commerce; Nancy Killefer for OMB, and former Sen. Tom Daschle for Health and Human Services — were all guilty of tax discrepancies.

Speculating, I would say that Killefer and Daschle — the last two in line for confirmation — were dead on arrival because of the speed of the news cycle.

If either one had been first in line, they would have had it made. Since they were at the tail end of these tax scandals, they felt compelled to withdraw their candidacies. (More likely, the Obama camp told them to drop out.)

Ironically, perhaps the most culpable of the four was Geithner (the only one confirmed) because his honesty was really in question. He paid up back taxes for 2003 and 2004 after the IRS caught him in 2006, but he didn't pay 2001 and 2002 until Obama nominated him — because the statute of limitations had run. But the statute doesn't apply to fraud with intent to evade tax liability, and he accepted reimbursement of taxes from the IMF that he didn't pay, plus he had tax issues for domestic help going back to 1993.

Richardson is caught up in a "pay-to-play" scandal. A federal grand jury is investigating whether the governor urged a state agency to hire a financial firm for $1.4 million in work after they made political contributions to Richardson. There are a number of such investigations going on countrywide. Impeached and convicted former Illinois Gov. Rob Blagojevich — another embarrassment for Obama that dragged on too long — served only to heighten interest in Richardson, another Democratic governor.

Then there's the Obama commitment to denying appointments to lobbyists.

Yet I believe by latest count he has granted "waivers" for about eight nominations to his cabinet. In all fairness, these could have been good experienced people. Daschle comes to mind. While technically not a lobbyist, in just four years he earned millions in consulting fees from lobbyists, lawyers and companies. He knows Washington and could tell them which buttons to push. Along the way, some Democratic millionaire magnanimously gives him a limo and a driver free of charge — to a guy who bragged he drove himself to work as Senate Democratic majority leader.

All these people are sophisticated, have tax accountants and know what a taxable event is. (Not getting a 1099 doesn't cut it for this elite group.) Furthermore, whether Democrats or Republicans, they all are required to fill out mountains of forms delving into potential embarrassing personal matters — with tax issues heading the list. They know better, and do a disservice to a president nominating them for a cabinet position when they fudge the facts.

And all this comes at a time when Bernie Madoff and the mini-Madoffs are being exposed as crooks, along with assorted Wall Street types who are abusing taxpayer bailout money with lavish spending, exorbitant bonuses and salaries.

All these "errors of judgment," or outright fraud, spring from the acquisition of power that the holder translates into privilege, and as William Pitt (after whom Pittsburgh is named) observed in 1770 "corrupt the minds of those who possess it." This "corruption" results in the abandonment of ethical principles and a sense of morality — which brings us to today. We have become a nation unrestrained by ethical principles, and what is really scary is that the overwhelming majority of our high school students cheat, far too many plagiarize and steal from stores and yet they overwhelmingly believe they are ethical citizens.

Many others, including myself, have said this before. We need to "introduce" our kids as early as kindergarten or first grade to ethical and moral principles. Simply stated — and this may be the lawyer in me talking — what is right and what is wrong.

This could have been George Bush's clarion call for "No Child Left Behind" — integrity. (What good is it to learn to read and write if you grow up to be a crook?) Then if we're lucky, these young people will grow up to be ethical politicians and ethical Wall Street wizards.

Dream on.

A dear friend of my oldest son who cut his financial teeth in a Wall Street hedge fund said it thusly: "I fear the integrity and ethics... have drifted away — and far too many generations ago. It reminds me of something a nun said to me in grade school: "Right is right even when no one is doing it, and wrong is wrong even if everyone is."

Looking back, that was the most important thing I ever learned, and I fear not enough people out there anymore are willing to teach a kid something like that.

John Reiniers, a regular columnist for Hernando Today, lives in Spring Hill.

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