The Michigan Daily - Friday, February 22, 2002 - 7
afiter Enron fl
Los Angeles Times
WASHINGTON - The congressional firestorm surrounding Enron
Corp.'s collapse could mark a turning point that signals increasing political
consequences from the surge of American families into the stock market.
Since the early 1980s, the share of American households that own stock has
soared from about one in five to one in two yesterday, with many of those
investments concentrated in 401(k) pension plans. And as Main Street's stake in
Wall Street has increased, so has the political system's sensitivity to issues sur-
rounding investor and pension protection - as Enron is graphically demonstrat-
ing in waves of hearings, denunciations and reform proposals.
"Because of this change, there is extreme sensitivity among members of
Congress to these issues," says Rep. Richard Baker (R-La.), who chairs the
House Financial Services subcommittee on capital markets. "It is no longer a
few well-heeled investors losing a couple of hundred thousand dollars. Now
it is the pensioner losing her retirement. As a result, there's an environment
that did not previously exist in Congress"
This new environment is confounding expectations of how the widening
market participation might affect politics.
For years, many conservative strategists have hoped that as more workers
own shares they would absorb the predominantly small-government attitudes
of business owners. That3hasn't happened to any significant extent; in the
2000 presidential race, stock owners were only slightly more likely to support
George W. Bush, the more conservative candidate, than voters, who didn't
own stock,. exit polls found.
But the Enron furor suggests that the most immediate effect of widening
stock ownership may be to increase the constituency for government action to
safeguard investments and pensions from fraud. A recent Los Angeles Times
poll found that Americans who own 401(k) plans, though broadly pro-business
in attitude, were much more likely than non-investors to support new govern-
ment regulations aimed at accountants and the managers of pension plans.
"As you have more people invest in capitalism, the theory was that that
would lead to a hands-off view toward government," said Democratic pollster
Stanley Greenberg. "In fact the opposite may be true post-Enron. That stake
in capitalism has been put in jeopardy by reckless behavior and we are back
at the old-time question of 'Who can arbitrate for ordinary people?' It turns
out to be government."
The mass public move into the stock market has been one of the most pow-
erful economic and demographic changes of the last quarter-century. New
figures from the Investment Company Institute show that about half of all
American households own stock mutual funds.
"Just to put this in historical terms, when the stock market crashed in 1929,
1.2 percent of the American public owned stocks, yet it was remembered as a
historical calamity," said Joel Seligman, dean of the Washington University
School of Law in St. Louis and a historian of securities law. "When you see a
situation like Enron, and you are dealing with about half the households, it is
clear the stakes have risen."
Sen. Joseph Lieberman (D-Conn.) met with employees of Portland General Electric yesterday to
discuss the impact of Enron's Corp.'s collapes on retirement savings.
nron eXeCutves urge
investment 1in company
WASHINGTON (AP) - Enron executives
urged employees to invest all their retirement
money in Enron stock, a Democratic congress-
man said yesterday after obtaining a videotape
of a company meeting.
Rep. Henry Waxman said a video from 1999
seems to conflict with recent Senate testimony
by Enron executive Cindy Olson, who testified
Feb. 5 that the company was legally prohibited
from giving investment advice to employees.
According to the congressman, a woman
who is identified only as "Cindy" on the video
responds "absolutely" when asked by an
employee, "should we invest all of our 401(k)
in Enron stock?"
Enron executive Jeffrey Skilling nodded his
head in agreement to the word "absolutely,"
according to Waxman. The California Democ-
rat said that Enron Chairman Kenneth Lay,
chief operating officer Skilling and vice chair-
man Joseph Sutton were at the podium when
the question was asked and answered.
Calls to Enron headquarters in Houston and
to the office of Skilling's spokeswoman were
not immediately returned.
Waxman outlined the contents of the video-
tape in a letter to Sen. Joseph Lieberman, who
chairs the Senate Government Affairs Commit-
tee that Olson testified before.
Olson told the Senate panel that Enron
would have encouraged employees to diversify
"We tried to talk about diversification with
respect to choice in the 401(k)," Olson testified.
But "there's a fine line that employers have with
respect to giving investment advice. And so we
were concerned about stepping over that line."
Waxman wrote Lieberman that the video-
taped evidence "seems to contradict testimony
that Ms. Olson gave the committee about her
own role in encouraging Enron employees to
invest their 401(k) savings in company stock.
The congressman said Enron lawyers recent-
ly provided nine videotapes of the company's
all-employee meetings, which consisted of pre-
sentations and responses by management to
The videotape about the 401(k) plan and
Enron stock is labeled Feb. 1, 1999, but Wax-
man said the meeting refers to events that took
place well after that date and that the meeting
probably took place in early Dec. 1999.
Tax refunds on
the rise; issues
with new forms
WASHINGTON (AP) - As if tax forms weren't
already complicated enough, the sweeping tax law enacted
last year is forcing taxpayers to grapple with dozens of
changes. One new line alone has caused over 1 million
Even with the tax relief President Bush signed, the tax
laws are "an abomination" and new government reports
will illustrate the "absurdities," Treasury Secretary Paul
O'Neill said yesterday. He pledged anew to try to simplify
tax laws, but the White House could make his job more
difficult: Bush is proposing new tax credits that would add
The 10-year, $1.35 trillion tax cut passed by Congress
and signed by Bush in June made 441 tax law changes,
according to H&R Block Inc. Most will be phased in
gradually over the decade, but some important ones are in
The Internal Revenue Service expects about 132 million
individual returns this year, including a projected 45 mil-
lion to be filed electronically. The deadline is midnight
April 15 in most of the country. Procrastinators can
request an automatic four-month extension to file the
forms but any taxes owed must be paid on time to avoid
Through Feb. 15, average refunds were $2,210, almost
12 percent more compared with the same period last year,
mainly because of the lower tax rates and a bigger child
tax credit, according to statistics released yesterday. E-fil-
ing by people using home computers is running 38 percent
ahead of last year.
Due to extra mailroom precautions resulting from last
year's anthrax scare, IRS Commissioner Charles Rossotti
says more taxpayers should give computer e-filing a fresh
look to reduce the chance for paperwork delays and to cut
the agency's costs.
"The less paper we get, the better off we're going to be,"
Millions of taxpayers got some benefit of the big tax cut
in the form of rebate checks of up to $300 for individuals
and $600 for married couples that were mailed out over
the summer and fall.
But Congress, seeking to spread the wealth, authorized
a new line on this year's tax forms for people to claim a
credit if they got no check or received less than the full
amount. This credit is sowing widespread confusion; the
IRS has received more than 1 million returns with errors
related to it.
The upshot is that people who got a check in the full
amount cannot claim the credit, and those who got noth-
ing or got less than the full amount might be able to.
That includes people claimed as dependents in 2000 but
not in 2001. Consult the 1040 Form instructions careful-
ly to find out.
Continued from Page 1
said she had feared that the U.S. was returning to a
form of unilateralism after succeeding in removing the
Taliban from power in Afghanistan. She said the U.S.
should finish its work in Afghanistan before driving "a
wedge" into our alliance with countries that are either
ambivalent toward or against military action in Iraq.
The assassination of Afghanistan's interim tourism and
aviation minister last Thursday, Albright said, was an indi-
cation that the process of rebuilding the country is merely
in its infant stages.
Responding to a question from the media, Albright
said that during its War on Terror - similar to its strat-
egy during the Cold War - the U.S. must sometimes
support foreign governments, such as Pakistan, which
are not chosen by a democratic process. The reason, she
said, is those regimes are supportive of the United
States in defending itself from terror.
"You do not often have the luxury of having such a
clear choice," she said. "You have to make some prag-
matic choices in order to defend your own country."
But, she added, the U.S. must also make sure that
those countries fulfill their promises of holding free
And does she have any interest in seeking the open posi-
tion of University president?
"When I was secretary of state I made sure I did not
get involved in the domestic politics of a country and I
do not have any interest in getting involved in domestic
politics at the University of Michigan," she said.
Continued from Page 1
Garrison said that the union has a
"We're hopeful that we will be
able to get the layoffs rescinded,"
Negotiations began in January to
draft a new contract for school
The current contract expires this
year on June 30.
Bostick said that the usual issues
of class size and pay will come up
But, Garrison said the unions will
try hard to make negotiations as
smooth as possible.
"We're attempting interest-based
bargaining style of organizations.
You bring forth issues not necessar-
ily proposals first," she said.
Continued from Page 1
struggling nations obtain drugs and other
According to Bender there are only 18
drugs currently approved for the treatment
of HIV At best, these suppress the virus.
The most effective treatment is the use of
protease inhibitors, which prevent the pro-
teins that HIV produces from being bro-
ken down to a size that can spread through
the body. Unfortunately to stay ahead of
mutation a patient must be taking at least
three different protease inhibitors.
A year's supply of drugs can cost
approximately $10,000. Some of the coun-
tries that are most afflicted have per capita
incomes of only a few thousand dollars per
a year. To compound the damage, the pop-
ulation hit the worst by HIV is young
adults. The most active and contributing
members of society are being cut down in
their prime. With the continued spread of
HIV the problem only grows.
"Economies are being wiped out by
AIDS. Most of the populations have had a
life expectancy drop from 60-30 years,"
To contribute to the United Nations
World-Aid Fund, President Bush has
pledged $200 million for the current year,
not including domestic government
research. Many feel that in relation to the
U.S.'s socioeconomic background and
world leadership status a pledge of $200
million is inadequate and noncommittal.
"I think they have a social and moral
duty to do more. Doing more now will
save us money later. We should step up and
do it," LSA freshman Sasha Achen said.
"On the face of it I think it's a poor
response. But beyond the dollar amount it
really says something about how we per-
ceive the future of AIDS to be. It's kind of
a head in the sand approach," said Larry
Jacobs, a graduate student in the School
of Information and a member of the
Lavender Information and Library Associ-
Jacobs said he feels that the Clinton
administration's foreign policy more
strongly emphasized the need for AIDS
funding to ensure international economic
and social stability. But he says the focus
seems to have shifted to military con-
Bender said the Clinton administration
"for the first time articulated that econom-
ic development was a key of economic
According to The New York Times,
since the fund was proposed by Annan last
May, the U.S. has pledged a total of $500
million dollars for three succeeding years.
President Bush's request for $900 million
in international AIDS spending next year
included another $200 million for the
United Nations Relief Fund. Some law-
makers feel that the amount is inadequate,
wishing to give an annual support of $1.2
Though critics say that this sets a poor
example for other countries Secretary of
Health and Human Services Tommy
Thompson and other officials have noted
that no other country has done more to
contribute than the U.S., including helping
to spread AIDS awareness through the
They have recently marked Africa to be
a geographic area of health awareness.
Anyone traveling to Africa with the Peace
Corps., regardless of concentration, is
given special training in AIDS awareness
and prevention education. As a secondary
goal of their trip, members dedicate a por-
tion of their time to teaching about AIDS
to natives, how it is transmitted and how to
avoid contracting it.
"I think we could afford to give a little
more, but I don't think it's necessary since
there are so many nations. We don't need
to support all of the nations of the world.
There are a lot of rich European nations,"
LSA freshman Ben Bernier said.
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strangers into buildings.
"I do not think it helps at all," said
LSA junior and RHA Executive Assis-
tant Amy Ament, a resident advisor in
West Quad, adding that students are try-
ing to be polite by letting others inside.
"People do not question the people
coming into their hall."
Others said the increase in security
guards was not helpful because resi-
dence halls are too large and have too
many residents, but said that solution
should be combined with others.
"Nothing is going to be fool proof,"
RHA Administrative Advisor Taryn
Petryk said. "If we do a lot of little
things, maybe somehow it will help
what is going on in the dorms."
Different methods were discussed,
such as those in place at Michigan State
University, where residents' guests are
checked-in at the front desk and the
number of guests a person can have in
their room is limited.
Michigan State freshman Lauren
Zacklan said that she feels safe because
of her residence hall's security measures.
"I think it's really helpful because you
know, for the most part, who is in the
(residence halls)," Zacklan said, adding
that she is still careful to take precau-
tions. "I'm careful to keep my doors
locked, but for the most part they do a
good job of keeping strangers out."
But RHA members said such a poli-
cy would not work here, where most of
the residence halls have multiple
entrances and some halls, such as parts
of Vera Baits on North Campus, do not
have front desks in ideal locations.
"At (Michigan State), I get let in by
propped open doors and side doors,"
Aurora said. "I think it will increase the
amount of propped open doors. People
just won't want to go through the hassle
of signing in guests."
Other students suggested things like
automatically-locking doors to resi-
dents' rooms and simply increasing
awareness around campus that students
should lock their doors.
"If you go to the bathroom, just lock
your door, it's that simple," Ament said.
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barism that makes a mockery of
everything Danny's kidnappers
claimed to believe in," it said. "They
rlim-a to a Pkii ;+o;n otina 1;i
The Journal said, "We will, in
coming months, find ways, public
and private, to celebrate the great
work and good works Danny did.
But today is a day to grieve.
"This loss is, of course, most painful
fn nv's family in this ncontrv and
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