[Congressional Record Volume 148, Number 44 (Thursday, April 18, 2002)]
[Senate]
[Pages S2941-S2942]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                AN ESSAY BY BERNARD RAPOPORT ON ENRONICS

 Mr. HOLLINGS. Mr. President, I want to share with my 
colleagues an excellent essay by a long-time friend of this Senator, 
Bernard Rapoport. The essay points out that using any means to make 
money as those at Enron did, or evading taxes as too many American 
corporations do today by creating off-shore schemes, are unpatriotic 
acts, which should outrage the American people.
  As the message comes from someone who has distinguished himself as a 
business leader and whose generosity has made our society a little more 
just and equal, it is a message I hope all American business executives 
not only hear, but heed.
  The essay follows:

                   ``Enronics''--(Lack of Patriotism)

       My father was a Russian Jewish revolutionist, (the Agrarian 
     Revolution of 1905). He was a Marxist which advocated the 
     philosophy that the ``ends justified the means.'' It is, 
     perhaps, an understandable point of view of someone subjected 
     to the despotic czarist rulers of the Russia in the time in 
     which he was raised. A few years after he escaped from 
     Siberia, to which he was exiled for life for participation in 
     the revolution, he came to America still convinced about ends 
     and means from the Marxian view. I, too, was raised with that 
     philosophy. Fortunately, and I think at the same time as he, 
     I was influenced by Emerson's wonderful admonition that 
     ``character is that which can do without success,'' and it 
     brought both of us to a new understanding. Yes, how one 
     achieves is more important than if one achieves.
       It's the ``means'' that in fact does determine the 
     ``ends.'' In my eight and a half decades of living I've had 
     three poignant examples of unrestrained American patriotism. 
     Of course, there have been many others, but what follows are 
     the three that are most firmly imprinted in my memory.
       The first was America's reaction to Pearl Harbor. Second, 
     during World War II, on that day that General Dwight 
     Eisenhower told us by radio that D-Day had begun and that 
     there would be a large loss of lives, and, third, 9/11! The 
     most essential ingredient in patriotism is love of country, 
     which requires a commitment that we conduct ourselves in such 
     a manner as to consistently do those things to make our 
     country better.
       The tragedy of ``Enronics'' is that these high-falutin' 
     capitalists lowered themselves to a Marxian philosophy. Yes, 
     their end was making money. Any means legal or otherwise, was 
     justified because of their ``ends!''
       My reason for this essay is that I'm not angry--``I'm 
     mad!'' My father's daily plea was to me was to ``have a sense 
     of outrage at injustice.'' ``Enronics.'' Gives just cause to 
     understand outrage because it is unrestrained unpatriotism.
       Here's another example of what I perceive to be 
     unpatriotism. In the New York Times

[[Page S2942]]

     of February 18, 2002, the column headline on the front page 
     was, ``U.S. Companies Use Filings in Bermuda to Slash Tax 
     Bills.'' I always thought I was fairly sophisticated when it 
     came to finance, but I quickly learned after reading that 
     article that I wasn't nearly as ``smart'' as I thought I was. 
     This is an occurrence that happens often in my life. I 
     majored in economics at the University of Texas. The 
     bibliography included Adam Smith's ``Wealth of Nations,'' 
     which is the predicate for capitalism. Smith realized the 
     greed instinct within all of us, but thought that the 
     invisible hand, i.e. competition, would be the moderator or 
     leveler of the greed instinct. Well, this particular article 
     to which I've alluded is beyond my comprehension. Evidently 
     intelligent lawyers and accountants had come up with schemes 
     to ``legally'' avoid the rules by which the rest of us must 
     play. Secondly, this was combined with lobbyists who appealed 
     to members of Congress to include riders to particular pieces 
     of legislation which would benefit one particular 
     corporation, and enable it to escape the responsibilities 
     that any patriotic company would observe. Competition is 
     making a better product, merchandising it more intelligently, 
     and paying the taxes that all the rest in the same category 
     pay. Well, not in the legal sense, but morally. I ask the 
     question, ``Why do we put up with these kind of shenanigans? 
     Why don't we have a sense of outrage at this injustice? 
     Why don't we get mad?
       I'm reminded of Murray Edelman's wonderful though, 
     ``Political history is largely an account of mass violence 
     and of the expenditure of vast resources to cope with 
     mythical fears and hopes. At the same time, large groups of 
     people remain quiescent (that's us!) under noxiously 
     oppressive conditions and sometimes passionately defend the 
     very social institutions that deprive or degrade them.''
       For example, in the New York Times article, it points out 
     that one company made $30 million additional profit because 
     they didn't pay taxes. Now if they had played by the same 
     rules as other companies, they would've shown $30 million 
     less profit because of the payment of what it really owes. 
     Guess what! Their stock sells at a much higher price because 
     they are taking advantage of what I call an ``Enronic'' 
     approach. At least, such companies should have the courtesy 
     and be required to show what their earnings would be if they 
     were paying on the same basis as their competitors. In the 
     New York Times article it is pointed out that one corporation 
     saved $400 million in taxes! Reducing taxes can really be a 
     meaningful objective if these groups to which I've referred 
     to were truly patriotic. All these companies do to avoid 
     these taxes is to have an office in Bermuda or the Cayman's 
     or some other island, and obtain this unfair advantage. As 
     ridiculous as it may sound, a company with one of these 
     offices in Bermuda, for example, can borrow money from its 
     Bermuda account, charge out the interest that it pays, 
     reducing their taxes in the United States. Let's be quickly 
     reminded that there is no tax on the interest earned by the 
     Bermuda parent. So an additional injustice is compounded as a 
     result of this tax avoidance scheme.
       The U.S. Treasury has to borrow money, sell bonds, and you 
     know who buys them? These same corporations! Guess what! The 
     interest they have received on their bonds as a result of 
     their Bermuda office will not be taxable. It's a vicious 
     circle! Where, of where, is there not a sense of outrage to 
     their unconscientious acts of unpatriotism?
       We must be constantly reminded of what Guiseppe Mazzini 
     said, ``God has given you your country as cradle, and 
     humanity as mother; you cannot rightly love your brethren of 
     the cradle if you love not the common mother.''

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