Tilting at Windmills.

The Misery of Coach * Cell-Phone Dementia * Equal Protection for Republicans Recession Hype * Greenspan's Desertion * Sweet Briar Beats Yale

THE CORPORATE LEADERS WHO ARE always telling the rest of us about the beauty of a market economy often prove unwilling to meet market tests themselves. If their business is in trouble, they'll request a government bailout. If they run a sports franchise, they'll ask the taxpayers to build a stadium. If they can get away with preventing a free market so that they can enjoy the fruits of monopoly power, they will do so, and like Microsoft, keep fighting in the courts for the right to continue doing so.

The latest revelation of how business minds really work is what's known as "the rescission of exercised stock options" If those words puzzle you, they did me too--that is, until they were explained by Floyd Norris of The New York Times. Stock options are offered to corporate managers on the theory that if the managers are successful enough to raise the price of the stock, they should be able to profit from it. But last year, when a lot of stocks didn't rise (m fact, a lot actually fell), many of the managers who had exercised their options by purchasing stock then arranged to cancel the deal retroactively. In other words, they wanted a sure thing. As long as the stock went up, they would keep it and profit. If it went down, they wouldn't lose, even though their fellow shareholders suffered losses. Not only could the other shareholders not cancel their purchases, Norris reports, but even some lower-ranking employees of the privileged managers' companies were not allowed to rescind.

THERE IS ONE LEGITIMATE LEGAL argument to justify government aid to religious--or, as W. prefers-- "faith-based institutions." It is that the Establishment Clause of the First Amendment was not intended to for- bid government help to religion but to forbid government from singling out an individual religion or religion generally for help or harm. Aid to religious charities or religious schools can be justified as part of a program of aid to all charities or all schools, or to categories of schools and charities not defined by religion. The "wall of separation," a phrase used not in the Constitution but in one of Thomas Jefferson's personal letters, does not exist. If it did, how could fire departments put out fires in church buildings? The point is that the fire department does not single out churches for help or harm. It puts out fires in all buildings.

But here comes the catch for churches. If other buildings are taxed, why shouldn't churches be taxed? Otherwise we are singling out churches for a favor we don't give other building owners. Why shouldn't churches pay for the public services they receive just like the rest of us? Thus, while there may be a good case for Bush's programs' constitutionality, the same case can be made for taxing church property, and I suspect faith-based institutions wouldn't like that at all.

TO W.'s CREDIT, HIS TOP PEOPLE are all able. Like everyone else, I've always admired Colin Powell. I have known Dick Cheney for 20 years, and I have immense regard for his competence and reasonableness. After my first encounter with Paul O'Neill a couple of years ago, I wrote an item in this column hailing him as a potential future president. (The reason I was so taken with him was that he was the first corporate executive I've heard boast as much about improving worker safety as he did about improving profits.)

All three men have experience in the federal government--many people don't know that O'Neill worked at the Veteran's Administration and the OMB during the 1970s--so they know the buttons to push to get things done. What worries me, however, is the policies for which they are going to push those buttons. Are they going to give the lobbyists what they want? "Industry groups are lining up to make their case to the new Bush administration that rules they don't like should be killed," reports The Washington Post. A Wall Street Journal headline reads, "Bush Tax Cuts Send Corporate Lobbyists Into A Feeding Frenzy."

O'Neill, in a February press conference, reminded me of one of those country-club Republicans when he said, "Democrats think that everyone should have the same amount of income" I don't know a single Democrat who believes that, but I do know a lot of good people who believe tax cuts should benefit working people who need help instead of the wealthy who are already doing all right.

MY OWN VIEW ON TAX CUTS IS that they should be concentrated on helping those who need help, with incomes under $75,000. That's why it's crazy to even consider getting rid of the estate tax, a move that would confer almost all of its benefits on the wealthy. The one legitimate objection to the estate tax, that it sometimes makes it hard to keep small businesses and farms in the family, could be taken care of by minor reforms in the tax, not by eliminating it.

ANY TAX CUTS SHOULD LEAVE room for increased expenditures in health and education. Too many people still lack decent health care. And Bush's proposals to make schools accountable must be accompanied by enough funding for poor schools to give them a fair chance. This will be the crucial test of whether he really means "no child should be left behind."

WE ALL KNOW ABOUT THE tremendous gap in education expenses between rich and poor states, but even within the wealthier states, there is a marked disparity between districts. In the state of New York, for example, $8,171 is spent on the average New York City pupil while $12,222 is spent on students in the surrounding suburbs. The extremes are more dramatic. The Bridgehampton School District in Suffolk County spends $33,408 per pupil while the Portville School District in Cattaraugus County spends only $6,229. Needless to say, those Bridgehampton schools will have a lot easier time meeting President Bush's accountability tests than those in Portville

THE ESTIMATES ARE THAT 98,000 Americans die each year because of medical mistakes. David Lawrence, the CEO of Kaiser Permanente, is one health care insider who is willing to admit there is a problem. Typical hospital patients, he says, see "multiple docs, multiple nurses on multiple shifts, and multiple medical personnel," such as lab technicians and physical therapists. "There are lots of chances for information to fall through the cracks."

Although Lawrence deserves credit for recognizing the problem, his solution to it, as reported by The Washington Post's Abigail Trafford, is not totally reassuring. First he says you should check out the hospital and make sure it has a program to combat errors. That makes sense. But then he says you need to have an advocate to take with you to the hospital, "someone smart enough and tenacious enough to act on your behalf. Someone who can keep track of medication and procedures and demand to talk to the doctor." Hmm. This seems to mean that if you don't happen to have a close friend or family member with the time and talent to fill this role, you're going to have to hire someone. Have things gotten to the point where we not only have to pay the hospital, the doctors, the nurses and all the technicians, but we have to pay someone else to protect us from them?

INSTEAD OF repealing the estate tax, the administration might try enforcing it. A recent IRS study indicates that there is $4.2 billion in underpayments. In 1992, for example, 24 percent of those audited had overpaid, but a whopping 66 percent had underpaid. Interestingly enough, the report found that if a lawyer prepared the return, the estate was more likely to be reported at less than full value.

WHEN THE PALM BEACH POST counted those 10,600 undervotes in Miami Dade and found that they would have increased George W. Bush's margin rather than eradicating his lead as Al Gore hoped, the conservative Washington Times put the story on its front page and later gleefully noted that The New York Times had ignored the story and The Washington Post had given it five paragraphs on page four. But then guess what happened when The Washington Post reported on page one that of overvoted Florida ballots, Gore's name was punched on 46,000 of them and Bush's on only 17,0007 The Washington Times said nary a word.

SPEAKING OF FLORIDA, EVEN IF there had been a genuine Bush victory, the electoral college result would still have not reflected the will of the nation, which gave Gore a substantial popular-vote victory--in fact, one that was five times greater than John Kennedy's. There is a solution to this problem. Some years back, a Century Foundation (then called the Twentieth Century Fund) Task Force came up with this recommendation to reform the electoral college: Award 102 electoral votes (two for each state and the District of Columbia) to the winner of the popular vote, with the rest of the electoral votes determined as they are today. This makes sense to me, balancing as it does both the will of the nation and the regard for the states that the Founders wanted to express.

THE TASK FORCE REPORT NOTES A fact you may not have known--I certainly didn't--that the 1976 election almost produced the same denial of the people's will that happened last fall. If just 10,000 total votes had changed in Ohio and Hawaii, Gerald Ford could have won the electoral vote even though Jimmy Carter won the popular vote.

YOU MAY RECALL NICHOLAS Thompson's article on U.S. News and World Report's college guide. He pointed out that, while the guide did a good job of describing a school's resources, k did little to evaluate what happened to a student while he or she was there. Now comes a survey designed to do just that. It's called the National Survey of Student Engagement. It includes questions about how much time the students spend preparing for class and how often they write papers of 20 pages or more. Interestingly enough, the colleges that scored highest were not the Harvards and Yales that do so well in U.S. News, but four small, relatively unknown colleges--Beloit, Centre, Sweet Briar, and Elon.

THE BUSH ADMINISTRATION'S initial reaction to the energy crisis has been, it's a state issue, let California solve it. Certainly it can be argued California is itself responsible for much of its energy problem. But, even though that is true, it doesn't mean that the problem can be solved by California alone. Today, much of California power is supplied by out-of-state producers. They are outside the jurisdiction of California's regulators. This situation is not confined to California. "The trend is the same across the nation," writes Richard Oppel of The New York Times, "as electricity supplies are increasingly controlled by companies that do not operate under the oversight of state regulators." Common sense tells us that every state should not try to be self-sufficient in energy production. Some states may be better suited to production; others will be top-heavy in consumption. So, as much as the conservatives in the Bush camp may hate to admit it, this is a federal problem requiring federal action.

BY THE WAY, WHEN GEORGE W. Bush tried to blame environmentalists for the failure to construct enough power plants in California--"We need to relax those standards"--he was quickly rebuffed by a spokesman for Reliant Energy who said, according to the columnist Paul Krugman, that "assertions that environmental regulations were holding back power production were "absolutely false." Reliant Energy, by the way, is based in Houston, where people tend to be kind to Bushes.

MY WIFE AND I HAVE NOTICED A new form of cell-phone dementia. It is the pedestrian so absorbed in his teleconversation that he bumps into you on the sidewalk, or more seriously, walks into the street without looking. Recently my wife was driving down a street in our neighborhood when she observed a woman on the sidewalk talking into a cell phone. As my wife approached, the woman stepped into the sweet without even a glance to her right or left. To make matters worse, she was pushing a stroller in which a small child was seated. My wife slammed on the brakes, skidding to a halt inches from the child.

PUTTING TIME LIMITS ON welfare payments helps recipients to think of welfare as temporary and to look for work more seriously than they otherwise would, according to a pioneering welfare reform experiment conducted in Florida between 1994 and 1999. More than three-fourths of the recipients left welfare before they had used up all their benefits. This is another indication that welfare reform has, on the whole, been and will continue to be a success, at least as long as the good times last. (Note: I said on the whole. Remember the article by Alexander Nguyen in our November issue that showed how a lot of present and former welfare recipients are not getting the help they need?) A real recession could mean that time limits have to be reconfigured or that public service jobs must be provided to allow for the increased difficulty in finding work during a serious economic downturn.

IN ADDITION TO HELPING WELFARE reform work, the prosperity of the '90s had one other significant social impact. It played a crucial role in helping the country absorb what may have been the largest wave of immigration, legal and otherwise, since the heyday of Ellis Island.

ALLAN GREENSPAN'S DESERTION of deficit reduction, which he later embarrassedly repudiated, reminds me of how those conservative Supreme Court justices deserted their states' rights and judicial restraint principles in the Florida vote case. It's touching what the fellows will do for W.

Just as remarkable as the conservative justices' flight from states' rights and judicial restraint was their sudden embrace of the Equal Protection Clause of the Constitution (see Jamin Raskin's article in this issue). As African Americans and many others know, equal protection has not, at least since the Reconstruction era, been a cause that makes Republicans hearts beat faster. Of course, it is worth noting that in their opinion, the justices took care to restrain their new passion for equal protection by saying that it applied only in this case--in other words, where it was necessary to produce a Republican victory.

WHEN BILL CLINTON WAS ASKED to name the Washington journalist "who generally gets it right," he picked Ron Brownstein of the Los Angeles Times. I was struck by Brownstein's explanation of why Clinton might have chosen him: "If you portray these guys as pushing an agenda in part because they believe in it, it leads to a good relationship" Washington reporters love to assign cynical motivations to any political action. Consider their explanation of why Bill Clinton signed the welfare reform bill. Almost none of them conceded that he might have done it because he believed on the whole it was a good idea. The Washington Post's John E Harris has observed that "Everyone involved (myself included) wrote about the poll-tested calculations behind a parade of Clinton policy initiatives, from welfare reform to further tax deductions." Harris continued, "We should all remember that no one's motivations are truly knowable to another." We should also remember, Harris might have added, that what counts with a public official is not motivation but performance.

ON THE PERFORMANCE TEST, MY guess is that Bill Clinton will rank reasonably high among our presidents. The economy under his leadership performed spectacularly for eight years. And it took leadership to get his deficit reduction package through Congress against the opposition of all Republicans in the House. The result was an unprecedented prosperity, with an unusual combination of high employment and low inflation. In foreign policy, his efforts for peace in Northern Ireland and the Middle East were admirable. And in the former Yugoslavia, he triumphed where Bush the elder had feared to tread, bringing peace and an end to Serb domination of Bosnia and Kosovo and getting rid of Milosevic to top it all off.

But Bill Clinton failed the performance test with the Rich pardon. His not going through the normal vetting procedure at the Department of Justice was unhappily consistent with a fauk of his often discussed in these pages: A sloppy indifference to the proper functioning of executive branch agencies except when they were in the news. And his refusal to let loyal White House staffers tackle him before he crossed the wrong goal line manifested a self-destructive arrogance I had heretofore seen only in his sex life.

THE UNFAIR BURDEN OF THE PAYroll tax on struggling workers has long been a major concern of The Monthly. It finally made it to the front page of a major paper last month when The Washington Post's Glenn Kessler pointed out that 80 percent of Americans pay more in payroll taxes than in income taxes. When George W. Bush boasted that his tax cut would eliminate the $1,055 in income taxes owed by the Paul Peterson family, he neglected to mention that $5,000 in payroll taxes would still be due. Combine that injustice with former Treasury Secretary Robert Rubin's recommendation that if we fear a recession, the best way to stop it is "a special rebate aimed at working people with the highest propensity to spend" and what do you get? The Peters Proposal: A rebate of their annual payment to all of those whose incomes are so low that they pay only payroll taxes. This would give the average recipient $800. It would also strike a blow at the unfairness of the payroll tax. If a recession seems a serious probability, the rebate should be paid this summer. The funds to do it would be available if the Bush tax cuts are not enacted. And to keep my fellow geezers from getting their knickers in a twist, the rebate would be payable not from Social Security funds but from general revenue, most of which comes from those who can afford to pay.

IF WE DO HAVE A recession, it could be the first to have been produced--or at least intensified--by hype. The hype has come from two sources: the Bush administration which uses the threat of a recession to win support for a tax cut, and CNBC, which hypes any story that keeps viewers glued to its channel. The top story in recent months has been the economic slowdown and CNBC's talking heads discuss it constantly.

THE WASHINGTON MONTHLY IS usually edited from the standpoint of printing articles I believe to be true, stating points of view I believe to be right. One exception to the rule is an article that, although it states or implies a point of view that I don't share, reflects thoughts and opinions that need to be, but I suspect are not, known and understood by the readership of this magazine. Examples are the last issue's "The Last Angry Man" by Ta-Nehisi Coates and this month's article by Andrew Webb. I don't admire Louis Farrakhan but I think Coates is right about the importance he has had for black males. Neither do I admire closeted gays (or the military attitudes that keep them closeted), but I believe Andrew Webb when he says there are a lot of closeted gays in the military who want to stay that way and don't appreciate the attempts by outside gay activists to put them in the spotlight.

HISTORICAL PERSPECTIVE WAS missing from criticism of the Clintons for taking with them roughly $200,000 worth--later cut in half--of gifts they had received while in the White House. Have the critics forgotten the $2.1 million retirement home that friends bought for the Reagans? Similar reportorial amnesia has been displayed on presidential pardons. I seem to recall that Harry Truman made some embarrassing pardons. And George Bush Senior's pardon of Casper Weinberger destroyed the Iran-Contra independent prosecutor's case against not only Weinberger but more significantly, against Reagan and Bush himself.

DID YOU SEE THAT ARTICLE IN The New York Times about the horribly overcrowded I-95? Similar conditions exist on many other highways. A few years ago, I drove round -trip on the interstate between Tampa and Orlando. It was bumper to bumper all the way in both directions. At Thanksgiving, I visited my son in California. Every time we took to the road, I was nervous. The traffic was heavy at all hours. Even for Thanksgiving dinner, two of the guests were more than an hour late because of a backed up interstate. My old solution, the train, is just not available for most journeys these days. And even when it is--as on the Metroliner between Washington and New York--one has to endure the sound of all the loudmouths with cell phones. Of course, we can also fly, but the charms of air travel today are suggested by the teaser on a recent mailing for the Consumer Reports' Best Travel Deals: "How to Escape the Misery of Coach" My recommendation is: Don't travel unless you absolutely have to.