Ballot Box

The Worst of Joe Lieberman

A troubling tale from his past. Is it true?

Slate continues its short features on the 2004 presidential candidates. Previous series covered the candidates’ biographies, buzzwords, agendas, worldviews, and claims to fame. This series assesses the story that supposedly shows each candidate at his worst. Here’s the one told by critics of Joe Lieberman—and what they leave out.

Charge: In July 2002, Lieberman declared that Bush and the GOP had responded to corporate malfeasance “with special favors for special interests. All too typically, they had be to be dragged kicking and scheming to support the real reforms in corporate accountability favored by bipartisan majorities in the Senate.” Lieberman boasted that Democrats “have come together behind a tough corporate accountability bill that says to executives: we won’t let you abandon your workers, cheat your investors, and hurt our country.” He approvingly quoted a Democratic policy analyst who attributed “abuses of stock options” to “an outmoded and unbalanced system of corporate governance.”

Two months later, in his book Take on the Street, Arthur Levitt Jr., former chairman of the Securities and Exchange Commission, portrayed Lieberman as a hypocrite. Levitt recalled that in 1993, the Financial Accounting Standards Board “voted unanimously to seek comment on a rule that would make companies put a fair value on their stock option grants and record that number as an expense. Corporate lobbyists, outraged by the FASB’s perfidy, persuaded Congress to hold hearings.” According to Levitt, Lieberman “led the charge. He introduced legislation to bar the [SEC] from enforcing the rule. In addition, Lieberman wanted to strip the FASB of authority by requiring the SEC to ratify each of its decisions, in effect relegating private-sector standards to mere recommendations. Lieberman didn’t stop there. He also sponsored a Senate resolution that declared the FASB proposal a cockamamie idea that would have ‘grave consequences for America’s entrepreneurs.’ … While Lieberman’s bill did not pass, his resolution did—by an overwhelming 88-9. … [I]t was an unmistakable signal that Lieberman had the votes to stop the FASB if it pushed ahead.”

Defense: According to The New Yorker, “Sandy Robertson, a prominent California venture capitalist, threw a fund-raiser for Lieberman’s political-action committee” in October 2002 and “introduced Lieberman to the group with thanks for ‘all your work on stock options.’ The Senator responded with a rueful smile. … Even before a sympathetic crowd, Lieberman could muster only a sheepish defense of his position. ‘I continue to believe that stock options are a good idea, but they were abused by greedy and unethical executives. That wasn’t clear to me then,’ he said. ‘Stock options democratize capitalism. As I heard from Silicon Valley and around the country, the industry was using options to attract people to small companies from big companies. Looking back, seven to ten million people got them.’ But, Lieberman acknowledged, ‘Clearly a disproportionate per cent of the options went to a small percentage of executives. That was disappointing.’ “