The Ashcroft slump

Posted: Jun 13, 2002 12:00 AM
WASHINGTON -- Presidential aides could scarcely believe their ears Monday morning. Attorney General John Ashcroft, on the other side of the globe in Moscow, was scaring the devil out of his fellow Americans with talk about a lethal "dirty bomb." What's worse, he was spooking the stock market. The arrest of an al Qaeda terrorist for planning mass destruction was supposed to be announced in Washington by senior Defense and Justice Department officials. Ashcroft beat them to the punch with considerably more graphic language than had been planned. That temporarily throttled a Monday morning stock market rally, eagerly anticipated after a horrible week of falling prices. Nobody can be certain that the new Department of Homeland Security will relegate the Justice Department to its pre-Ashcroft prosaic routine. While grandstanding is unacceptable behavior in the buttoned-down Bush administration, what really bothered the White House about the attorney general's remarks was their impact on markets and the economy, which the president's men worry about more than they admit. The warnings have piled up in recent weeks. One financier who is a fervent political supporter of Bush warned him last week that the economic recovery is weaker than the professional economists believe. One early political supporter of Bush who is closely connected to the White House mentioned the danger of a politically lethal "double dip" -- a second recession before recovery from the past recession is complete. Economic numbers do not justify such concern, with one important exception: falling stock prices. The Bush team knows that could poison the entire economy, and its officials are aware of the psychological dangers. They are furious with the administration's friends in the bankrupt Enron Corp., and the mindset of scandal-ridden Tyco Limited's fabulously rich former CEO Dennis Kozlowski evading sales taxes on high-priced art. Is it fear that more Enrons and Tycos are lurking on the big board that is depressing the stock market? Such was the underlying concern at the White House Monday when it started the new week with a news development in the war on terrorism, the administration's strong political suit. It was decided to reveal the May 8 arrest of al Qaeda operative Abdullah al Muhajir (a U.S. citizen born Jose Padilla) and designate him as an "enemy combatant." Deputy Secretary of Defense Paul Wolfowitz and Deputy Attorney General Larry Thompson, two sober public servants, were to make the presentation. On a visit to Moscow, Ashcroft jumped in ahead of the planned Washington event -- with much stronger language. In his stentorian fashion, Ashcroft declared that al Muhajir "poses a serious and continuing threat to the American people and our national security." In making this arrest, "we have disrupted an unfolding terrorist plot to attack the United States by exploding a radioactive 'dirty bomb.'" That weapon, Ashcroft went on, "is highly toxic to humans and can cause mass death and injury." An investor (or any American) listening to the attorney general might have gotten the wrong idea. Ashcroft did not stress that al Muhajir was apprehended in the "discussion" stage of the plot, that no bomb had been produced and that a dirty bomb is not a nuclear weapon. Worse yet, he exaggerated the government's own estimate of potential damage from the weapon. The Dow Jones industrial average, which had jumped 40 points to start the day, fell quickly by 80 points. Wolfowitz and Thompson held their press conference, with what was now old news, and stock prices rebounded. Nevertheless, the Ashcroft slump delivers two messages to the Bush administration. First, after 16 months in office following a brutal confirmation process and eight months of fighting terrorism, Ashcroft seeks the spotlight as if he were still a senator contemplating a presidential run. Soon, he will have to adjust himself to dealing with the head of a new massive department embracing responsibilities that traditionally belong to the attorney general. Second, it could be time for George W. Bush to use his bully pulpit as one president who understands and is sensitive to financial markets. If markets are so skittish that exaggeration of a dirty bomb can depress prices, the president might reassure them by expressing his contempt for the Dennis Kozlowskis of corporate America.