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Methinks He Protested Too Much

Why in the world did Donald Rumsfeld insert himself into the Enron story?

11:01 PM, Jan 22, 2002 • By RICHARD STARR
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DO THEY suddenly have too much time on their hands over at the Pentagon? On Tuesday, the Defense Department press office issued a release that was, as these things go, full of piss and vinegar

"Mr. Rumsfeld does not own any shares in Enron," it began. "Contrary to the Associated Press, Washington Times, USA Today, and New York Times stories, to the best of his knowledge he has never owned shares in Enron, and definitely has not since he divested most of his holdings on reentering government in January 2001."

After elaborating on how Rumsfeld's wife had once owned an index fund designed to track the S&P 500, which therefore included Enron among its hundreds of holdings, the release concluded with this bit of bluster:

"The Associated Press, Washington Times and the New York Times stories all cited the Center for Public Integrity as a source. USA Today cited its own research. All were inaccurate. To the best of our knowledge, none of the news organizations contacted Mr. or Mrs. Rumsfeld to determine the accuracy of their stories."

I first saw the release cited on Glenn Reynolds, aka Instapundit, noted that "Rumsfeld isn't just the Secretary of Defense. He's the reincarnation of Perry White, giving journalists hell for not doing their jobs."

"Attaboy Rummy!" sums up my own instant reaction. Believe it or not, journalists don't mind seeing other journalists catch hell for their misdemeanors. My second reaction was to go look up the stories, because I hadn't until that point remembered hearing Rumsfeld's name even casually mentioned in connection with Enron.

And that leads us to the first thing wrong with the Pentagon release. Unless you were following the Enron story obsessively, you probably wouldn't have remembered that Rumsfeld was among the several administration figures mentioned in the articles. The holdings attributed to him were trivial compared with, say, Karl Rove's, or those of Secretary of the Army Thomas E. White, a former Enron executive who disclosed holdings of $25 to $50 million in the company's stock last year. Rumsfeld didn't really figure prominently in any of the stories. So purely as a matter of PR craftsmanship, the release was a bad idea--no reason to shout about how your boss was maligned by a scandal story in which he's only a footnote.

But it gets worse. Rumsfeld did disclose the Enron holdings that the stories cited, as the Center for Public Integrity was understandably quick to point out. And they helpfully provided a link to the form.

Now, it's pretty easy to put two and two together here. Such was the punctilious adherence of the Rumsfelds to the disclosure requirements that some poor mope went through the records of whichever mutual fund it was that Mrs. Rumsfeld held in her portfolio and listed each stock in the fund individually. One of them, naturally for a fund of the 500 biggest American companies, was Enron.

This is actually an excellent illustration of the absurdity of Washington ethics regulations. It's almost impossible to imagine a public official being corrupted by ownership of an S&P 500 index fund. I don't know anyone who owns shares in an index fund who can even name the individual stocks it comprises. Indeed, the whole point of buying an index fund of this kind is to place a bet on the health of the American economy. We should hope that our public servants are biased in favor of improving the overall health of the economy.

But Rumsfeld wasn't complaining about the ludicrous nature of the ethics rules. He wasn't pointing out that it's preposterous to suppose the Rumsfeld family's indirect ownership of 100 shares of Enron--spit in the ocean of their fortune--could ever affect one of his decisions at the Pentagon. He wanted to kick some butt and take names. But it looks like the news organizations were right, and he was wrong (even if the AP foolishly ran a subsequent correction citing the Pentagon release). As far as the rules go, Rumsfeld's distinction between what he owned and what his wife did was a distinction without a difference.