10.10.08 3:00 PM ET
Governor Ann Richards has the last laugh.
If only Ann Richards were around today to say, “I told you so.”
With the U.S. economy in meltdown mode, a campaign commercial made 14 years ago suddenly seems painfully prophetic. In 1994, when George W. Bush was challenging Ann Richards to become governor of Texas, she deployed the slogan “Can we afford the business experience of George W. Bush?”
In a television commercial that became notorious in the race, she ticked off a list of failed companies Bush had been associated with—from Arbusto to Harken Energy—and concluded the companies’ collective losses totaled $371.6 million.
Richards lost the election and Bush went on to become President of the world’s largest economy. But with the markets plunging, and a $700 billion government bailout underway, Richards, who passed away in 2006, would have some new losses to add to her tally. Here’s a flashback to Richard’s findings.
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The George Bush Index of Economic Ruin
As an M.B.A. from Harvard University, Bush was championing his record as a businessman in his race against Richards, since the only political experience he had was a failed Congressional campaign in 1978, and some stints as an adviser to his father. Richard’s commercial bashing his business record was timely because Caterair, an airline catering company, had just announced it was near bankruptcy—and Bush had sat on its board of directors for five years. Caterair was bought out by an Arlington, Texas-based competitor.
In 1977, after finishing Harvard, Bush used $17,000 remaining in his educational fund set up by his parents to found an oil company in Midland, Texas named Arbusto (that’s Spanish for bush). His uncle Jonathan Bush, a Manhattan-based stockbroker who described his recently-graduated nephew as “an absolute star,” sent a bevy of successful businessmen to invest in Bush’s company—Lewis B. Lehrman, George L. Ball, William H. Draper, John D. Macomber, Russell S. Reynolds. But despite being located in the Oil Patch, one of the most oil-rich areas of Texas if not the nation, Bush hit nothing but dry wells, losing millions. Soon people started calling Arbusto El Busto.
3. Bush Exploration
Sensitive to such jokes—and intent on capitalizing on his family’s name now that his father had become vice president under Ronald Reagan—Bush changed his company’s name to Bush Exploration. In 1982, in what The New York Times called “the biggest miscalculation of his business career,” Bush decided to take his company public. The offering was a disaster, raising a mere $1.1 million of an announced $6 million. “I really realized I had made somewhat of a strategic error,” Bush said at the time.
4. Spectrum 7
Bush Exploration continued to flounder, so in 1984 Bush merged his company with Spectrum 7 Energy Corporation, a Cincinnati-based drilling concern. That company flatlined as well, and when the oil market collapsed in 1986—oil dropped below $10 a barrel—Spectrum 7 merged with Harken Energy. Bush received 212,152 shares of Harken stock valued at $530,380—all for running oil companies that, so far, had lost money for investors.
5. Harken Energy
After Bush’s father was elected president in 1988, some business came to Harken simply because Bush was who he was. In 1990, Harken received a contract to drill for oil in Bahrain, located in the Middle East on the Persian Gulf—a contract Harken got most likely because Bush’s father was president. Of the two wells Harken drilled in Bahrain, both came up dry. “Can you believe it?” a Texas political insider commented. “George W. goes to the Middle East and he can’t even hit oil there. Midas he is not.”
Maybe, but that didn’t keep Bush from making money for himself. On June 22, 1990, Bush sold 212,140 shares of Harken stock at $4 a share for $848,560—a mere eight days before a second quarter loss of $23.2 million was announced, which caused the stock price to drop to $2.37 a share. Even though Bush served on the company’s audit committee, he claimed he knew nothing about the looming bad quarterly report and was not guilty of insider trading.
6. The Texas Rangers
Bush sold the Harken stock so he could buy a small percentage—just 1.8 percent—of the Texas Rangers baseball team. Despite his tiny ownership position, he was named a managing partner in part so he could be the “face” of the franchise for public relation purposes. It was the first business in his career that ended up being successful. He had little to do with the financial management of the team.
7. The U.S. Economy
During the Bush presidency, the national debt has more than doubled and the country has seen the worst financial crisis since The Great Depression.
Paul Alexander is the author of Machiavelli’s Shadow: The Rise and Fall of Karl Rove and Man of the People: The Life of John McCain, among others. His journalism has appeared in The New York Times Magazine, The New York Times, The Nation, New York, The Village Voice, Salon, George, The New York Observer, The Advocate, Men’s Journal, The Guardian, and Rolling Stone. A member of The Authors Guild and PEN American Center, he has been a fellow at the Hoover Institution at Stanford University.