The American Spectator

Washington Prowler

IT'S ALL LEFT UP TO PATRICK
With no Democrat in Rhode Island stepping up to challenge liberal Republican Sen. Lincoln Chafee in 2006, Democratic Sen. Chuck Schumer met recently with his colleague, Sen. Ted Kennedy to ask whether it would be worth approaching son Rep. Patrick Kennedy about making the challenge. Dad apparently gave Schumer at least tacit approval to make the pass at his kid.

Now Patrick, known to many as "Patches," is seriously mulling a run after declining once to do so. He got his nickname from famed Boston radio host and newspaper columnist Howie Carr. It comes from a blues tune by Clarence Carter that Carr found particularly appropriate for Patrick and pater familias Teddy:

But I would remember what my daddy said
With tears in his eyes on his dyin bed.
He said, "Patches, I'm depending on you so
To pull the family through. My son it's all left up to you."

The younger Kennedy has been a washout as a Democratic member of the House. Former Democratic House leader Dick Gephardt entrusted Kennedy with a high profile job as lead candidate recruiter for the Democratic Congressional Campaign Committee, only to see Kennedy use family connections to fundraise, with little interest in working to regain majority control of the House. After the election cycle, Kennedy was eased out of the leadership post.

Today, he serves on the House Appropriations Committee, where he is considered by his colleagues to be second-tier member. "He's a Kennedy in name only," says a Republican Appropriations staffer. "Even Democrats are underwhelmed after meeting or working with him."

But the name is usually all it takes for a Kennedy to make a splash, politically, if not otherwise, and Patches is thought to be the Democrats' best hope in taking a seat from the Republicans. The irony in all of this, of course, is that Patches is looking at taking a seat that many Republicans would gladly surrender, given who is occupying it now.

Lincoln Chafee, who has been a thorn in the side of conservative and even some moderate Republicans in the Senate, is currently refusing to cooperate with his colleagues on everything from Social Security reform to tax policy to ending the filibustering of judicial nominees.

"Kennedy against Chafee, man that's a tough one," says a Senate Republican staffer. "If I had a vote, I guess I'd hold my nose and vote Republican, but hope that Kennedy gets the votes."

It's a weird political world when Republicans would prefer to have Patches in the Senate well. "The floor speeches would be worth watching, that's for sure," says another Senate Republican staffer. "Patches doesn't have his father's or his uncles' oratorical gifts. Not even close."

What he did inherit from his family is an uncanny ability to land in trouble. His run-ins with the law are legendary on Capitol Hill, from abandoning his car and running into the Capitol after being chased for speeding in Washington, D.C., to his physical assault of a female, African-American security guard at Los Angeles International Airport, to his well-documented history of drug and alcohol abuse.

He is not known for strong political instincts, and for his sometimes embarrassing floor speeches in the House and on the campaign trail (another reason Gephardt yanked him out of leadership). Taking all of that into account, Republicans say, they would prefer to see him elevated into an even higher profile position that might be helpful to the GOP nationally.

"Two Kennedys in the Senate would probably be better than one," says a Republican National Committee staffer. "Patches has had the advantage of getting lost among all those House members. In the Senate, he'd be right out in front. We'd take that."

Republican Party officials feel so certain about this, that they doubt that Senate leadership will try to use promises of additional party resources -- money, staff, high-profile leadership appearances -- to induce Chafee to fall in line on some Senate Republican issues.

"If the guy wants to keep his family's job, he has choices to make, but I don't think we should waste our time," says the RNC source. "Chafee has shown time and again that he will make promises to the party, then back out on them. This is his fight to win or lose. But in the end, Senate Republicans and the party are stronger with him out, and Patches in."

TRIAL LAWYER BONANZA
While Securities and Exchange Commission Chairman William Donaldson is focusing on the size and tile color of his new office's bathroom, his career staff at the regulatory agency is pulling another end around that may be another embarrassing chapter in Donaldson's tenure at the top regulatory agency for the financial marketplace.

While a number of SEC senior staff were taking vacation time last week for Easter break, career SEC policy staff were hard at work preparing what is called a "bulletin" to U.S. companies informing them that they will have some leeway in measuring the value of employee stock options in financial reports. The bulletin was seen as the SEC's response to new Financial Accounting Standards Board rules that require companies to recognize stock options as an expense.

The valuation of stock options has been a dicey issue for some time within both the corporate and regulatory world. On several occasions in the past few years, Congress has attempted to address the issue, but legislation has stalled.

During the tech boom of the late '90s, stock options were key financial inducements to employees, and many companies, particularly in the tech arena, have been fighting the expense categorization policy, as have Republicans in the House and Senate. One of the main concerns companies have, not fully addressed in the SEC bulletin, which may be released as early as this week, is that the rules could make them targets of investor or employee class-action lawsuits or SEC investigations if their initial valuation estimates in quarterly and year-end reports are incorrect.

In the past few weeks, Congress had attempted to pass a bill that would have blocked the FASB policy change, but according to both Capitol Hill and SEC sources, career SEC staffers with ties to Democratic political appointees on the commission were furiously developing the bulletin, gambling that Congress would not be able to pass legislation before its spring recess, and that with few people paying attention during the Congressional recess, they would be able to release the bulletin with little notice or complaints from Republicans. The SEC staff's gamble paid off.

As a result, with no input from SEC Commissioners, the staff is releasing a bulletin on the stock option issue that essentially stands as SEC policy that is enforceable. Companies that failed to account for the SEC bulletin policy would expose themselves to potential SEC investigations and possible fines.

"This is policy making by staff, not by the commissioners, and it's outrageous," says a House Committee on Government Reform staffer. "Donaldson appears to be out to lunch on a lot of these issues, letting career staff just do what it wants. Perhaps it's time for a change."

There have been rumblings that the White House has been looking to push Donaldson out of the chairman's chair, if Donaldson didn't leave of his own volition. But Donaldson has consistently told associates that he has no intention of leaving.

"At some point we have to look at Donaldson's behavior, or lack of action, and wonder what the hell is happening over there," says the House staffer. "This is a guy who consistently votes and works with the Democrats, and works against Republicans up here. It's only going to get worse."

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