Donald Trump on Jeb Bush and Florida's Financial Crisis: He Is Right And Here Is Why ... by Alan Farago

It has been nearly ten years since Jeb Bush left the Office of Governor in the nation's third most populous state, but for many in Florida, his two terms as governor were unforgettable. Jeb came to the Governor's Mansion in 1998; a man on a mission. He was short-tempered, brittle and did not tolerate dissent inside his circle.

Today, as a contender to be the GOP nominee for president in 2016, Florida's former governor offers an image that is not so different from the "compassionate conservative" he portrayed himself to be to the state's voters. Today, it is about restoring the "Big Tent" and inclusiveness. But his record as governor was not "compassionate"; he was narrow-minded, could be vindictive, and was eager to deploy divide and conquer tactics.

On the campaign trail now, former Governor Bush is trying to rebrand himself. What Jeb Bush claims as achievements has been taken at face value for the most part, until recently when Donald Trump found a way to peel back the gravitas. Trump blamed Bush for the Sunshine State's recession woes, saying Bush's policies were "the catalyst for financial disaster." Politifact, a collaborative effort of The Tampa Bay Times and Miami Herald, took Trump to task for his Sept. 8 tweet: "Jeb's policies in Florida helped lead to its almost total collapse. Right after he left he went to work for Lehman Brothers -- wow!"

Politifact trains its gaze on the financial crisis of the late 2000's and concludes that Trump is mostly wrong. From the ground view, Trump is mostly right. It will take more than a Tweet to explain why. First, Lehman.

During the Bush years from 1998 to 2008, Lehman -- the investment firm whose collapse in September 2008 triggered the financial crisis -- was the largest broker to the State of Florida of toxic, derivative mortgage debt.

"Jeb's first consultant job after leaving the Governor's Mansion in 2006 was for Lehman. "At virtually the same time Jeb was set in motion by Lehman Brothers to solicit an equity investment by Carlos Slim, the Mexican multi-billionaire, WCI Communities declared bankruptcy with over $1.8 billion in debt. The value of the company's stock was halved overnight. The Lehman Brother's collapse cost the state of Florida well over $1 billion." (Florida stands to lost $1 billion because of Lehman Brothers' bankruptcy, Tampa Bay Times, June 4, 2009)

The International Business Times reported:

"As Jeb Bush oversaw the State Board of Administration (SBA) that runs Florida's massive public pension system, the state shifted billions of dollars into higher-risk, higher-fee alternative investments, benefiting the same sector of the investment industry he would work in upon leaving office. Many of those state deals delivered returns that fell short of projections. Roughly 20 percent of that system's 53 private investment deals during Bush's governorship went to companies that employed his brother's Pioneers. Those financial firms, in turn, delivered more than $5 million of campaign cash to George W. Bush, the Republican National Committee and Jeb Bush's Republican Party of Florida."("Jeb Bush's Administration Steered Florida Pension Money to George W. Bush's Fundraisers", April 14, 2015)

The state pension fund provides for the retirement of teachers, firemen, and police among other government employees. Using the fund as a political quid pro quo or vehicle to extort campaign cash is a serious matter, but Jeb's relationship with Lehman discloses what exactly? That the financial services sector takes care of its own. That politicians, when they can, make sure favors they granted are reciprocated once out of office.

Jeb Bush dodged the Lehman Brothers implosion the same way he sidestepped the collapse of Enron and its Azurix subsidiary that had made inroads in Tallahassee along the way to privatize water resource management in Florida. In 1999 it was a close call; Bush family ties to Enron were even tighter than to Lehman Brothers.

There is a lot more than Lehman or Enron in the main body of evidence tying Jeb Bush to Florida's boom and bust in the first decade of the 21st century.

Jeb Bush was elected governor in 1998 with no prior experience in public office. He was impatient to start, after an unexpected loss in his 1994 run against the late Lawton Chiles. It is no secret that GOP strategists like Karl Rove had sized up Jeb, not his older brother, to the presidential bid in 2000. Jeb, however, instead of prepping for a presidential campaign had to circle in a political holding pattern until he could run for Florida governor four years later. In the interim he worked for a major developer in Miami, Armando Codina, and burnished his conservative credentials through a non-profit he founded to advance his agenda, the Foundation for Florida's Future; specifically, how free market economics and self-interest of corporations could grow the economy faster than any government and especially when unburdened from unnecessary rules and regulations.



Jeb's victories in 1998 and 2002 were supported by Florida's builders and the supply chain required to construct large scale condo developments and tract housing. He relied on campaign bundlers like Al Hoffman, the chairman of WCI Communities, Inc.-- a major condo and sprawl developer in Florida that blew up in the financial crash -- who was finance chairman of both George W. and Jeb's campaigns.

Florida was the state where the gears of the machine all lined up to mesh Wall Street financial motive with political levers at the most intricate level of decision making, from state authority in land use planning to local zoning. Jeb Bush now paints Florida's rapid growth during his terms as a positive example, but while he was governor, Jeb was the chief advocate for growth at a very severe cost to the public.

Jeb Bush didn't cause the financial crisis, but the policies he advocated as governor -- marked by a brittle character and an unwillingness to listen to diverse opinions -- and new laws he promoted substantially harmed Florida, pushing the state in directions from which it has still not recovered. Here are a few examples.

Of master-strokes facilitating the housing boom in Florida, one was a new law passed by the Florida legislature in 2002.

HB 813 was called the Everglades Bill because it promised $100 million in state funds towards the multi-billion dollar cost to restore the Everglades. The money for the Everglades came at a cost. There was a hidden kicker in the 2002 Bush bill: it limited citizen standing, red-lining citizen and civic organizations from access to courts to sue state government over changes to local rules and regulations. It was always this way with Jeb: what one hand giveth, the other hand taketh away.

The purpose of limiting citizen rights was to tip the scales to development in wetlands and farmland so that construction could proceed without the appeal of certain civic groups to the state's growth management law.

Through this bill, Jeb Bush picked winners and losers. The winners would be the compliant; the losers would be those groups who sought protection within state law. Of the special interests Jeb Bush catered to, the one with the most skin in the game of dodging rules and regulations is the leviathan, Big Sugar.

Although Donald Trump has blasted the sugar subsidy in U.S. farm policy, he hasn't captured the extent to which Jeb Bush's political career is entangled with Big Sugar.

In Florida, nearly all the regions that could hold opportunities for massive growth also had significant wetlands protected by law. This is a political fact that eludes most non-Floridians. Where other states are defined by mountains, or plains, or rivers; Florida is defined by water and high volumes of rainfall that nourish its springs, rivers and bays but also the largest mass of wetlands of any state in the nation.

It is said that in Florida, political money flows downhill toward water. Controlling water is a central theme of political life, organizing special interests like Big Sugar that needs its water just right; the right volume at the right time of year, and politics, that uses water supply infrastructure to put its spigots for campaign cash.

State laws protecting water quality and natural resources against rampant growth had been codified by a generation of elected officials in Florida who came of age in the 1960's and 1970's. For these Floridians, the impacts of badly planned growth were cropping up everywhere. A strong bipartisan consensus in the state legislature worked together to pass legislation protecting water resources and quality and natural habitat. Laws like the state's Growth Management Act became models for the nation when they were created but were instantly set up by special interests, land use law firms and lobbyists.

By the time Jeb Bush was elected in 1998, citizen activists were not only well-versed in the failure to protect, they were advocating for stronger governmental enforcement. Jeb Bush had other plans: to use the rubric of "smaller government" to mask a very deliberate shifting of risk to the taxpayer and away from polluters and industry.

Big Sugar, for example, In 1999 and 2000, had no need to tamper with legislation at the state level. The reason: the industry, along with government agencies, and conservation organizations were in the process of finalizing a major piece of federal legislation signed into law in December 2000 by President Clinton with Gov. Bush representing the state: The Comprehensive Everglades Restoration Act or Plan (CERP).

CERP was signed in the Rose Garden on the same day that the U.S. Supreme Court decided the presidential election in favor of George W. Bush. Afterwards, Big Sugar went straight to work in Tallahassee. Its goal -- as true today as it was then -- is to strengthen defenses of nearly 700,000 acres of sugarcane south of Lake Okeechobee.

Sugar production in Florida is not just protected by corporate welfare in US farm policy, it is a polluting industry protected by inefficient and insufficient law. The main costs of cleaning up sugar's pollution of the Everglades is imposed on taxpayers, who bear the weight in many ways; from the severely degraded River of Grass, to Florida Bay, to the cooperative relationship between state and industry in turning treasured waterways leading from Lake Okeechobee into sacrifice zones for sugar's waste.

For Big Sugar to be maximally profitable requires its full command of Florida's water infrastructure; pitting its profits against the values of homeowners and the water needs of millions of Floridians on both coasts. The industry's strategy in Florida is based on delaying and obstructing governmental interference in order to maximize its profits, for as long as possible. Same as Big Tobacco.

Jeb Bush proved his service to the cause. He recognized early on the political advantage of micromanaging water management.

Big Sugar supported the 2000 federal legislation because the heart of the plan and its largest cost component were 333 aquifer storage and recovery wells (ASR) at a cost of over $2.1 billion. These wells, to be drilled through Florida's sole source aquifer and into layers below, were intended as vertical storage areas for water that would otherwise require the horizontal plane; surface water storage and cleansing marshes at a scale that would eat into Big Sugar's profits.

Today, fifteen yeas later, only a couple of these wells have even been built, but then -- in 2000 -- through the ASR scheme Big Sugar believed it had put in place a way to indefinitely postpone further consider of its biggest problems, water quantity and water quality. These were problems because the only realistic solution was to massively convert sugar farms to water treatment and storage marshes to both replenish the Everglades and protect communities nearby from the effects of its rampant pollution.

Moreover, in order to prevent Lake Okeechobee from flooding sugar fields in the rainy season and have enough water in the dry season for its needs, Big Sugar's plan was to take excess water -- measured by the millions of acre feet -- and pump it underground. Then, when the water was needed later in year, it would be pumped back out. The only problem: ASR had never been tried before in Florida on a large scale. (The dismal weakness in the scheme was that the single federal agency with scientific expertise on ASR -- the U.S. Geological Survey -- was not even consulted on CERP's aquifer-based water storage plan.)

To make ASR workable, in 2001 Big Sugar enlisted Jeb Bush on important task. Industry lobbyists proposed and Jeb Bush endorsed the weakening of state drinking water standards. (There was, at the same time, a Florida-based initiative to weaken national drinking water standards -- ultimately successful -- that assured the future of the fracking industry.) The reason Big Sugar needed to lower the state's drinking water standards: the chemistry of the water that was being pumped down into test aquifer storage and recovery wells had fecal coliform counts that exceeded federal standards, and since the same water meant for the Everglades also ends up in the drinking water supply of millions of Floridians, Big Sugar saw a problem.

Big Sugar reckoned that to make ASR work, it was necessary to lower drinking water standards in Florida.

That spring of 2001 Jeb Bush faced a firestorm of criticism from nearly every public interest group in the state. One Georgia legislator, when told of the Bush plan, said it was "dumber than dirt".

The public fiasco would not ever again be repeated while Jeb was governor. Fate intervened.

In September 2001, responding to the imminent threat to the US economy by terrorists who used box cutters to crash passengers jets, Fed Reserve Chairman Alan Greenspan used the most powerful financial tool in world history -- the federal benchmark interest rate -- and lowered it to almost zero.

The Florida developers who supported Jeb Bush and George W. Bush understood perfectly well what zero percent interest means: a gold rush.

In the 1980's and 1990's, Florida's tract housing developers, Jeb's core supporters in his 1998 victory, had perfected their business model; from scraping land of vegetation, to laying electric lines, telephone and roads, to water and sewer, to housing developments where the key to profit was scalability. All of Florida's tic-tac houses and Insta-Gro communities don't look the same for aesthetic reasons: they had to be the same to fit the mathematic formulas for derivative debt based on mortgages.

Before 9/11, building sprawl was a multi-billion dollar business in Florida for bankers, lawyers, developers and large landowners. After 9/11, it would be a trillion dollar business so long as regulations didn't get in the way.

In January 2001, only a few months after 9/11, former Orange County commissioner Mel Martinez was confirmed as Secretary of HUD, the key federal agency overseeing housing and issues related to housing financing, through direct investment and supervision of agencies charged with the management of Fannie Mae, Freddie Mac, and Ginnie Mae. Martinez told his audience of homebuilders, "Our Blueprint for the American Dream Partnership is the right response at the right time. It is unprecedented in scope and sets out to close the minority homeownership gap by harnessing the resources of the federal government to those of the housing industry."

Its ebullient message frame was "The Ownership Society". It was born in Florida with the full-throated backing of Jeb Bush supporters.

Politifact skips past this key point and Donald Trump does, too. Here's Politifact:

"So what caused the financial crisis? It was a mix of factors, leading to a perfect storm as home sales peaked in 2005 and 2006. The combination included untested financial regulations, lax lending, overzealous bankers and traders, poor risk assessment, greedy investors, compliant governments on all levels and a global economy looking for easy money. When the bubble burst, Florida was among the hardest hit because it had gained so much during the boom. But observers told us that it is foolhardy to pin the meltdown on any single state official, let alone Bush. The downturn was a nationwide phenomenon, not just a problem in Florida."

The narrative of unattributed blame for the financial crisis misses the manifold ways in which the financial system was geared from below -- at the level of state land use regulations and even lower, at the level of county zoning -- to provide fodder for derivative debt that cratered world financial markets.

Jeb Bush fundamentally obeyed the rules of Florida's shadow government: his role was to facilitate special interests like Big Sugar and his developer pals; they didn't want neighbors from blocking their path to outsized profits.

In the 2002 legislative session, Jeb Bush and Big Sugar succeeded in raising the bar against citizen standing.

Across the state, the Bush initiative was condemned the same way Bush was criticized in 2001 for his effort to lower drinking water protections. Newspaper editorial boards lambasted Bush. The St. Pete Times editorial board called it an "unwarranted assault": "Now, if a developer seeks a permit on a project that threatens to degrade the environment, Florida residents have a reasonable opportunity to oppose the permit. There is no indication that the right is being abused or that developers are thwarted if their projects are responsible." (St. Pete Times, April 3, 2002)

Big Sugar was committed to expanding its footprint through utilities and infrastructure including rock mines (used to manufacture cement and asphalt) into the Everglades Agricultural Area; all precursor activities to tract housing. State land use planning law could give environmentalists a way to throw up legal roadblocks to Big Sugar's development plans. That's what they targeted.

But that isn't the end of it.

The Jeb Bush 2002 legislative victory against citizens was a dress rehearsal for a 2003 assault on the Everglades Forever Act, the foundation that established both a state and federal pollution standard for phosphorous, a critical fertilizer component used by Big Sugar.

Phosphorous flows off sugar fields through canals and into the Everglades, turning splendid biodiversity to ash. The Jeb Bush goal: to lower the pollution standard in the Everglades.

In the spring 2003 legislative session, there were more lobbyists than state senators in the hallways of the Capitol in Tallahassee. The key players were two Miami-Dade legislators: Gaston Cantens and Marco Rubio. In 2010 Rubio would gain his foothold in the US Senate by money from the billionaire Fanjuls, enraged at GOP Governor Charlie Crist who initiated a deal with US Sugar, a deal that broke Big Sugar's fundamental rule: no surrender of lands in sugar cane production unless it met their maximum profit expectations. (Recently, Rubio defended the sugar subsidy in the Farm Bill as "a matter of national security".) Cantens is now chief political advisor for the Fanjuls.

In the spring of 2003, Jeb Bush sent his top environmental officer, Florida Department of Environmental Protection Secretary David Struhs to declaim from the federal court house steps in Miami. Federal agencies supported the changes Jeb Bush sought -- Struhs lied -- and he promised those changes did not violate earlier law. And they did. It took environmentalists nearly a decade to prove in a federal Clean Water Act lawsuit, that the Jeb Bush law was illegal. (In the interests of full disclosure, I am president of the board of the small Miami-based environmental organization, Friends of the Everglades, that successfully sued the U.S. EPA on this issue.)

That moment in 2003 was the high point of the Jeb Bush terms as governor of Florida. In early January, Bush had been inaugurated to his second term in the state capitol. He surveyed the Tallahasee crowd, filled with supporters, lobbyists and donors.

At the very same time in Washington DC, the same political forces were cheering the lowering of mortgage standards so low that anyone whose breath could fog a mirror could qualify for mortgages that would be piled into collateral debt and off-loaded into pension funds like Florida's, derivatives that Alan Greenspan, the Fed Chief, claimed to benefit the economy until they fermented then exploded in 2008.

Florida based writer Martin Dyckman recently wrote: "Jeb Bush has a consistent problem with not thinking through what he's about to say." It is not an accident. The problem is that somewhere in Jeb Bush's mind, he disagrees with what he is about to say, himself.

The Ownership Society, after all, was mostly a scheme to rearrange the deck chairs on a financial Titanic, putting America's middle class at great risk. In the same way, freeing polluters and developers from regulations in Florida turned out to be a recipe for an insular, narrow-minded majority serving special interests to steamroller the public interest. What rankles, still, in Florida is that Jeb Bush as governor brooked no dissent; it was "my way or the highway".

"There will be no greater tribute to our maturity as a society," Jeb lectured his audience during his final inaugural address in 2003, "Than if we can make these buildings around us empty of workers; as silent monuments to the time when government played a larger role than it deserved or could adequately fill." That is the false narrative. The real narrative is that Jeb Bush helped lead to Florida's financial crisis by weaving an iron curtain around special interests who had pushed him forward from Miami: Big developers, Big Infrastructure and Big Sugar.

That he was successful in doing the bidding of special interests makes him one of those key actors cited by Karl Rove (''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do.'', "Without A Doubt", by Ron Suskind, New York Times, Oct. 17 2004) ; and so, yes, Jeb Bush played a big role in the culture of risk-taking and speculation that brought Florida's economy to its knees in the late 2000's.

Today Jeb Bush is holding up his Florida record as one of unblemished achievement, but he can't sound persuasive because his claims don't bear the weight of fact.

Donald Trump on Jeb Bush is like that first gold miner in the Roaring 40's, with a pick axe, a good arm and a sixth sense where the treasure is; with each swing he's getting closer and closer. He can feel it in his bones. However takes more than a Tweet to tell the story.