WASHINGTON -- President Bush, seeking to boost investor confidence by cracking down on corporate fraud, said Saturday that he will ask Congress to nearly double the budget of the Securities and Exchange Commission.
In his weekly radio address, Bush said he would seek $842 million for the SEC for fiscal 2004 -- which will begin Oct. 1 -- the largest budget increase in the agency's history. The SEC's fiscal 2002 budget was $438 million.
Bush said the additional money would be used to add hundreds of accountants, lawyers and examiners to combat corporate fraud and to replace aging technology systems.
Bush said he would also seek an additional $25 million for the Justice Department to hire more FBI agents and prosecutors to expand corporate fraud investigations.
"The SEC and Justice Department are the referees of corporate conduct," the president said. "Under my budget, they will have every resource they need to enforce the laws that punish fraud and protect investors."
For more than a year, the country has been rocked by scandals involving major companies that had misrepresented their financial status to investors and regulators. Enron Corp. and WorldCom Inc. became household names.
Critics -- Democrats and Republicans -- said the SEC, which serves as a watchdog over publicly traded firms, had been seriously underfunded for years, lacking adequate staff and modern technology needed to do its job.
Democrats have accused the Bush administration, with its strong ties to corporate America, of dragging its feet on corporate reform. Bush previously signaled his intention to substantially increase the SEC's budget. In his radio address, he sought to link a strengthened SEC to his plans for a revitalized economy. The key part of his economic growth plan is the elimination of taxes on stock dividends.
"Our government is also acting to restore investor confidence in the integrity and honesty of corporate America," Bush said Saturday. "In response to the abuses of some corporations, we passed serious reforms, and we will vigorously enforce them."
Democrats said they were pleased with the Bush administration's increased commitment to the SEC for the 2004 budget but questioned why it has not pushed substantial budget increases for the agency for this year.
Congress has not yet passed spending for most of the 2003 budget, including the SEC's funds. The administration has requested $568 million; Senate Democrats have said it should be $750 million.
"We are still seeking to ensure that the SEC has the needed resources for this year," said Jesse Jacobs, a spokesman for Democrats on the Senate Banking, Housing and Urban Affairs Committee, which has regulatory oversight of the SEC.
His boss, Sen. Paul S. Sarbanes (D-Md.), was chairman of the committee last year and coauthor of the Sarbanes-Oxley Act, which toughened the law on corporate fraud and corporate accountability.
Rep. Barney Frank of Massachusetts, the ranking Democrat on the House Financial Services Committee, was critical although he was pleased the president was proposing increased funding.
"Unfortunately, he still hasn't gotten it right. The proposal he announced today promises sufficient SEC funding for the next fiscal year -- which is nearly nine months from today," Frank said. "I urge the president to drop his insistence on further delay and join us in pushing for the appropriate funding level in the next few weeks, when we adopt the appropriations for the rest of this current fiscal year."
A spokeswoman for the Office of Management and Budget said the Bush administration would support giving the SEC more than the $568 million it requested earlier but did not say how much more.
In his radio address, Bush also promoted his tax cut plan, which he said "will add nearly $59 billion to the economy in 2003 alone." In the Democratic response, New Mexico Gov. Bill Richardson urged Congress to pass an alternative stimulus plan proposed by the Democratic Governors Assn.
The Democrats' proposal calls for $50 billion in federal aid to the states, which "are in the midst of the worst fiscal crises in half a century."
"Direct aid to cash-strapped states is perhaps the most direct way to immediately jump-start an ailing economy," Richardson said. "Congress can flex its fiscal muscle by assisting struggling states -- which cannot run deficits -- in closing their budget gaps without extreme service cuts or tax hikes."