AUSTIN, Texas -- Nothing like a lot of distracting saber-rattling to get you to take your eyes off the shell with the pea under it. Kind of like the prospect of being hanged in the morning, impending war does tend to concentrate the mind wonderfully. But the remaining balance, if any, in your 401(k) is an attention-grabber as well, so while the administration tries to make up its mind whether it agrees with itself on the best way to handle Saddam Hussein, I recommend a swift glance back at the corporate reform agenda.

President Bush went around the country this summer essentially saying, "Done that, it's all over," on corporate reform. His adoption of Sen. Paul Sarbanes' Accounting Reform and Investment Protection Act, which he staunchly opposed until two weeks before it passed by a unanimous vote, is his most unusual claim to parenthood since he announced in mid-debate he was the father of the Texas patients' bill of rights. In that case, he had first vetoed the bill of rights and then refused to sign it after it passed by a veto-proof majority.

But the media failed to run the DNA on his paternity claim. Listening to Bush at his Economic Forum in Waco, one would have thought that the Sarbanes bill was his very own pet project and that he had shepherded it carefully through the bob-wire thickets of Congress. As they say in West Texas, not hardly.

But Karl Rove or somebody with political savvy did have the sense to get him to sign it, for which we are all appropriately grateful. Unfortunately, what remains to be done is considerably more than what has been accomplished to date. Still unresolved is that matter of counting stock options as an expense on corporate balance sheets, and here we need to keep an eagle eye on the shell game.

Dozens of corporations have already announced they will begin expensing stock options when they are granted under a complicated formula called Black-Scholes. As Reuven Brenner and Donald Luskin point out in a recent Wall Street Journal article, that's jumping from the frying pan into the fire -- trading one form of fake accounting for another. No one knows what a stock option actually costs until it is exercised.

"That means the options are risky liabilities of unknown future cost -- a short position in derivative security, actually," Brenner and Luskin write. "As such, they should be reflected on the company's balance sheet and marked to market every quarter. ... Keeping the options off the balance sheet conceals what is potentially a vast liability. ... Putting options on the income statement reveals their expense. Putting them on the balance sheet reveals their risk. Together, they reveal exactly how much a company is paying for its precious human capital. ... By bringing the true cost and nature of options into explicit public view, the debate will focus on the fundamental issues behind the accounting facade. One such issue is the role of boards and the functioning of markets for corporate control in awarding these compensations and significantly altering the company's risk profile. Another is whether or not linking compensation to stock prices, rather than companies' actual performance, is a good idea to start with."

Both Democrats and Republicans can do themselves a great deal of good by shutting down the phony mailbox, offshore corporations in places like Bermuda and the Cayman Islands. Shutting that tax loophole will meet with thundering approval from the voters. That is a real bone-in-the-throat issue, and not fixing it is definitive proof of how far Congress has been corrupted by campaign contributions. These corporations that use offshore mail-drops to evade taxes use our air, our water and our roads, they are protected by our laws, our police and our military, and they can damn well help pay the taxes.

Then there are the continuing issues of corporate governance and pension protection. Employees need the right to sell the company stock in their 401(k)s. Give workers the right to elect the trustees of their retirement funds. Corporations need truly independent directors, including a director to represent the employees' interests. Management should be forbidden to spend company funds electing its preferred candidates. Stop loans on 401(k)s.

Is anyone ready to admit yet that permitting banks, brokerage firms and insurance companies to merge was a rancid idea? We can thank Phil Gramm, the senator from Enron, for that one. Anyone ready to tackle derivatives yet? Because I guarantee you, if we don't regulate derivatives, we're going to see a mess that will make Enron look like patty-cake.

Whichever party gets out in front on these issues is going to have an overwhelming advantage in the fall. According to Newsweek, congressional committees are sitting on evidence that could seriously embarrass pols of both parties. Of course, they're both up to their necks in making this mess -- the question is which one is going to get the credit for fixing it.

Just watch out for any paternity claims by George W.

To find out more about Molly Ivins and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at COPYRIGHT 2002 CREATORS SYNDICATE, INC.