ROBERT SCHEER

January 15, 2002

If you believe President Bush, Kenneth Lay--one of his top financial backers and his "good friend"--was merely an equal-opportunity corrupter of our political system, buying off Democrats and Republicans as needed. It is a convenient claim designed to unlink Bush from the biggest bankruptcy in U.S. history.

But, as the good ol' boys in Texas--and now Bush spokesman Ari Fleisher--like to say, "That dog won't hunt."

On Friday, Bush attempted to distance himself from the Enron scandal by stating that CEO Lay "was a supporter of Ann Richards in my run in 1994," obscuring the fact that Lay gave Bush three times as much money as he did the Democratic gubernatorial incumbent whom Bush was trying to unseat. Bush added that he really did not get to "know" Lay--the man he nicknamed "Kenny Boy"--until after he won the governor's race. I can't speak to the varying levels of intimacy of their relationship , but Bush had considerable contact with Lay two years earlier when the Enron leader served as the chair of the host committee for the 1992 Republican convention in Houston, where Bush the senior was nominated for his second term as president.

At that time, Investor's Daily reported that "recently, Lay has turned Enron into a corporate bastion for the GOP." After the elder Bush's defeat, the Bush family switched its political ambitions to George W.'s prospects for governor, and Lay came up with the first of many contributions to that effort.

Lay's loyal support of the Bushes may have been gratitude for the decisive role that the first Bush administration played in Enron's meteoric rise. Building on the Republican-engineered deregulation of the electricity industry that began in the 1980s, Enron got a huge boost during the first Bush administration with passage of the 1992 Energy Act, which forced utility companies to carry Enron's electricity on their wires.

In fact, Lay publicly thanked Bush with a column in the Dallas Morning News a week before the 1992 election. Calling Bush "the energy president," Lay wrote that "just six months after George Bush became president, he directed Energy Secretary James Watkins to lead the development of a new energy strategy." That resulted in the legislation making Enron's exponential growth possible.

Lay was effusive in expressing his gratitude, writing that the Bush "strategy is the most ambitious and sweeping energy plan ever proposed."

That gift to Enron was coupled with a major exemption granted by Wendy Gramm, then chair of the Commodities Futures Trading Commission in the Bush administration, an exemption that permitted Enron to begin lucratively trading energy derivatives. Gramm then joined the board of directors of Enron and served on its auditors committee, where much of the false reporting now being exposed seems to be centered. Her powerful role in the company did not stop her husband, Sen. Phil Gramm (R-Texas), from pushing through legislation that further weakened government oversight of Enron's activities.

After Bush the elder's defeat in 1992, the ties between Enron and the Bush camp grew even stronger. In March 1993, Enron hired Bush's Commerce secretary, Robert A. Mosbacher, and his secretary of State, James A. Baker III, to line up contracts for Enron around the world. As Enron's representative, Baker--later George W.'s Florida election strategist--even went on a trip accompanying the ex-president to Kuwait to do big business in the nation Bush had fought the Gulf War to save.

The trip was criticized by Gen. Norman Schwarzkopf, who said that he had turned down millions in proffered deals to do business in Kuwait after the war.

"I represent 540,000 American men and women, not some private company," said Schwarzkopf. "They were willing to die in Kuwait. Why should I profit from their sacrifice?"

A decade later, the new Bush administration turned immediately to Lay to get his bearings on an energy policy. Lay met with Vice President Dick Cheney's energy group six times. This was no surprise, given the close ties between Lay and Bush during the latter's days as Texas governor. Consider, for example, that as governor, Bush did not hesitate to call then-Pennsylvania Gov. Tom Ridge and assure him that Lay -- then eager to deregulate Pennsylvania's electricity market -- was the finest of men, representing the most worthy of companies.

Keeping true to family traditions, the president has always aggressively supported far-reaching deregulation of utilities--it is, in fact, his political mantra--and Enron appears to be the biggest benefactor of that philosophy. Whether the contacts between them were actually illegal and not merely an egregious betrayal of Enron's employees, shareholders and consumers, it remains for the eight investigations planned or underway to reveal what Bush and White House insiders knew, and when they knew it.

DALTON CAMP

January 16, 2002

The giant energy corporation, Enron, is now bankrupt, many of its shareholders have lost their life savings and the political community is in a frenzy of buck-passing and a feverish hunt for scapegoats.

The fall of Enron, friend and spoiled child of the Bush administration, its principal donor and maximum financial supporter, has been described as a systemic failure in which Murphy's law presided over the flight of management oversight, the due diligence of corporate directors, the accountability of the high-priced accountants and the reliability of investment analysts. Perhaps, worst of all, politicians who had been hopefully bought would not stay bought. To sum up, what former British prime minister Edward Heath memorably described as "the unpleasant and unacceptable face of capitalism" is on view in all its inglorious reality in the corporate boardrooms of America.

This is no trifling matter: corporate executives dumping their shares secretly on the market, aware of the corporation's imminent collapse while urging their employees to hold onto their shares — indeed, preventing them from selling, all the while assured by the corporation's accountants that all was well and knowing better. The betrayal of trust was a flagrant, deliberate management stratagem and represented the easy triumph of insider information over the understandable innocence of employee shareholders.

As Watergate's "Deep Throat" advised seekers of the truth : "Follow the money." The truth is that Enron's was not the only bankruptcy; there is the moral bankruptcy of American democracy. Following the money has become the entrenched first principle of America's political system. In the rhetoric of its advertisers, the people govern. But they do not. Fewer of them vote, fewer are heard. It is money that talks. Money buys access. Money is the coin of the realm in American politics. Those who pay increase their accessibility, their proximity to power. People answer phone calls from those who pay. The converse is obvious; if Americans do not pay, they do not have access and lack the privileges conferred upon those who give money to elected politicians.

Consider the president of Enron. He is the largest donor to George W. Bush. Since Bush was a gubernatorial candidate in Texas, Enron has been his largest supporter. Enron is the largest supporter of the Bush presidential campaign. The corporate media, hastening to the defence of the system, have been gratified to report Enron has also given to Democrats , as well as Republicans. But Enron has made 75 per cent of its political contributions to Republicans.

Then Enron's president, Ken Lay, called upon his friends, seeking help. At the outset, Bush claimed he really didn't know Lay very well and went on to suggest he thought Lay was a Democrat. No matter what Bush may have thought about Lay's politics, the Enron president called two Bush cabinet members and the budget director, seeking help and information. They all took his call. To profound relief and satisfaction, the Bush administration was of no direct help to the beleaguered Lay.

But the Bush stimulation tax package did include a three-year corporate tax rebate, a divine gift to the corporate state. Lay called Bush's budget director to ask about the likelihood of Enron getting the rebate soon. No small matter to Enron, the Bush tax rebate represented $250 million (U.S.). Nothing wrong, in this cozy environment of a steadfast corporate donor, such as Enron, hoping to get some of its money back.

But then — speaking of the American democracy and the moral standards of American democracy and the moral standards of American capitalism — who else but a corporate alms provider and pocket-liner to an entire political establishment could summon cabinet members to their telephones? Someone who had their numbers at work, who was a presidential pal and committee member to the vice-president and, at the same time, a man of evident sharp practice and seriously deprived of any serious schooling in ethical behaviour.

It helps that Commerce Secretary Paul O'Neill failed to inform the President of the perils of their mutual friend. Besides, as he was inspired to say that bankruptcy is an everyday thing in America, a land of losers and winners, accountants destroying its files and some 100,000 cheated Enron shareholders who, alas, do not have O'Neill's phone number.

For the past decade, America's economic system has been the biggest game in town and true heroes were its CEOs. Wealth was a sign of virtue. Investors bought stocks because stocks were going up and the more they bought, the more they went up. The Laffer Curve, an economic theorem, had been first drafted on a café tablecloth. Endorsed by the Wall Street Journal, Arthur Laffer proclaimed the "new physics," which proved that everything that goes up stays up, given lower taxes. According to theory, it was programmed to last forever, but it didn't.

No one should ignore these signals of the profound and growing moral decay at the heart of America's political and economic life. For a presumed leader of the free world, it is a sorry sight and a disheartening one.

Dalton Camp is a political commentator. His column appears on Wednesday and Sunday.

CHRISTIAN LIVEMORE

January 16, 2002

You gotta hand it to Republicans : They're flexible.

Only a very flexible mind could campaign on the fact that the peace and prosperity of Bill Clinton's presidency was not actually his doing, and then turn around and blame the current recession on him when he has been out of office for over a year.

And only a body with very quick reflexes could campaign on a package of tax cuts for the rich which they proposed in 1999 when the economy was percolating like Mrs. Folgers coffee pot, and now claim that the package was designed to stimulate a weak economy.

And only folks with contortion abilities worthy of Harry Houdini (or a very unhealthy interest in other peoples' sex lives) could spend six years and $65 million investigating if and when Bill Clinton received consensual oral sex from a willing adult, and then caution reporters against turning the Bush Administration's ties to Enron into a "partisan witch hunt."

And only folks with the strength of Hercules could juggle the two conflicting actions of, on the one hand, insisting that Ken Starr HAD to include the salacious details of Bill Clinton and his cigar in the Starr Report in the interest of full disclosure, and on the other hand turning their heads while Bush places the records of his term-and-a-half as governor of Texas in his father's presidential library, where they will be safely out of reach of those pesky public access laws.

And only folks with the acrobatic dexterity of the Great Walendas could oppose President Clinton's retaliatory bombing of Al-Quaeda camps after the attack on the U.S.S. Cole, screaming Wag the Dog, and then blame the attacks of September 11 on Clinton's weak stance against terrorists.

I swear, it's like one big game of Twister in Washington these days. It's a wonder they don't all get ticketed for tying up traffic on Dupont Circle. Shoot, if those were Democrats, we'd be in traffic court for years. We'd be doing community service visiting Strom Thurmond's grandson in the nursing home. Don't believe me? Two words : Gary Condit.

And the media is all too happy to join the fun. They're blaming Clinton for everything from the 9/11 attacks to the tanking economy to the death of his beloved dog while he was out of the country. Even though there is a mandatory quarantine of up to six months on animals traveling internationally, hateful conservatives and media editorialists seized the opportunity to attack the last elected president.

Any excuse to breathe the name Bill Clinton.

It's sad. Pathetic, really. Like a woman trying to have sex with her husband's dead body, they just can't let the Big Dog go.

And who can blame them, really?

I mean, think about it. Who would you rather cover every night on the evening news? The dashing, six-foot-four-inch (height, folks, height), shade-wearing rock star who Sharon Stone said she'd be all over "like white on rice"? Or the guy who falls out of his chair and knocks himself unconscious choking on a pretzel?

The guy who spent his last vacation buying bikinis with Anthony Hopkins in Rio de Janeiro? Or the guy who put a nail through his thumb nailing a plank to a wall in the first five minutes of a photo op for Habitat for Humanity?

The guy of whom the ethnic Albanians say, "There's God, and then there's Bill Clinton"? Or the guy who uses such graceful language as, "Not over my dead body"?

The guy who gave us the lowest unemployment since the 1960s? Or the guy who doesn't want to allow an extension of Unemployment Benefits to folks who lost their jobs as a result of the World Trade Center attacks?

The guy who eliminated the deficit and gave us a massive budget surplus? Or the guy who blew that budget surplus on tax cuts for his rich friends at Enron and has no explanation for why his tax cuts did not stimulate anything but the pocketbooks of his wealthy friends and campaign contributors?

The guy who made it to Ground Zero ahead of the sitting president even though he was grounded in Australia for two days? Or the guy who flew around the country all day on Air Force One, then hid in the White House and didn't even show up in New York until four days later?

It's like E entertainment news having to cover Tom Green having sex with a moose while Harrison Ford is flying around in his helicopter saving chicks trapped on the sides of mountains. It's just no fun.

It's not profitable, either.

Robert Parry. Name ring a bell? Robert Parry broke the Iran-Contra story. Robert Parry is one of the finest investigative journalists in this country. He used to write for Newsweek. He now runs a Web site called Consortium News because none of the major media outlets will hire him. Robert Parry tells the truth . The New York Times, Newsweek, The Washington Post, The Wall Street Journal, they don't like that. They like stories that talk about what a great leader George Bush is, how in command he is, how sm-- how smar-- I can't even say it -- how he's not dumb. Robert Parry won't say those things . Robert Parry is not for sale.

Fortunately, there are plenty of reporters who are. (Tim Russert, call your office.) As Mark Twain said, "Tell me where a man gets his corn pone and I'll tell you where he gets his opinions."

Those of you who are wondering when Bush intends to release the papers from Ronald Reagan's presidency that he was supposed to release six months ago, shut up and go put a flag on your car before John Ashcroft throws your ass in jail for supporting terrorism.

And for those of you who are wondering when the media is going to ask Bush about said Reagan papers, it'll probably be about the same time they ask his father about the October Surprise.

There may also be those of you out who are hoping that even if the media gives Bush a pass on Enrongate, the Democrats in Congress certainly will not.

Something else Mark Twain said may provide an answer to that : "Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself."

CHRIS MATTHEWS

January 17, 2002

Here's how the Democrats should play this Enron thing :

(1) Shoot to kill!

Remember Mayor Richard Daley's orders to the Chicago police back in 1968, the bad old days of rioting and street looting? "Shoot to kill." Democrats should take Boss Daley's words to heart when they talk about the men who looted Enron. What inner-city rioters did to retail stores in the late 1960s, the big shots did to Enron. They looted the place.

This is the story Democrats need to repeat until November. They need to tell it till it hurts, because only when the media get sated with the story will the country have fully digested it.

(2) Place the blame humbly and smartly on the Republicans.

No party is without its embarrassments. The Democrats have had to defend some fairly sordid big-city mayors in the past and some unsavory goings-on in the White House. Certainly, some Democrats got some campaign money from Enron.

That said, the Republicans have a special weakness: a too-easy coziness with boardroom types, especially oil guys. Vice President Cheney had Enron to the White House to advise on energy policy. President Bush calls the Enron chief executive officer "Kenny Boy." Texas Sen. Phil Gramm's wife got hundreds of thousands from Enron for serving on its board.

There's one big problem with this cotillion. What's good for Enron's big boys was not good for America. It certainly wasn't good for Enron's employees.

(3) Tie it all together.

The 2002 elections are not going to be won or lost on this issue, any more than the 1980 election was decided by the Iranian hostage crisis. But like the hostage crisis, Enron's downfall tells you something about the people in charge. President Jimmy Carter's inability to get the 52 hostages back was a symbol of his inability to meet other national crises, notably the double-digit inflation and interest rates of the time.

Rather than say the word Enron over and over again, Democrats might take former President Ronald Reagan's example from that 1980 campaign. Instead of exploiting the hostage crisis verbatim, Reagan focused on Carter's weakness in general. Instead of attacking the Republicans for Enron, the Democrats should attack the problem of Enron. They should continue to voice their empathy for the working families who got hurt and anger at those who did the looting. The voters will get the message.

I do not know whether it would be good for the country if the Democrats gain seats in Congress from this Enron matter. I do suspect that it's an opportunity for the voters to learn something.

A deep and abiding connection exists between a party's constituents and its positions. Bush and Cheney are oil and gas guys who feel at ease among oil and gas guys. Cheney views an alternative to oil as something of a joke. Bush, like his father, views the Saudi Arabian peninsula as an extension of the Texas and Oklahoma oil patch; in other words, it's ours.

In the case of Enron, we are seeing that oil connection in full view, and we're learning the dangers of keeping fast company. After all, wasn't Bush the President who wanted to encourage stock ownership? Wasn't he the candidate who wanted us to tie up our Social Security in stocks?

So what's he doing hanging out with Kenny Boy and the other looters?

E-mail : cmatthews@sfchronicle.com

DANA MILBANK and GLENN KESSLER

January 18, 2002

As presidential candidate George W. Bush's top economic adviser in 2000, Lawrence B. Lindsey was also a paid consultant to Enron Corp. At one point, those two roles merged.

For $50,000 a year, Lindsey attended meetings in 1999 and 2000 of the energy company's economic "advisory board." In those sessions, Enron Chairman Kenneth L. Lay convinced Lindsey of the wisdom behind one of Enron's businesses, a consulting operation that advised companies on energy efficiency.

"It stuck with me," Lindsey said in an interview yesterday.

In fact, Lindsey incorporated Lay's ideas into the Bush campaign's energy policy. During the campaign, Lindsey described Lay's contribution as key.

The cozy relationship -- in which a Bush campaign adviser, being paid by Enron, placed an Enron idea on the candidate's agenda -- served as one more reminder of the political influence and reach of the once-giant energy company. Its ties extend deep into President Bush's staff, appointments, Cabinet members, friends, family -- and his own past.

According to financial records, 35 administration officials have held Enron stock. A few, such as top Bush political adviser Karl Rove, had six-figure holdings. Several others -- Lindsey, U.S. Trade Representative Robert B. Zoellick, Commerce Department general counsel Theodore W. Kassinger, Maritime Administrator William G. Schubert -- served as paid Enron consultants.

Bush's secretary of the Army, Thomas E. White, was vice chairman of the Enron business that Lay had described to Lindsey during the campaign. White had held between $25 million and $50 million in Enron stock in addition to options and other forms of remuneration. Newly appointed Republican National Committee Chairman Marc F. Racicot was an Enron lobbyist. Bush campaign adviser Ed Gillespie, sent in when Bush took office to get the Commerce Department up and running, was an Enron lobbyist.

Still others, such as Attorney General John D. Ashcroft and Energy Secretary Spencer Abraham, received campaign contributions from Enron, while many more -- including Securities and Exchange Commission Chairman Harvey L. Pitt, Federal Energy Regulatory Commission Chairman Patrick H. Wood III and Deputy Attorney General Larry D. Thompson -- have indirect ties to Enron or auditor Arthur Andersen. And Enron consulted on policy with top administration officials such as Commerce Secretary Donald L. Evans, Treasury Secretary Paul H. O'Neill and Vice President Cheney.

There has been no indication that the administration's ties to Enron are illegal, and the giant company had similar connections to several Democrats and Republicans in Congress. But the sheer volume of Enron connections to the executive branch offers a study in the long reach of a powerful campaign contributor and aggressive corporation. Though the administration says it made no effort to keep Enron afloat, the extensive ties between the two may present Bush with a political difficulty if Democrats can create a perception of guilt by association.

Enron began in 1985 as a traditional gas pipeline company, but transformed itself into an innovative trader of gas, electricity and other commodities. Its stock became a Wall Street favorite as it tried to enter markets for fiber-optics, movie rentals, paper, even advertising. Many of its businesses were regulated or otherwise affected by federal decisions.

Enron and its executives poured millions of dollars into the political process -- $1.7 million in the 2000 election alone, according to the Center for Responsive Politics.

Over the years, a series of actions by Congress and the FERC, which broke down the old monopoly of utility companies over power plants and transmission lines, benefited Enron. The company successfully lobbied for a regulatory exemption for futures trading in energy "derivatives," complex financial instruments that became its most lucrative business and contributed to its downfall. The Bush administration sometimes rebuffed Enron, however, such as when it refused to embrace an Enron-backed position on combating global warming.

Bush last week played down his ties to Lay. He said he "first got to know Ken" in 1994, when "he was a supporter of Ann Richards," the Democratic Texas governor whom Bush ousted. In fact, Bush knew Lay from their work on the 1992 Republican National Convention and the Bush presidential library. The current president received $47,500 from Lay and his wife in 1994 -- many times what Richards received. Lay has said he supported Bush, not Richards, in 1994.

Over the years, Lay and Enron interests have contributed more than a half million dollars to Bush campaign funds, according to the Center for Public Integrity, making him Bush's greatest patron. The Bush presidential campaign reimbursed Enron for use of its corporate jets. Lay, who got the nickname "Kenny Boy" from Bush, served on Bush's presidential transition advisory team for the Energy Department. Enron employee Cynthia Sandherr served on the transition team for the Commerce Department.

In the White House, four senior officials were listed as Enron shareholders. Three of them -- Cheney chief of staff I. Lewis "Scooter" Libby, congressional liaison Nicholas E. Calio and former communications adviser Margaret Tutwiler -- likely sold their interests or were not required to under ethics rules; full details will not be made public until May.

The fourth, Rove, whose Enron holdings were valued between $100,000 and $250,000, sold his shares last year after the value had fallen to $68,000; the Enron shares, which the White House said Rove purchased on his own, were part of a portfolio worth more than $2.3 million.

White House counsel Alberto R. Gonzales acknowledged last June that Rove took part in meetings that helped shape the administration's energy policy while he still owned stock in Enron and other energy companies. Gonzales, however, said the meetings were general in nature and not specific enough to be barred by conflict-of-interest regulations.

Also tied to Enron is Lindsey . His consulting firm, Economic Strategies Inc., counted an Enron unit among its many clients. Counting speaking fees and his multi-client business, Lindsey earned more than $1.1 million in 2000.

White House press secretary Ari Fleischer said that Lindsey, before Enron's Dec. 2 bankruptcy filing, led a White House "review" that monitored the impact of Enron's woes on energy markets. Lindsey said it was merely part of an ongoing monitoring of the energy markets by one or two aides. Democrats in Congress yesterday said Lindsey's actions may have violated federal conflict-of-interest regulations. Lindsey said his work was not "Enron-specific."

Cheney, himself a former Texas energy executive, was on a first-name basis with Lay, who met with the vice president to discuss development of the administration's national energy policy. In all, the vice president's office disclosed, the energy task force met six times with Enron representatives. Rep. Henry A. Waxman (D-Calif.), a critic of the task force, said "it seems clear that there is no company in the country that stood to gain as much from the White House plan as Enron."

A number of senior Bush aides have had routine or incidental contact with Enron. White House Chief of Staff Andrew H. Card Jr. was alerted by Commerce's Evans about a call from Lay expressing a desire for government help in the weeks before its bankruptcy. Bush budget director Mitchell E. Daniels Jr. received a call from Lay in October about prospects for the economic stimulus package. That package, as passed by the House, included a tax provision that would have provided Enron with a $254 million rebate, according to the Congressional Research Service.

Even Bush's homeland security director, Tom Ridge, had Enron ties. At Lay's urging, Bush called Ridge in 1997 when he was Pennsylvania governor to help with Enron's bid -- eventually successful -- to enter the Pennsylvania market.

At the Justice Department, Ashcroft and staff chief David Ayres -- Ashcroft's former campaign manager -- recused themselves from the Enron probe because of Enron contributions to Ashcroft's campaign funds.

The Justice Department decided that deputy staff chief David Israelite and communications director Barbara Comstock need not recuse themselves; both had worked for the Republican National Committee, which received hundreds of thousands of dollars from Enron. Thompson, Ashcroft's deputy, was a partner in a law firm, King & Spalding, that represented Enron, but he disagreed with a Democratic lawmaker who said Thompson should disqualify himself.

After Commerce's Evans received a call from Lay in which the Enron chief said he would value government calls to a private credit rating agency, Evans called into his office his counsel, Kassinger. Kassinger had earlier said he had provided "legal services" to Enron while a trade lawyer at the firm Vinson & Elkins LLP in Houston, Enron's hometown . Ultimately, Evans said, he decided not to intervene.

Treasury's O'Neill, who also got a call from Lay concerning Enron's dire finances, handed the matter over to Peter R. Fisher, the undersecretary for domestic finance. Fisher had holdings in Enron valued between $1,000 and $15,000 when he joined the administration, as did Mark A. Weinberger, the assistant treasury secretary for tax policy. Treasury's spokeswoman said Fisher's modest holdings were part of a trust that he does not control. O'Neill said the department provided no help to Enron, although it consulted with lenders.

Elsewhere in the administration, Trade Representative Zoellick received $50,000 in advisory fees from Enron and listed stock holdings between $15,000 and $50,000 -- relatively small percentages of his overall earnings and holdings (Zoellick sold his shares after joining the administration).

A score of other administration officials had Enron holdings, ranging from relatively small stakes held by Defense Secretary Donald H. Rumsfeld and Export Import Bank Chairman John E. Robson to holdings exceeding $100,000 by Charlotte L. Beers, the undersecretary of state for public diplomacy.

At the SEC, Pitt faced requests this week from congressional Democrats and the watchdog group Common Cause that he remove himself from his agency's Enron investigation because he had been a securities lawyer who represented Andersen, Enron's auditor. FERC Chairman Wood, a friend of Lay's, replaced Curtis Hebert Jr. Hebert told the New York Times last year that Lay had said he wouldn't back his reappointment unless Hebert changed his views on electricity deregulation.

Even since its bankruptcy filing, the vestiges of Enron continue to touch those around the president. Bush's brother, Florida Gov. Jeb Bush, flew to Houston yesterday for a $500-per-person fundraiser at the home of a former Enron president.

Staff writers George Lardner and Paul Blustein contributed to this report.

DAVID WALSH

January 18, 2002

The collapse of energy trading giant Enron, with all its legal and economic ramifications, has obviously embroiled the Bush administration in a major scandal. A column in the Los Angeles Times last week referred to the affair as “Teapot Dome, the Sequel” (the Teapot Dome affair essentially brought an end to the Harding administration in the 1920s). It is pointless at the moment to speculate whether or not Enron will prove the present government’s undoing. The more critical issue is grasping the extent to which Enron as a criminal and parasitic enterprise expresses the social essence of the Bush administration and the American ruling elite as a whole.

To speak of “connections” or “intimate ties” between Enron and the Bush regime nearly misses the point. To a large extent, the present administration is an extension of the Enron board of directors. This government, one might say, is Enron in office, not simply because numerous Bush cabinet members and other appointees (and other leading Republicans) have been employed in one capacity or another by Enron, but more profoundly in the sense that the social types found in Enron’s boardroom and in leading government posts in Washington are interchangeable.

As evidence one might simply note that the top law enforcement official in the land, Attorney General John Ashcroft, was obliged to recuse himself January 10, along with his chief of staff, David Ayres, from the criminal investigation into Enron launched by his own department because he received tens of thousands of dollars from the company for an unsuccessful bid to hold onto his Senate seat in the 2000 elections. The Vice President of the United States, former oil man Dick Cheney, has been obliged, under pressure from congressional investigators, to acknowledge that he or members of his staff met six times with Enron executives last spring during discussions held by his secret energy task force. The only executive Cheney met with alone was Enron chief Kenneth Lay.

From this point of view, to debate whether Bush government officials “crossed the line” in their dealings with the energy trading firm results from a misunderstanding. There is largely no “line.” Only a child would believe, for example, that former top executives of Enron—only a few months off the job—and their associates in the Bush administration would not have known of the company’s financial crisis at least from last summer, as the company’s stock continued its plunge which would wipe out the life savings of thousands. (The wife of Republican Senator Phil Gramm of Texas sits on Enron’s board of directors!)

When Commerce Secretary Donald Evans tells interviewers that he received a telephone call from Lay in late October informing him that the company was in dire straits and that he told White House chief of staff Andrew Card of the conversation “several weeks” later, but that Card never informed Bush, there is good reason to be skeptical. In effect, one is being asked to accept that Bush’s 2000 campaign manager (Evans) did not inform the president, or at least have him informed, that his long-time backer and largest financial contributor (Lay) was facing disaster. It is more likely that he didn’t tell him because Bush already knew.

In any event, the very manner in which the Enron crisis has burst into the headlines has considerable significance. The marked rise of interest in Enron (which, after all, collapsed more than six weeks ago) largely coincides with the wearing thin of the non-stop propaganda about the “war against terrorism.” In effect, the period during which the attention of layers of the population, confused and angered by the September 11 events, could be diverted by prospects of a decisive war in Central Asia and the capture of Osama bin Laden—with the additional mileage provided by the anthrax scare—has come to a close. The war itself, brutal and imperialist in character, is ending, not with a bang but a whimper. Once again the underlying social issues in the US are coming to the fore.

This speaks to the reality that the war in Afghanistan has been driven from the beginning by the growing social and political crisis in the US. It is enough to ask: what would be the standing of the Bush regime if there had been no attacks in New York and Washington on September 11 and no war as a result? The administration, only six months old, was increasingly beleaguered and unpopular at home and abroad by the end of last summer. It was threatening to unravel. There is every reason to believe that had it not been for the suicide hijackings and subsequent events, the standing of the Bush government might mirror the present condition of Enron on the New York Stock Exchange, where the price of one of its shares has fallen from $90 to under a dollar.

Enron’s collapse, in its own fashion, gives some indication of the fragility of the political standing of the extreme right and the narrowness of its social base. It cannot be considered coincidental that the resignation of Jeff Skilling—one of the architects of Enron’s meteoric rise—as chief executive in August (at a time when we now know a company vice president was warning that Enron was about to implode in “a wave of accounting scandals”) was followed three weeks later by the announcement from Gramm, whose family fortunes (literally) have been bound up with Enron’s fate, that he was bowing out of political life. The Texas Senator clearly saw the writing on the wall.

What was Enron?

In the wake of Enron’s spectacular demise, a whole host of media analysts are wagging their fingers at what they describe as the “excesses” of the 1990s. A New York Times column (“A Bubble That Enron Insiders and Outsiders Didn’t Want to Pop”) points out that Enron “was not much of a company, but its executives made sure it was one hell of a stock. ” Enron “has ... become an indictment of the anything-goes approach to business that characterized the late 1990s. The bull market convinced analysts, investors, accountants and even regulators that as long as stock prices stayed high, there was no need to question company practices.”

The Times cites comments by the president of a money management firm, who suggests that Enron was “the prime example of all the things that were allowed to go wrong during the stock market mania. ... This wall got built brick by brick in broad daylight in the 1990’s by companies doing whatever they had to do to make their numbers, being willing to sacrifice the long-term well-being of the company so that executives could get rich.”

The Times piece is useful as far as it goes, but it is intended to leave the impression that there was something aberrational about the conditions which made Enron’s growth possible and about the company’s operations themselves. One is presumably meant to conclude that, finally, cooler heads have prevailed.

On the contrary, Enron is a paradigm for American capitalism in the era of Reagan, Clinton and the two Bushes. As we have previously noted on the WSWS, the deregulatory policies of Republican and Democratic administrations alike created conditions where profits could be accumulated, not through the construction of new facilities and the organization of new energy supplies, but through manipulations in the energy market. Enron acted like a financial speculator, purchasing and selling energy contracts extending months and even years into the future.

Enron was not an excrescence, some entity peripheral to the workings of American and global capitalism. Through its drive for shareholder value at any cost, the company became the universal “business model.” Lay may have been a parvenu, but his firm enjoyed the most fruitful relations with “old money.” The Securities and Exchange Commission is investigating Enron’s ties to Wall Street and the most respectable American financial institutions. Regulators are probing to see whether banks such as J.P. Morgan Chase & Co. and Citigroup helped Enron carry out its massive fraud.

The Wall Street Journal, in a piece suggestively titled “How Wall Street Greased Enron’s Money Engine,” writes: “The upshot : Some of the world’s leading banks and brokerage firms provided Enron with crucial help in creating the intricate—and, in crucial ways, misleading—financial structure that fueled the energy trader’s impressive rise but ultimately led to its spectacular downfall. Indeed, without the financial grease from Wall Street , Enron wouldn’t have grown into the nation’s biggest energy trader and seventh-biggest company. In return Wall Street firms earned hundreds of millions of dollars in fees—$214 million in underwriting alone, and much more in lending, derivatives trading and merger advice.”

Enron rose to the top of the heap over the past decade through corrupt, reckless and socially destructive methods. The firm created a market for energy futures where none existed or needed to exist. Its role in California was particularly disastrous, where it deliberately manipulated energy prices, helping to nearly bankrupt the state. Some of its activities were openly criminal. It was apparently assisted in its shady operations by accountants at Andersen, whose officials have now acknowledged that the firm shredded or deleted thousands of potentially incriminating documents as the roof was falling in last autumn.

Enron essentially produced nothing and served no legitimate economic purpose. Skilling believed, in the words of a Journal analysis, “that a company didn’t need a lot of hard assets to thrive. ... Hard assets, Mr. Skilling said, tied up cash that could be more profitably deployed trading.” He “emphasized divesting Enron of ‘big iron’ [i.e., machinery and equipment] and instead putting the money to work trading everything from electricity to Internet bandwidth, from memory chips to advertising space.”

Enron became a giant confidence scheme, in which elaborate and “opaque” accounting methods were used to hide massive losses and continue attracting credit. In the end, Enron’s “asset-light” approach led to disaster, when disclosures of its web of transactions with related partnerships, some headed by company executives, shook investor confidence. Of Enron’s reported $60 billion in assets, only about $10-15 billion is still in physical plant and equipment, according to estimates.

Enron’s methods accumulated fantastic wealth in the hands of top executives and have now wrought devastation on its workforce and those taken in by its promises.

Bush officials see nothing extraordinary about Enron’s rise and fall. Treasury Secretary Paul O’Neill, who has also acknowledged receiving calls from Lay last October about Enron’s financial crisis, stated in a television interview last weekend that he was not surprised by the company’s demise. Demonstrating utter indifference to the fate of thousands of Enron workers and small investors who have been ruined by the collapse of the firm, the treasury secretary—doing his best Marie Antoinette impression—continued: “I’ve watched lots of corporations come and go. ... There are very few companies that have been around for 40 or 50 years. ... Companies come and go. It’s part of the genius of capitalism. People get to make good decisions or bad decisions, and they get to pay the consequences or to enjoy the fruits of their decisions. That’s the way the system works.”

This comment ignores the small, nagging fact that Enron employees and those who invested in the company had no say in or foreknowledge of the “decisions” made by Lay and other executives that devastated their lives, even as company officials were rewarding themselves with tens of millions of dollars in salaries, bonuses and the sales of stock. Moreover, it is a distinct possibility that many or all of those who operated in a fraudulent manner will “pay” no legal or financial “consequences” and continue “to enjoy the fruits” of their criminality. That, in fact, is “the way the system works.”

There are many obvious parallels between Enron and the Bush regime. On the one hand, a corporation with no assets, and on the other, a government with no legitimacy. The political faction now in power in Washington first came to prominence under Reagan. After the defeat of the elder Bush in 1992, they chafed under Clinton, despite all his best efforts to appease them. They viewed even the most timid restrictions on their unfettered access to wealth as intolerable. Lacking confidence in their ability to gain office through elections, these right-wing forces, with the aid of a cabal of reactionary lawyers and judges, leveraged the trivia of the Whitewater-Jones-Lewinsky affairs into an impeachment drive aimed at unseating a twice-elected president. They were able to advance as far as they did with their plans largely due to the miserable cowardice of the Democratic Party, which was unable to offer much serious resistance to the “vast right-wing conspiracy. ” (In this regard, it is worth noting that Enron’s donations to the Democrats, while not nearly as large as those it made to the Republicans, were nonetheless sizable.)

The attempt at a coup d’état having narrowly failed, the ultra-right was determined to see George W. Bush in the White House. Following last year’s election, in which Al Gore won the national popular vote and, by all indications, the popular vote in Florida, the Bush forces, gangster-like, hijacked the vote.

The Bush administration was installed in office through fraud and rules that way today, in both domestic and foreign affairs. It has seized upon the September 11 terrorist attack to implement a sweeping, right-wing agenda of attacks on democratic rights at home and embarked on an open-ended colonial war in Central Asia, whose principal purpose is to pave the way for US dominance of vast reserves of natural resources, particularly oil and gas.

The character of the Bush administration is not peripheral either to the state of American society and its ruling elite. It represents the most predatory and rapacious elements of American big business and presides over a society sharply polarized between a fabulously wealthy handful and broad layers of the working population. This element’s coming to the fore is not a trick of fate, any more than Enron’s. The crisis of American and world capitalism , in the final analysis, is behind the lurch to the right by the US political establishment, the virtual collapse of liberalism and the criminality of the present regime. The first lesson to be drawn from the Enron scandal is the need to place it in this political and historical context.

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