RICHARD S. DUNHAM
January 14, 2002
The sooner he explains what he knew and when he knew it, the more distance he'll put between himself and the growing scandal The Washington scandal machine is warming up. With the Justice Dept., the Internal Revenue Service (see BW Online, 1/11/02, "Enron: Now the IRS Joins the Hunt"), the Securities & Exchange Commission, the Labor Dept., and at least six congressional committees already probing Enron's bankruptcy, Democrats are smiling. Some already are talking about the Enron debacle as "Bush's Whitewater."
That's a bit premature. There's no evidence that the President did anything for Enron CEO Kenneth L. Lay, a friend and political benefactor, as the company descended into bankruptcy. Indeed, the first indications are that Treasury Secretary Paul O'Neill and Commerce Secretary Donald Evans declined to take action in October after receiving telephone calls from Lay.
Nevertheless, the President and his top associates have plenty of questions to answer. After all, Enron and its senior execs top the list of major campaign contributors to George W. Bush when he was Texas governor and later when he ran for President. And Evans and O'Neill seemed to go out of their way to keep the President in the dark about the looming storm. Why?
Investigators will have a million questions like that. In the meantime, here are some of the larger queries the President is going to have to answer before the final gavel is pounded :
It's significant because Lay called Commerce's Evans and Treasury's O'Neill in October seeking help for the company just before and after analysts downgraded the stock -- and its value plunged. Fleischer says Bush learned of the problems "last fall," possibly from press reports of its bankruptcy. But that filing didn't come until December. If the Cabinet secretaries knew of Enron's serious problems for months before informing the President, there's reason to wonder why they didn't think the news of the biggest potential bankruptcy in U.S. history wasn't sufficiently important to tell the boss.
The Cabinet secretaries have every right to shield the President from a potentially embarrassing situation. But it would say a lot about the way the Bush White House functions that major policy decisions are made without the President's input or knowledge.
Asked by reporters on Jan. 10 when he last spoke to Lay, Bush answered that he last "saw" Lay last spring at a literacy fund-raiser sponsored by his mother, former First Lady Barbara Bush, in Houston. After eight years of Bill Clinton, reporters are hypercautious about careful choices of Presidential words. The President didn't directly answer the question. It's important to know whether Lay tried to contact the President -- successfully or not -- during his company's rapid decline in the fall.
Fleischer says Bush believes that the Secretaries acted appropriately in not telling the President of their conversations with Lay. "The President is pleased with the actions that his Cabinet Secretaries took," says Fleischer. "He thinks they acted wisely and properly." But was it their duty to inform anyone in the White House about potentially damaging revelations relating to a close Presidential friend and longtime contributor?
The President has expressed his concern for tens of thousands of Enron employees and pensioners who saw their retirement nest eggs destroyed by the company's collapse. It's not very likely, but perhaps the government could have done something to help these victims before they lost everything.
The President said on Jan. 10 that he "never discussed with Mr. Lay the financial problems of the company." And there is no evidence that the Administration did anything for Enron as its stock value plummeted. But the congressional committees are sure to review whether Bush over the years adopted any policy proposals sought by Lay or Enron, as governor or as President.
Fleischer says he's aware of only two Cabinet members who received calls from Lay. It's important to know whether any others -- such as Energy Secretary Spencer Abraham or Interior Secretary Gale Norton -- were asked to help the failing company.
There's no evidence that Lay had a role in writing the Bush/Cheney energy proposal that sparked a sharp debate last year. But it's clear that Enron -- and other energy companies -- would have benefited from many of its provisions. The Administration's unwillingness to release many documents relating to the policymaking process have only raised more questions about which corporate contributors played a role in White House energy discussions.
Fleischer says he's getting answers for the press as quickly as the questions are asked. He's going to be even busier than usual in coming weeks. And the sooner the President provides answers, the sooner he puts the Enron mess behind him.
Dunham is a White House correspondent for BusinessWeek's Washington bureau. Follow his views every Monday in Washington Watch, only on BusinessWeek Online. Edited by Douglas Harbrecht.
ANTHONY YORK
January 16, 2002
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Did the Bush administration do the disgraced company's bidding during the state's electricity crisis?
Remember the California energy crisis? As the implications of the collapse of Enron spiral ever wider, increasing attention is being paid to the close connections between the White House and the Texas energy trader. So far, there has been no evidence that Bush officials tried to stave off the Enron disaster. But the real smoking gun for Enron could be its role in the California energy deregulation debacle.
Vice President Cheney has already admitted that he and Enron CEO Ken Lay discussed the California situation in some of their six meetings last year, leading some critics to believe that Bush's hands-off policy toward California was done at Enron's bidding. Lay was also instrumental in replacing the chairman of the federal commission that regulates energy issues with his own nominee, after the original chairman refused to kowtow to Enron's wishes on electricity deregulation. A California state Senate committee is currently calling for depositions of Enron and Arthur Andersen officials to find out if the former energy giant or its auditors willfully destroyed documents that were under subpoena from the committee. And an ongoing criminal investigation by California Attorney General Bill Lockyer is still looking into allegations that energy producers and traders, including Enron, artificially manipulated the price of energy to profit off of California's poorly constructed energy deregulation plan.
Enron officials once took pains to note that California's problems could not be blamed on energy producers but on not having deregulated enough. But it's now becoming apparent that Enron was as responsible as anyone for the shape of that deregulation plan. As the Enron mess continues to heat up, California could prove to be the company's biggest political embarrassment.
FRANK RICH
January 19, 2002
Wasn't that the best?" said a laughing Ann Richards this week, when I asked her reaction to President Bush's effort to hide behind her skirt when questioned about Enron. "It was so silly. Why didn't he just say Ken Lay was a strong supporter and gave him a half-million dollars and is a good friend, and he's really sorry Ken's in these terrible circumstances?"
Good question. As the world knows now, George W. Bush told two lies when first asked about his ties to the top guy in what may prove the largest corporate flimflam in history. The president said (1) that he only "got to know" Mr. Lay in 1994, when in fact their relationship goes back at least to 1992; and (2) that Mr. Lay "was a supporter" of Governor Richards, when in fact Mr. Lay told TV's "Frontline" last year that he "did support" Mr. Bush over Ms. Richards in their Texas race.
This is the president who promised to usher America into "a new era of personal responsibility"?
What makes the dissembling so strange is that there is no evidence of any administration illegality in the Enron affair. And yet each day brings a new half-truth or seeming cover-up. Appearing on CNN last Saturday, Lawrence Lindsey, the top Bush economic adviser and a former Enron consultant, seconded the president's effort to pin Ken Lay on Ann Richards, but somehow forgot to say what would become public four days later — that he had overseen an administration study of the impact of Enron's travails in October. Earlier, Mary Matalin had visited the Imus show to defend her boss, Dick Cheney, but instead of vowing to open the books on the secret meetings between Enron and the vice president's clandestine energy task force, she asserted that Enron got "not one thing" from the administration's energy plan (actually it got plenty) and tried desperately to dismiss the entire ruckus as lacking an intern's "blue dress."
Hard as it is to believe, it was only 10 days ago that Ari Fleischer declared, "I'm not aware of anybody in the White House who discussed Enron's financial situation." Now we're painfully aware that the only White House inhabitants who may not have discussed it are the president, Barney and Spot — or so we must believe until future investigators turn up a smoking pretzel.
Washington, meanwhile, is busy debating whether Enron the Scandal is as hot as Whitewater. This should be a no-brainer. While The Wall Street Journal published an encyclopedic series of tomes to parse a low- rent Arkansas land scam to a public that never did quite understand it, everyone instantly gets an epic fraud in which arrogant high-fliers stacked the deck to fleece thousands of peons to the tune of zillions.
For a quick cultural index of this story's allure, check out the hundreds of hotly contested Enron lots on Ebay, where the bankrupt company's stock certificates have gone for north of $200 — a multiple of 300 times the last known value of a share of the stock itself. And, Ms. Matalin notwithstanding, this scandal is not sex-free. Not only did Enron approach Penthouse and Playboy to try to enter the porn business, as The Times has reported, but we learn in Fortune that "rumors of sexual high jinks" in Enron's executive suites "ran rampant." A nation that doted on the soap operatics of "Dallas" may have at long last found a worthy sequel in "Houston." Once the "sexual high jinks" kick in, it could play 24/7 on cable, with or without Paula Zahn.
The Washington wisdom that Enron has no legs — that it's not a political scandal, merely a financial one — is based on the premise that the Bush administration didn't ride to Ken Lay's rescue once disaster struck. But what about the favors performed for Enron before the meltdown? That's as political as you can get, particularly since , unlike Whitewater, this scandal implicates both parties and the corrupt campaign finance system that makes them look like interchangeable vending machines for their often overlapping patrons.
Though the Bush administration has been in office only a year, Enron's oily fingerprints are all over its actions as well as its résumés and stock portfolios. Mr. Lay helped hand-pick the head of the government agency in charge of regulating his own business and stood to gain a $254 million corporate tax rebate in the administration-blessed stimulus bill (despite the fact that Enron used almost 900 offshore "subsidiaries" to avoid paying any income taxes at all in four of the last five years). The Enron old-boy network may even have played a backdoor role in the life-and-death matter of stem cell policy. When President Bush announced his stem cell "compromise" in August, many top researchers criticized it as an obstacle to medical progress. But miraculously the administration was able to produce an instant endorsement from John Mendelsohn of the M. D. Anderson Cancer Center in Houston — who we now know is an Enron board member whose institution received $600,000 in Enron lucre.
The Clinton Democrats had eight years of Enron exposure, and while never receiving remotely the sums that the Republicans did, nonetheless had their own contacts (and presidential golf outing) with Mr. Lay. We already know, thanks to a 1997 article in Time, that Bill Clinton nudged Mack McLarty to lend the administration's weight to an Enron bid on a $3 billion power-plant project in India, and that the Democrats received $100,000 from Enron just four days before the Indian government came through. Will Joe Lieberman, who (like two-thirds of his committee) took Enron money, revisit his own party's Enron history as well as that of the G.O.P.? According to a 1995 report in The Nation, Robert Rubin's association with Enron didn't start last year at Citigroup but dates back to his pre-Treasury career at Goldman, Sachs. Enron's Washington office is currently headed by another former Clinton Treasury appointee.
Then again, who in either party hasn't cashed an Enron check? No fewer than 71 senators and 188 congressmen have been on the Enron gravy train. All but 5 of the 56 members of another investigative committee, House Energy and Commerce, got Enron or Arthur Andersen dough. The country's chief law enforcement officer, John Ashcroft, has recused himself from the case because he too received Enron cash — though even that ethical gesture looks suspicious, given his failure to stay out of Justice matters involving such other contributors as the N.R.A. and Microsoft. Another Congressional investigator, Billy Tauzin, Republican of Louisiana, was the single biggest House recipient of Arthur Andersen campaign money. Phil Gramm, the ranking Republican on the Senate Banking Committee, and his wife, Wendy (a former federal regulator now on Enron's board), could pass for one of Enron's wholly owned Cayman Island subsidiaries.
Harvey Pitt, the Bush administration's chief at the S.E.C., was actually an Arthur Andersen lawyer. After this week's revelation that top Andersen executives knew of funny business at Enron as early as February 2001, you have to wonder whether Mr. Pitt should be a witness in an S.E.C. investigation rather than its overlord. Was he representing Andersen at the time it first detected Enron's misbehavior? Was he in the loop? The stonewalling may have already begun, since neither the S.E.C. nor Andersen, when queried late this week, could say just when Mr. Pitt was in the accounting firm's employ.
Whom can the country turn to for an honest investigation? Democrats and Republicans alike are so beholden to accounting-industry money that they scuttled an attempt by Arthur Levitt, the former S.E.C. head, to regulate conflicts of interest in companies like Andersen two years ago. "If ever there was a case for a special counsel, this is it," says Governor Richards, but that idea certainly has no takers in Mr. Ashcroft's Justice Department or among grandstanding Democrats. "We haven't come anywhere close to that point yet," said Mr. Lieberman, never one to surrender a spotlight without a struggle.
A top aide to Henry Waxman, another Democratic inquisitor, has called the Enron scandal "the perfect storm," and a storm this perfect is certain to muddy Democrats as well. Enron has arisen like the ghost of over-the-top Christmases past, as a jolting throwback to the untethered America of the dot-com bubble. The greed of its perpetrators, and of the enabling politicians of both parties who took their cut before the wipeout, looks even uglier against the stark backdrop of those less well- connected Americans who are fighting our war.
E-mail : frankrich@nytimes.com
JOE CONASON
January 17, 2002
Has the Washington press corps lost its taste for White House scandal?
Having just begun to examine the details of the Enron crash and the tangled financial and political strands that connect the bankrupt energy trader to almost everyone who is anyone in the Bush administration, several of the most influential scandalmongers already think it’s time to "move on." They contend that since no evidence has been found that would implicate President George W. Bush or any of his appointees in a crime, this story should be relegated to the business pages.
That judgment seems premature, to say the least, and hardly consistent with the hungry attitude of the Clinton era, when putting officials under oath and demanding reams of documents became the highest priorities for nearly every newspaper and network in the nation.
Back then, if the White House appeared defensive, or if the Presidential press secretary was caught giving false information, or if the President himself made a scandal-related remark that was obviously untrue, journalists who smelled blood would bare their teeth and snarl. Today some of the fiercest pundits of yesteryear sound as if they’re ready to whimper and roll over.
Consider the contradictions that have emerged over the past several days. At another time, such a hastily revised narrative would have provoked weeks of furious commentary about cover-ups and candor (or the lack thereof).
Until Jan. 13, Bush press secretary Ari Fleischer insisted that nobody in the White House knew until last week about calls from Kenneth Lay seeking administration aid for his failing firm last fall. Mr. Lay and his associates contacted Treasury Secretary Paul O’Neill and Commerce Secretary Donald Evans, among others, to hint at the market chaos certain to ensue unless the administration helped them cope with banks and credit agencies.
Now, however, we are told that sometime in November, Mr. Evans, the former Bush campaign chief, told White House Chief of Staff Andrew Card Jr. about the calls from Mr. Lay. According to the commerce secretary, Mr. Card replied, "Thank you very much." But supposedly neither of them ever mentioned the Lay pleas to the President, who was also left uninformed by Mr. O’Neill.
As far as his appointees were concerned, the President had no need to know that the world’s largest energy trader, on the brink of implosion, was asking for federal assistance. Why tell him?
For his part, Mr. Bush has suggested that he hardly knew the man he calls "Kenny Boy" until after he was elected governor of Texas in 1994.
Last week, when reporters asked about his relationship with Mr. Lay, the President replied, "He was a supporter of [former Texas Governor] Ann Richards in my run in 1994. And she did name him the head of the Governor’s Business Council, and I decided to leave him in place just for the sake of continuity. And that’s when I first got to know Ken and worked with Ken, and he supported my candidacy."
That incredible statement is just as misleading as the famous remark another President once made about "that woman, Ms. Lewinsky," and much easier to debunk, as demonstrated in the Houston Chronicle. Actually, Mr. Lay’s support of George W. Bush dates back to his first unsuccessful candidacy for Congress in 1978. Mr. Lay, his wife and Enron executives gave Mr. Bush a total of $146,500 in 1994, compared with $12,500 they donated to the Richards campaign that year.
Explaining this choice in a television interview last March, Mr. Lay said, "When Governor Bush, now President Bush, decided to run for the governor’s spot, [there was] a difficult situation. I’d worked very closely with Ann Richards also, the four years she was governor. But I was very close to George W. and had a lot of respect for him, had watched him over the years … and so [I] did support him."
Tempting comparisons with a previous era can be overdrawn, of course. So far as anyone knows, neither the President nor any of his appointees were doing business with Enron when the firm’s principals were ripping off their stockholders and employees.
They had done a lot of political and financial business with Enron and Mr. Lay for years prior to those unfortunate events. They had provided Mr. Lay and his executives with special access to policy makers, including Vice President Dick Cheney. They had followed Mr. Lay’s advice about who should be appointed to regulate his company and how his company should be taxed. They learned that Enron was heading down the drain before anybody else found out, including the company’s sadly misinformed employees, yet kept their mouths shut and did nothing.
Whether that decision was proper or not remains to be determined in the course of ongoing investigations by various committees of Congress, agencies of government and public prosecutors. There is still much more to be learned, however, before all the journalists who have misplaced their teeth yawn and go back to sleep.
ROBERT BOROSAGE
January 22, 2002
Concerned about potential taint from the metastasizing Enron scandal, George W. Bush met with reporters recently to distance himself from Enron's chairman, Ken Lay (nicknamed "Kenny Boy" by W. before the scandal). It is testament to how indelible that taint may become that Bush found it necessary to lie about his friend. He claimed that Lay supported Ann Richards in 1994 when Bush ran for governor of Texas and that he only got to know him later. In fact, Lay was a leading contributor to Papa Bush's re-election run in 1992, and by his own account was "very close to George W." Enron's PAC and executives pumped $146,500 into W.'s 1994 race (while Richards received all of $12,500 from Enron sources). Bush "was in bed with Enron before he ever held a political office," reports Craig McDonald, director of Texans for Public Justice.
W. has good reasons for trying to minimize his relationship with Lay and Enron in the dying days of his father's presidency. After Clinton's 1992 victory, Enron pushed hard to exempt its energy futures contracts from regulatory oversight before the new Administration took office. The lame-duck chairwoman of Bush's Commodity Futures Trading Commission, Wendy Gram, wife of Texas Republican Senator Phil Gramm, brought the exemption to a final vote on January 14, 1993, six days before Clinton took office. Enron, a leading contributor to Phil Gramm's campaign coffers, then named Wendy Gramm to its board of directors, where she pocketed about $1 million in payments and stock benefits over the next nine years. She served on the company's audit committee and helpfully turned a blind eye to the shady private partnerships Enron set up off the books to hide debt and mislead investors. In 2000, as the Supreme Court was naming Bush President, Senator Phil Gramm slipped a bill exempting energy trading from regulation into Clinton's omnibus appropriations act, avoiding hearings, floor debate and notice. Enron was all set to operate in the dark.
What is the Enron saga about? Enron's bankruptcy, the largest in history, exposes the decay of corporate accountability in the new Gilded Age. No-account accountants , see-no-evil stock analysts, subservient "independent" board members, gelded regulators, purchased politicians-every supposed check on executive plunder and piracy has been shredded. Enron transformed itself from a gas pipeline company to an unregulated financial investment house willing and able to buy and sell anything--energy futures, weather changes, bandwidth, state legislatures, regulators, senators, even Presidents.
It is Enron's rise that lays bare the hypocrisy of modern conservatives--call them Enron conservatives. Enron conservatives fly the flag of free markets but actually use political and financial clout to free themselves from accountability, rig the market and then use their position to ravage consumers, investors and employees. These are not the small-is-beautiful compassionate conservatives George Bush advertised in the election campaign, or the tory conservatives who protect flag, family and honor. Enron conservatives make the rules to benefit themselves. "They have clout and the ability to get the rules written their way," said Stephen Naeve, chief financial officer for Houston Industries, Inc. about Enron in 1997. "They play with sharp elbows."
Ken Lay learned about regulation while working at the Federal Energy Regulatory Commission (FERC). After he created Enron, he lavished millions on lobbyists and campaign contributions to free Enron from regulation and to push energy deregulation. His lobbyist stable has included James Baker, Bush I's Secretary of State; Jack Quinn and Mack McLarty of the Clinton White House; and Marc Racicot, current head of the Republican Party.
Enron's lobbyists played a large role in California deregulation -- setting the state up for a hit. Most experts believe that Enron, controlling about a quarter of wholesale trading in electricity with no regulatory oversight, was central to the market gaming that led to last year's "energy crisis," which cost Californians about $50 billion. For six months Pat Wood, Enron's handpicked head of FERC, refused to impose price controls. The White House, led by economic adviser Lawrence Lindsey, a former Enron consultant, ridiculed the very notion. In those six months, Public Citizen reports, Enron posted increased revenues of nearly $70 billion . When the price controls were finally enacted, the "crisis" disappeared. Spencer Abraham, Bush's clueless Energy Secretary, now informs us that this is a triumph of deregulation.
Enron conservatives prefer plunder to production. Enron's twenty-nine top executives cashed in a staggering $1.1 billion in stock in the three years before the firm went belly up. Small investors got soaked, and faithful employees got stiffed. In August, after Lay and CEO Jeffrey Skilling had cashed in more than $160 million in Enron stock, Skilling abruptly resigned. Lay personally e-mailed his employees to assure them that "our growth has never been more certain." Enron then maneuvered to ban its employees from selling the Enron stock in their retirement accounts as its value plummeted, leaving thousands stripped of their life savings.
Enron conservatives aren't limited to the Houston boardrooms. Enron conservatives in the Administration pushed through the $15 billion airlines bailout that included zero for workers. Enron conservatives in the House passed the "stimulus" package that featured tax cuts for corporations and the wealthy while scorning unemployment insurance and healthcare assistance for those losing their jobs. Enron itself was slated to receive $254 million from retroactive repeal of the minimum corporate tax. Enron conservatives in Congress passed the President's tax cut, which showered almost half its benefits on the wealthiest 1 percent. And they even repealed the estate tax, insuring that Lay and his fellow executives could pass along their ill-gotten gains intact to their heirs.
Enron conservatives aren't all Republicans. Enron's deregulation plans, and its contributions, were popular with the Clinton White House. Enron gave $10,000 to the New Democrat Network, the money wing of the Democratic Party. With his employer, Citigroup, owed at least $750 million by Enron, Clinton Treasury Secretary Robert Rubin didn't hesitate to call Treasury to suggest it intervene to forestall the downgrading of Enron's credit rating.
But the leading Enron conservative is W. himself. After all, Bush made his own fortune with inside connections while other investors in his company were getting soaked. Lay and Enron were Bush's leading supporters, contributing $113,800 directly to his campaign and another $888,265 to the Republican National Committee, an arm of the campaign, according to the Center for Responsive Politics. Bush repaid Lay and other "Pioneers" -- those who raised $100,000 or more for his campaign -- with his shameful tax plan. He continues to push for a stimulus plan that benefits corporations over workers. He is pressing Congress to pass the Enron energy plan, which features massive subsidies to energy companies and further deregulation. And while the White House has begrudgingly admitted to six meetings between Enron representatives and the Cheney energy task force, it continues to stonewall efforts by the General Accounting Office to find out who met with Cheney to draw up the plan.
Public Citizen reports that Enron set up a staggering 2,832 subsidiaries, with almost a third located in the Cayman Islands and other tax havens. On taking office, the Bush Administration announced that it was abandoning Clinton efforts for a multilateral crackdown on these havens, saying, in Treasury Secretary O'Neill's words, that the Administration will not "interfere with the internal tax policy decisions of sovereign nations."
The Administration crows that there is no smoking gun vis-à-vis Enron. We'll see. But the real scandal is not what was done illegally but what was done under cover of law. Enron conservatives don't violate the rules; they change the rules to suit themselves.
As Bush was distancing himself from his old friend Kenny Boy, one of the President's first regulatory acts in office went into final effect : the repeal of the Clinton rules that allowed the government to deny contracts to companies that are repeat violators of workplace safety , labor, environmental and other federal laws. Enron conservatives don't see why corporate lawlessness should get in the way of federal largesse. After all, in this Administration Enron's rise and fall are seen, in the words of Treasury Secretary O'Neill, as a "triumph of capitalism."
Robert L. Borosage is co-director of
Campaign
for America's Future and co-editor of the recent book,
The Next Agenda : Blueprint for a New
Progressive Movement.
ROBERT SCHEER
January 22, 2002
One of the major falsehoods being bandied about by apologists for the Bush Administration is that while Enron may have bankrolled much of the President's political career it got nothing for those bucks once George W. occupied the White House. That is nonsense.
The Administration's energy program, developed by Vice President Dick Cheney in secret meetings--six of them with Enron officials -- could have been written by lobbyists for the now failed company. At the behest of Rep. Henry Waxman (D-Los Angeles), the minority staff of the House Committee on Government Reform has prepared a devastating analysis of 17 major concessions made to Enron that gave Kenneth L. Lay, Bush's intimate friend and Enron chief executive, just about everything he wanted. The report concluded that "it is unlikely that any other corporation in America stood to gain as much from the White House plan as Enron."
Those Bush Administration concessions to Enron included finishing the job of deregulating the electricity market begun by Bush's father. The senior Bush's actions had paved the way for the company's meteoric growth.
George W.'s energy plan also made it even easier for Enron to sell energy derivatives in the commodity market and pursue other financial shenanigans that had been a major source of profit. The unregulated selling of energy derivatives, an Enron specialty, was celebrated in the Bush energy plan as "sophisticated and customizable." We now know that practice was so sophisticated that it was the major source of Enron's paper profits.
Oddly, given that Republicans are presumed to favor leaving power with the states, the Bush energy plan emphasized increased federal power over utility pipelines that forced local utilities to carry Enron's product. This was an expansion of the "open access" powers granted in the 1992 Energy Policy Act, passed in the first Bush Administration. That law undermined the power of local authorities and regional utility companies for the benefit of Enron. In 1999, Enron had defined "open access" as the company's "single-most important initiative."
Two years later, George W. delivered. Fortunately this subversion of the political process had a short life because Enron went belly up before Bush could save the company from itself.
But the question remains why Bush, as governor and President , wanted to foist the example of such a despicable corporate player upon the American people as a model for business behavior.
Surely the Enron alums who occupy key positions in the Administration knew that the President's model corporation had avoided paying federal income taxes for four out of the past five years.
Enron even claimed $382 million in government refunds. How dare this President collect taxes from ordinary Americans after touting a company that created 881 offshore dodges to avoid taxes. Few taxpayers can open subsidiaries in the Cayman Islands pretending to do business, but Enron had more than 700 there.
The IRS and Treasury Department under the Clinton Administration had attacked the use of such tax dodges and attempted to eliminate them. Bush, however, sought to reward a company that, far more than any of its competitors, took advantage of offshore loopholes. Dynegy, Enron's lead competitor, had no offshore tax havens, suggesting that it is possible to do business honestly.
But how would Bush know of his pet company's chicanery, his apologists howl--particularly the talk radio right-wingers who spent eight years skewering Bill Clinton over the most minor transgressions? Bush should have known because his top economic advisor, Lawrence B. Lindsey, who was paid $50,000 in 2000 for consulting work for Enron, went straight from that gig to being head of the White House's National Economic Council. In the latter capacity, Lindsey wrote a rosy report on Enron's emerging problems and presented it to the President shortly before the company's collapse.
Were he and the other Enron alum who hold high positions in the Administration lying to the President, or did Bush not want to hear any bad news about his once-favorite company? Either way it smells.
BILL PRESS
February 6, 2002
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"Who cares if there were a hundred meetings?" sniffed Mary Matalin, chief spokesperson for Vice President Dick Cheney.
In one phrase, she summed up the White House arrogance : It's a financial scandal, not a political one. It has nothing to do with the Bush administration. It doesn't matter how much money Enron gave George W. Bush, how many former Enron officials work in the White House, or how many secret meetings Cheney held with Enron executives in putting together his energy plan. Because there's no proof that Enron ever got anything for its money or access.
Wrong. Maybe there was no proof before, but there is now; a secret memo -- personally handed to Cheney by Ken Lay, which helps explain why the White House is so skittish about Enron and why Cheney and Bush stubbornly refuse to release the records of those energy task force meetings.
The memo was obtained by the San Francisco Chronicle and reported exclusively there last week. This is the Enron smoking gun.
The Enron memo, which Lay gave Cheney during their one-on-one meeting in April of 2001, makes eight energy-policy recommendations. Some are technical, dealing with such issues as equal access to transmission grids. Others relate specifically to California's energy problem.
Seven out of eight recommendations were adopted in the administration's final energy plan. And Lay's request that Bush and Cheney reject California's plea for federal assistance became White House policy.
Most of us have forgotten last year's energy crisis. Californians can't. For weeks, they experienced rolling blackouts caused by soaring wholesale prices for electricity. As a result of deregulation, approved by the state legislature the year before, California's utilities had sold their generating capacity to Enron and other out-of-state energy companies, which then proceeded to jack up prices.
Gov. Gray Davis, initially slow to react, blamed California's problems on Enron and other energy "cowboys" for engineering "a massive transfer of wealth" from California to Texas. He asked President Bush for relief in the form of federal price caps on electricity, vowing : "Never again can we allow out-of-state profiteers to hold Californians hostage."
Davis was more correct than he realized. Not only was Enron responsible for California's energy crisis, it had the support and cooperation of the Bush White House.
On California, Lay made three arguments: It was too early to tell whether deregulation was working; imposing even temporary price caps would be harmful to energy companies; and Californians were responsible for creating their own problems and deserved no federal assistance. All of which became talking points for Bush and Cheney.
"We think that's a mistake," Cheney said when asked about California's request for federal price controls.
He then proceeded to lay the blame on California : "When the problem became obvious last year, over a year ago, they didn't respond. I don't call that a sterling record of leadership, I would guess, on their part." Ken Lay could not have said it any better.
The purpose here is not to reargue the California energy crisis. It's to point out that when President Bush and other administration officials insist that Enron had little access and what access it did have never paid off, they are simply not telling the truth. The Ken Lay memo is the latest proof of just the opposite.
We know that many former Enron officials were given top jobs in the Bush administration. We know that Ken Lay got to interview candidates for the Federal Energy Regulatory Commission and recommend its new Chairman.
We know that Enron executives held six secret meetings with Dick Cheney. We know that 17 recommendations of Enron were included in Cheney's final report. And now we know that Ken Lay sought to dictate administration policy toward California.
One week before Enron's collapse, last November, Lay called Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans seeking a last-minute federal bailout and was turned down. That's the only time Enron heard the word "no" from their friends in Washington.
Up until the very end, when it was too late to help, everything Enron asked for from the Bush White House, Enron got.
Bill Press is a syndicated columnist, the co-host of CNN's Crossfire, which airs Monday-Friday at 7:30 p.m., and author of the newly-published book Spin This!
RICHARD COHEN
January 29, 2002
The principle that the government can and should run a deficit to stimulate a sick economy was first propounded by John Maynard Keynes. This is called Keynesian Economics. The principle that the government can and should run a deficit when it does not have to was developed by George W. Bush. This is called Enronian Economics.
It should not be surprising that Enronian Economics has taken over Washington. Both the Texas-based firm and the Texas-based president have so much in common. For one thing, the president was once a friend of Enron's former chairman, Ken Lay. He called him Kenny Boy, but since the collapse of the firm, he doesn't call him at all.
But more than that personal connection between the two was -- and remains -- a shared business philosophy. Bush recently expounded the doctrine that a tax cut postponed is the same as a tax hike. In other words, a bird in the bush is worth two in the hand, or something like that. Or, to put it another way, a chicken that is unhatched can be counted -- especially if the hatching occurs in the out years.
This, of course, is Enronian in both its essence and conception. Enron, too, counted things that didn't exist as if they did. I am referring now to profits. And it counted things that did exist as if they didn't. I am referring now to losses. By counting one and not the other, Enron was able to present itself as the seventh-largest corporation in America. This assertion, as Bush himself would tell you, was entirely faith-based.
And so, as luck would have it, is the president's tax plan. He has managed, in a way that would make Kenny Boy green with envy, to make a projected $4 trillion budget surplus disappear. In this case, the money has not been parked in some offshore tax haven. Nosiree. Bush did it by giving tax breaks to the rich and the poor alike over a 10-year period.
This plan, as brilliantly counterintuitive as Keynes's, would give 37.6 percent of the tax cut to the top 1 percent of the population. In other words, the very rich would get the most. (Who could argue with that?) So that, just for instance, Kenny Boy would have received an annual tax break of $53,123 -- had his company not collapsed at his very feet.
So, if that had not happened -- and as far as Bush and Lay are concerned what doesn't happen happens -- the chairman of Enron, who earned $8.3 million in salary and bonuses in 2000, would have saved more from the Bush tax plan than what the average American earns in an entire year.
Stop right there! I know what you're going to say : But Lay earned his money. It's his, not the government's. Indeed. I could not have put it better myself. Moreover, he earned the money because his company didn't earn any money at all. So he gets a rebate on money he made by his company's not making any money and deceiving its employees and stockholders. Is this a great country or what?
Sen. Edward M. Kennedy apparently doesn't think so. He has proposed postponing tax cuts for people such as himself -- the very wealthy. His plan would not affect 95 percent of American families -- those making less than $130,000 a year. But for reasons I have already made perfectly clear, the administration has -- fairly and justly -- characterized the Kennedy plan as a tax increase.
Lest you think there is anything political in all this, let me point out that on "Meet The Press" recently, the new chairman of the Republican National Committee, a certain Marc Racicot, even called Bush's brother , Jeb, a dirty tax-increaser for postponing a tax break for Floridians . "I think the argument could be made, in all fairness, yes," he said. It was that "in all fairness" that convinced me of his utter sincerity.
Alas, we are approaching the end of this particular column. Too bad, because there was so much more I wanted to say -- maybe something about George Orwell and how politics abases language and, with it, thought. But, instead, I will tip my hat to George W. Bush, who has combined Orwell with Keynes to propound The Anticipation Theory of Taxation.
It's as plain as the nose on your foot.
