Mar 1 2002

Minimizing the Enron Fallout

It's an apolitical, bipartisan scandal that no one understands

The rapid demise of energy giant Enron is being called the largest corporate bankruptcy in modern American history. Stories of workers losing their life savings while executives struck it rich have certainly been big news–often overshadowing the war in Afghanistan–but conservative pundits and mainstream journalists alike have tried to minimize the story’s political impact.

One early tactic was to spin the story as a business failure rather than a political scandal. White House press secretary Ari Fleischer took credit for this gambit during the NBC News special The Bush White House: Inside the Real West Wing (1/23/02), boasting: “Look what made it onto the air. The business scandal side of it. All the political stuff they’re ignoring.”

This was the line adopted by William Safire in his New York Times column (1/14/02):

But based on what we now know, it’s not a political scandal. Bush’s people, including former employees or consultants of Enron, did right by refusing to bail a campaign contributor out of its mess at public expense or by misleading investors. Taxpayers should be grateful.

It was also the take of Tom Brokaw on CNBC (1/26/02):

At the moment, it is a huge business scandal, but whether or not it becomes a big political scandal as well, I think we have to wait and see…. For now, at least, there is not the connection of the dotted line between heavy political favoritism for Enron…. For now, you can’t connect the dots.

Columnist and New Republic senior editor Andrew Sullivan (CNN, 1/27/02) took a slightly different tack. Insisting that “this is not a Bush scandal so far…. We don’t know it’s a political scandal,” Sullivan tried to reframe the controversy as

an attack upon free markets. It’s an attack upon capitalism. It is a violation of the very transparency that makes capitalism work. And conservatives should be tougher on Enron than liberals, because it is an absolute scandal of the capitalistic system.

Where’s the scandal?

Sullivan’s attempt to paint Enron as a red menace aside, the idea of getting the political class off the hook was clearly appealing to many journalists. But the question of whether Enron’s contributions bought any influence has to be measured by politicians’ behavior when the company was on the way up, not on the way down.

And, in fact, Enron in its heyday benefited greatly from the benevolence of policy-makers–a relationship that only grew more symbiotic under the Bush administration. The Associated Press reported (2/1/02) that Enron chief Ken Lay submitted names for the Federal Energy Regulatory Commission, the supposed watchdog of his industry, and one of his choices became the chair. Lay even personally interviewed some of the candidates (New York Times, 5/25/01).

When the electricity crisis hit California, leading to soaring prices and rolling blackouts, Vice President Dick Cheney turned to Lay for advice; a memo he gave Cheney, later uncovered by the San Francisco Chronicle (1/31/02), laid out arguments that were markedly similar to the administration’s for taking a hands-off approach. The congruence between the energy executive’s views and those of an administration headed by two oil-industry vets–and the effects those views had on the nation’s largest state–should certainly intrigue a press corps that was actively trying to connect the dots.

Cheney’s energy taskforce–which received advice from numerous industry officials whose identity the White House insists will remain secret–was largely a ho-hum affair for the media before Enron’s financial collapse. After Enron’s woes became public knowledge, Cheney’s office disclosed that executives from the company met with members of the task force at least six times. In a letter to Cheney, Rep. Henry Waxman (D.-Calif.) said he had found 17 policies in the White House energy plan released in May 2001 that “were either advocated by Enron or benefited Enron” (Reuters, 1/26/02). Cheney even brought up money allegedly owed to Enron in a meeting with Indian officials (New York Daily News, 1/18/02).

The bipartisan line

Given the deep and powerful connections Enron cultivated in Washington, the political element of the Enron scandal can only be denied for so long. A fallback position held that Enron was, as the Wall Street Journal‘s John Fund put it on Fox News (12/31/01), a “bipartisan scandal.” While Fund is a career conservative, dedicated centrists like Jim Lehrer (NewsHour,1/11/02) also made this argument: “It wasn’t just Republicans and the Bush administration getting these calls. [Enron] gave a tremendous amount of money to Democrats as well.”

CNN‘s Lou Dobbs (1/14/02) seemed to take offense when correspondent Tim O’Brien noted that the energy business gave more money to the GOP by a substantial margin. “But we do have a sense that Enron not only [was] contributing to Republicans but mightily, as well, to Democrats, wherever it served the political purpose of the company, isn’t that correct?” he asked.

The one thing we don’t want to ever be accused of here is, of course, participating in creating, if you will, in the court of public opinion, making it a hanging court…. I just want to make sure we are balanced in keeping it all in perspective.

It’s true that Enron gave money to–and got favors from–Democrats (though approximately 72 percent of their donations went to Republicans, according to the non-partisan Center for Public Integrity–Public i, 1/25/02). But pundits emphasizing this fact never explained why the public should be less outraged if corporate wrong-doers were able to influence both major parties rather than just one.

Given that Washington reporters will virtually never run with a story unless it’s being pushed by one of the two major parties, the scandal would likely evaporate if the Democrats could be warned off it. And this seem to be the thrust of some coverage: “Congressional Democrats have to be careful about pointing fingers,” asserted NPR reporter Scott Horsley (1/14/02). “Although the majority of Enron’s large campaign contributions went to Republicans, when the company was on the rise, it gave plenty of money to Democrats, as well.”

And NPR‘s Cokie Roberts (1/14/02) pointed out that Democrats had an incentive to avoid questioning the system: “There are a few dangers for Democrats as well, though, Bob. They can overreach. It’s a popular president, and they can ruin what’s become a trust in government that’s helpful to them.”

What ‘supporter’ means

Despite this spin, the most prominent recipient of Enron’s largess was George W. Bush. Enron officials are Bush’s most generous lifetime contributors; he even spent much of the 2000 campaign flying around on the Enron jet.

This is a reality Bush tried to de-emphasize on January 10 when he explained that Ken Lay

was a supporter of [Democratic Texas Gov.] 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.

In fact, according to Texans for Public Justice, Richards received $12,500 from Enron sources during the 1994 election cycle, while Bush got $146,500, including $47,500 from Lay and his wife, Linda.

The same media that was hyper-attuned to President Clinton’s prevarications about his sex life seemed unconcerned about Bush’s distortion about his largest political contributor. Of the three nightly newscasts, only ABC‘s World News Tonight (1/10/02) even mentioned the deception. NBC‘s Tim Russert quizzed Secretary of Commerce Donald Evans about the president’s doubletalk on Meet the Press (1/13/02), but later characterized Bush’s tale as “a little softening” (CNBC, 1/26/02). Fox News Channel‘s Bill O’Reilly (2/7/02) was also charitable, saying that Bush “didn’t lie…. He kind of, like, spun.”


Is it just too complicated?

Despite the obvious features of the story–official deception, shredding of documents, influence-peddling–there is some feeling that the story is just too difficult to understand. Paul Farhi, writing in the Washington Post‘s “Style” section (1/16/02), lamented that Enron was an IWS–an “Incomprehensible Washington Scandal.” Outside a “few nerdy journalists,” Farhi worried that “the simple story becomes so barnacled with facts and accusations, so encumbered with major and minor players, that the core is no longer recognizable.”

The same day, an op-ed in the New York Times by Patricia Mark similarly bemoaned how complicated the Enron story was: “The first time I heard the name Enron (about a month or so ago), I thought: Football play? High-performance drink? New fabric that’spart enamel, part rayon?” Marx told readers that “major news stories are complicated, and the window of opportunity for learning the rudiments is, unfortunately, limited.” The time for understanding Enron, she suggested, had passed.

The New York Times‘ Bill Keller (1/26/02) did try to give readers a primer under the headline “Enron for Dummies.” One thing he felt we should know was that Enron was on to something by replacing

state-regulated monopolies. They were often plodding and inefficient. Enron used Wall Street magic to transform energy supplies into financial instruments that could be traded online like stocks and bonds. These contracts guaranteed customers a steady supply at a predictable price.

Keller added that “introducing the laws of supply and demand into the energy system was smart business and is, by and large, good for customers. One sad side effect of this scandal is that some good ideas may be discredited by association with Enron.”

Presumably, Keller is referring to electricity deregulation, which is likely to face more critical scrutiny–if not from the press, then from the states that have to sell the idea to their citizens. Keller’s assertion that Enron’s “Wall Street magic…guaranteed customers a steady supply at a predictable price” might come as news to some. He might ask the state of California, for starters.