Views » February 19, 2002

A Scandal Bigger than Enron

By David Moberg

Just as President Bush pretends that he barely knew “Kenny Boy” Lay, the major financial backer of his career, many conservatives are pretending that Enron is a scandal of business, not politics. The roster of business misdeeds is already long and likely to grow, but the rise and fall of Enron is a major political scandal on at least three levels.

First, the Bush administration is perhaps the most unabashedly pro-corporate ever. No industry has more influence than the energy sector, and no company had more clout than Enron. At least eight of the most powerful members of the administration, including both Bush and Vice President Dick Cheney, had significant ties to Enron—receiving pay or campaign contributions, investing in the company, or gaining appointment on the basis of Enron’s recommendation. Enron’s tentacles reach even further into Congress, state governments and the Republican Party, whose new head, Marc Racicot, was an Enron lobbyist.

In just its first year in office, as Rep. Henry Waxman (D-California) catalogued in a request for an investigation, the Bush administration delivered almost everything Enron wanted: an energy plan with at least 17 policies Enron favored, opposition to electricity price caps in California (which Cheney announced a day after meeting with Lay), numerous interventions by Cheney and others to help Enron sell a controversial power plant in India, a proposed repeal of the corporate minimum tax (further helping a company that had already avoided paying taxes for five years), appointment of Enron’s choice to head the Federal Energy Regulatory Commission, and opposition to efforts by the other major industrial countries to rein in offshore tax havens (where hundreds of Enron special enterprises were set up).

Enron couldn’t overpower other corporate interests to win support of the Kyoto agreement (and its lucrative promise of emissions trading), and the company didn’t get a bailout, but it was stunningly successful at influencing the administration.

The second level of scandal is that Enron’s contributions and influence spread across the political spectrum. Corporate money not only won influence among ideologically sympathetic Republicans, but corrupted the Democrats, who have largely abandoned the party’s claim to represent the “little guys” and the broader public interest.

The Democrats are marginally better on corporate issues: In recent years, some Dems tried to push modest regulations that would have restrained abuse of tax havens and retirement plans, as well as the use of auditors as consultants. But much like the savings-and-loan debacle of the ’80s, this is a scandal tainting both parties.

Yet the biggest scandal is ideological. For at least the past 25 years, there has been a concerted attack on government and a worshipful adulation of the “free market” as the answer to all problems, including the ones it creates. The balance sheet of this ideological attack deserves to be audited—but not by Arthur Andersen.

Such an audit would show that few of the promises have been delivered, and that the Democrats have offered weak resistance and frequent collusion. At the same time, social and economic inequality and instability have grown, and democracy has been undermined.

Congressional and courtroom investigations may expose some of the political dimensions of the Enron scandal in the Bush administration. And real campaign finance reform—public financing of elections, not the weak compromise recently approved by the House—could seriously reduce the corruption of politics.

But it will take a broad citizen movement on the scale of the Populist or Progressive movements of a century ago to dig out the roots of the Enron scandal—overwhelming corporate power—and demand the revival of democracy and government in the public interest.

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