Enron Spoils the Party

• Share

We're not going to have to tear up the speech, are we?" George W. Bush asked late last week, as his aides labored over the text of Tuesday night's State of the Union address. Bush was gently mocking the endless process--and perhaps acknowledging how many reasons there are for last-minute rewrites: a war and a recession, an anxious public, an aggressive opposition party, and above all the fast-moving story of the largest corporate bankruptcy in U.S. history--a scandal that has so far defied White House attempts to isolate it or explain it away. In the space of five days last week, the story of Enron's collapse went from the merely unusual to the truly baroque, with plot elements lifted from the pages of Robert Penn Warren and John Grisham. On Tuesday FBI agents moved in when document shredding was discovered inside Enron's Houston headquarters. On Wednesday Enron CEO Kenneth Lay, until recently the national cheerleader for a frictionless new economy and a man the President nicknamed "Kenny Boy," resigned in disgrace, forced out by a board of directors who had apparently been napping for months. One of 11 congressional investigations opened its hearings on Thursday with a tableau we might as well get used to: Enron's former outside auditor taking the Fifth Amendment. On Friday J. Clifford Baxter, 43, an executive who left Enron last May, was found dead in his Mercedes-Benz in the median of a divided highway in the fancy Houston suburb of Sugar Land--an apparent suicide. That same day, as if on cue, the White House acknowledged that Bush's top political strategist, Karl Rove, had recommended that Enron hire a key G.O.P. consultant during the early days of Bush's presidential campaign five years ago.

It was one more intimate link between Enron and the Bush team, one more unwelcome story at a time when the President is hoping that his big speech will change the subject back to heroism and unity and patriotism, the themes that have helped make him so popular of late. But even Bush's poll numbers--playing a game that Enron accountants know so well--are beginning to tell two different stories at the same time. For a President with two wars to fight and a 77% approval rating in the new TIME/CNN poll, the Enron story has been up to now little more than a bother. The poll shows that most Americans give Bush high marks indeed for his handling of the war and the terror threat. But when it comes to domestic issues--the economy, health care, the budget deficit--his grades are middling, and Enron is reviving some of Bush's least favorite issues, such as campaign-finance reform, while stoking old questions about whose side he is on. With 45% of those surveyed predicting the recession is going to get worse, 51% said that Bush cares more about Big Business than he does about regular people--an ominous combination for the White House. And so last week Bush told about how his mother-in-law got socked by Enron's collapse. As Bush and his team know, the growing links between the Administration and the company that cooked its books and wiped out the retirement savings of thousands provide the best ground Democrats have had in months for staging fights over issues like tax cuts, the budget and pension reform--the subjects that are increasingly important to people and where Bush gets his lowest marks. No wonder nervous Bush aides reached out last week to at least one prominent Republican who had been critical of the Administration and asked him to tone it down. They called allies in the House and told them to keep it to a dull roar.

One night two weeks ago, White House Press Secretary Ari Fleischer pushed back from his desk and smiled. The evening news had just ended and, once more, all the TV stories about Enron dealt with it as an accounting debacle, not a political one. Fleischer looked over at Tom Brokaw of NBC, whose cameras had been shadowing Bush all day, and said, "All right. Did you notice all the Enron stuff that everybody was asking about? Look what made it on the air--the business-scandal side of it."

By mid-January, Fleischer and other senior officials assumed they had put the Enron problem behind them. They were mistaken. Over the last year, the Bush team had quietly performed a host of political sacraments for the Texas company before it began to go bust, and vice versa: there was the $1.76 million in contributions that Enron executives sent to the G.O.P. during the 2000 campaign; there was the energy policy Vice President Dick Cheney drafted in 2001 after meetings with Enron officials, portions of which seem to have sprung directly from Enron's wish list; there were ex-Enron chiefs and consultants salted around the Bush Administration, from the Army Secretary Thomas White to the U.S. Trade Representative Robert Zoellick. And last summer Bush chose Pat Wood--a man strongly backed by Lay--to be his top energy-price regulator.

But when top Enron officers bombarded Washington with dire pleas for help last fall, something almost unprecedented happened: nothing. Though both sides had been in contact for months on a variety of issues, at the moment the company threw itself down at the mercy of the feds, top officials at Treasury and Commerce said, in effect, "See ya." Even Robert Rubin, the Clinton Treasury Secretary who dialed up on behalf of Enron's creditors at Citigroup, was turned away by Bush officials.