Enron Spoils the Party

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The we-did-nothing defense bought the White House time, but there were enough failures in the government's safety net of market, accounting and energy regulation to open the door to more than half a dozen congressional probes--and to give some cover to the hundreds of lawmakers from both parties (including 212 of the 248 involved in the hearings) who had taken money from Enron or its accounting firm, Arthur Andersen. By then the White House seemed cocky. For reasons no one can explain, it went through with its plan to make one of Enron's former lobbyists, former Montana Governor Marc Racicot, the new Republican National Committee boss.

Each new development had the Democrats rubbing their hands together in anticipation. For months the opposition party had had almost nothing to say, partly because the nation was at war and partly because it was keen to align itself with a popular President. With nothing much to argue about, the Democrats had nothing with which to distinguish themselves. Worst of all, no one in the country was willing to blame the state of the economy on anyone other than Osama bin Laden. "You can only do what you can do based on the cards you have to play," said Senator John Breaux last week. "We don't have many cards."

Then Enron dealt them a fresh hand. The implosion of the huge Texas energy firm and the sudden loss of retirement funds for thousands of employees and pensioners opened up all the pathways to Scandalland that had been closed since Sept. 11. Every populist conflict in the Democratic playbook has at least a cameo role in the Enron drama: fat cats versus little guys, energy producers versus energy consumers, corporate secrets versus shareholder democracy, business-friendly Republicans against lunch-pail Democrats.

Last week, when the Congressional Budget Office found that 70% of the federal budget surpluses for this year and the next had evaporated under the weight of last year's tax cuts, the recession and lower post-Sept. 11 spending, it was only a matter of time before someone made Enron a verb. Bush, said Senate Democratic leader Tom Daschle, is "slowly Enronizing the economy. Enronizing the budget. We are taking the same approach Enron used in sapping retirement funds and providing them to those at the very top. That's exactly what Enron did. And I'd sure hate to see the U.S. do that."

Looking around for other things to Enronize, the Democrats turned next to campaign-finance reform. Last week the long-suffering backers of the Shays-Meehan bill to eliminate unregulated soft money finally attracted the 218th signature they needed to get the stalled measure onto the House floor. That doesn't mean it will pass at all, much less soon. The phrase "discharge petition" sounds encouraging but permits a vote only on certain Mondays. The House rarely, if ever, meets on Mondays. (Got that?)

Like teenagers trying to see how far they can get on a stolen credit card, Democrats then moved on to energy policy. House minority leader Dick Gephardt, gearing up for a presidential campaign, proposed a new "Apollo project" to make the U.S. energy-self-sufficient by 2010. Last week another White House hopeful, Senator John Kerry of Massachusetts, gave a similar speech, calling for Americans to produce 20% of electricity from renewable sources by 2020. Both proposals are designed to force the White House to side with energy producers and against average Americans. The White House said it is sticking with its own energy plan.

And when the first Senate hearing on Enron got under way, it felt less like an inquiry and more like a warm, ritual bath designed to soak away the stain of contributions. Senator Joe Lieberman of Connecticut, who got $2,000 from Enron and $11,500 from Arthur Andersen in the past decade, invited former SEC chairman Arthur Levitt, the nation's leading accounting hawk, to do the scrubbing and apply the rinses. That gave Senator Robert Torricelli of New Jersey, who was until recently the subject of a federal probe into his campaign finances, a chance to apologize to Levitt, who had pushed unsuccessfully for lawmakers to tighten accounting standards. "Congress did not respond," Torricelli intoned. "We were wrong. You were right."

While Senators were making their acts of contrition, Republicans on the House side--with a nervous eye on the coming midterm elections--were trying to score points by publicly flaying some scapegoats. Arthur Andersen auditor David Duncan, who the company says ordered the shredding of Enron documents at the giant accounting firm's Houston office, took the Fifth in front of the House Energy and Commerce Committee (but not before briefing the panel's investigators behind closed doors). Then Duncan's superiors appeared before the committee and tried to pin all the blame on Duncan rather than take responsibility for a "document retention policy" that seemed to encourage shredding. Republicans got more than twice as much campaign cash from Enron employees as Democrats did in 2000--$1.7 million compared with $683,000--which may be one reason the House panel plans on more hearings next week.