White House love-in under pressure
The relationship between the White House and Enron, the doomed energy company, focuses attention on the very ways in which the US is run, writes Julian Borger
Wednesday February 6, 2002
Washington this week is staging its own version of Kabuki theatre, otherwise known as congressional hearings. Like the highly-stylised Japanese dramas, the sets will be familiar, the characters will wear fixed expressions and the plot will follow rigidly traditional lines. But beneath the masks, themes of universal significance will unfold.
It does not take a seer to predict that the Enron hearings will become emblems of the Bush administration. The themes explored in the cut and thrust of the multi-pronged enquiries go to the very heart of how the US is being run: the function and dysfunction of twenty-first century capitalism, the interplay between big business and government, and the executive's prerogative to conduct its dealings in secret.
All those issues intersect in the Bush-Cheney White House. In drawing up its flagship energy plan, a task force run by Dick Cheney, the vice-president, consulted an array of experts and interested parties. Enron executives are believed to have played a significant role in drafting the plan which favoured the energy trader in general. The plan emphasised production over conservation and deregulation over control. In particular, the final version included language which boosted an Enron project in India.
Furthermore, it has emerged that Enron was allowed to suggest candidates for the Federal Energy Regulatory Commission, the government body that was supposed to police companies like Enron, and two of those candidates, including the chairman, were ultimately selected by the Bush administration.
Just how intimate Enron and Cheney were in those early months of the year remains unclear, because the White House has refused to disclose any details of the meetings, despite calls from both Democrats and Republicans to come clean.
As a result of the impasse, congressional auditors in the General Accounting Office, are taking the administration to court for the first time in GAO history.
As both Cheney and Bush have accurately pointed out, the battle is about much more than the energy plan. It addresses the constitutional balance of power between executive and legislative in the US political system. The current administration has made a fetish of secrecy and portrayed it as an overdue attempt to reverse the steady erosion of executive power which began during he Vietnam era, continued through the Iran-Contra affair and culminated in Bill Clinton's multiple embarrassments.
The heart of the administration's argument is as follows: if it cannot seek outside guidance in confidence, then it can never hope to receive unvarnished, truly honest advice, to the detriment of good governance. That argument may play well in the courts, particularly if the matter reaches the conservative-dominated Supreme Court, which was after all instrumental in resolving the 2000 election in Bush's favour.
The backdrop also favours the administration. It is a time of war when most Americans would like to see a strong executive. The opinion polls show that the voters make a distinction between management of war and management of the economy, with the president receiving much better marks for the former. But there is still a spill-over effect. Bush's ratings on domestic issues have been buoyed by the fervently patriotic mood since September 11.
Nevertheless, the Enron scandal is likely to inflict more damage before it is finished. The Bush administration could afford to be so cosy with big business as long as most Americans shared their view of corporate titans. Kenneth Lay was seen as a hero of the free market, who had gone into battle against the slings and arrows of supply and demand and emerged victorious. They were as wise as they were battle-hardened, and their advice would considerably outweigh schoolbook suggestions offered by civil servants.
But it turns out that "Kenny Boy," as Bush used to call Lay when they were still chums, was not such a genius after all. The administration had put its faith in a corporation that was little more than a pyramid scheme, riding on hot air on the boundaries of fraud. Lay now insists he did not really know what was being done in his name, but the fact is he has single-handedly made it far more difficult for Bush, his former protege from Texas, to appear to be on the side of the both the fat cats and the regular Joes at the same time. A majority of Americans, asked in a recent Time/CNN poll, agreed that "George W Bush cares more about big business" than "people like you".
Even if the White House thinks it can win the battle over secrecy in court, and call it a triumph for the institution of the presidency, the administration will sustain political wounds in combat. In almost every presidential scandal in recent history, the cover-up has been worse than the original misdemeanour. Even if the two have little in common, Cheney's refusal to hand over the energy taskforce documents will begin to echo Richard Nixon's refusal to surrender the Watergate tapes.
A clear sign that the Bush team cannot remain aloof from the affair emerged last week when the justice department officially ordered White House staff to preserve records of contacts between government officials and Enron executives over the past three years
One possible outcome is that the administration will lose its struggle to fend off campaign finance reform. Since the Enron scandal broke, the sponsors of a bill designed to curb unregulated, or "soft", corporate money in politics won enough signatures to force a vote in the House of Representatives.
Other possible casualties include Republican legislators facing election in November, and all the consequences that entails for a precariously balanced Congress. There are many other factors in that equation however. Democratic congressmen and senators accepted Enron money too, and much will depend on what the economy is doing by the end of the year, and on whether US forces have tracked down Osama bin Laden by then.
By stonewalling the GAO the White House is taking a huge political risk. The tactic is aimed at strengthening the presidency, but, by providing his adversaries with a rallying point, it may end up weakening the president.
Email julian.borger at guardian.co.uk