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Enron debacle is the nation's most famous business failure not just
because it happened suddenly, amid a thunderclap of revelations about
misstated profits and possible criminality, but also because it offers
the tantalizing prospect of a Bush scandal. So far the expectation
has been unrealized, as the company's SOS calls to Washington were
met with the proverbial "drop dead" from Bush officials.
Although Democrats can't quite decide whether the scandal is that
Bush officials gave Enron special favors or that they gave it this
death-bed cold shoulder (or maybe a little of both, depending on the
day), the Enron disaster will linger for months.
The administration
had better get used to it. So far it has demonstrated the self-righteous
defensiveness that often characterizes the Bush operation's dealings
with the press. Two years ago, the Bush campaign refused to answer
questions about any possible drug use in Bush's past. It argued
that it wasn't going to play the scandal game — and it weathered
the media storm just fine, but took a hit in the campaign's final
days when Bush's never-disclosed DUI arrest surfaced. The approach
of the Bush White House now is almost exactly parallel, with the
difference that Enron is inarguably an appropriate matter of public
scrutiny.
The administration
is not resisting congressional investigators solely because of its
stiff neck. It has a legitimate interest in preserving its right
to keep some of its internal deliberations secret. But the best
way to do so may be to reveal as much information as possible while
continuing to deny any legal obligation to do so. In particular,
the administration should disclose information about the Cheney
energy task force and about Enron contacts with administration officials.
The administration appears to be beyond reproach in this matter.
It should do itself the favor of acting like it.
For conservatives,
Bush's political interest in the Enron scandal should be secondary
to resisting the inevitable rush of foolish regulations. Enron's
collapse is, as the Bush administration says, a triumph of capitalism,
in the sense that only in the free-market system is such a mismanaged
but politically connected firm allowed to fail. But a functioning
market also depends on a level of transparency that was absent in
the case of Enron. Accounting and securities rules should be reviewed,
while keeping in mind that a huge net of regulations already enmeshes
companies like Enron. No government rule could have saved Enron
from its own fundamental folly: making the wrong bets in the energy
and tech markets.
Liberals are
nonetheless arguing that new regulations are necessary for 401(k)s,
limiting how much company stock a employee can hold (never mind
that one sponsor of this legislation, Sen. Jon Corzine, became a
multi-millionaire by investing heavily in Goldman Sachs stock when
he worked there) and discouraging companies from giving their employees
stock. This plan, as Richard Nadler points out in this issue, is
a gratuitous shot at the 401(k)s that have made it possible for
workers to save and invest for their retirement without relying
wholly on their employers or the government. Most employees already
understand the importance of diversifying their portfolio, and the
Enron controversy will only reemphasize the point.
There will
be attempts to roll back the partial deregulation of electricity
that occurred at the state level during the Clinton years, even
though it has been successful at delivering cheaper energy. The
campaign-finance system will come under renewed assault, although
all of Enron's spending seems to have gotten it nothing untoward.
(Sometimes it prevailed in Washington, sometimes not, generally
depending on the ideological preferences of policymakers.) Finally,
since Enron avoided paying federal taxes in recent years, there
will be a renewed push to pile on new corporate taxes, although
it should now be clear that thriving, profitable businesses are
good for the little guy. It's corporations that go out of business
that create aggrieved former employees and shareholders.
If the administration
provides full disclosure, criticizes and prosecutes any lawbreaking
that has occurred, and stands for carefully designed reform where
necessary, neither partisan nor ideological opportunists will be
able to feast on Enron's carcass.
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