The Fog of Money
The media blows the Enron campaign-finance story.

By Allison R. Hayward, an attorney in Rescue, California
January 29, 2002 9:45 a.m.

t appears that the Enron meltdown may be the proximate cause bringing before the House the Shays-Meehan campaign-finance-reform bill. For easily two weeks now, the press has reported the enormous sums supposedly lavished upon official Washington by the Houston-based company. The coverage of this issue has so confused the facts and present rules that it is nearly useless.

For starters, Enron doesn't contribute to federal candidates — not Bush, not the Texas delegation, not committee chairmen, not anyone. Enron's activity in federal elections is governed by a number of rules, the primary one being that corporations may not make direct contributions to federal candidates or federal PACs. It can however establish a PAC through which executive and administrative employees can pool their contributions (up to $5,000 a year). This PAC can then contribute up to $5,000 per candidate per election to candidates. If individual employees at the company make contributions (to candidates or to the PAC), they must be from their own money, and cannot be a result of coercion from the company. Individuals may contribute up to the princely sum of $1,000 per election per candidate, and up to $25,000 in an election cycle. Enron can also contribute so-called corporate "soft money" to political parties for nonfederal purposes.

The media's coverage of Enron's campaign activity typically describes how the company spread its money to Republicans and Democrats alike, bathing the Capitol in green to the tune of millions of dollars. Nowhere is the accurate, and more complicated, picture revealed — that but a portion of this money is truly "Enron" money. A significant share of the total bandied about is money that individuals who happen to work at Enron contribute out of their own pockets, for their own reasons. Another portion is Enron PAC money, which — again — is from the pockets of Enron executives and administrative personnel.

How is it that individual donors' contributions get picked up into the Enron total? Whenever a person contributes to a federal campaign, the campaign is required to ask the person for his or her occupation and employer. In the analysis of Enron, anyone with "Enron" as an employer has been swept into the total attributed to the company. No one is suggesting that Enron orchestrated these contributions, or can explain why this individual personal contribution activity should be amassed in this way. But, this method does inflate the Enron total, and make for more dramatic reporting.

To be sure, Enron has been a soft-money player with its own money. That's no secret either — soft-money contributions are fully disclosed by the national parties, and in some rare instances, such as in California, these contributions may trigger state reporting by the donor. Disclosure is supposed to shine sunlight on the system, requiring recipients to defend their fundraising if things turn ugly. In fact, some party committees have chosen to contribute their Enron dollars to Enron-employee charities in response to the scrutiny. Before becoming too excited about requiring recipients to return the other "Enron" money, one should consider that many of the Enron employees with the extra cash to contribute to candidates may also be the folks who bailed out as the company was tumbling southward. Letting Congressman Whatshisname keep his $1,000 from an Enron executive may be a fairer result than returning that money to the donor.

Sloppy coverage of the Enron-campaign angle poses several problems. First, individual donors exercising their First Amendment rights to contribute may be swept into a press feeding frenzy for no good reason. We should encourage individuals to exercise civic responsibility through the political process, not teach them why they should stay away from the process. True, most of the people I know would prefer to put their extra dollars with Charles Schwab rather than Charles Schumer, but a healthy privately financed political system requires the participation of individual donors. Second, the media's oversights contribute to the public's misunderstanding of the existing campaign-finance system, and build unnecessary cynicism for politics. Third, the hysteria also provides an excuse for the Reformistas to gin up their legislative agenda, by using existing disclosure requirements to make a case for new restrictions. So, it remains up to citizens to educate themselves, rather than rely on television's talking heads or the paper's editors to get them the story.