When President Bush surveys the wreckage that currently goes by the name of Enron, he must feel something akin to the discomfort of a lover looking to get out of a relationship suddenly gone sour. Has a president of the United States and a single corporation ever been locked in a tighter embrace than Bush and Enron?
As anyone who has glanced at the business pages this week is aware, Enron, once the darling of Wall Street, is now a synonym for corporate catastrophe. The SEC is investigating a series of private partnerships set up by Enron executives that allowed the company to keep at least half a billion dollars worth of debt off its books. In the past two months, the company has fired its CFO, treasurer and top lawyer, and is facing a flood of class action suits from both investors and employees. And after the failure of its last-gasp merger attempt with competitor Dynegy, Enron is now frantically struggling to set up a bankruptcy plan that will allow it to keep some semblance of its operations intact. Its stock, which traded at $85 a year ago, is now at 26 cents.
So what does any of that have to do with Bush? Well, it's not just that the Houston-based energy trader has been the primary bankroller of Bush's political aspirations, back to his first run for Texas governor. The current Bush administration is also studded with Enron connections. Secretary of the Army Thomas White is a former high-ranking Enron executive, and Robert Zoellick, the U.S. Trade representative, was a paid member of Enron's advisory board. The Washington consulting firm run by Lawrence Lindsey, the White House's top economic advisor, worked for Enron. And other top officials, including Karl Rove, Bush's chief political strategist and I. Lewis Libby, Vice President Dick Cheney's chief of staff, both owned huge chunks of Enron stock when they joined the Bush administration. It's also worth remembering that at the end of the first Bush administration, Enron hired chief of staff James Baker and Commerce Secretary Robert Mosbacher.
Current CEO Ken Lay was also widely rumored to be a possible pick as either Bush's treasury secretary or energy czar, although in retrospect, given the huge profits Enron was raking in during the California energy crisis just as Bush took office, such an appointment might have been politically problematic.
Given all those links, it's fair to think Enron's collapse, at the very least, raises questions about the Bush administration's energy and economic policies, given that much of the administration shares Ken Lay's oft-stated views on promoting deregulation and allowing markets to rage unchecked by any government meddling.
But some Bush critics are going one step further, succumbing all too easily to the proposition that Bush is somehow culpable for Enron's misdeeds, or at least a co-conspirator. The argument appears to be this: If, as it seems increasingly clear, Enron's executives are guilty of cooking their books, defrauding investors and ruining the lives of thousands of their employees, shouldn't Bush come in for criticism too, given his close ties to the company? And isn't it even possible some administration figures, past or present, might be involved in Enron's misdeeds? Some are even whispering "Teapot Dome" -- as if the current situation were analogous to the Warren G. Harding administration scandal in which Secretary of the Interior Albert B. Fall leased oil reserves to private companies in return for kickbacks.
It's too soon to say, of course, whether any smoking gun linking the Bush administration to Enron's woes or Enron's previous actions will ultimately emerge. Given the scope of the company's meltdown, anything seems possible -- though it is worth noting that the irregularities being investigated by the SEC in Enron's financial filings mostly occurred on Clinton's watch, not Bush's. But in any case, to look for Bush culpability is to miss the true significance of Enron's catastrophic implosion.
The list of guilty parties in the Enron debacle is not limited to Enron executives or Bush administration officials. It includes the fawning business press that lauded Enron as the most "innovative" company in America, the Wall Street analysts who shrugged off Enron's incomprehensible financial statements, and Arthur Andersen, the accountancy that signed off on those same statements.
But Enron's roller coaster ride is not as astounding as everyone would like to believe. It is, instead, exactly the way capitalism works when government is asleep at the wheel and greed is allowed -- nay, encouraged -- to be the primary operator in the marketplace.
Forget about the Teapot Dome. This is more like the South Sea Bubble of the early 18th century, when the failure of the South Sea Trading Company to make good on its promises of huge profits from New World trading led to the ruination of thousands of investors. As a result, unincorporated joint stock corporations were forbidden -- a reform that was the legacy of a company whose "negligence, profusion and malversation," in the words of Adam "invisible hand" Smith, resound down through history as a case study in what governments should not allow companies to get away with.
Will energy trader Enron spark a legacy like its slave-trader forbear, and usher in new regulations? Don't hold your breath. Instead, just watch as Enron's failure is placed at the doors of specific Enron officials, while everyone else scurries around noting how "unprecedented" and "unparalleled" the meltdown is. Try to keep your patience as years and years of legal wrangling attempt to sort out the bankruptcy mess and class action accusations that will keep Enron's name in the papers long after the company itself stops functioning.
But come on. What could possibly be more business as usual than high-ranking executives cashing out at the top of the market, as Lay did, while employees are left holding the bag? What could possibly be more standard practice than jiggering the books to make your numbers look good every quarter? What could possibly be more ordinary than accountants, analysts and investors ignoring what they can't understand, as long as the profits accumulate?
It would seem fair that the Bush administration pay some sort of political price for Enron's woes, given its close ties to the company. And this would no doubt be a bigger headache for Bush if there wasn't the convenient distraction of a war on terrorism right now. After all, it's just a tad embarrassing when one of your closest allies turns out to be a house of cards operated by wheeler-dealers whose rise and fall will be a staple of economic textbooks and business school seminars for at least the rest of this century, if not the millennium.
Even if it turns out Ken Lay wasn't primarily responsible for, or even aware of, the shenanigans being conducted by his once-anointed successor Jeffrey Skilling and his cadre of cutthroat traders, it still doesn't say much for Bush's judgment that his reputed No. 1 pick for treasury secretary is now a figure who, at best, let the company fall apart on his watch, and at worst bears some responsibility for its legal and economic woes.
But it's still probably too much to hope that as a result of Enron's collapse, other companies will come in for closer scrutiny or regulation, or that any systemic changes will result to prevent the future fleecing of the many for the profit of the few. And you don't have to look for any conspiracy between Bush and his energy buddies to prove that. Enron and Bush are business as usual in the 21st century. You'd think that we might have learned something in the centuries since the South Sea Bubble, but in fact, we actually appear to be headed backwards.