Enron's Fall: FDR's Ghost
When the Enron story first broke, Vice President's Cheney's spin-mistress, Mary Matalin, dismissed it as unimportant. Referring to Bill Clinton's Monica Lewinsky scandal (which really was unimportant), it doesn't even involve a "blue dress," she insisted.
But the Enron scandal is important; and not only because major figures in the Bush Administration and Republican Party (as well as many Democrats) are implicated. Enron is important because it brings into question the deregulatory policies and free-market ideology that have driven American politics since the Reagan years.
The ghost of Franklin Delano Roosevelt must be chuckling. "Told you so," I can hear him saying. During the Great Depression of the 1930s it was arrogant and greedy financiers and businessmen ("economic royalists," FDR called them) who fought every effort Roosevelt made to help and protect ordinary Americans from further social and economic disaster. FDR's New Deal expanded the regulatory powers of government to protect ordinary people from the excesses of capitalism and as the more enlightened capitalists have long understood so saved capitalism from itself. FDR's New Deal also created Social Security to assure all American's a retirement pension.
Ever since the Reagan Presidency, right-wing Republicans and their Democratic allies have waged war on FDR's New Deal edifice, promoting legislation to destroy Social Security and the federal government's regulatory agencies. This assault on government's regulatory and protective authority is based on philosophic dissembling and historical lies. Free-markets are not the natural state, as proponents insist. Human beings are inherently cooperative, ready to work together for the common good. Cro-Magnons cooperated to keep their fires going. The rescue workers on September 11th, like the "greatest generation" of World War II, are further proof of the obvious.
Revolutionary America chartered private corporations with legal requirements that they operate for the public good. This concept, as American as apple pie, was systematically overturned by corrupt legislators and judges during the Gilded Age of the late 19th century. The result was a free-market clime of economic disparity, child labor, social strife, and, ultimately, the Great Depression. FDR's reforms gave government the tools to temper economic inequality and protect the public from corporate malfeasance. He also introduced monetary tools to avert another Great Depression. Free-market demagogues in the media and in government have, till now, been successful in undermining FDR's New Deal accomplishments. Enron is one inevitable result.
Congressional investigations will, I hope, tell us what Enron did that was illegal. Enron's top executives seemingly cooked the books, mislead the shareholders, stole billions, and abandoned their employees with their pension funds gone. While it would be good to see some of these white-collar crooks busting rock at a federal prison, it would be better if Congress and the media focused attention on the corrupt and dishonest practices that are perfectly legal.
Enron began as a small firm building oil pipelines. It grew by speculating in oil, gas and other commodities. It seemed to flourish by creating an area of operations outside the purview of government regulators. Enron is alleged to have helped Vice President Cheney draft the Administration's energy program, designed to promote the policies of energy deregulation under which Enron prospered. Cheney has refused to divulge anything about his secret discussions with Enron executives, and this will be a subject of congressional investigation.
Enron enjoyed a privileged position in government because of the campaign contributions it gave politicians of the two major parties (but, of the $5.9 million it gave to federal candidates and parties from 1989 to 2001, 74% went to Republicans). Enron was one of George Bush's major financial supporters as was the accounting firm of Arthur Andersen that audited Enron and allegedly allowed it to hide its losses.
Enron paid no corporate taxes in four out of the past five years. Indeed, under Bush's tax plan, it stands to get a rebate. Enron avoided taxes my setting up more than 900 bogus companies in place like Barbados and the Cayman Islands. This kind of tax evasion is apparently legal. One of the reasons corporate leaders give money to politicians is to get tax legislation that enables them to legally avoid paying taxes. Bush's proposed tax-cut, which rewards the wealthiest Americans who need it least, is part of this dynamic.
Enron's bankruptcy cost shareholders billions of dollars and Enron employees their nest-eggs for retirement. The top executives bailed out in time and walked off with more than one billion dollars. This is certainly disgusting and unethical but it may not be criminal. Under deregulation, there's no protection for the ordinary wage-earner. Bush's idea of privatizing social security would put the retirement funds of every working American into the high-risk situation that crushed Enron's employees.
It all comes down to campaign contributions; let's call it "legalized bribery." The Bush Administration boasts that it did not come to Enron's aid. Perhaps it should have. When a major corporation fails, leaving its employees, not to mention its creditors, in dire straits, government intervention might be warranted. Had the Bush Administration intervened, the public would have accused it of paying off its financial benefactors. That's the trouble with the private funding of political campaigns: it makes even good policy suspect, it pollutes everything.
Public policy should be based on merit alone, not on political contributions. Campaign finance reform is the unfinished business of the New Deal. Only by getting big money out of politics can we get fair tax legislation, secure pensions, and effective government oversight to protect ordinary citizens. Ronald Reagan wanted to get big government off our backs; instead we got big corporations running rampant. The Enron scandal is not only about corporate criminality, it's about an ideology that makes dishonest and unethical political and businesses practices commonplace and legal.