The Enron fiasco encompasses any number of scandals involving accounting, corporate governance, employee retirement plans and heaven knows what else to come. What it lacks so far is a juicy political scandal.
Over the years, Enron executives gave millions of dollars to candidates and parties, including President Bush. But when the company found itself hurtling toward disaster, CEO Kenneth Lay learned firsthand the wisdom of Harry Truman’s remark that if you want a friend in Washington, you should get a dog. When his company needed help in a crisis, it reaped a handsome harvest of ingratitude.
You might think that the refusal of politicians to come to the aid of their benefactor proves that the campaign-finance system is not as sordid and corrupt as reformers believe. But no. Advocates of stricter regulations say the scandal is precisely that nothing happened.
“It’s pretty clear that the reason the administration didn’t act is that it was so deeply and widely enmeshed with Enron financially that anything it did would have looked like payback,” writes Nicholas Lemann in the New Yorker. “The political system cannot deal cleanly with a company that makes such an enormous investment in a particular set of politicians.”
If politicians who got Enron money had come to the rescue, that would have proven the need for campaign-finance reform. But since politicians who got Enron money didn’t come to the rescue, that also proves the need for campaign-finance reform. You follow? Neither do I.
But Sen. John McCain, Arizona Republican, and other proponents of change regard the Enron affair as a huge boost to their cause. House Democratic Leader Richard Gephardt vows, “We are going to clean up politics in this country once and for all.”
Enron certainly tried to purchase allies in the halls of power. Over the last decade, its executives and political action committees made nearly $6 million in political contributions. Among the beneficiaries are 71 senators and 188 House members. Muckrakers point out that Enron contributed $114,000 to the Bush presidential campaign. The Bush connection, says a New York Times editorial, raises “the taint of influence-peddling.”
How can anyone take that charge seriously? During his presidential campaign, Mr. Bush spent $193 million. In that sea of cash, Enron’s donations were barely enough to earn Mr. Lay a presidential nickname (“Kenny Boy”).
One of the most important favors the company got from Washington was an exemption from a 1940 law, allowing its foreign subsidiaries to conceal their debts. But despite all the money it had spread around Capitol Hill, Congress killed Enron’s proposal when it revised the law in 1996. The company finally got the exemption by lobbying the Securities and Exchange Commission, whose members don’t have to solicit campaign contributions.
This vapor of nothing presents problems for those who regard campaign fund-raising as a den of iniquity. But there has never been much evidence that corporations can assure special assistance by giving to candidates or that donors in general have much influence on how the recipients vote.
Bradley Smith, a Federal Election Commissioner, wrote before joining the FEC that “those who have studied voting patterns on a systematic basis are almost unanimous in finding that campaign contributions affect very few votes in the legislature. The primary factors in determining a legislator’s votes are party affiliation, ideology, and constituent views and needs. … Where contributions and voting patterns intersect, it is primarily due to the fact that donors contribute to candidates believed to favor their positions, not the other way around.”
Of course, the danger of quid pro quos is not entirely imaginary. But no one has explained how banning “soft money” contributions to political parties, the chief target of McCain-Feingold, is supposed to prevent a lawmaker from casting votes to help those who have helped him. Mr. Lay, like other rich people, has a First Amendment right to promote his views. So if he can’t give money directly to a party so that it can support candidates he likes, he can set up his own organization to run ads praising those candidates or attacking their opponents.
Such “independent expenditures” are fully protected as an exercise of free speech. And they create exactly the same risk as direct contributions. If Mr. Lay can buy a politician by giving to his campaign fund, he can probably buy one by spending money in a way designed to help the politician’s campaign.
The legislation favored by Mr. Gephardt, contrary to his promise, won’t cleanse money from the political system it will only launder it.
In reality, the amount of authentic corruption is far less than the reformers claim. If Enron’s bigwigs thought the campaign-finance system was a giant bazaar of favors bought and favors sold, they know better now. When will the reformers figure it out?