May 19, 2002
Robert Scheer Watch

Robert Scheer is at it again. Today's Los Angeles Times column is another mindless screed against Enron, desperately attempting to tie Bush and Cheney to the latest round of allegations against Enron's machinations in California. Apparently his January broadside failed to convince enough people, so it's time for a reload. He's still off base (and off his rocker). (Registration required to view the articles)

Now that the Enron culprits have been caught red-handed, might not the media inquire of the president whether he takes any responsibility for nearly bankrupting California by refusing to come to the state's aid in a timely fashion?

It is not the federal government's job to bail out California because of a botched energy restructuring.

I am not a disinterested bystander; I had a $500+ electric bill *for one month alone* (without air conditioning) due to the fiasco. However, that does not make it Washington's responsibility to fix California's mistakes.

Forgotten in all the excitement of the damning revelations of internal Enron memos describing the energy company's dastardly techniques for market manipulation is the apparent stupidity, if not complicity, of the Bush administration that made Enron's chicanery possible.

Hmmmm. let's see, most of the rolling blackouts and insanely high bills occurred in 2000, before George Bush was in the White House. Within a few months of his inauguration, there were no more rolling blackouts. However, in Scheer's tiny little mind, Bush is apparently responsible for something that happened on Clinton's watch, or while Gray Davis was governor of California.

Too rough, am I? Just go back a year, when rolling blackouts were helping to wreck California's massive economy while the Bush-Cheney team stood insufferably aloof, blaming the victim. Exonerating Enron and other energy traders, President Bush refused to impose wholesale federal price caps to end the gouging. Couldn't do that, the Bush administration said, because that would intrude on the supremely rational free market. But now we know that the Invisible Hand was actually the grasping tentacle of Enron, and probably other Texas-based energy hustlers, whose antics must have poor Adam Smith spinning in his grave.

The Cato Institute had an article last year that totally demolishes what Scheer is trying to spin. The highest charges for energy came from Seattle Light and Power and BC Hydro, followed by other publicly owned utilities. Enron, Dynergy, and Reliant were charging less than the market average for power, which is hardly screwing the consumers.

It is true that Bush refused to intercede, and his decision was the right one. Imposing caps on the market would have simply prolonged California's crisis, as the boom in power plant construction probably would not have occurred. California was importing 25% of its energy supply from outside the state, which was a recipe for disaster. Other states had to put up with the negative effects of the power plants, while California used the energy those plants provided.

A year ago, Dick Cheney said the Bush administration viewed wholesale price caps as "a mistake" because "there isn't anything that can be done short-term to produce more kilowatts this summer." Yet, at the same time, Enron was grabbing electricity from California and selling it in Oregon at an obscene profit. Federal price controls would have prevented Enron from playing one state against another. If Cheney didn't know that, he must not have learned anything from his own enormously lucrative days in the Texas energy racket.

If Enron was making such obscene profits, why are they bankrupt? Besides, a year ago the problem was in Oregon, which due to drought, not only could not send power to California (as had been the case previously), but they could not even provide enough power for their own customers.

And could Bush himself not have guessed that his Texas buddies were gaming the market? After all, his vaunted business experience was also in Texas—and in the energy industry. But let's assume he saw no evil when he was on the inside of the energy biz; wouldn't it have behooved him to have done some due diligence research on his top campaign donor? Could it be that he wasn't too eager to find out that his political career was hugely indebted to money siphoned from Enron's apparently ill-gotten gains?

This trope, undoubtedly the most bloody overused chorus against Bush, is a total red herring; it is complete and utter bullshit. If Bush was so indebted to the oil industry, he would have permanently blocked the Clinton administration's last-minute regulations on diesel fuel emissions, which are expected to cost the oil companies *billions of dollars* annually, and he would not be proposing a plan that will cause a drawdown in coal-fired power plants (which will reduce pollution).

Enron was his largest donor—so what? He was governor of Texas for six years, and Enron was the largest company based in Texas. Why wouldn't he get a lot of money from Enron?

Surely Army Secretary Thomas E. White could have tipped off his commander in chief to what was brewing, since he had been recruited by the administration from his position as head of Enron Energy Services—a subsidiary of the collapsed energy giant—which was deeply involved in ripping off California consumers.

Oh, I see. Because Bush hired an Enron employee, he must have known what was going on.

Or maybe Poppy Bush could have warned his son, since as president he had signed into law the 1992 Energy Policy Act, which opened the way for electricity to become a tradable commodity, and an appointee of his, Commodity Futures Trading Commission Chairwoman Wendy L. Gramm, had sealed the deal by exempting electricity trading from the regulatory oversight afforded other commodities. (Gramm, wife of a Texas senator, herself moved on quickly to join Enron's board of directors, even serving as a member of the board's ill-fated audit committee.)

I see—Scheer is attempting to smear the whole deregulation process. Well, it took eight years for their labor to bear fruit. Is Scheer actually crediting Bush I, Bush II, and Wendy Gramm with the foresight necessary to profit, eight years down the road, from their actions in 1992? If that is the case, more power to them—I want people who can successfully run a business running the government. Governance is not intended as a for-profit venture, but demonstrated knowledge of personnel and fiscal management is a good thing.

In any case, during its first year, the younger Bush's administration catered to every whim of Enron chief and Bush family sponsor Kenneth Lay. After six meetings with Lay and other Enron executives, Cheney came up with an energy plan that did nothing for California but used the state's woes as justification for nuclear power and further deregulation, accompanied by the planned rape of pristine wilderness areas.

Enron has never operated a nuclear power plant.

The "planned rape of pristine wilderness areas" refers to the less than 1% of the Arctic National Wildlife Refuge that Bush proposed to open for drilling. The ANWR is larger than 10 states, so there will be plenty of unspoiled natural area left is drilling is ever permitted.

Out West, California officials were spending billions of taxpayer dollars to secure power to keep vital services functioning, while inside Enron a memo admitted that the company "may have contributed" to a Stage 2 power emergency, pushing the state to the brink of widespread blackout. If some wacko damages a transformer in a hospital to cause a power outage, it's jail time. But these Enron characters deliberately denied Californians energy needed to sustain life while Bush blithely covered for them.

More lies. How Stuff Works has a nice page on the operation of the California Independent System Operator ISO). The page mentions that hospitals are exempted from blackouts. (I cannot find anything on the ISO webpage, because it is mostly charts and graphs relating to current conditions. They might have a statement somewhere that delineates exemptions). While it is not mentioned here, people with special medical conditions are also exempted from the blackouts, if they contact their power distributor. In short, nobody's life was endangered by a stage 2 alert, which doesn't even prompt blackouts.

Another memo detailed the company's so-called Death Star strategy: jamming transmission lines in order to collect payments for fixing problems they created.

Enron's actions have been described in great detail. None of these articles have explained why the federal government was supposed to step in and deal with the problem California created.

When the mob does things like this, we call it blackmail and extortion. Now that a glossy corporate giant cozy with the president has done such things, what does the Justice Department propose we call them?

I guess the multiple investigations against Enron and Arthur Anderson are not enough for Scheer, because they don't implicate Bush or his administration in any illegal activity. (A list of current investigations against Enron and Arthur Anderson can be found at the Boston University Law Library website.)

posted on May 19, 2002 03:59 PM


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