Enron: the containment strategy

["Ian Murray" <seamus2001@xxxxxxxxx>]

Democrats, GOP Debate The Effects Of Enron
Some Say Scandal Not a Political Issue

By Thomas B. Edsall and Dana Milbank
Washington Post Staff Writers
Sunday, January 20, 2002; Page A05


AUSTIN -- Those attending the annual Republican National Committee meeting here expressed confidence
that the scandal surrounding Enron Corp.'s bankruptcy would not become a political liability -- and
outlined defenses in case it does.

Elected officials and party faithful at the GOP gathering made three arguments why the collapse of
the well-connected company would not sway voters in November's midterm elections: The controversy is
corporate, not political; the Democrats also have uncomfortable ties to the company; and Democratic
scandalmongers may face a voter backlash as Republicans did during the impeachment-tinged election
of 1998.

"Enron is an issue but not a political issue," Republican National Committee Deputy Chairman Jack
Oliver said. "Enron is an issue of trying to solve problems so they never happen again."

That view, expressed by many here in Austin, found some agreement in an unlikely place: the parallel
Democratic National Committee meeting in Washington. "At home I have not heard anyone discuss the
connection between Enron and politics," said Nassau County (N.Y.) Executive Tom Suozzi. Attending
the conference from across the country, Los Angeles City Attorney Rocky Delgadillo concurred:
"People in Los Angeles connect Enron with the bad energy companies that jacked up prices and caused
blackouts. I don't think they've made the leap to politics yet."

Still, Democrats said the investigation of Enron by Congress and the Justice Department's criminal
inquiry can only serve to reinforce an image of Democrats as the party of the little guy and
Republicans as the party of big business. Even before the Enron debacle, President Bush was
perceived in polls as closer to corporate interests than to those of common citizens. Regardless of
GOP complicity, the case of Enron -- in which thousands of workers lost their savings while
executives cashed out -- serves as a sort of shorthand for a Democratic class-strife message.

"At the instinctive level, people understand big business is a Republican constituency," Rep.
Anthony D. Weiner (D-N.Y.) said at the DNC meeting. "Enron will be the word on the floor of the
House and Senate for the next year. It will be a noun, it will be an adjective, it will be a verb.
You will see the Enronization of everything. . . . I think Enron will linger like a cloud over this
election."

The close margins in the narrowly Republican House and narrowly Democratic Senate make predictions
for November's contest inherently unreliable. Many other factors will be at work and could easily
overshadow Enron. Democrats will blame Republicans for the loss of budget surpluses and for the
recession; Republicans will say Democrats want to raise taxes. Top Bush political adviser Karl Rove
even argued on Friday for using Bush's handling of the anti-terrorism campaign to the GOP's
electoral benefit.

In the upcoming legislative session, Democrats believe the Enron taint will aid their program. They
say they will use Enron to block any new effortto pass the GOP's stimulus package, which would have
helped Enron. They will attack the Bush energy proposal as a product of Enron influence. And they
will use Enron to push for passage of campaign finance reform, which is close to earning a vote in
the House. They may also use Enron hearings to make the case for tougher financial regulations.

"Enron is a metaphor for the Republican administration: cooking the books, covering up, the top guys
taking their money off the table and leaving the working folks holding the bag," said DNC Chairman
Terence McAuliffe. "I am going to challenge [RNC Chairman Marc] Racicot to join me in lobbying for
campaign finance reform."

New RNC communications director Mindy Tucker said the GOP has nothing to fear. "We want to talk
about Enron, we want to talk about the investigation, we want the American people to know what
happened," she said. "There are a lot of things we are doing on Enron that we will be talking about
that will be part of the message."

Racicot, elected RNC chairman in Austin, made the same point: The Enron matter is business, not
politics. "There obviously may have been some mistakes made here in terms of management judgment,
but my view of it is so far that there is no evidence suggesting there is anything to be concerned
about in terms of an abuse of discretion by a public official at any point in time," he said.

Yet, even while offering those confident words, Racicot was forced to spend much of his time at the
meeting explaining how he would handle his continued employment with a Texas law firm with a
lobbying arm in Washington and a host of corporate and trade association clients that included Enron
until recently. Racicot, who has said that he would no longer lobby on behalf of clients and that
Enron is no longer a client, said he would embrace the chance to testify to any of the 10
congressional committees investigating Enron: "I don't have the least bit of concern or reticence
about that."

A few Republicans, such as Bush strategist Rove, see the possibility for gain if Democrats push too
hard on Enron. "If anybody tries to turn this intoa political circus, it's going to backfire on
them," he said. "Remember, these deals that are the core of Enron's problems occurred in '97, '98,
'99 and 2000. So the people are going to say, 'Why didn't the regulators catch it then?' " when
Democrats held the White House.

The RNC has already moved to remind the public that, politically speaking, Enron was an "equal
opportunity employer." Enron chief executive Kenneth L. Lay may have been Bush's biggest political
patron, and the disgraced company is tied to the White House through former consultants and
shareholders, but Democrats have awkward affiliations, too.

Thomas "Mack" McLarty, former chief of staff to President Bill Clinton, lobbied for Enron, as did
former Gore aides Jack Quinn and Greg Simon and Clinton treasury and regulatory officials. In 1993,
Vice President Al Gore attended a fundraiser chaired by Lay for a Senate candidate, and in 1996
Clinton invited Lay to the White House to honor him as a "corporate citizen."

The RNC also pointed out that six of the top 10 recipients of Enron money in the House are Democrats
and that half of Senate Democrats have received Enron contributions. Senate Majority Leader Thomas
A. Daschle (D-S.D.) received $7,000. Several of those contemplating investigations of Enron,
including Sen. Joseph I. Lieberman (D-Conn.) and Rep. Henry A. Waxman (D-Calif.), have taken
contributions from the company, the RNC noted.

But that is not stopping Democrats from attempts to make Enron a political advantage. The Democratic
Senate Campaign Committee sent out a news release Friday decrying North Carolina Senate candidate
Elizabeth Dole's "too-cozy relationship with Ken Lay," including a September fundraiser. Florida
Democrats made noise about Gov. Jeb Bush's appearance for a fundraiser at the home of a former Enron
president.

Right here in the president's home state, the Enron scandal has hurt Rick Perry, Bush's GOP
successor in the governor's office. On Friday, Perry accepted the resignation of Max Yzaguirre, a
former Enron executive Perry had picked to run the state Public Utility Commission. Lay donated
$25,000 to the Perry campaign the day after Perry named Yzaguirre to the post. Perry has said he
would not return a total of $200,000 he has received from people with ties to Enron.

Republicans can expect to hearmore of the same. "It's not as complicated as we're making it," said
Prince George's County Executive Wayne K. Curry, a Democrat. "You just go into the barbershops and
beauty parlors and say, 'They're their guys.' "

Staff writer David S. Broder in Washington contributed to this report. Milbank reported from
Washington.