The Magazine

Wrong Lessons from Enron

The scandal shouldn't help campaign finance reform--but it does.

Feb 4, 2002, Vol. 7, No. 20 • By FRED BARNES
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WHAT DOES IT MEAN to be Enronned? Senate Majority Leader Tom Daschle coined the neologism for the narrow purpose of attacking President Bush for supposedly jeopardizing the Social Security system. For Washington it means being engulfed by the financial scandal. Congress has scheduled 11 full-dress hearings on the subject. The scandal has spilled over into other issues, dramatically reducing prospects for passage of Bush's energy plan--or any energy deregulation, for that matter. It has made Social Security reform impossible for the time being. And most important of all: It has moved the liberal version of campaign finance reform far closer to enactment.

The fight over election spending isn't over yet. But the Enron scandal has brought wildly favorable attention to liberal reformers. Their argument is irrational, but it is now accepted virtually as fact in the media. The reformers insist that private campaign contributions, and especially soft money donated by companies and well-heeled pressure groups, is corrupting. The bigger the contribution, the more favors the donor gets: That's the argument. Enron proves the opposite. The energy conglomerate and its officials lavishly aided the Bush campaign in 2000, but when they sought help from the Bush administration as Enron spiraled toward collapse, they got none. Their election donations bought them nothing.

Still, it was the Enron business that prompted two House Republicans and two Democrats to sign a discharge petition and force a floor vote on the issue. Since liberal campaign finance reform passed twice before (in 1997 and 1999) with 252 votes each time, approval by the House is now highly likely. One of the signers, GOP representative Tom Petri of Wisconsin, said the scandal "brings to life for a lot of people the concept of soft money. Until now this was an inside-the-Beltway game." The reform bill would ban soft money altogether. Of course donating soft money isn't a scandal. It's what the recipient does in response to getting the money that might be. Yes, Enron got access to Bush cabinet members and folks in Congress. But any large company or organization has easy access to Washington officialdom, whether or not it provides campaign money. In Enron's case, there's no evidence of any quid pro quo.

How might campaign finance reform be defeated or altered? The key is the Senate, not the House. Even House Republican whip Tom DeLay, who is fiercely opposed to the bill, is unlikely to muster enough votes to stop House passage. And once the House acts, there's bound to be a drive for Senate approval of an identical bill, replacing the measure the Senate has already passed. That would avoid a Senate-House conference and instead send the measure immediately to the president, who has indicated he would sign it. As the bills now stand, the Senate would raise the limit on "hard money" donations by an individual from $1,000 to $2,000. The House would leave it at $1,000. Another option is for the House to approve the Senate bill, but that probably won't happen because most campaign finance reformers prefer the House bill.

This leaves the ball in the Senate's court, where Republican senator Mitch McConnell of Kentucky is the leading foe of campaign finance reform. His goal is to make sure there is a House-Senate conference at which the differing measures would be melded into one--and the prospects for making changes would be greatest. When the Senate passed its version, 41 senators voted no. That's sufficient to block passage of a new bill identical to the House's. So McConnell is bent on holding the 41 together as a bloc opposed to a new bill, assuring a conference later this year.

"A number of things could happen" there, says McConnell. It is possible the House-Senate conference would fail to reach an agreement. More likely, the bill would undergo significant alteration. For example, hard money donations could be indexed for inflation (since 1975), boosting the limit to $3,000. Or soft money could be capped at, say, $60,000 per election cycle, as GOP senator Chuck Hagel of Nebraska has proposed. The idea behind these is to soften the impact of reform.