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Six Million Reasons Why Campaign Finance Reform Should Be Enacted Now

Jan. 21, 2002

Six Million Reasons Why Campaign Finance Reform Should Be Enacted Now

Enron and Campaign Finance Reform

The Enron affair underscores the need for immediate enactment of campaign finance reform.

“This story of greed, deceit and influence-peddling illustrates like nothing since the S&L crisis of the 1980s how thoroughly corrupt our political system has become,” Public Citizen Joan Claybrook said. “There?s only one way our Congress can restore the credibility of the government in the wake of this debacle. It must rid the system of the legalized bribery that entices members of Congress to strip away protections for Americans against corporate misconduct.”

The following is a summary of Enron?s nearly $6 million in campaign contributions, which bought it unrivaled political access and influence.

Enron?s Campaign Contributions

From 1989 to 2002, Enron and its employees gave $5.95 million in individual, Political Action Committee (PAC) and soft money contributions to federal candidates and parties, 74 percent?to Republicans and 26 percent?to Democrats (Source: Center for Responsive Politics).

Soft money accounted for 60% of total Enron contributions ? and 70% from 1995 on (Source: Center for Responsive Politics).

From 1991 to June 2001, Enron gave $3.94 million in soft money, 77% to Republican party committees and 23% to Democratic ones (Source: Common Cause).

Enron also gave $160,000 in 2000 to Section 527 tax-exempt political groups that collect unlimited soft money contributions to try to influence elections, including $110,000 to committees established or controlled by House Republican leaders. (Sources: Internal Revenue Service and Public Citizen 527 database).

President George W. Bush has been an Enron favorite. Enron and its employees contributed $312,500 to Bush?s 1994 and 1998 Texas gubernatorial campaigns. Another $113,800 was donated to the Bush 2000 presidential campaign. ( Enron also gave $10,500 to the Bush-Cheney Recount Fund and $300,000 to the Bush-Cheney 2001 Inaugural Fund.) [Source: Center for Responsive Politics].

Since 1989, 259 current members of Congress have received Enron campaign cash. This includes 188 Representatives (117 Republicans, 71 Democrats) and 71 Senators (41 Republicans, 29 Democrats). Enron is the single largest contributor from the Energy/Natural Resources industry sector over that time period. (SOURCE: Center for Responsive Politics)

Top current senators receiving Enron contributions since 1989: Kay Bailey Hutchison (R-Texas.), $99,500; Phil Gramm (R-Texas.), $97,350; Conrad Burns (R-Mont.), $23,200; and Charles Schumer (D-N.Y.), $21,933 (Source: Center for Responsive Politics).

Top current representatives receiving Enron contributions since 1989: Ken Bentsen (D-Texas), $42,750; Sheila Jackson Lee (D-Texas), $38,000; Joe Barton (R-Texas), $28,909; Tom DeLay (R-Texas), $28,900; and Martin Frost (D-Texas), $24,250 (Source: Center for Responsive Politics).

Enron?s Special Political Access and Influence

Enron Chairman Kenneth Lay called two of the Bush administration?s cabinet officers, the secretaries of treasury and commerce, seeking federal support, just before the company filed for bankruptcy. President Clinton?s former secretary of the treasury, Robert Rubin,?also called a high ranking Treasury official around this time to seek support for the company.

Enron officials had at least six meetings in 2001 with Vice President Dick Cheney and other administration officials who were drafting energy policy. The eventual administration recommendations, focusing on increasing energy supplies at the expense of the environment, were very favorable to Enron.

Last winter, Enron Chairman Kenneth Lay supplied President Bush?s chief personnel adviser with a list of preferred candidates for the Federal Energy Regulatory Commission (FERC). Lay also offered FERC member Curtis Hebert Jr., who disagreed with Enron on certain issues, political support to retain his position if he changed his views. He did not and was forced out by the administration.

Enron supporter U.S. Rep. Tom Delay (R-Texas) successfully steered a bill based on the above-referenced White House energy program through the House in August 2001.

Senator Phil Gramm (R-Texas) played the major role in final negotiations to pass the Enron-supported Commodities Futures Modernization Act of 2000. The legislation, previously approved by the House and President Bill Clinton, exempted energy derivative trading (Enron’s main business) from government regulation.

High officials of both the Clinton and Bush administrations strongly supported Enron in its financial dispute with the Indian Government over a power plant venture. As it headed into bankruptcy last fall, Enron hoped that this support would bring it the financial oxygen of a $2.3 billion settlement.

Pending Campaign Finance Reform Legislation and Its Impact on Enron

The Senate-passed McCain-Feingold and the House companion Shays-Meehan bills would ban all soft money contributions and stop corporate and union treasury financing of TV and radio sham issue ads that are really campaign ads. The McCain-Feingold bill would raise the individual hard money contribution limit from $1,000 to $2,000 per election, as would the Shays-Meehan bill except for House elections.

Under the legislation, Enron and its top executives would no longer be able to donate large chunks of soft money to parties (70% of Enron?s recent political contributions) or contribute to Section 527 committees established or controlled by candidates or officeholders (nearly three-quarters of their 527 contributions).

However, individual contributions from Enron executives and employees could jump perhaps as much as 50 percent under McCain-Feigold’s increased individual hard money limits. Enron executives and employees would remain free to contribute hard money individually and through company-supported PACs, giving respectively up to $2,000 or $5,000 per candidate per election. In the 1999-2000 election cycle, Enron?s contributions included $490,000 from individuals and $280,000 from PACs out of a total $2.444 million in donations. And, as noted above, under the pending reforms the scope for individual contributions would increase.

Current Status of Pending Legislation

A House discharge petition to force consideration of the Shays-Meehan bill has 214 signatures, and two additional members have promised to sign after the House reconvenes. If two more signatures can be garnered, Speaker Dennis Hastert will have to reverse his position, bring up the bill expeditiously under a fair procedure, and hold a vote. The House has approved similar legislation in 1998 and 1999 and is likely to vote for it again if it is considered.

The Senate is very likely to approve the bill when it passes the House since it has been cleared with Senators McCain and Feingold — though a last minute filibuster effort is possible. President Bush has indicated he will sign a bill sent to him by Congress.

Further Campaign Finance Reforms Will Be Needed

Full public financing of federal elections is necessary to curb the influence ? and appearance of influence ? of wealthy special interests like Enron over public policy and broaden the opportunity for individuals to run for office. Since 1976, the U.S. has had a system of voluntary public financing, including candidate spending limits, for the presidential general election, though this has been subverted in recent years by party soft money spent on behalf of presidential candidates and the proliferation of broadcast sham issue ads that are really campaign ads. The pending reform legislation would eliminate these loopholes, upholding the presidential public financing system. We also have a partially publicly financed presidential primary system. We need to move toward full public financing (including free TV advertising for candidates which will lower costs) for presidential primaries, congressional primaries and general elections.

In the past few years, four states (Arizona, Maine, Massachusetts and Vermont) have enacted wide-ranging public financing laws, and others are expected to consider such legislation in 2002 and subsequent years. While state reform for state elections is no substitute for federal action, state innovation provides a good model and precedent for moving forward in Washington.