By Richard S. Dunham Anyone who's part of the Bush political dynasty's inner circle recognizes the coin of the realm: Loyalty. No personal characteristic is valued more by George W. Bush in friends -- or staffers. He saw his father's Presidency undercut by top aides who cared more about their images than the boss's success.
So imagine how torn the President must be right now. As his Administration is engaged in waging war across the world, he's grimly monitoring news reports about the demise of Enron, an energy giant closely tied to the Bush family.
Enron Chairman Ken Lay is a personal friend and political patron of the Bushes. He has helped raise more money for their campaigns than any other benefactor, and he has lent them talented Enron executives for policy projects like education reform. How close are the Bushes and Lay? When Houston's new baseball park -- dubbed Enron Field -- opened in 2000, Lay's guests included both George Bushes.
PROPRIETY ABOVE ALL. Enron's woes tell Americans something vitally important about the Bushes' view of loyalty. As much as they regard it, they value propriety even more. And the President isn't about to have his own reputation sullied if it means creating the perception that he did a special favor for (a) a friend, (b) a contributor, (c) a fund-raiser, and (d) a representative of Big Oil.
Enron shareholders have lost more than $30 billion in the Houston-based energy giant's downward spiral. The stock collapse came after the company revealed that complex investments in outside partnerships weren't disclosed in financial statements -- even though Enron had billions at risk.
A month ago, Enron admitted it had overstated earnings by $583 million over four years. Major lenders, including Citigroup and J.P. Morgan Chase & Co., could face losses in the hundreds of millions of dollars.
DIRE CIRCUMSTANCES. White House insiders say they're keeping the unfolding Enron saga at arms-length. The Administration is prepared to respond only if the collapse of Enron -- once the 18th-largest U.S. company -- would result in a market meltdown or severely damage retirement plans that had invested in the longtime blue chip.
The Treasury Dept. is "keeping an eye on...any effect [the Enron stock slide] may have on markets or any other areas," White House Press Secretary Ari Fleischer said on Nov. 28. Beyond that, Bush's spokesman had no public comment.
The Administration has good reason to be circumspect. Ties to the Bush White House run deep. Enron and its execs donated more than $500,000 to Bush's campaigns -- more than any other corporation or interest group. Lay was a "Pioneer," a mover and shaker who raised more than $100,000 for the President's 2000 campaign. And he's George W.'s all-time top contributor.
LUCKY TO GET OUT. Several top Bush advisers owned hefty chunks of Enron stock before the bust. Among the Administration officials who once were Enron investors: economic czar Lawrence B. Lindsey, political guru Karl Rove, and Lewis "Scooter" Libby, chief of staff to Vice-President Dick Cheney. All were required to sell their stock when they joined the White House (and avoided hundreds of thousands of dollars in losses when the stock price plunged to under $1).
When it came to staffing the Administration and developing a new energy policy, Bush again turned to Enron. He picked Thomas E. White, vice-chairman of Enron Energy Services, to be his Army Secretary. White, a retired brigadier general, earlier served Enron as chairman and CEO of Enron Operations Corp. and as chairman and CEO of Enron Power Corp.
Lay himself was seriously considered for a Cabinet position and was on the short list for Energy Secretary -- a position that eventually went to former Michigan Senator Spencer Abraham. Friends say the position Lay really coveted was Treasury Secretary. In the end, he didn't get the job so he didn't join the Bush White House. "If I was going to go, I wanted to make sure it was something truly worthwhile," he told BusinessWeek in January. "I've got a job, and I can support President Bush in a lot of other ways, just like I did his father in his four years."
POWERLESS. The Administration must be relieved that Lay didn't end up a senior official, with all the distractions the Enron scandal would have entailed. But it might also feel sorrow that Bush is constrained from using the federal government's massive power to save his friend's company or assist the tens of thousands of Texans whose jobs and pensions may be in jeopardy. With congressional investigations already in the works and a Securities & Exchange Commission probe under way, the Administration can only hold its collective breath.
On Capitol Hill, House Republicans have passed a tax-cut plan that could provide a $250 million windfall to Enron by retroactively repealing the alternative minimum tax on corporations. But Bush Budget Director Mitch Daniels on Nov. 30 disavowed the House action and said the Administration favored a "much more modest" plan that did not include a retroactive repeal.
As for Lay, he has so many troubles at corporate headquarters that he can't much worry about things in Washington. That's a big change from 10 months ago, when he opted to remain at Enron. "I was happy to stay here from Day One," Lay told BusinessWeek after deciding against a move to Washington. You can bet that his friends, the Bushes -- as much as they value loyalty -- are happy about that, too. Dunham is a White House correspondent for BusinessWeek's Washington bureau. Follow his views every Monday in Washington Watch, only on BW Online