By Richard S. Dunham The dual wars on terrorism and the recession are likely the dominant policy challenges of George W. Bush's second year in office -- and will be the primary topics covered in his State of the Union address on Jan. 29 (see BW Cover Story, 2/4/02, "Bush's New Reality"). But the President's greatest political challenge in 2002 may come from a most unpredictable source: the Enron meltdown.
The reason? Enron and its executives donated more than $400,000 to Bush's 2000 campaign, his Florida recount fund, and his inaugural committee. Nobody is saying the Bush team did anything improper (and the evidence thus far is to the contrary). But inquiring minds want to know if Enron tried to use its entrée to influence Administration policies.
The unfolding Enron mess has the potential to confound the Administration's relentless spin-control efforts. First, the Bush team has little power to dictate the scripts for the dozen-or-so congressional panels looking into various elements of Enron's activities. It isn't possible to predict where investigations by tough -- and independent-minded -- Capitol Hill chairmen such as W.J. "Billy" Tauzin (R-La.), Joseph I. Lieberman (D-Conn.), and Carl Levin (D-Mich.) will lead.
"FISHING EXPEDITION." Despite the best efforts of White House spokesman Ari Fleischer, it's going to be well-nigh impossible for Bush to prevent Congress (and the media) from demanding a comprehensive list of contacts between Enron officials and Administration staffers. Fleischer says the White House will resist any "partisan fishing expedition." But that's unlikely to stop the news media and lawmakers from asking just how Enron tried to influence Administration policies in the months leading up to the biggest corporate bankruptcy in American history.
Tauzin, in an interview with BusinessWeek's Laura Cohn, said he couldn't yet tell where the facts would lead (see "Enron Is Just the Worst Example"). Lengthy and numerous congressional hearings could well overshadow the Bush economic-policy message for months. For a White House that likes to control events and manage the spin, that's a bit disconcerting.
Former Clinton spokesman Joe Lockhart offers Bush some good advice: Get all the facts out as quickly as possible. That may happen eventually, but not immediately. Why? Some of George W.'s advisers believe it would be risky to release information about special-interest contacts, and this White House tends to be risk-averse.
TAKE STOCK. Nevertheless, it's in the President's interest to "get ahead of the story," as public relations folk say. He should immediately order Chief of Staff Andy Card to conduct an internal review of Enron's lobbying of the Bush Administration. Card should compile a list of every call from an Enron rep to a White House staffer or Cabinet department.
For Bush's self-protection, his top aide should determine: one, what Enron sought, and two, the end-result of the policymaking process. Even if the information is not immediately released to the public and Congress, it could help the President avoid potentially embarrassing statements in the future.
Fleischer will continue to try to shoo away inquiries by reporters while labeling as "partisan" demands for information from Democrats such as California Representative Henry Waxman. But it'll be hard for the White House to maintain that line of attack if former Enron CEO Kenneth W. Lay and other company officials testify on the Hill about their 2001 lobbying efforts. Lay is scheduled to appear before the Senate Commerce Committee on Feb. 4. It's sure to be a media circus.
CHASING CHENEY. It'll be even more difficult for Vice-President Cheney to stay "on message" about Enron. While Cheney said in an early-January letter to Waxman that his 2001 energy policy task force had met a half-dozen times with Enron reps, he steadfastly declines to disclose the names of the corporate officials who took part in the policy deliberations. Cheney cites executive privilege.
That's the same argument the Clinton Administration made in the wake of demands from Republican-controlled congressional committees for internal White House documents. It would be the height of hypocrisy for Hill Republicans to countenance in a GOP White House something they condemned in the Democrats.
Hypocrisy aside, Cheney soon may be facing a lawsuit from Congress' bipartisan General Accounting Office demanding disclosure. While Cheney may be correct and courageous as a matter of principle, he's likely to take political heat for stonewalling. Again, it'll be difficult for the Bush team to control the message here.
GOOD IMPROVISER. Cheney should release the information on every group -- from corporate interests to environmentalists -- that tried to influence the energy task force. Get the information out right away, before the GAO takes him to court. The White House would take a PR hit in the short-run, but it would erase the impression that it had anything to hide.
George W. Bush is a person and a politician who values consistency, discipline, and sticking to the script. But as a President, he has learned that greatness is rooted in an altogether separate value: the ability to adapt to rapidly changing circumstances. "The difference in 12 months is enormous," acknowledges White House Communications Director Dan Bartlett, Bush's rapid-response guru. "The perfect storm came in the form of a war, a national emergency, and a recession."
Bartlett is correct. The constancy that defined Bush's disciplined drive to the White House in 2000 is being challenged again and again by circumstances -- often beyond his control. A huge budget surplus melted away amid an economic slowdown, additional government spending, and a recession-fighting tax rebate. The events of September 11 forced the feds to commit to spending more than $100 billion over two years to wage war on terrorists abroad and defend potential targets at home.
PERILOUS RISKS. Vermont Senator Jim Jeffords' midyear declaration of independence put Democrats in control of the Senate and gave new Senate Majority Leader Tom Daschle (D-S.D.) the instant ability to frustrate Bush's legislative initiatives and bottle up his nominees to the judiciary and federal agencies.
In every case, the 43rd President has proven to be adept at thinking on his feet and adapting to the new realities. As much as the President likes to control events, he has proven to be masterful at adapting to changing times. Just look at his deft handling of wartime shifts in foreign policy.
In domestic political terms, Enron may pose more perilous risks than Osama bin Laden. To cope with the political uncertainties of the Enron scandal, Bush needs to exhibit the same kind of flexibility that has served him so well in the war on terrorism. Dunham is a White House correspondent for BusinessWeek's Washington bureau. Follow his views every Monday in Washington Watch, only on BusinessWeek Online