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Beyond the Beltway, Enron Is Already a Political Issue

Members of the Senate Commerce Committee lined up at a Feb. 26 hearing to take whacks at that pinata of American politics, Enron Corp. But the bashing doesn't stop at the Beltway. Across the country, candidates are test-marketing the scandal as a political issue.

North Carolina Democrats are blasting Senate front-runner Elizabeth Dole for holding a Sept. 20 fund-raiser hosted by then-CEO Kenneth L. Lay. Florida Dems are trying to make political hay out of GOP Governor Jeb Bush's extensive Enron connections, including a 1995 investment in one of its partnerships. And in California, a Republican challenger is airing ads criticizing Democratic Governor Gray Davis for taking sizable contributions from Enron.

Capitalizing on an anti-Enron backlash, however, may be difficult in a political landscape littered with millions in company donations to both parties. The most vulnerable pols, strategists say, are those who try to cover up their Enron ties. Best positioned: "outsider candidates who have never been part of the Beltway business," says Democratic consultant Jennifer Laszlo Mizrahi.

That's certainly the case in Texas. Representative Ken Bentsen, a Senate contender, has been hampered by his record as the top House recipient of Enron largesse. The Houston Democrat is trying to defuse "Kenron" by giving thousands of dollars to charities aiding ex-Enron workers. A top rival, ex-Dallas Mayor Ron Kirk, can hardly throw stones: His law firm received $180,000 for Enron lobbying. The beneficiary? Schoolteacher and self-styled outsider Victor Morales, who is leading his better-known foes in the Mar. 12 Democratic primary.

In California, Enron is the target of both Dems and Republicans. They blame it for the state's 2001 energy crisis. Davis, whose job-approval ratings plummeted after electricity shortages and price spikes, accuses Enron of plotting "to make a killing off of California" through "greed and manipulation." Commercials run by former L.A. Mayor Richard Riordan, a Republican candidate, tie Davis to the debacle by claiming he received more Enron cash than any other candidate in the country. Such ads may have helped prevent Davis from gaining in the polls, but they haven't done much for Riordan. The momentum in the Mar. 5 primary has shifted to GOP businessman Bill Simon, a political neophyte.

Democrats think their best target this year could be Presidential brother Jeb Bush. On Apr. 17, he had a 30-minute phone conversation with Lay about electricity deregulation. When asked about it, Bush told reporters: "I don't think I talked with him." But the governor's records confirm the chat and an e-mail declaring: "I would love to meet with Ken." Floridians are particularly sensitive because the state pension fund lost about $330 million on its heavy investment in Enron.

North Carolina Dems are having a harder time getting Enron to stick to Dole. After being pummeled for holding a fund-raiser while she claimed to have suspended political activities out of respect for September 11 victims, Dole donated $5,000 she received from the Lay family to an Enron employee fund. She also criticized Democrats for negative politics. Only 13% of voters are less likely to back Dole because of the Dems' attacks, according to a Feb. 11-13 Elon University Poll.

Still, with Congress holding hearings and considering changes in corporate oversight, the Enron scandal is unlikely to fade away. If nothing else, it is providing a sobering lesson for politicians who saw Corporate America as a bottomless well of campaign cash. This year, they will discover if there is a price for drinking too deeply. There must be something about running the Olympics that makes you want to run for public office. Twelve years ago, Peter V. Ueberroth, architect of the successful 1984 Los Angeles games, thought about a campaign for governor of California--but decided not to take on Pete Wilson. Now, Mitt Romney, CEO of the Salt Lake City games, is considering a race for Massachusetts governor. Romney, son of the late Michigan Governor George Romney, was defeated in 1994 when he tried to unseat Senator Ted Kennedy. If he throws his Olympic rings into the ring, he'll face a bitter GOP primary against acting Governor Jane Swift. Faced with a disappearing federal surplus, more than two-thirds of Americans are willing to sacrifice some of that Bush tax cut if it means more money for domestic programs such as education, a prescription-drug benefit, and extended unemployment payments, according to a Feb. 15-17 Ipsos-Reid Poll. But while Americans favor a moratorium on tax relief, Democratic leaders are shying away from an election-year confrontation with Republicans. The reason: They're afraid they'll be viewed as advocates of higher taxes and bigger spending. Despite the President's popularity, some Republicans aren't expecting a halo effect this year. Connecticut Governor John Rowland, chairman of the Republican Governors Assn., says Bush's sky-high approval rating won't help statewide candidates get elected.

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