"Progressives" for Enron?

When state legislatures across the nation began deregulating their utility industries during the '90s, critics rightly predicated it would be a heist that could dwarf the thievery of the Savings and Loan deregulation of the '80s. The largest bankruptcy in U.S. history and hundreds of billions of dollars heisted from rate payer wallets during deregulation has vindicated those who were opposed to utility deregulation.

The search for blame following the implosion of Enron has invariably resulted in a search for the once high-flying Houston energy trading company's political campaign spending money trail. Yes, there can be little doubt that Enron's heavy spending on the campaign trail gave it a lot of hearings with politicians that other campaign donors did not get. Many politicians are now returning their Enron campaign contributions, in some cases to aid employees who were ripped off by the company's 401K program. This misses the entire point of what enabled utility deregulation in the first place: The ideological consensus in Washington D.C. in favor of deregulation policies in general, or Enrononomics as I call it.

Although Enron gave three-fourths of it contributions to Republican politicians, that hasn't prevented Democrats from being staunch believers in Enrononomics. Evidence for this belief in the goodness of deregulated markets could be seen in the late '70s when a Democratic Congress and president pushed through airline deregulation. This was the case in the early '80s when a Democratic controlled Congress overwhelmingly passed legislation deregulating the S & L industry. And so to was it the case when federal legislation known as the Comprehensive National Energy Policy Act of 1992 was overwhelmingly passed into law by a Democratic controlled Congress. This legislation is what gave state government's the power to deregulate their utility industries and Enron and the rest of the energy industry began licking their collective chops.

U.S. Representative Jim McDermott of Seattle is a good example of a liberal Democratic Party politician who is a staunch supporter of Enrononomics. A fully baptized member of the Church of Neoliberal Economics, his brain overflowing with neo-liberal hokum, Congressman McDermott hasn't seen a deregulation bill or a pro-corporate trade treaty he doesn't like. He is an unapologetic supporter of NAFTA, WTO, FTAA and the proud sponsor of the badly misnamed African Growth and Opportunity Act.

I saw Congressman McDermott speak at a town hall meeting in Seattle during the height of the California energy "crisis" in January of last year. When a community member asked about the energy situation in California Congressman McDermott replied that "I was opposed to utility deregulation in California in 1996," and that "I was opposed to the attempt to deregulate Washington state's utility industry in 1997." However, "It's difficult to imagine undoing deregulation in California," McDermott concluded, as if utility deregulation is the equivalent of an 8.0 earthquake rocking Puget Sound.

What Congressman McDermott was doing at this town hall meeting was consistent with the manner in which he has conducted himself with his constituents over his congressional political career: Spout a lot of populist rhetoric during campaigns and at town hall meetings while actually voting against the very populist positions he takes. On October 5 1992, Congressman McDermott joined with 362 other members of the U.S. House of Representatives, including 238 Democrats, 123 Republicans and the "populist" independent Bernie Sanders of Vermont, in enacting the Comprehensive Energy Policy Act. It was precisely this law that enabled state legislatures, like in California and Washington, to even have the authority to deregulate their utility industries in the first place.

Fortunately, in a turn of events that could be considered a miracle, the Washington state legislature was not able to pass utility deregulation in 1997 and deregulation is now politically dead. Say the word "deregulation" down in Olympia, Washington and usually most Washington state politicians will immediately start falling over each other to pass any deregulation bill into law. We were lucky utility deregulation didn't happen in Washington state, as it did in 23 other states, no thanks to Congressman McDermott though.

Meanwhile, California ratepayers were getting fleeced big time during the first half of 2001 by private energy traders, led by Enron. We can thank Congressman McDermott for the events in California during the first of 2001 as well.

The legislation enabling what Enron and the rest of the energy industry was doing in California was known as the Commodity Futures Modernization Act. "Modernization" is word to watch out for in legislation of any kind. When such legislation is passed into law, citizens should reach for their wallets in order to catch thieves, like Enron's executives, in the act of lifting them. On October 19, 2000, McDermott joined with 376 members of the U.S. House of Representatives, 194 Republicans, 180 Democrats and 2 Independents, including the "populist" Bernie Sanders of Vermont, in passing this legislation. This legislation enabled companies like Enron to operate an energy trading subsidiary completely free of any regulatory oversight, including price controls. Enron did this through its Enron Online subsidiary.

Enron profited handsomely from this legislation after it was passed into law in December 2000. Enron's revenues immediately skyrocketed during the first quarter of 2001, increasing from $12 billion during the previous quarter in 2000 to $48.4 billion. During the time Enron and other energy companies were able to run their unregulated power auctions, from December 2000 until June 2001, California experienced 38 stage 3, or "rolling blackout," emergencies. California had only experienced one Stage 3 emergency from May 2000 until December 2000. It was clear that Enron and other energy companies were deliberately withholding energy from the California market and causing the blackouts. When the Federal Energy Regulatory Commission imposed price controls on the California market, the blackouts stopped.

Enron would soon be history after the imposition of price controls in California. This leads one to conclude that the company's demise would have been hastened if the commodity deregulation legislation Congressman McDermott voted for in the Fall of 2000 had not become law.

Meanwhile, Congressman Peter Defazio of Oregon voted against both pieces of energy deregulation legislation mentioned above. He introduced legislation in January 2001 that would re-regulate the utility industry and he has remained an advocate for re-regulation. Needlesstosay, DeFazio's legislation has gone nowhere. Yes, it's difficult to imagine DeFazio's legislation undoing the damage utility deregulation has done when Congressman McDermott and the rest of Neoliberal Washington refuses to support utility re-regulation.

We have seen quite a ground swell world-wide against Enrononics as neo-liberal economic policies have brought ruin to one economy after another, from Indonesia to Russia to Argentina to Mexico. We have seen this groundswell of resistance to Enrononomics here in Seattle during the WTO protests in 1999 and we will see it again during the World Economic Forum meetings in New York City at the end of this month. The public is overwhelmingly opposed to Enrononomics. What the public can't seem to find is the will to stop voting for the politicians who support Enrononomics policies.

Local school teacher and Green Party candidate Joe Szwaja ran a spirited campaign against McDermott in 2000(It's worth noting that Szwaja was an active participant in the WTO protests while McDermott was helping Seattle roll out the red carpet for the WTO). Despite almost no media coverage of Szwaja's campaign, he received over 52,000 votes for 20 percent of the total vote.

I talked to Szwaja recently and found out that he was not going to be running for office this year. He figured he would run again in 2004 but that it would not be for McDermott's seat. He hopes to run for a seat in the state legislature, which he believes would be winnable. Szwaja figures, correctly, that he won't have a chance of winning against McDermott so there is no reason for running against him again anytime soon. As long as the Seattle media continues to treat non-major party candidates like Szwaja as side show freaks, the task of voting powerful incumbents like McDermott out of office will be nearly impossible, no matter what they do in office.

Expect to see Congressman McDermott and his challenged imagination taking the oath of office again next year around this time.

Rick Giombetti is a writer and activist in Seattle. He can be reached at: rickjgio [at] speakeasy.org