The Bush Administration, urged by the oil industry, has embraced a corrupt regime.
A probe of the company's White House ties should begin at his door.
Renewables are coming on strong, despite fat subsidies for oil and coal.
Arriving in San Francisco after a ten-hour drive through a snowstorm, Lucas Benitez sounds earnest and exhausted.
Did George W. Bush once have a financial relationship with Enron? In 1986, according to a publicly available record, the two drilled for oil together--at a time when Bush was a none-too-successful oil man in Texas, and his oil venture was in dire need of help. (In early March The Nation broke the story on its website; two days later the New York Times covered this Bush-Enron deal.)
In 1986 Spectrum 7, a privately owned oil company chaired by Bush, faced serious trouble. Two years earlier Bush had merged his failing Bush Exploration Company with the profitable Spectrum 7, where he was named the company's chief executive and director. Bush was paid $75,000 a year and handed 1.1 million shares, according to First Son, Bill Minutaglio's biography of Bush. Bush ended up owning about 15 percent of Spectrum 7. By the end of 1985 Spectrum's fortunes had reversed. With oil prices falling, the company was losing money and on the verge of collapse. To save the firm, Bush began negotiations to sell Spectrum 7 to Harken Energy, a large Dallas-based energy company mostly owned by billionaire George Soros, Saudi businessman Abdullah Taha Baksh and the Harvard Management Corporation.
In September 1986 Spectrum 7 and Harken announced a plan under which Spectrum 7 shareholders would receive Harken stock. Bush said publicly that Spectrum 7 would continue to operate in Midland, Texas, as a wholly owned subsidiary of Harken and that he would become an active member of Harken's board of directors. As Minutaglio reports, the deal would give Bush about $600,000 in Harken shares and $50,000 to $120,000 a year in consultant's fees. It also would provide $2.25 million in Harken stock for a company with a net value of close to $1.8 million.
As the details of the Spectrum-Harken acquisition--which Bush badly needed--were being finalized, Enron Oil and Gas Company, a subsidiary of Enron Corporation, announced on October 16, 1986, a new well producing both oil and natural gas. A press release reported that the well was producing 24,000 cubic feet of natural gas and 411 barrels of oil per day in the Belspec Fusselman Field, fifteen miles northeast of Midland. Enron held a 52 percent interest in the well. According to the announcement, 10 percent belonged to Spectrum 7. At that point, Spectrum 7 was still Bush's company. Harken's completion of the Spectrum 7 acquisition was announced in early November.
To spell it out: George W. Bush and Enron Oil and Gas were in business together in 1986--when Ken Lay was head of Enron. (Lay was named Enron chairman in February of that year.) How did this deal come about? Was this the only project in which Bush and Enron were partners? The White House did not respond to a request for information but later was quoted as saying there had been nothing unusual about the arrangement. Spokeswomen for Enron and EOG Resources (formerly Enron Oil and Gas) said they could not provide information on the well or on other possible Bush-Enron ventures.
Does the relationship between the younger Bush and Lay go back further than heretofore reported--to the mid-1980s? The deal could have happened with no contact between Lay and Bush. But most company heads would be quite interested to know that the son of a sitting Vice President had invested in one of their enterprises. Is it possible that Bush and Spectrum 7 received undue consideration from Enron? Given Enron's penchant for using political ties to win and protect business opportunities, it's tough not to wonder whether this Bush-Enron venture involved special arrangements. This is one more Enron partnership that deserves scrutiny--especially since George W. Bush failed to acknowledge it before the details became public. The Spectrum-Enron deal is either an odd historical coincidence or an indication that there's more to learn about the Bush-Enron association.
It's official now: The United States has a policy on climate change. President Bush announced it on Valentine's Day at a government climate and oceans research center. "My approach recognizes that economic growth is the solution, not the problem," he said. Instead of requiring the nation to lower greenhouse gas emissions below 1990 levels, as called for in the Kyoto Protocol, the new policy is voluntary and aims only to slow the growth of emissions, not reduce them. The centerpiece of the new climate policy is a tiny little tax cut for any manufacturers who are interested.
Of course, it's not nearly as big as the tax cuts used for real national priorities like distributing income upward or starving civilian government of resources. It's just some walking-around money, less than $1 billion a year, for investors who voluntarily, now and then, feel like doing the right thing for the environment. The President would also like industries to report their own emissions levels voluntarily, which may earn them valuable credits in the future if an emissions trading scheme is implemented.
It takes a creative imagination to believe that this is an appropriate way for the world's largest economy (and producer of about 20 percent of the world's greenhouse emissions) to respond to a serious global crisis. If you believe, that is, that global warming is a crisis. George Bush and his friends keep hoping it's not, but the scientific consensus, not to mention world opinion, is absolutely clear on this point. At the request of the Bush Administration, the National Academy of Sciences re-examined the climate change issue last year and promptly concluded that the problem is every bit as important as previously reported. Finding a way to debunk all this annoying environmental science must be high on the White House wish list.
It almost looks like that wish has been granted. Bjørn Lomborg, a statistics professor at a Danish university and self-described "old left-wing Greenpeace member," says the story began when he got interested in the longstanding debate between environmentalist Paul Ehrlich and economist Julian Simon. Ehrlich claimed that shortages of many natural resources were imminent; Simon said they were not. A few years ago Lomborg started researching the facts in order, he says, to prove that Ehrlich was right. Instead he found to his surprise that Ehrlich was wrong--and indeed, environmentalists were wrong about many, many things.
Trapped by the "litany" of doom and gloom, environmental advocates have, according to Lomborg, missed the evidence that most of the problems they worry about are not so bad, and are not getting any worse. There are more acres of forests all the time, plenty of fish in the sea, no danger of acid rain, no threat of rapid extinction of species, no need to do much about global warming and no reason to worry about environmental causes of cancer. Everyone in the environmental world, his erstwhile comrades at Greenpeace included, has misunderstood the subtleties of statistics and overlooked the growing good news, as he graciously offers to explain.
Preposterous as it sounds (and, in fact, is), that's the message that Lomborg presents in The Skeptical Environmentalist. It received rave reviews in the Wall Street Journal, the Washington Post, The Economist and elsewhere, and it looks as if the Bush Administration has torn a few pages from it. Lomborg plausibly points out that the environmental litany of short-run crisis and impending doom is unrealistic, and sometimes based on statistical misunderstandings. If he had stopped there, he could have written a useful, brief article about how to think about short-run versus long-run problems and avoid exaggeration.
Unfortunately, Lomborg stretches his argument across 350 dense pages of text and 2,930 somewhat repetitive footnotes, claiming that the litany of doom has infected virtually everything written about the environment. As an alternative, he paints a relentlessly optimistic picture of dozens of topics about which he knows very little. Responses from researchers who are more familiar with many of his topics have started to appear, including rebuttals in the January issue of Scientific American, in a report from the Union of Concerned Scientists and on the website www.anti-lomborg.com.
On global warming, Lomborg believes that "the typical cure of early and radical fossil fuel cutbacks is way worse than the original affliction, and moreover [global warming's] total impact will not pose a devastating problem for our future." In support of this Bush-friendly thesis, Lomborg attempts to reinterpret all the massive research of recent years, including the carefully peer-reviewed Intergovernmental Panel on Climate Change (IPCC) reports. But he is not up to the task. Discussing the standard graphs of average temperature over recent centuries, which most analysts use to highlight the exceptional recent increases, he offers pages of meandering speculation and concludes that "the impression of a dramatic divergence [in recent world average temperature] from previous centuries is almost surely misleading." Lomborg's own figures 134, 135 and 146 present strong visual evidence against his strange conclusion, showing average temperatures heading sharply and unprecedentedly upward in recent decades. He also finds it terribly significant that we do not know exactly how fast temperatures will change in the future, as greenhouse gases accumulate in the atmosphere; nonetheless, he accepts IPCC estimates that temperatures above the range of recent historical experience are essentially certain to occur.
When it comes to estimating the economic costs of greenhouse gas reduction, Lomborg's claim that all models produce "more or less the same results" is absurd. He has missed a valuable analysis from the World Resources Institute, by Robert Repetto and Duncan Austin (The Costs of Climate Protection: A Guide for the Perplexed), which describes and analyzes the huge range of sixteen major models' estimates of the costs of greenhouse gas reduction. Repetto and Austin attribute the divergent estimates to the models' differing assumptions about the pace of economic adjustment to future changes, the extent of international emissions trading and the uses the government will make of revenues from carbon taxes or similar measures, among other factors.
I turn out to have a small part in Lomborg's story, in a manner that does not increase my confidence in his research. My name appears in footnote 1,605 in his chapter on solid waste, where he cites in passing a three-page article based on my 1997 book on recycling but overlooks the book (Why Do We Recycle?) and the larger point that it makes. Lomborg's solid-waste chapter simply says that the United States is not running out of space for landfills. Echoing an example long favored by the most vehement critics of recycling, he calculates that a landfill big enough to hold all US solid waste for the next 100 years would be quite small compared with the country's land area. Nothing is said about other countries--Denmark, for example--where land might be a bit scarcer. Almost nothing is said about recycling, either, because it seems that it doesn't much matter: "We tend to believe that all recycling is good, both because it saves resources and because it avoids waste.... We may not necessarily need to worry so much about raw materials, especially common ones such as stone, sand and gravel, but neither should we worry about wood and paper, because both are renewable resources."
The United States is not running out of landfill space, but this does not invalidate concern about waste and recycling. Rather, it shows the error of collapsing our thinking about long-term problems into short-term crisis response.
Several life-cycle analyses of material production, use and disposal (none of which Lomborg refers to) have found that extraction and processing of virgin materials accounts for far more environmental damage than landfilling the same materials when they are discarded. The greatest benefit of recycling is not that it solves a nonexistent landfill crisis, or that it staves off any immediate scarcity of resources, but rather that it reduces pollution from mining, refining and manufacturing new materials.
There are similar shortcomings in many other areas of The Skeptical Environmentalist, of which I will mention just a few. Lomborg claims that there is little need to worry about trends in air pollution: "The achievement of dramatically decreasing concentrations of the major air pollutants in the Western world...is amazing by itself.... There is also good reason to believe that the developing world, following our pattern, in the long run likewise will bring down its air pollution." He endorses wholeheartedly the hypothesis that economic growth will first cause air pollution to get worse, but then later will lead to improvement. This controversial idea, the so-called environmental Kuznets curve (EKC), was more widely accepted in the mid-1990s, the period from which Lomborg's citations are taken. Recent research has cast doubt on this pattern, as he acknowledges in the second sentence of a footnote. Yet he has missed the most comprehensive critique of the EKC research, by David Stern ("Progress on the Environmental Kuznets Curve?," Environment and Development Economics, 1998). According to Stern, the EKC pattern can be clearly detected only for a few air pollutants, such as sulfur, and then only in developed countries.
Rushing to critique environmental views in one area after another, Lomborg may not have had time to read all his citations. In his introductory chapter he maintains that the collapse of the indigenous culture of Easter Island was based on factors unique to that island and does not suggest that an ecological crash caused by resource overuse could threaten other societies. But the only source he cites about Easter Island reached exactly the opposite conclusion, speculating that ecological problems could have caused the decline of such civilizations as the Maya, early Mesopotamia and the Anasazi in what is now the southwestern United States: "Easter Island may be only one case of many where unregulated resource use and Malthusian forces led to depletion of the resource base and social conflict," concluded James Brander and M. Scott Taylor in "The Simple Economics of Easter Island" (American Economic Review, March 1998).
In his concluding chapter, Lomborg relies heavily on studies by John Graham and Tammy Tengs. These studies purport to show vastly different costs per life saved, or per life-year saved, from different regulations. At one extreme, the federal law requiring home smoke detectors, flammability standards for children's sleepwear and the removal of lead from gasoline have economic benefits outweighing their costs. At the other extreme, controls on benzene, arsenic and radioactive emissions at various industrial facilities are said to cost from $50 million to $20 billion per life-year saved. The implication is that shifting resources from the more expensive to the cheaper proposals would be enormously beneficial--by one wild calculation (which Lomborg uncritically accepts) saving 60,000 lives annually: "And the Harvard study gives us an indication that, with greater concern for efficiency than with the Litany, we could save 60,000 more Americans each year--for free." Graham and Tengs follow closely in the footsteps of John Morrall, who made similar claims in a related, earlier study.
A widely cited article in the Yale Law Journal ("Regulatory Costs of Mythic Proportions," 1998) by Georgetown University law professor Lisa Heinzerling explains the fatal flaws in the Morrall study. This, too, escaped Lomborg's notice. Heinzerling demonstrates that Morrall's long list of allegedly expensive regulations includes numerous items that were never adopted and in many cases never even proposed. Moreover, many of the cheaper lifesaving measures--removing lead from gasoline, for example--have already been done and cannot be redone for additional savings. Thus the re-allocation of money that would putatively save thousands of lives would have to be from nonexistent expensive regulations to already completed cheaper rules. In more recent, forthcoming work, Heinzerling and I have found that the same fundamental errors occur throughout the Graham and Tengs studies, including "the Harvard study" that Lomborg likes so well.
Finally, Lomborg cannot be allowed to speak for "old left-wing Greenpeace members" in general. I personally remain happy to support Greenpeace because, among other reasons, I admire its courageous and imaginative confrontations with the likes of nuclear weapons testers, the whaling industry and oil companies drilling in ecologically fragile areas. I am of course disappointed, but hardly shaken in my worldview, to learn that Lomborg claims to have caught Greenpeace in a statistical error or two. Greenpeace doesn't rely on me to throw grappling hooks onto whaling ships, and I don't rely on it for quantitative research. On the strength of this book, I won't rely on Lomborg, either.
Questions about Enron's links to the White House and Dick Cheney's Energy Task Force are reassuring. They mean that the nation, after the September 11 attacks, is now confident enough to focus on some of the more traditional threats to our democracy, like the corporate takeover of our political system.
Following the release of the White House energy plan last year, the Government Accounting Office (GAO) demanded the Energy Task Force's records, including any interactions with major Bush campaign donors like Enron's Ken Lay. The Vice President's office refused to release the documents, claiming that Congress was exceeding its oversight authority. One of the oil and gas men whose privacy the White House wants to protect is Cheney himself, who in 1999, as CEO of Halliburton, was a member of the Petroleum Council, an advisory group to the Energy Department. The council issued a report calling for the opening of the Arctic National Wildlife Refuge (ANWR) and of roadless areas of the West to fossil fuel exploitation, proposals incorporated into the White House plan.
The GAO was preparing to sue for the first time in its eighty-year history when the terrorists struck. It then put its suit on hold so it could focus on "homeland security" and let the White House do the same. With the collapse of Enron and the beginning of Congressional hearings on the largest bankruptcy in US history, that holding pattern appears to be ending.
Still, even as environmental groups backed away from criticizing the President after September 11, the White House continued to push its "free market" environmental agenda. This past October, Interior Secretary Gale Norton had to explain why she'd altered scientific data, in a letter to the Senate, to make it appear that oil operations in the Arctic would not harm hundreds of thousands of migratory caribou, when in fact her own Fish and Wildlife Service (FWS) had provided her with data suggesting it would. "We did make a mistake. We will take steps to clarify and correct that," she told reporters in explaining one of the many discrepancies in her letter.
Norton has also concluded that drilling in the Arctic won't violate an international treaty that protects polar bears. The FWS, which has twice issued reports stating that drilling poses a threat to the bears, was directed to "correct these inconsistencies" with Norton's position. Polar bears can live with oil drilling, the FWS now tells us. They'll just look more like panda bears.
Ten years after President Bush Sr. pledged "no net loss of wetlands," George W. has signed off on an Army Corps of Engineers proposal that will make it easier for developers and mining companies to dredge and fill America's vital wetlands through a "general permitting" process that is rarely if ever challenged. Again, Norton failed to forward comments from her FWS to the corps, even though the FWS had written that the proposed policy change would result in "tremendous destruction of aquatic and terrestrial habitat."
Among the beneficiaries of the new engineer corps rules will be mining companies involved in "mountaintop removal" in Appalachia. J. Steven Griles, Norton's deputy, was a longtime mining lobbyist, and Norton herself lobbied for the lead industry.
Over at the EPA Christie Whitman won greenie points when she ordered GE to begin dredging PCBs out of the Hudson River. At the same time, the EPA has begun moving top career people (from the office of wetlands, enforcement, etc.) around the agency in a strange reorganization no one quite understands. "Are they purposely designing this to hamstring EPA for the next twenty years?" wonders a career employee who also complains that enforcement actions (as opposed to industry-friendly out-of-court settlements) are down significantly in the past year.
Under White House and lobbyist pressure, the EPA is also getting ready to relax clean air standards (that, as governor of New Jersey, Whitman supported) requiring old coal-fired power plants to shut down or significantly reduce gaseous emissions that contribute to acid rain and other forms of pollution.
Even Energy Secretary Spencer Abraham's recent Detroit auto show announcement that the government will work with the auto industry to develop pollution-free hydrogen-fuel-cell cars got mixed reactions. That's because he used the announcement to abandon a program aimed at improving existing auto fuel-efficiency standards. As usual, most of these environmental policy decisions are rife with corporate conflicts of interest, but conflicts that in recent months have gotten even less media attention than they normally would.
In her public appearances Whitman now emphasizes the need to protect America's water supply from terrorists (if not arsenic). Norton has been pushing the argument that drilling in ANWR can provide as much oil as we import from Iraq in eighty years (or the oily equivalent of sixteen years of Cheney's diet), and President Bush insists that Arctic drilling will make us "more secure at home." If nothing else, America's new "war on terrorism" is helping the Bush White House in its old war on the environment.
One of the major falsehoods being bandied about by apologists for the Bush Administration is that while Enron may have bankrolled much of the President's political career it got nothing for those
The rise and fall of the house of Enron should trigger comprehensive investigations--civil, criminal and Congressional. The full scope of relations between Enron and its cronies in the Bush Administration must be dragged out into the sunlight. Miscreants should be prosecuted, and fundamental reforms enacted to bring corporations back to public accountability.
Desperately trying to put a lid on the cascading scandals, White House spokesmen have insisted that since Bush officials did nothing when Enron chairman Ken Lay warned them about its impending collapse, there is no political scandal, only a financial one. Don't fall for that.
The largest scandal, as Robert Borosage suggests on page 4, is not just what was done illegally but what was done legally--for example, the failure of Bush Cabinet members to warn small investors and employees that Enron was going down and that its executives were bailing out. Or the slick way Enron gouged billions from Western energy consumers while its planted head of the Federal Energy Regulatory Commission, Pat Wood, ignored the pleas of Western governors for price controls. Or Treasury Secretary Paul O'Neill's torpedoing of the Clinton Administration's attempt to regulate offshore tax havens, a direct benefit to Enron, among others. Or Enron officials' six meetings with Vice President Cheney to help shape Bush's energy plan. What is Cheney hiding by refusing to reveal the names of those FERC met with?
Clearly, the full range of Administration contacts with Enron should be probed. This will reveal how crony capitalism works and what must be done to curb it. Congress must begin the hard task of rebuilding the legal framework for corporate accountability. As William Greider writes on page 11, Enron's demise reveals that all the supposed checks on executive plunder--accountants, stock analysts, independent board members, regulatory agencies--were either short-circuited or inactive. We need bold reform now. And Congress should take a close look at pensions, boosting defined-benefit plans and returning 401(k) plans to the supplement they were intended to be. And of course Enron once again illustrates the corrosive corruption of big-money politics.
With the House and the White House in Republican hands, Democrats in the Senate, sadly, will have to take the lead in ferreting out the facts and defining the necessary reforms. "Sadly" because too many Senate Democrats mirror Republicans in pocketing corporate bucks and parroting the deregulation/privatization line that comes with them. The chairman of the Governmental Affairs Committee, Joseph Lieberman, was leader of the corporate-funded Democratic Leadership Council and a founder of New Democrat Network, the proud recipient of Enron contributions. Last year Lieberman blew off the probe of Enron's connections to the California energy crisis. He now has another chance to show if he stands with his voters or his contributors.
Enron's bankruptcy is the largest in US history, but it is not unique. It is a product of the conservative offensive to unfetter corporations by dismantling hard-won public protections. Given that freedom, Enron's executives--and their brethren--gouged consumers, fleeced investors, even betrayed their own employees. It's time for Congress and the people to put an end to Enronomics and call corporate marauders to account.
Last spring Richard Pollak asked in these pages, "Is GE Mightier Than the Hudson?" (May 28, 2001). Given the Environmental Protection Agency's December 4 decision to dredge the PCB-contaminated river, it is tempting to ring in the new year with a resounding No. Despite the company's multimillion-dollar blitz of lawyering, lobbying and PR, the Bush Administration, in the person of its EPA Administrator, Christine Todd Whitman, has come down squarely on the side of those in New York's historic Hudson River Valley who have been agitating for years to make GE clean up the lethal mess it created by dumping more than a million pounds of polychlorinated biphenyls in the river from the 1940s into the 1970s. This pollution has turned 200 miles of the Hudson, from just above Albany south to New York Harbor, into the biggest Superfund site in the nation; EPA law requires that GE pay the cost of removing the toxic chemicals, which the agency estimates at $460 million. More than once, the company has told its stockholders it can well afford this sum, as a multinational with a market value of some $500 billion surely can.
Still, it may be premature to pop the champagne corks. This past fall, fearing that Whitman might follow the lead of her Clinton Administration predecessor, Carol Browner, and endorse the cleanup, GE filed a federal suit attacking as unconstitutional a Superfund provision that allows the EPA, if the company refuses to dredge, to do the job itself and bill GE for three times the final cost plus penalties of $27,500 a day. GE has plenty of time (and cash) to pursue this and other maneuvers against dredging, which is needed to remove some 150,000 pounds of PCBs still in the Hudson. The EPA estimates it will take at least three years to work out the project's engineering and other details--e.g., what kind of equipment is needed, how much stirred-up sediment is acceptable and what landfills can safely handle the contaminated mud. Many residents along the banks of the river are divided--sometimes angrily--on these and several other issues. During the EPA's 127-day comment period in 2001 it received about thirty-eight boxes of letters and 35,000 e-mails, many spurred by GE's scare campaign--on billboards, in newspaper ads and on TV infomercials--warning that dredging will destroy the river.
The EPA has pledged that the public will have even more of a voice in the project's design decisions over the coming months--a welcome process but one that GE is likely to exploit with more propaganda. At its enviro-friendly-sounding website (hudsonwatch.com), for example, the company continues to insist, on no hard evidence, that the citizens of the Hudson River Valley oppose dredging "overwhelmingly." Some residents do resist dredging and the inevitable inconvenience it will bring to their communities, and not all have arrived at their view because of GE's PR tactics. But after almost two decades of review by the EPA, the burden of scientific evidence shows that the remaining PCBs, which cause cancer in laboratory animals and probably in humans, continue to poison the river a quarter-century after their use was banned and GE stopped dumping them.
The EPA's December 4 order could be the precedent that requires the company to clean up forty other sites where it has dumped PCBs. This would cost several billion dollars, a hit not so easy to reassure shareholders about. Even with GE master-builder Jack Welch retired and busy flogging his bestselling How-I-Did-It book, don't look for the company to roll over anytime soon.