ENRON & FRIENDS

August 23, 2003:  Well whaddaya know!  Just when I was starting to think that a muckraking page focusing on Enron and similar companies was starting to get kind of stale and outdated, look what happens.  A monster electricity fiasco happens in the northeast... and, after a brief attempt to blame Canada, it looks like the guilty party is a bunch of sleazeballs who spent the money they should have put into maintenance of power equipment into Republican party contributions and other influence buying.  I'm talking about FirstEnergy Corp. of Ohio, of course.  It's a merger of the old Ohio Edison with Centerior Energy, and others.  These guys have been scum from way back, apparently... Ohioan presidential candidate Dennis Kucinich, for one, has been on these guys' cases for years, and is now submitting a petition to the state PUC asking that they have their license revoked and be kicked out of the utility business, because this is just the latest in a long series of hose jobs that they have gotten away with for too long.  And of course, there's nothing that spells "gotten away with" nearly as well as raising money for Bush and Cheney's re-election.  Would a normal utility get away with doing such poor work, year after year, without anybody making them straighten up?  Not very often, I don't think, Chester.  But somehow, when generous donations get made to certain parties (or a certain Party), you keep seeing people who decide to just not care about what would normally be considered their basic duties, and getting away with it for year after year.

They not only donated $2,000,000 to political candidates, mostly republicans, but they spent an additional $2,250,000 on lobbyists, that we know of.  (And I bet not all of that money stayed with the lobbyists themselves.)  Many of these lobbyists are ex-employees of the congressmembers they now seek to influence.  Others used to work for federal agencies being lobbied, such as FERC and the EPA.  They invited Dick Cheney over to speak, and he left with $600,000.  They spent $9,300,000 on expensive "consultants" in the same year that they laid off 400 people who did actual work.  On the state government side, they've hired a former state senator (Roy Ray), a former Speaker of the Ohio House (Vern Riffle), and a top aide of the governor, to help them dodge threatening legislation.  They contributed $114,000 to the current governor, Bob Taft.  The CEO, Anthony J. Anderson, was appointed to George W. Bush's transition team after he, er, won the 2000 election.  What they buy for their money is, in a word, deregulation.  Actually, according to Ohio state senator Robert Hagan, what they got was "everything they ever wanted."  For instance, Ohio's deregulation law included a clause allowing FirstEnergy to bill its customers for all the costs they ran up with their nuclear plant.  And the city of Toledo only agreed to continue doing business with FirstEnergy after a flurry of lobbying and local campaign contributions.  Not to mention the fact that their rates they're allowed to charge are well above the norm for the region. They say that in the old days before laws were changed, they openly paid "retainers" to active members of the legislature.

According to Kucinich, one of their pre-merger constituents waged a years-long campaign to knock Cleveland's nonprofit public utility out of business.  He says "They have ignored safety precepts.  They've basically had the regulators wink at them."

A few weeks ago, I was reading an article about a possible shift of the U.S. power infrastructure toward a new generation of nuclear power plants, due to the moment when the world supply of cheap oil can no longer keep up with demand looming close now, and there's a sidebar about a nuclear plant where the doofuses running it didn't notice that one of their boron control rods had turned into boric acid and eaten a head-sized hole into the reactor's containment vessel, with only a thin skin of inner lining holding back the three hundred atmospheres of pressure inside...  Guess what?  That plant is owned by FirstEnergy Corp.  And their work to get it back online slipped way behind schedule -- the reactor's been out of operation for 17 months now.  Two other reactors were offline for weeks longer than scheduled for routine refueling.

More troubles they've had:  Their unions have accused them of skimping everywhere on maintenance.  Consumer advocates call them "a rogue utility, shoddy and irresponsible."  Their nuclear plant's computer network was crashed by the "Slammer" worm.  The Nuclear Regulatory Commission concluded that their reactor had been improperly maintained and they had ignored warning signs.  They took on excess debt by buying General Public Utilities in New Jersey two years ago.  GPU had blackouts on the Fourth of July weekend, bringing on investigations by the state government.  They tried to sell four plants to reduce their debt, and couldn't get the sales to go through.  (Did the buyers decide the plants were turkeys?)  They had to restate their earnings once their auditors were put in the position of having to report honestly, and the restatement was late.  They lost a lawsuit over failure to install smog reducing equipment at a coal powered plant.  And finally, when the big blackout happened, their alarm system failed.  This may be part of the answer to why the Canadians did not get the warnings they were supposed to get to signal them of impending trouble, as agreed after the blackout of 1965.  And one generator failed at a plant in Eastlake, Michigan just before the blackout, possibly being the event that triggered the collapse.

There are various theories about what actually triggered the blackout -- one being that a sag in voltage caused electric motors to briefly draw a lot of extra juice -- but it's pretty clear that the overall cause was people not giving a shit about keeping their equipment up.  Kucinich says FirstEnergy has "consistently failed to invest in upgrade of equipment."

Did you know that power experts were warning Bush and Congress that the need to fix the power grid was urgent, back in November?  Ohio state regulators warned of impending trouble back in 1998.  And the North American Electric Reliability Council, formed to prevent a recurrence of the 1965 blackout, has been saying for several years that deregulation is undercutting its ability to do its job of avoiding blackouts.  And now that Congress has finally woken up to the need to pass some legislation to fix up these transmission lines -- something the Dems had been trying to pass for years, against party-line resistance.  It wasn't even an expensive giveaway, it was just a loan program, but the GOP voted it down three separate times, backed each time by George W. Bush.  Yet Bush just came out in public and claimed he had been in favor "all along" of modernizing those transmission lines!  The best plan he's come up with yet to deal in any way with transmission lines is his proposal to strip regulatory power from the states and hand it all over to FERC -- a move opposed by every state with below-average electricity prices, and even more opposed by the West Coast states who got Enroned, and also by those hit in the recent blackout... add those up and you get almost the whole country -- and he's now saying that this idea should probably be delayed three years instead of being included in his current energy bill.  (One part of that bill he's not backing down on is drilling in the Alaska National Wildlife Refuge.  This is the part of the bill that may have done most to block its passage, though it's far from the bill's worst feature.)

Tom DeLay says that if Democrats had only passed the Bush energy plan -- the one with all the subsidies for new nuclear plants -- none of this would have happened.  Which is nonsense, because the bill has nothing for transmission lines.  Well, we already knew what an asshat Tom DeLay is.  (His latest move: he just started rattling sabers at Iran and Syria again.)

The blackout is making Congress eager to pass some kind of bill having something vaguely to do with it.  The White House is "confident" that the bill they pass to address energy problems will be their Enron/Cheney energy bill, hastily amended to add reliability standards of utilities to the existing provisions, which are mostly about increasing openings for deregulated electricity markets (like those we enjoyed so much here), removing obstacles to utility mergers, and so on.

You'll be glad to know that the job of investigating the causes of the blackout is now safely in the hands of Spencer Abraham at the Department of Energy.  Spencer Abraham took quite a bit of Enron money... he's staunchly pro-deregulation.  He's also someone who got his start in GOP politics by working to pack judicial benches with right-wingers, at the Federalist Society.

Surprisingly, Abraham is speaking very negatively now about the proposal to broaden FERC regulation of transmission lines, a move his boss favored not long ago.

Oh, here's our first conspiracy theory for the blackout: it was all fabricated to cover a tiff between the Bushies and the Saudis.  Obviously the real culprit isn't FirstEnergy at all!  Actually, I saw a report that Al Qaeda, or somebody using their name, claimed responsibility and said it was a successful terror strike.  But they claimed they hit generating plants, not transmission lines, so they're clearly fibbing, probably for the least-informed parts of the Arab audience.

The California recall election is getting busy fast.  I wrote in the last edition that Governor Davis was foolishly taking a low key "rose garden" strategy.  Well, he isn't.  He's decided to come out swinging, and campaign hard.  Wisely, he's attacking the recall itself rather than making it about a contest with the other candidates -- a lot of Democrats are feeling the message about the Republican fondness for trying to undo elections they don't win.  He names the Texas redistricting fight (in which the GOP legislators decided to just throw out the legal process in place for nonpartisan redistricting), and a similar one in Colorado, as further instances of this.  He also decided to be contrite and confess to mistakes, while pointing out that the real blame lay elsewhere.  (Bill Simon was scathing about his fingerpointing... but Mr. Simon, we have not forgotten how well you did at taking responsibility for mistakes... and the plain fact is that Davis's accusations are true.)  Davis is also doing a bunch of high-profile crowd pleasing policy moves... which are in many ways more liberal than his usual stance.  He seems to have decided that a swing to the left will help him fend off the challenge, in opposition to the conventional wisdom of politicians.  Far from the tool of organized labor that his opponents are trying to paint him as, he's actually distancing himself somewhat from the big unions (who say they may not be able to endorse him, due to rank&file dissatisfaction with him), to go after other blocs, such as minority groups that don't vote in lower turnout elections, but probably will in this one.  Assumptions that turnout would be low appear to be false; it's looking like we'll get more voters than we got in the regular election.  New voter registrations are booming.  Maybe the fact that there's a real choice of candidates, for a change, has something to do with that.  An awful lot of "voter apathy" has nothing to do with voters not caring.  (Polls show the public is damn sick of the two major parties right now.)

Now, if only those new electronic voting machines report honest totals.  I'm hearing rumors that in some states, the 2002 elections already showed suspicious discrepancies between exit polls and official results.  In the 2000 election, the only state where the official winner didn't match the exit polls was Florida.

We need to make this our rallying cry: demand of the sellers of electronic voting machines, "Show us the source code!  Show us the source code!"  They are refusing to let their customers check the quality of the product they're buying.  Now we probably shouldn't have it actually made public, because that would invite too much hacking that they can't defend against all of, but they sure as hell ought to be able to hand it over privately to experts hired by the state governments, so that they can verify whether the things are both secure and honest.  Even that isn't a complete answer -- we need a way, for instance, to verify that each individual machine is using the same code as shown, which would require added hardware features -- but if they aren't willing to do at least this much, their product cannot be trusted.

Meanwhile, the U.S.S. Ahnuld looks like it's taking on water.  All of his opponents, even in his own party, are sneering at him for having no policy (but he kept promising to come up with one real soon now), and the AM radio shouting heads are starting to turn on him.  "Schwarzenegger is no conservative," thundered Rush.  Matt Drudge called him "Governor Tax".  And the Christian right thinks he's practically a member of the Green Party, because he's pro-choice (as any California candidate pretty much has to be to have a chance) and doesn't hate gays enough.  (A friend in Texas tells me that radio preachers these days seem obsessed with the topic of homosexuality.  They can't seem to get off the subject.)  Cruz Bustamante, despite the political handicap of having the opposite of a Mr. Universe physique, is ahead of Schwarzenegger in some polls.  It might have helped that Bustamante was the first to come out with an actual plan for dealing with the budget.  His plan, idiotically titled "Tough Love for California", includes a tax hike of $8,000,000,000... and a significant part of that is that he's calling for repealing part of Proposition 13, the Jarvis-Gann tax cut measure that I discussed last time.  He wants to restore some regular property value assessments for commercial parcels, but not for homes.

(The loss of luster from the Schwarzenegger campaign is somewhat paralleling a slide in popularity for Dubya.  One poll now shows him neck and neck in popularity for 2004 with "any democrat", and even in the Dixie states where support used to be rock solid, people are now getting belatedly pissed off about having been lied into a war.)

Here is a story about a Republican minority who are opposing the recall of Governor Davis on principle.  They say recalls are only suitable for gross corruption and malfeasance, or someone incapacitated who can no longer serve.  Well, maybe it's not on principle.  They say that if Ahnuld and Bill Simon and Peter Ueberroth split the votes, then Cruz Bustamante would be running as an incumbent in 2006.  They'd rather face only non-incumbent Democrats.

If Bustamante wins, here's a report that he might kick a bunch of Davis cronies out of office.

I mentioned last time my delight at how Warren Buffett, the top economic adviser to Schwarzenegger, called for finally doing something about Proposition 13.  Well, Schwarzenegger's fellow republicans were outraged.  They have been very unhappy that his colleague raised the issue.  And maybe that explains some of the deflation of his support among other GOP powers.  And when he finally came out with a budget policy proposal, it included no tax increases.  (But he didn't rule them out for later consideration.)  He suggested a spending cap, but not how to reach it.

And guess who else says it's nonsense to restore anything like normal property taxes...  Governor Davis.  Sigh.

Ahnuld is launching his TV blitz.  So far I've seen one ad, which was pretty much content-free, except for a promise to govern for the people and not for special interests.  But, just in case he manages to sound convincing and win support, here's a little piece of dirt that everyone in the state ought to hear about, which suggests something about how well special interests might actually be received in a Schwarzenegger administration.  Guess who Ahnuld had a meeting with in 2001, along with Richard Riordan.  None other than Kenneth Lay of Enron. During the electricity crisis.  To be specific, it was May 24, at the Peninsula Hotel in Beverly Hills.  And a little birdie who was there says that Lay's purpose for the meeting was to groom Schwarzenegger and Riordan as possible candidates to run against Davis in 2002.  (Riordan ran, and was upset in the Republican primary by Bill Simon, Jr.)  Also present was Michael Milken, the former junk bond king.  Now, we know what Ken Lay's style of grooming is.  If he had Schwarzenegger there, it was to get his support for stealing more money from utility customers.

In fact, Lay passed around a four page handout to his guests, a document titled "Comprehensive Solution for California".  The main thrust of it was that the California electricity market needed more deregulation, and a total avoidance of any further government takeover of the electric utility apparatus.  This took place at the exact time that the Governor and all other state politicians were trying every possible means to persuade President Bush to relent and impose price caps, and Bush refused.  Ken Lay was scared -- he knew that if he didn't prop up the situation somehow, Enron could come to an unhappy ending.  (FERC had already imposed minimal caps, and finally imposed real ones on June 18 -- contrary to conservative predictions, market prices dropped quickly after the first cap, and the shortages faded away after the second.)  Lay asked his guests to support his plan and lobby for it.  Schwarzenegger's staff has made no reply to reporters asking about his presence there, and whether he did anything requested by Lay after it.

Now why was Michael Milken there, two years ago?  Well, by a possibly coincidental coincidence, one effect of California's budget crisis and the money lost in the electricity crisis is that California's bond quality rating has been lowered.  It is now one notch above junk bond status.  When this happens, the result is that banks who deal in California bonds get a much bigger cut of interest payments.  The main banks doing this is are JP Morgan Chase and Citigroup, the same outfits that worked hand-in-glove with all the scammery at Enron.  One Californian who works in the banking industry has written that, in his opinion, some of the same people who helped Enron steal so much money from California are now helping Citigroup and other banks to steal even more, and one reason they have worked for bringing about this recall is that it makes California look like an even poorer credit risk, thereby raising the interest rates on its bonds, and helping to strip ever more money out of the state.  Perhaps, to certain wealthy conservatives, it is irksome that a state loaded with liberals manages to produce such a big part of the country's wealth.  (Of course, it would never occur to them to question the dogma that conservatism is what generates wealth best.)  Maybe, if they can't pull off a conservative takeover here, the next best thing in their view is to just take all our money.  They probably feel in their hearts that liberals don't deserve to keep it.  The GOP, if not their business partners, have certainly showed a punitive streak toward the state before, as when they closed down huge parts of the military spending here without regard to strategic value.

Even if they are more fair-minded than that, it's worth noting that there are a lot of unfounded prejudices that people tend to hold onto about what makes for a prosperous future.  Like, a lot of people probably still unconsciously assume that a mostly white population is a good indicator.  Many still assume that immigrants drag things down, instead of helping.  Most cities and regions that try to bring in sources of future growth end up missing out on what would actually give it to them... either they waste their resources on something like a sports team, or they are persuaded to give breaks to giant malls or superstores.  And when it comes to the kind of people they try to attract as residents, they try their best to appeal to middle class families.  Yet investigations keep showing that the best predictor of future economic growth is not the middle class suburban population with kids, but young singles, especially those who are in some way cultural outsiders: artists, tech geeks, gay people, and so on.  Even punk rockers are probably a better predictor of future growth than suburban professionals: the "DIY" philosophy makes them more likely to start new businesses.  I think that many forms of small-government ideology fall into the same class of misconceptions about how to foster long-term prosperity.  People argue the religious belief in laissez faire principles to themselves so incessantly that they miss out on the times when something else actually succeeds better.  Two of the best examples of non-free-market policies that are beneficial to all in the long run are public health, and public education.

So far, California's economy has been too big and robust for any of these moves to really hurt it very much.  But if this keeps up, eventually there won't be any great economic powerhouse here to milk.  Thanks to conservative policies already pushed into place -- such as the insane requirement that any budget has to pass the legislature with a 2/3 majority, which is the reason we have a late budget every single year -- the quality of California's public services and infrastructure have already been pretty well decimated.  The state isn't yet poorer, but we're treating ourselves as if we were poorer.  If you metaphorically look at the state as a big collective entity, we would be like a millionaire who's too stingy to pay doctor bills when he's sick -- a pathological failure of self-care.  The worst part of this is bad schools.  Our wealth was created primarily by bright, well-educated, creative minds, not by any natural resource.  By ceasing to nurture such minds, we are destroying our long-term economic future.  Conservative policies across the country on education can consistently be summarized in one way: in effect, they want less of it.  Besides constantly trying to hamper certain kinds of educational content, they are succeeding in turning a decent education from a right into a class privilege, and thereby reducing the total amount of education that the population gets.  The result of this will inevitably be that when these generations grow up, they will be poorer.

One last thing about Ahnuld:  in roughly half of elections, he hasn't bothered to vote.  Well, that put him ahead of Sonny Bono, at least.

Some brief other stories:

• Bush is still trying to change the law about overtime pay so that you get less of it.  Some current overtime hours would be legally paid only at the normal hourly rate.
• Act now, folks, this is your lucky year!  Congress didn't pass bankruptcy "reform" yet.  As it happens, a record number of bankrupcies is being filed this summer.  If you're hesitating, folks, it's probably now or never...
• When George W. Bush was asked about whether he will support still further corporate tax cuts, he said probably not, but he'll remain "flexible" on the question.
• Bush's nominee for a new EPA head is, of course, no prize... but it could have been worse.
• As Michael Powell at the FCC is getting his ass handed to him by Congress -- or at least a small token piece of it -- his chief of staff just quit.  Knowing which side of his toast has just landed on the carpet, Powell is now making a big public show of doing something to promote "localism" in the broadcast media.  He wants to increase licensing of low-powered stations.
• There's been a long ongoing struggle between Gale Norton at the Department of the Interior and some native tribes, including the Navajo Nation.  The court has appointed an outside official, Alan Balaran, to sort the shit out (some of it dates back over a century), and he has just pronounced that Norton is guilty of shredding evidence.  She did this, he says, in order to allow oil and gas companies to underpay the tribes for their land.
• Here's an accusation by something called the International Currency Review in London that the CIA and the Defense Intelligence Agency carried out an operation to electronically slurp $10,000,000,000 or so out of the Iraqi Central Bank just before the country was attacked.  They have only guesswork as to where the money went.  They traced some of the steps of its laundering, but not to the end.
• The Democrats in the Texas state senate are still on the lam in Albuquerque to stop the Republicans from pushing through a gerrymandering.  Today they heard a rumor that Tom DeLay had been in Albuquerque, and decided that they'd better have their hotel rooms swept for electronic eavesdropping equipment.  They didn't find any.  They've now decided that they can't just sit and do nothing, so they are suing the Texas Republican Party.  The Republican legislators passed daily fines against the absent Dems, which they are refusing to pay.  They want a court ruling that they have the right to do this to block the redistricting.  And now there's speculation that the Texas House democrats may flee the state, taking a turn so the Senate dems can come back for a while...  Tom DeLay says they're violating the Constitution.
• In more jerrymandering news, there's a story that the GOP is eyeing a plan to carve Dennis Kucinich's district in Ohio into pieces.
• Does it make sense to you, after 9/11, to try to privatize air traffic controllers?  It does to the president.
• The remnant of Enron is asking its bankruptcy judge to squeeze every possible dime out of those who still owe Enron money.  The amount involved is something like $1,100,000,000.
• The Pentagon has decided to thank our brave soldiers in Iraq by taking away their promised "imminent danger" pay.  Apparently getting shot at with shoulder-mounted rockets doesn't constitute a danger any more.  Also their family separation allowance.  Congress might reverse this.
• Jeb Bush makes a tasteless joke about Gary Coleman's stature.  Arianna Huffington is no better: says she wants him to sit on her lap if they're both in a gubernatorial debate.
• Karl Rove has admitted he plans to play up anniversary memories of September 11 in the upcoming Republican presidential campaign, even though R's have routinely accused D's of "politicizing" 9/11 any time they objected to something like the Patriot Act.  They're even floating a plan to delay the Republican convention until near September 11, but this would be too late for the President to legally get on the ballot in some states.  (They plan to see about adjusting those qualification dates, though.)

• I made several reports in the past about the dispute over banning snowmobiles in Yellowstone National Park.  It turns out that last winter there were an unusually high number of citations issued to troublesome snowmobilers.
• The state of Texas wants to discourage "frivolous" complaints about pollution by charging a $30 deposit to file a pollution complaint against a dairy farm or cattle feedlot.
• Some good news: John McCain has changed his mind and is not retiring from the Senate.  To anyone who says I am just being partisan, I will say this once more: the truest champion we've got in Washington against special interest influence is this Republican.
• I mentioned a medieval law recently passed by Florida requiring parents trying to adopt out their children to list their entire sexual history in a newspaper ad.  They repealed the law.
• Here's a GOP fundraising scheme that's just really special:  They call you up and tell you that you've been awarded a "businessman of the year" award.  But it costs you $5000 to collect it at an honorary banquet.  Critics called this a "telemarketing scam".  They've probably had to stop now that it's been exposed.
• The Pentagon has a process in place to review weapons spending programs to filter out the ones that are bullshit.  President Bush wants his missile defense scheme exempted from that review.
• Did I mention this?  Bayer was selling an anti-cholesterol drug it knew was killing people.
• A reporter named Jane Akre took Fox News to court for ordering her to tell deliberate lies in a newscast, and firing her when she objected.  The appeals court ruled that deliberate lying in a newscast is not illegal, so she gets nothing.
• One of the most solid-sounding endorsements that a California politician can get in a state election is that of the California Association of Police and Sherrifs.  Did you know that this endorsement is sold to the highest bidder?  Bill Simon paid $444,000 for it in 2002.
• A little deal-shopping story of unusually overt sleaziness, courtesy of Bill Thomas (R-CA), the chairman of the House Ways and Means Committee.  This is the same guy who recently sicced DC cops on Democratic members of his committee who wouldn't sit still for passing a bill they hadn't read.  Here he's telling his colleagues, "Bring me your favorite business tax breaks, under $100,000,000 each, and I'll stick them in my military bill."  For lobbyists, this is like a 25 pound salmon jumping into the boat before you even have your hook baited.
• An old but probably still valid statistic: George W. Bush has spent 40% of his presidency away from Washington at "leisure destinations": Camp David, Kennebunkport, and Crawford.
• The answer to a future trivia game question: one of Dubya's droids once advised people to do something about global warming by shopping more.

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