Enron on the Potomac

KENNETT, Mo. -- Few corporate failures have equaled in scope or duplicity the ongoing collapse of Houston's Enron Corp., a business concept built on the economic potential of distributing energy and other commodities from point of origin to customer.

The underlying principle of the distribution of resources without so much as touching the manufacturing end is hardly unique, except Enron's visionaries in Texas succeeded, if only momentarily, to escalate the degree to such an extent that their company rapidly became the seventh largest business in the United States.

Enron literally became a separate state, operating under its own rules and conducting its business affairs as mere unregulated activities that only became moral, if not legal, because its officers and directors said so. The guiding founder of Enron, a native Missourian who received his academic training at the University of Missouri's College of Business at Columbia and who not only mastered the laws of supply and demand but the concept of cashing in on the work and products of others. To some degree, this is an age-old economic theory that has been in practice since the first European traders set foot on the shores of Third World countries long ago.

The bankrupting disaster of Enron was quickly adopted by the nation's political leaders, most particularly several hundred members of the U.S. Congress who quickly scheduled the company's collapse on the agendas of 11 of their committees, and before one could say "great political opportunity," committee chairmen scheduled televised hearings in their self-described effort to "get to the facts and protect the interests of the American people." This phrase has been used so frequently in the past fortnight that its words must be chiseled on some marble wall in the U.S. Capitol.

The other day one U.S. senator, who seemed to be frothing at the mouth, told a couple of Enron officials unfortunate enough to be seated in witness chairs that he would call them "carnival barkers" except for the fact that it would give the barkers a bad name. Cute. Frankly, I would call the senator a blowhard, except for the fact that he probably didn't write his remarks and was merely reading words written by one of his tax-supported speech writers.

Without attempting in any way to exonerate the corporate sins of Enron executives, nor excuse their transgressions against hard-working company employees and thousands of investors who put their life savings in the firm's stock, it might be prudent to note that when it comes to carnival barkers and their nefarious claims of huge profits produced by conscientious employees, the officers of Enron can't begin to compare with the long records of duplicity, deceit and personal aggrandizement committed over a long period of time and still in existence today in the halls of the U.S. Congress.

The records of past and present congresses make the Enron deceivers look like Boy Scouts.

Let's take a look at these records. Let's start with perhaps the potentially disastrous failure of this and previous congresses to deal with the hide-and-seek exercise known as "borrowing" money from current Social Security payments for politically expedient programs designed to keep politicians in office, safe from the wrath of taxpayers. Too many of us still don't comprehend the shell game going on in Washington.

The long-term liabilities of Social Security and the slightly smaller Medicare accounts, while inflating current revenue, are simply being added to a swelling account known as "future debt." What this means to your children and grandchildren is far greater than the experiences now being endured by Enron shareholders. Billions have been "transferred" from Social Security and Medicare accounts to fund "emergency" programs, grant tax breaks and perform political magic for influential political segments. The result is that virtually nothing is left in these accounts, even though record numbers are approaching eligibility.

Further deceit should be noted every time taxpayers read Congress has voted "emergency funding," a label that exempts spending from budget rules. Congresses have long succeeded in using so-called distress situations as excuses for their profligacy, unworried that their actions could spell ruin to the economies of future generations. It is a lewd, lascivious legacy, bordering on the obscene.

The present budget, obviously affected by the Sept. 11 bombing and a recession, uses creative accounting to hide hundreds of billions in costs, with more congressional gimmicks just waiting to be attached.

By omitting or underestimating various costs and understating the ultimate funding shortages of tax cuts, Americans have been presented a much rosier picture than is warranted. Nobody is accusing the federal government of the same kind of malfeasance swirling around Enron, but Washington has long ago adopted common and well-known accounting tricks that have become part of the political apparatus.

Such tricks include counting revenue that won't materialize and temporary tax cuts that are renewed year after year and deplete funds for legitimate services and programs. These breaks are estimated to cost "several hundred billion dollars over the next 10 years," according to the Center on Budget and Policy Priorities. Not only is revenue overstated, future liabilities such as the alternative minimum tax plan are understated. Since the White House has already said deficits will continue through 2004, all we're doing is handing future generations higher taxes. When losses from extending popular "temporary" tax cuts are factored in, the cost tops $1 trillion in just one single plan.

It's politicians on the Potomac who give carnival barkers a bad name.

Jack Stapleton is the editor of Missouri News & Editorial Service.