Matthew Hoy
By Matthew Hoy on June 6, 2002

I'd stop if he'd stop: Paul "$50,000 Enron man" Krugman that is.

Apparently the world would be a much better place if we had no power plants, signed the Kyoto global warming treaty, and simply ignored that Sept. 11 ever happened.

I know what you're thinking: I'm exaggerating. Yes, but Krugman is too.

Krugman's latest column is just another recitation of a litany of liberal complaints about the Bush administration -- with little insight, evidence or new information.

You've got to parse Krugman very carefully, because what he says is accurate. As far as it goes.

[A]s Senate investigators examine evidence on the administration's Enron contacts, the White House counsel, Alberto Gonzales, has already delivered the verdict: Everything's fine, because officials did nothing to help Enron as it was collapsing.

I believe him. I also believe that the administration played no role in the death of Elvis Presley, an equally relevant assertion.

Wow. Thanks, that's really a generous concession. Hey everybody! Republicans didn't kill Elvis! Just thought you'd like to know.

Mr. Gonzales is pulling the same trick on energy policy that Dick Cheney has pulled on antiterrorist policy: Respond to real, serious questions about the administration's actions by self-righteously denying charges that nobody is actually making. Nobody has accused the White House of helping Enron when it was down, just as no Democratic leader has accused the administration of deliberately allowing Sept. 11 to happen.

From the evidence is known to exist, no one in the Bush administration did anything to help prop up Enron as it teetered on the edge of bankruptcy -- despite a phone call from former Treasury Secretary Robert Rubin urging action.

Also note Krugman's assertion that no "Democratic leader has accused the administration of deliberately allowing Sept. 11 to happen." Well, leaders haven't, but Rep. Cynthia McKinney (Nutcase-Ga.) has. The administration can afford to ignore late-night radio talk show hosts with their conspiracy theories, but it can't choose to ignore the wacko claims of elected representatives of several hundred thousand people. McKinney's allegations were widely-reported in the mainstream media -- they had to be addressed.

The real questions in both cases are whether the administration failed to act against real threats because it was preoccupied with a preconceived agenda; why officials who manifestly got it wrong have not been held accountable; and whether, because nobody has been held accountable, the administration is continuing to make the same mistakes.

The only one around with a preconceived agenda is Krugman. His Times editorial page colleague, Nicholas Kristof, identified one of the major problems facing the FBI earlier this week when he identified liberals' aversion to any type of profiling.

Which officials "manifestly got it wrong" and "have not been held accountable" on Enron? Was not helping prop up Enron a mistake? (Rep. Henry Waxman, D-Calif., and others think it was.) Held accountable? For what? What crime or wrong was committed?

I know that I'm about to get a barrage of mail saying that energy policy and terrorism are not comparable; but bear with me for a minute.

He's right on this one. And his plea won't stem the flow.

In the case of energy policy, the administration still won't release information about Dick Cheney's energy task force. But it's clear that energy companies, and only energy companies, had access to top officials. The result was that during the California power crisis � which, it is increasingly apparent, was largely engineered by Enron and other companies that had the administration's ear � the administration did nothing.

Yes, the energy task force notes -- it's internal executive branch documentation. Krugman may disagree, but until a court rules otherwise Cheney has every right to refuse to release it. Many have likened the Cheney task force to Hillary Clinton's health care task force back in the early '90s that was forced to release documentation about its meetings. There is a big and legally distinct difference between the two. Unlike Cheney's task force, Hillary Clinton's was run by an unelected official (Hillary) and consisted of members of the public -- not executive branch employees.

Yes, it is increasingly apparent that California's power markets were gamed by the power companies. But it started under Clinton's watch. San Diego Gas & Electric was the first of California's "Big Three" power companies to divest itself of its power plants -- allowing it charge market rates for power. In San Diego, big electricity bills started showing up in the mail months before Southern California Edison and Pacific Gas & Electric started straining under the financial pressure of paying increased costs for energy, but barred from passing it on to consumers.

From one of the better reporters at the North County Times Dan McSwain:

Under former chairman James Hoecker, a Clinton appointee, the agency plunged ahead with energy deregulation with an inadequate staff and no experience in policing markets. Hoecker has described at length his failure to transform the FERC from a bureaucracy that took an average two years to approve a utility rate request. The best thinking was that power buyers and sellers were big outfits that could look out for themselves in competitive wholesale markets.

But under Gov. Gray Davis, California's bungled deregulation put ordinary consumers at risk and removed risk from the state's three big utilities. What's more, during the critical early months of the 2000 market meltdown, Davis bet heavily on FERC intervention. The Clinton FERC did nothing.

Of course, Clinton's FERC eventually put price caps on energy prices -- and the Bush administration's FERC extended them when the time for renewal came up. Krugman should avoid using superlatives like "never," "always," "everyone," "no one," or "nothing." Bush did some things -- just not everything Democrats wanted -- and not right away.

McSwain continues:

Enter Pat Wood, chief utility regulator in Texas who was widely admired by consumer advocates despite his diehard belief in deregulation.

Wood certainly smelled fishy to Californians: Bush, Wood and the fallen Enron chairman Ken Lay go way back.

Yet in Texas, utility lobbyists had unsuccessfully pressed then-Gov. Bush to get Wood to back off. The regulator blocked state deregulation until an abundance of power plants was built, ensuring a surplus to prevent price spikes.

In his first decision as federal chairman, Wood engineered price caps on Western markets.

He issued the first fines on marketers who abused federal market rules. He ordered generators to run their power plants, forestalling the sort of false electricity shortages that enabled gouging last winter.

He has also threatened powerful utilities in other states with the "death penalty," loss of the right to sell at market rates, if they prevent fair access to competitors on power lines.

Wood has been far from perfect, as evidenced by his refusal so far to take back from power sellers the obscene profits they extorted from spot markets. And California will get no federal help wiggling out of the expensive long-term contracts signed by Davis. Look for Wood to uphold the FERC's long tradition of honoring legal deals signed by consenting adults.

I noted earlier this week that FERC continues to take action -- threatening to revoke several power companies right to sell energy at market prices. Moves are being made -- just not with the reckless abandon that critics are supporting.

But just as John Ashcroft, who brushed aside appeals to make terrorism a priority, remains in charge of our effort against terrorism, Mr. Cheney � who ridiculed conservation and price controls, which in the end were what saved California � remains in charge of energy policy. And that scares me more than terrorism.

I'd love to know what Krugman is talking about with regard to Ashcroft. The Washington Post reported earlier this year that Bush was preparing a plan to deal with al Qaeda in the weeks leading up to Sept. 11. One would assume that Ashcroft, as head of the Justice Department, would have been involved. Why wasn't Krugman the voice in the wilderness before Sept. 11 calling for the government to make terrorism a priority?

Conservation and price controls "saved" California? I don't think Californians feel "saved" by them. Price controls were necessary to stop the shenanigans that power companies were using to drive up prices, but Californians have always been die-hard conservationists. Even before the power crisis hit, data showed that Californians used less power per capita than any other state.

You can't keep price caps on forever if you're going to have a deregulated power market (an argument can be made if power should have been deregulated in the first place -- but that's a separate issue). Price caps being antithetical to a free market. Krugman also misstates Cheney's comments on conservation. The dispute over conservation in the Bush administration's energy plan is one of degree. Those on the left want more conservation and less exploratory drilling. Those on the right want more drilling and couldn't care less about conservation. The Bush plan is somewhere in the middle -- but closer to the right than environmentalists want it.

Does he really believe that last line -- Dick Cheney scares him more than Osama bin Laden. Somebody's got their priorities out of whack.

Earlier this week the Environmental Protection Agency released a report confirming what the vast majority of climatologists, and every other advanced-country government, had already concluded: human activity is causing global warming, and the consequences will be nasty. But the E.P.A. did not propose any preventive action. Instead, it talked only about adapting to the changes.

Old hands recalled the days of James Watt, the interior secretary back in the 1980's. When scientists discovered that industrial chemicals were depleting the earth's protective ozone layer, Mr. Watt suggested that people wear hats, sunscreen and dark glasses. Luckily for the planet, he was overruled; the United States joined other countries in curbing production of ozone-depleting chemicals. The ozone hole is still growing, but disaster has at least been postponed.

Twenty years ago we were going to see the next ice age. Now it's global warming. Krugman would like to pretend that it's settled science -- but it's not. Second, the main thing blamed for that growing ozone hole was chlorofluorocarbons (CFCs) in things like hairspray. CFCs use has been banned in the U.S. and abroad for more than a decade -- and yet the hole is still growing. Maybe we humans didn't have a whole lot to do with it.

No such happy outcome seems likely on global warming. After a curious pause, George W. Bush rejected his own administration's analysis. "I read the report put out by the bureaucracy," he sneered.

Clearly, this was a replay of what happened early last year, when the E.P.A.'s Christie Whitman assured the public that Mr. Bush would honor his pledge to control carbon dioxide emissions � only to be betrayed when the coal and oil industries weighed in on the subject. So the administration learned nothing from the California crisis; it still takes its advice from the energy companies that financed its campaign (and made many administration officials, including Mr. Bush and Mr. Cheney, rich).

Who is Bush supposed to take advice from on energy policy? Seriously, if you're going to sponsor legislation on airport security maybe you would want to talk to the airlines and the police? If you're going to come up with an energy policy -- you're going to talk to energy companies.

Carbon dioxide emissions are another red herring.

And it's one thing to reward your friends with subsidies and lax regulation. It's something quite different to let them dictate policy on climate change.

Is he talking about Bush or Clinton? Clinton certainly let environmentalist groups dictate his policy on climate change. Elections have consequences -- what did Krugman expect?

Many people believe that the Bush administration had a special window of opportunity on global warming policy. Politically, it could have been a Nixon-goes-to-China moment: Mr. Bush could have passed legislation that would have been totally out of reach for a Democrat. Furthermore, many corporations were actually eager for guidelines that would allow them to make long-term plans.

But because the administration continues to listen only to the usual suspects, that window of opportunity is closing fast. And bear this in mind: Whatever he imagines, Osama bin Laden can't destroy Western civilization. Carbon dioxide can.

One of the corporations eager for guidelines -- Enron with regard to trading credits on power plant emissions. Enron didn't get it. So much for towing the company line.

Krugman's scare tactics on carbon dioxide are disappointing -- and out of whack with the true danger facing Americans. We have little to fear from carbon dioxide and much to fear from bin Laden and his ilk.


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June 2002



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