Paul Krugman

From a business point of view, Enron is a smoking ruin. But there's important evidence in the rubble.

If Enron hadn't collapsed, we might still have only circumstantial evidence that energy companies artificially drove up prices during California's electricity crisis. Because of that collapse, we have direct evidence in the form of the now-infamous Enron tapes -- although the Federal Energy Regulatory Commission and the Justice Department tried to prevent their release.

Now, e-mail and other Enron documents are revealing why Tom DeLay, the House majority leader, is one of the most powerful men in America.

A little background: at the Republican convention, most featured speakers will be social moderates like Rudy Giuliani and Arnold Schwarzenegger. A moderate facade is necessary to win elections in a generally tolerant nation. But real power in the party rests with hard-line social conservatives like DeLay, who, in the debate over gun control after the Columbine shootings, insisted that juvenile violence is the result of day care, birth control and the teaching of evolution.

Here's the puzzle: if DeLay's brand of conservatism is so unpopular that it must be kept in the closet during the convention, how can people like him really run the party?

In DeLay's case, a large part of the answer is his control over corporate cash. As far back as 1996, one analyst described DeLay as the "chief enforcer of company contributions to Republicans." Some of that cash has flowed through Americans for a Republican Majority, called Armpac, a political action committee DeLay founded in 1994. By dispensing that money to other legislators, he gains their allegiance; this, in turn, allows him to deliver favors to his corporate contributors. Four of the five Republicans on the House ethics committee, where a complaint has been filed against DeLay, are past recipients of Armpac money.

The complaint, filed by Rep. Chris Bell of Texas, claims, among other things, that DeLay laundered illegal corporate contributions for use in Texas elections. And that's where Enron enters the picture.

In May 2001, according to Monday's Washington Post, Enron lobbyists in Washington informed Ken Lay via e-mail that DeLay was seeking $100,000 in additional donations to his political action committee, with the understanding that it would be partly spent on "the redistricting effort in Texas." The Post says it has "at least a dozen" documents showing that DeLay and his associates directed money from corporate donors and lobbyists to an effort to win control of the Texas Legislature so the Republican Party could redraw the state's political districts.

Enron, which helped launch Armpac, was happy to oblige, especially because DeLay was helping the firm's effort to secure energy deregulation legislation, even as its traders boasted to one another about how they were rigging California's deregulated market and stealing millions each day from "Grandma Millie."

The Texas redistricting, like many of DeLay's actions, broke all the usual rules of political fair play. But when you believe, as DeLay does, that God is using you to promote a "biblical worldview" in politics, the usual rules don't apply. And the redistricting worked -- it is a major reason why anything short of a Democratic tidal wave in November is likely to leave the House in Republican hands.

There is, however, one problem: a 100-year-old Texas law bars corporate financing of state Legislature campaigns. An inquiry is under way, and DeLay has hired two criminal defense attorneys. Stay tuned.

But you shouldn't conclude that the system is working. DeLay's current predicament is an accident. The party machine that he has done so much to create has eliminated most of the checks and balances in our government. Again and again, Republicans in Congress have closed ranks to block or emasculate politically inconvenient investigations. If Enron hadn't collapsed, and if Texas didn't still have a campaign finance law that is a relic of its populist past, DeLay would be in no danger at all.

The larger picture is this: DeLay and his fellow hard-liners, whose values are far from the American mainstream, have forged an immensely effective alliance with corporate interests. And they may be just one election away from achieving a long-term lock on power.

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