Read an Excerpt
A Man, a Plan—and Names Named
By mid-April 2001, Dick Cheney had been vice president of the United States for less than three months. But he was already deeply involved in a series of secret meetings in his West Wing office. When more space was needed for these energy task force meetings, an employee on loan from the Energy Department would schedule the ornate Vice President’s Ceremonial Office in the Eisenhower Executive Office Building. The aide would also send out an e-mail designating precisely who would be allowed to attend the meetings the vice president was chairing. The April 17 list was a short one. Dick Cheney had quietly cleared his schedule to meet with a friend from Texas.
It’s not likely that Dick Cheney knew at the time that Enron was collapsing. But Ken Lay knew. The Enron CEO knew that the company he built had more liabilities than assets, a grossly inflated book value, and earnings statements that had little to do with actual earnings. The last best hope for the Houston-based energy giant lay in the unregulated electricity markets out west. Enron’s traders were gouging the California market, taking power plants off-line to create shortages, booking transmission lines for current that never moved, and shuttling electricity back and forth across state lines to circumvent price controls. Squeezed between what it cost them to buy power from Enron and what they could charge on the regulated retail market, one of the state’s two largest utility companies had filed for bankruptcy and the other had signed on to a government bailout. California was in an energy crisis unlike anything it had ever experienced. Governor Gray Davis was pleading for rate caps that would provide relief for the state’s devastated utility companies and the consumers enduring rolling brownouts and soaring utility bills. And Enron CEO Ken Lay was flying to Washington to talk to Dick Cheney.
The vice president was waiting. Lay handed him a three-page memo outlining Enron’s recommendations for the new national energy policy Cheney was developing. Most of what Enron asked for would be included in the report the vice president’s National Energy Policy Development Group would release the following month. One of Lay’s recommendations was urgent, because it related to the California energy market: “The administration should reject any attempt to reregulate wholesale power markets by adopting price caps.”
The following day, George Skelton, a reporter at the Los Angeles Times’s Sacramento bureau, got an unexpected call from a woman in the vice president’s press office asking Skelton if he wanted to interview Dick Cheney. Skelton says he thought the call might be the beginning of a campaign to make some inroads in the state Al Gore had swept in 2000. But Cheney wanted to talk energy. That was fine with Skelton, because at that time energy was the biggest story in the state. Cheney wasn’t the least bit tentative. “Price caps provide short-term relief for politicians,” he said. “But they do nothing to deal with the basic, fundamental problem.” Skelton pushed a little. Would the administration support temporary price caps to get the state through the summer?
“Six months? Six years?” Cheney said. “Once politicians can no longer resist the temptation to go with price caps, they usually are unable to even muster the courage to end them . . . I don’t see that as a possibility.”
California’s governor, both U.S. senators, even Republicans in California’s House delegation were begging the administration for price caps, or for some relief for utility rates that were forcing small-business owners to close their doors. But Cheney had already told Senator Dianne Feinstein that one of the lessons he learned in the Nixon administration was that price caps don’t work. Now he was calling a reporter to defend a position Ken Lay had laid out for him a day earlier. “Frankly,” Cheney said, “California is looked on by many folks as a classic example of the kinds of problems that arise when you do use price caps.” The vice president was such a free market zealot that he saw no government role in a utilities market that was savaging consumers. This was policy advocacy so fast and efficient that it seemed reflexive. Cheney heard from Ken Lay on Monday and called George Skelton on Tuesday, and Lay’s position on price caps was laid out under the vice president’s name in the Los Angeles Times on Wednesday.
The public was not aware of Lay’s visit to the White House. It’s not known whether Lay told Cheney that Enron was in trouble. The vice president refuses to answer the question, and Lay’s death in July 2006 while awaiting sentencing for bank and securities fraud suggests we’ll never know. But Cheney knew that in less than a year the wholesale cost of one megawatt-hour of electricity in California had jumped from $30 to $300—up to $1,500 at peak demand times. It was also widely reported that profits earned by power producers and marketers like Enron were up 400 to 600 percent.
Cheney did not prevail—in part because the administration didn’t have all its Federal Energy Regulatory Commission appointees in place. And in part because the situation in California had become so desperate. Several days after Cheney and Lay met, the Federal Energy Regulatory Commission ignored the vice president’s arguments and imposed price caps on energy traders working California. The wildly fluctuating markets were brought under control. FERC had pulled the plug on Enron’s California trading schemes, cleverly named “Fat Boy,” “Death Star,” and “Get Shorty.”
Enron collapsed six months later.
George Skelton never again heard from the vice president and says he didn’t expect to. But Cheney, who goes out of his way to avoid reporters and had organized energy task force meetings that were totally insulated from the press, had succeeded in getting Lay’s message out almost immediately—to the largest readership in the state of California.
President George W. Bush had created the National Energy Policy Development Group ten days after he took the oath of office. It was Dick Cheney’s idea, his big push to create a national energy policy and fix policy decisions he believed for too long had been made by the Environmental Protection Agency. The terrorist attacks of September 11 were more than eight months in the future, and Bush senior adviser Karl Rove had decided that a president who had lost the popular vote and been put into office by the Supreme Court should govern as if he had a mandate. Bush’s understanding of Washington was limited to a short run as loyalty enforcer in his father’s administration. As governor of Texas, he had been famously disengaged from public policy. But his vice president had served in three presidential administrations, had spent a decade in the U.S. House of Representatives, and had been secretary of defense during the first Gulf War. Bush named Cheney chairman of the energy task force, which also included the secretaries of Treasury, Commerce, Interior, Agriculture, Energy, and Transportation, EPA administrator Christine Todd Whitman, FEMA director Joe Allbaugh, and the White House deputy chiefs of staff for policy and economic policy. It was the first policy initiative the Bush administration would undertake. Its process and content would be shaped by the vice president—and, as it turned out, by the oil, gas, mining, and utilities interests he invited in—and it would all be done in secret.
No one paying attention to national politics could have been surprised to see oil and gas interests writing Dick Cheney’s energy policy. This is a fossil fuels administration; both men were bona fide members of a small fraternity of Texas oilpatch executives. Bush had spent ten years in the state’s Odessa Permian Basin oilfields, losing millions of dollars invested by others in his company but walking away with about $1 million for himself. Cheney left the Dallas-based oilfield construction and service giant Halliburton to join the Bush ticket in 2000 with approximately $45 million to show for his five-year effort.
Both men knew Ken Lay well; Bush had a closer relationship.
By the time Bush took his oath of office in January 2001, Lay and his Enron executives were Bush’s largest lifetime political backers, with more than $775,000 invested in his two campaigns for governor in Texas. Enron took an equity position in the Bush-Cheney presidency when it put $1.7 million into Republican races in the 2000 election. There was more than money. During the Florida recount and the weeks of litigation that followed, the Bush-Cheney political and legal team flew to Florida and Washington on Enron (and Halliburton) corporate jets, while Al Gore and his guys were booking coach. So after the inauguration, Lay and Enron vice president Robert Shapiro got face time with Cheney, and four other Enron officials also got into energy task force meetings with the vice president. If six executives from one company seemed excessive—well, as Cheney press aide Mary Matalin said, to make energy policy, you talk to energy experts.
Dick Cheney talked to energy experts, as the vice president’s visitors’ log began to look like the American Petroleum Institute membership list. This was no coincidence. Ten days before the inauguration, an oil and gas lobbyist on the administration transition team had invited a group of industry executives to the API’s Washington offices to draft a wish list. A month later, the same lobbyist, Steve Griles, was named deputy secretary of interior and assigned to work with Cheney’s energy task force. The energy executives Griles had called over to the API offices were suddenly presenting position papers to the energy task force.
Two months in office and Dick Cheney was back in his professional and social milieu. Conoco CEO Archie Dunham knew the vice president from the years they spent together on the Union Pacific corporate board, and from business dealings between Halliburton and Conoco. That, and the size of his company, was enough to get Dunham a private meeting with Cheney, and access to the task force. Dunham pushed for the acceleration of oil and gas exploration and the relaxation of environmental rules slowing construction of refineries and pipelines. He also wanted an end to unilateral U.S. sanctions that kept American oil companies out of Iran and Libya, an economic realpolitik argument Cheney had made as Halliburton’s CEO. Robert Allison of Anadarko Energy led a delegation of oil company executives into Cheney’s office to lobby for opening up more federal land for oil and gas exploration. British Petroleum’s Lord John Browne and other BP executives used their meeting with Cheney to discuss foreign markets. Electric utility giant Exelon had two chief executive officers; both of them, Corbin A. McNeill, Jr., and John W. Rowe, met with Cheney. Also representing electric utilities were Mark Racicot and Haley Barbour, both of whom had been heavily involved in the Bush-Cheney campaign. Racicot was Republican National Committee chair, a gig that Barbour had just given up. Much of this was largely overlooked by the press.
The energy task force did its work behind a veil of secrecy that has become the signature mark of the vice president. Staffers were warned to safeguard all information about who attended meetings. The few members of Congress who met with the task force did not brief their colleagues back on the Hill. Some lobbyists, such as Haley Barbour, were met at the curb and escorted in. There were no press releases.
“It was like a black hole for information,” said one Capitol Hill staffer. “Information went in, but nothing escaped.” “Near-Nixonian secrecy,” wrote Joshua Micah Marshall in The New Republic, hitting upon the etiology of Dick Cheney’s obsession with secrecy. The vice president was in charge. Considering that only oil and gas executives and lobbyists were writing the nation’s energy policy, he had to keep the process closed to the public, the press, and even the Congress. It was secrecy befitting the Kremlin, complete with reporters furtively watching cabs and limos, a reclusive and secretive executive, and a small cabal of corporate executives in control of public policy.
Accounts of committees drafting energy policy aren’t the sort of stories that grab the attention of newspaper readers. Nor do they provide the “white girl missing” excitement that animates the twenty- four-hour cable TV news cycle. So it’s not surprising that one of the defining events of the Bush-Cheney presidency never really captured the imagination of the public. It was an important story to miss. Something was happening here that was far larger than oil and gas executives writing energy policy. The fight to keep secret the participants and deliberations of the National Energy Policy Development Group was the beginning of a power grab undertaken within days of the inauguration of a president and vice president who months earlier had lost the popular vote. In one bold stroke, Dick Cheney was rewriting the extraconstitutional rules that divide power between the presidency and the Congress.
Cheney’s assault on the constitutional division of powers began with his response to what appeared to be a routine letter from a member of Congress. In this instance, Representative Henry Waxman’s request for names and minutes of energy task force meetings was turned over to the Government Accountability Office after the vice president refused to comply. Some level of disagreement between a new administration getting its bearings and minority committee members in the House was expected. What wasn’t expected was that Waxman’s request—a routine exercise of congressional oversight—would push the two branches toward a constitutional crisis.
The official who would press Waxman’s demand was David Walker. The comptroller general of the United States and head of the Government Accountability Office is a centrist Republican who had worked in Ronald Reagan’s Labor Department, then as an executive for two accounting firms. (He spent ten years as a partner at Arthur Andersen, departing four years before its collapse in the Enron scandal.) There is an earnestness about him, which becomes more evident when he describes himself as “the chief accountability officer of the United States government.” Appointment to the position of comptroller general involves an odd process. The leaders of both houses of Congress send the names of three candidates to the president, who selects one. Then the Senate votes to confirm. Walker and two co-finalists emerged from a pool of sixty applicants when Bill Clinton selected him in 1998. The fifteen-year term Walker would fill is the longest fixed term of any federal appointee. It insulates the comptroller general from political pressure and encourages a strategic, long-term approach to the issues confronting his office.
The Government Accountability Office is often described as the watchdog of the federal government. The term particularly suits the organization under Walker’s leadership. He tells reporters he represents 535 clients: all the members of the United States Congress. Reports issued by the agency are the gold standard of nonpartisan government audits. Walker has undertaken his own speaking tours, delivering grim, statistically grounded warnings about the federal deficit, Social Security, and the fiscal irresponsibility of the Bush tax cuts. Short, bald, always in a business suit, and speaking with actuarial certitude in a Jim Lehrer monotone, David Walker is as unflappable as Dick Cheney. When he took up Henry Waxman’s request, the government’s watchdog was challenging Dick Cheney’s attack dog—David Addington.
Addington is an authoritarian Republican, who began his career at the CIA after graduating from Duke Law School. He joined the minority staff of the House Intelligence Committee in the eighties, where he connected with ranking minority member Dick Cheney. When President George
H. W. Bush appointed Cheney secretary of defense in 1989, Cheney took Addington along with him. He is a distinct breed of lawyer, who like
Attorney General Alberto Gonzales seems to believe that his first responsibility is to make the law work for his client. Since 2001, Addington’s sole client has been Dick Cheney. Addington was Dick Cheney’s staff legal counsel—until Scooter Libby was indicted and Addington replaced him as the VP’s chief of staff. David Addington is as private as David Walker is public.
From the Hardcover edition.