For Immediate Release: January 30, 2002

Contact: Adam Lioz (202) 546-9707

Phantom Fixes: Prominent Campaign Finance Reform Proposals Would Not Have Reduced Enron's Or Andersen's Political Spending

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Washington, D.C. - Enron and Arthur Andersen could have contributed as much money to political campaigns had the Shays-Meehan and McCain-Feingold proposals been law for the past 14 years as they did under current law, according to a report released today by U.S. PIRG.

Phantom Fixes: How the Shays-Meehan and McCain-Feingold Bills Would Not Have Curtailed Enron's and Arthur Andersen's Campaign Spending analyzed the giving patterns of the two companies and the impact of proposed solutions to the problem of money in politics on that spending.

"It's never been more clear that we need get big money out of politics," said Adam Lioz, U.S. PIRG Democracy Advocate. "Unfortunately, the campaign finance proposals currently on the table would do nothing to curtail Enron's or Andersen's political spending. Kenneth Lay gave us the phantom firm, and now politicians are giving us a phantom fix."

"Our analysis clearly demonstrates that these firms would have been able to exercise the same amount of influence over elections had the prominent campaign finance reform proposals been law for the past fourteen years," added Lioz. "In fact, the increases in hard money limits could actually increase the influence of lobbyists and wealthy executives like those at Enron and Andersen."

The report's major findings include:

• More than 62% of Enron's and Arthur Andersen's combined $11.2 million in political contributions since the 1990 election cycle were made with "hard money." The Shays-Meehan bill significantly increases hard money limits.
  
  
• Kenneth and Linda Lay gave $882,580 in hard and soft money combined since the 1990 election cycle. Under Shays-Meehan's and McCain-Feingold's increased contribution limits, the Lays would have been able to give $975,000 in hard money alone during that period.
  
  
• Enron employees have made $508,000 in $1,000 contributions since the 1990 election cycle. Arthur Andersen's employees made $294,000 in $1,000 contributions during the same period. McCain-Feingold's increased contribution limits would allow these wealthy executives to double their contributions.
  
  
• Through giving to state parties, issue groups, or independent expenditures, Enron and Andersen could have spent the same amount of soft money under Shays-Meehan as they did previously.
  
  
• Since 1997, Enron's and Andersen's lobbying expenditures dwarfed their campaign contributions. Enron has spent more than $7.5 million on lobbying since 1997, nearly double their $3.8 million in campaign contributions over the same period. Andersen spent $9.6 million on lobbying, compared to $2.8 million on campaigns over the same period. Current proposals would do nothing to curtail this, and would actually boost the influence of lobbyists, since 92% of contributions from the top lobbying firms in the 2000 election cycle were made with hard money.

Phantom Fixes concludes that real campaign finance reform would lower, not raise, individual hard money contribution limits. U.S. PIRG called for the removal of contribution limit increases in the McCain-Feingold and Shays-Meehan bills.

"Hard money is the true currency of elections," said Lioz. "In fact, more than 80% of the money raised by federal candidates and parties in the 2000 election cycle came in the form of hard money."

"Raising hard money limits in exchange for a partial soft money ban throws the baby out with the bathwater," said Lioz. "Congress must hold the line on contribution limits and reject this unholy compromise. We'll never break the link between big money and politics by increasing the amount that large donors like Kenneth Lay can give directly to candidates."

"Rep. Ken Bentsen (TX), a leading recipient of Enron money, was also the only member of the House to put forth an amendment to remove contribution limit increases in the Shays-Meehan bill when amendments were filed last July. Members of Congress—especially Minority Leader Gephardt and bill sponsors Reps. Shays and Meehan—should follow Rep. Bentsen's lead and support an amendment that will strip these unconscionable increases," Lioz concluded.

U.S. PIRG is the national lobby office for the state Public Interest Research Groups. State PIRGs are a non-profit, non-partisan public interest advocacy groups.