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Authors: Lou Dubose

Vice

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PIMLICO

772

VICE

VICE

Dick Cheney and the
Hijacking of the American Presidency

LOU DUBOSE
AND
JAKE BERNSTEIN

This eBook is copyright material and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased or as strictly permitted by applicable copyright law. Any unauthorised distribution or use of this text may be a direct infringement of the author's and publisher's rights and those responsible may be liable in law accordingly.

ISBN 978-1-4090-2353-1

Version 1.0

www.randomhouse.co.uk

Published by Pimlico 2006

2 4 6 8 10 9 7 5 3 1

Copyright © 2006 by Lou Dubose and Jake Bernstein

Lou Dubose and Jake Bernstein have asserted their right
under the Copyright, Designs and Patents Act 1988
to be identified as the authors of this work

This book is a work of non-fiction.
The authors have stated to the publishers
that the contents of this book are true

This electronic book is sold subject to the condition that it shall not by way of trade or otherwise, be lent, resold, hired out, or otherwise circulated without the publisher's prior consent in any form other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser

Published in the United States by Random House,
an imprint of The Random House Publishing Group,
a division of Random House, inc., New York

Published in Great Britain in 2006 by Pimlico

Pimlico
Random House, 20 Vauxhall Bridge Road,
London
SW1V 2SA

www.randomhouse.co.uk

Addresses for companies within The Random House Group Limited can be found at:
www.randomhouse.co.uk

The Random House Group Limited Reg. No. 954009

A CIP catalogue record for this book
is available from the British Library

ISBN: 978-1-4090-2353-1

Version 1.0

To Molly Ivins,
a generous friend, wise and witty colleague,
and professional exemplar without peer

and
To Eve, thank you for being

INTRODUCTION

Dick Cheney—bald, gray, avuncular—standing beside
Texas
governor
George W. Bush
in a packed hall on the
University of Texas Austin
campus in July 2000 was the precise image the campaign intended to convey. Bush had wrapped up a brilliant and often brutal primary campaign, yet it was hard to take him seriously. Despite months of foreign policy home-schooling, the
gaffe-prone
governor continued to make careless mistakes like calling Greeks "Grecians," Timorese "Timorians," and Kosovars "Kosovarians." He told reporters that he didn't like to read long policy papers. There were press reports of hours of required "downtime" in the afternoon, following his long jog around Austin's Town Lake. In six years
as governor of Texas
, Bush had failed to convince the nation that he was no longer the volatile, irresponsible first son of a political dynasty. In fact, he was perceived as a lightweight.

By selecting Cheney, Bush brought to the ticket the experience, gravitas, and wisdom he couldn't provide himself. Cheney had served three presidents, had spent ten years in Congress, and as secretary of defense had coordinated the first Gulf War. He was Bush père's preferred candidate, the Washington insider who would provide adult supervision in the White House. Nothing exciting, just competent and steady. Dick Cheney was the safe, reassuring presence whose experience would ensure that public policy, in particular foreign policy, would not careen off track.

It's unlikely that anyone watching Bush embrace his running mate on that sticky July day in Austin anticipated the power Dick Cheney would wield as vice president. Hidden was the
foreign policy
course Cheney planned to chart for Bush, which would lock the administration into a legacy forever defined by the war in Iraq. And while Cheney was a private man, the press had yet to realize the thick veil of secrecy behind which he would operate.

Over the course of six difficult years, Dick Cheney has become the most powerful vice president ever to occupy the office, exercising authority that often subsumes the president's. Sources who speak about him do so at great risk and usually prefer "off the record" or "background only." "You do not want to be on the Dick Cheney blacklist," says a former congressman. He has become a shadow executive who spends too much of his time in what the media refer to as "an undisclosed location" and is so obsessed with privacy that while the
White House
, the
Pentagon
, and even American troops in Iraq are visible on Google Earth's satellite mapping photos, the satellite image of the vice president's residence in northwest Washington is obscured.

"Cheney has the foreign policy portfolio," says a lobbyist who served in the administration of the senior Bush. "Cheney has the Iraq portfolio. And he has the Congress portfolio. I don't know what's left." The answer is "Not much." Six years after the governor of Texas selected the CEO of Halliburton as his running mate, his presidency has been defined by foreign policy, and Dick Cheney has done the defining.

"I didn't pick Dick Cheney because of
Wyoming
's three electoral votes," Bush said to the cheering campaign supporters who had been bused onto the University of Texas campus. "I picked him because he is, without a doubt, fully capable of being the president of the United States."

In a very real sense, that is what has come to pass.

VICE

ONE
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 Fein-stein
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, although it seems improbable. 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.

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.

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