None of Your Business: On Obama's Public Sector Cabinet

None of Your Business: On Obama's Public Sector Cabinet

By David Paul Kuhn - September 3, 2010

We are a long way from Dwight Eisenhower's cabinet. "Eight millionaires and a plumber," as one journalist dubbed Ike's team.

The Obama administration has the least corporate executive experience of any White House in decades.

The premiere posts of Treasury and Commerce express the issue. Both are traditionally bridges to business. This is the only first-term administration in about a century, when the Commerce post was created, to have neither a Commerce nor Treasury secretary with significant business experience.

"Obviously, the Obama administration doesn't stack up with previous Republican administrations but they don't even stack up with previous Democratic administrations," said Stephen Hess, a Brookings institution presidential scholar and veteran of four administrations.

"Democratic administrations always have a much shallower corporate personnel," Hess continued. "But if you deconstructed previous Democratic administrations you would have found considerable tokenism, particularly to cool things with Wall Street. You would want a Treasury secretary who had the friendships and the connections to settle people down. You don't want a jumpy Wall Street, even in ordinary times."

Obama has advisors from the private sector. The National Journal calculated that 28 percent of Obama's top officials have experience as business executives. It was 38 percent during George W. Bush's first term.

But locating that experience sheds more light on the story. National Journal had to reach to Chief of Staff Rahm Emanuel's brief sojourn from government into investment banking and second tier cabinet posts (e.g., Housing and Urban Development Secretary Shaun Donovan, once managing director at Prudential Mortgage Capital for affordable-housing investments, or Interior Secretary Ken Salazar, who worked as a partner in his family-run ranch).

It's worth noting that, in these hard times, there would have also been issues with a big business cabinet. Many Americans already believe the Bush and Obama administrations put Wall Street ahead of the public interest (see bailout).

But Obama's circle has the worst of both worlds. He is seen as too close to big business. And big business sees him as too close to the populists.

The anger has built for more than a year, even among Obama supporters. The Obama White House is "without question the most hostile administration to business and to the role of business that we've had in decades," said media mogul Mort Zuckerman this summer on MSNBC, an erstwhile Obama backer.

CNBC's Jim Cramer, another former Obama man, said last March that,
"this is the most, greatest wealth destruction I've seen by a president." Cramer has not let up since.

Big business has not been this antagonistic toward Washington since Franklin Roosevelt. FDR's populism earned him the label of "traitor to his class."

The feud has already cost Democrats. Wall Street is donating a majority of its contributions to Republicans for the first time in years.

But how much would more corporate voices have mattered?

Not all businessmen make good cabinet officials. Robert McNamara was a corporate giant who mismanaged the Vietnam War. Banker Bert Lance was unprepared for the scrutiny of public office, to Jimmy Carter's detriment. Former Alcoa chief Paul O'Neil failed to settle into the Treasury post in George W. Bush's first term.

It was Bill Clinton and Bush economic wise men's proximity to Wall Street that led them to side with banks and not regulate derivatives-- a major cause of this recession.

Yet Obama's team presents the opposing issue. There is no definitive answer over whether an Obama cabinet with a giant of business, or two, would have shifted policy. The president would have likely selected someone of similar mind.

But market theatre also matters. Psychology and economics move markets. Consider Intel. It reported its best earnings in its 42-year history last quarter. Yet Intel's stock failed to sustain gains. The environment was too daunting.

Wall Street partly blames Obama for this environment. There are bigger factors. The European debt crisis. This Great Recession. Before the recession, 70 percent of U.S. economic activity was consumer spending. Joblessness lessens demand. Consumerism shrinks. Business hordes.

Yet historic debt looms over markets. And Greece got investors thinking more about that. Tax policy is also much discussed. Yet possible tax hikes on Americans with at least $200,000 in income--the partial expiration of the Bush tax cuts--will only return Americans to the taxes of Clinton era boon times.

But perceptions are reality in markets, as in politics. Proposals, like the bank tax, further irk the investing class. Washington has become one giant "headline risk" to Wall Street. And unknown risks weigh down anxious markets.

So do unforeseen reaches into the private sector. The government's prosecution of Goldman Sachs for unscrupulous but conventional behavior captured Wall Streets' feeling: what will Washington throw at us next? The drilling moratorium did not help matters.

This is where the failure to communicate counts. "Crisis of confidence" has become a trope among Wall Street denizens. CNBC viewers hear the Obama-is-anitbusiness charge daily.

Obama's mild flirtation with populism is a contributing factor. Obama is no FDR in deed or word. We are not witnessing broadsides against the "practices of the unscrupulous money changers." But the "greed is good" mantra has been with us since the 1980s. Wall Street is not used to being the bad guy.

The moneymen's bitterness is ironic. Liberals say infuriatingly thankless. The Bush and Obama bailouts saved big finance from the abyss. Obama has not exactly been attentive to the little guy either. About three quarters of all job losses are among blue-collar workers. Yet the stimulus focused its spending elsewhere.

But this divorce is as much heart as head. New York magazine's John Heilemann deftly chronicled the disconnect during the walk up to finance reform. One typical jab at the Obama administration by a big bank chief (and I've heard worse from Manhattan mid-level executives), "First you slap us in the face, now you kick us in the balls. Enough is enough. I mean, we're done.'"

Did the relationship have to devolve to testicular metaphors?

Hess thinks not. The presidential scholar said Wall Street, if not big business, "would be less likely to turn against the Obama administration if they had people like Clinton had his Bob Rubin, who could carry messages back and forth, who could explain what's on their mind. They are an awfully important part as a market economy."

David Paul Kuhn is a writer who lives in New York City. His novel, “What Makes It Worthy,” will be published in February 2015.

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