President Obama's appointment of William Daley as his chief of staff has elicited two basic reactions. One is to complain that the administration has long cared too much what the business community thinks. The other is to commend the administration for finally paying attention to what the business community thinks.
They can't both be right. Can they? One way to measure the administration's "business-friendly" attitude is to examine how many members of it have ties to business. There are several prominent administration officials, past and present, who have come from or left for the business community—in particular, Wall Street. Former director of the Office of Management and Budget Peter Orzsag, for instance, resigned from his post and took a job at Citigroup. Incoming National Economic Council Chair Gene Sperling earned nearly $1 million from Goldman Sachs in 2008. And Daley is an executive at JPMorgan Chase, the investment bank that received a $12 billion bailout during the financial crisis. But a review of the careers of senior administration officials—members of the Cabinet, the economic advisory councils, and the president's special adviseors—shows characteristically minimal ties, but lucrative ones.
The Obama administration is, like most administrations, primarily filled with wonks, academics, politicians, and nerds. Of the top few dozen White House officials, about two in three have no business experience at all, at least not in the past two decades or so. Others, such as Eric Shinseki, the current secretary of veterans' affairs and retired career military officer, have only experience serving on corporate boards—sometimes high-paying, but generally light-lifting, work.
On the economic-policy team, the same pattern holds. Treasury Secretary Timothy Geithner, contrary to public opinion, has never really worked outside of Washington or the New York Fed. Neither have most other members of the National Economic Council and the Council of Economic Advisers. No big hedge fund or corporate paychecks for Jason Furman, Austan Goolsbee, Cecilia Rouse, or Christina Romer, for instance.
A few members of the Obama administration do have long histories in private industry, though you rarely hear about it. The former acting director of the OMB, Jeffrey Zients, for instance, founded Portfolio Logic, a firm that invests mostly in health-care companies. * He also headed the Advisory Board and Corporate Executive Board companies. Another Chicago-based member of the administration, Valerie Jarrett, worked in the real-estate industry. Before joining the Obama team, she led the Habitat Co., a developer of multifamily properties.
Then, a smallish but heavy-hitting minority of Obama's top officials worked on Wall Street. Former Chief of Staff Rahm Emanuel, for instance, in a short stint out of politics, earned a reported $16.2 million working in investment banking for Wasserstein Perella, now part of Dresdner Kleinwort. (Remarkably, he earned that $16.2 million in just two-and-a-half years at the firm.) He also sat on Freddie Mac's board, making a total of $320,000 from the mortgage finance company.
Daley, the incoming chief of staff, worked at Chicago's Amalgamated Bank, later joining JPMorgan Chase, where he reportedly made about $5 million per year. But his career has been more diverse career than that, also serving as a corporate lawyer, the head of SBC Communications, and on the boards of Boeing, Abbott Laboratories, and Loyola University Chicago.
Jacob Lew, the head of the Office of Management and Budget, served as an academic, a wonk, and a government servant for 30 years—with time spent at New York University and the State Department. But his career included a controversial spell at the alternative investments unit—shudder—of Citigroup. As chief operating officer of the unit, which benefited handsomely from betting correctly on the collapse of the housing bubble, Lew reportedly made $1.1 million, possibly not including bonus income. His predecessor, Peter Orzsag, is now at Citigroup, in global investment banking, pulling in an estimated $2 million to $3 million per year.
And the heads of the National Economic Council—Larry Summers and now Gene Sperling—also benefited from Wall Street. Summers, a famed academic economist, headed to hedge fund D.E. Shaw after leaving his post as the president of Harvard University. There, he earned $5.2 million in 2008, plus another $2.7 million in speaking fees for engagements, including many at Wall Street banks. Sperling—another longtime government servant—earned $887,727 from Goldman Sachs for work advising on a nonprofit project in 2008, as well as $158,000 for speeches, many to financial firms, including Allen Stanford's Ponzi scheme of a hedge fund.
So, how much did the Obama administration earn on Wall Street? We'll never know exactly, given that staffers do not need to disclose lifetime earnings reports. We'll never know exactly, given that staffers do not need to disclose lifetime earnings reports. But, based on reported income alone, a very low estimate, the total is at least $31 million.
Correction, Jan. 7, 2011: This article originally misidentified Jeffrey Zients as acting director of the OMB. He is a former acting director. (Return to the corrected sentence.)