Gene Sperling, the leading candidate to replace Larry Summers as head of the National Economic Council, has run into a spot of trouble. It seems that while he was away from government service during the Bush years, Sperling was paid a lot of money by Goldman Sachs —$887,727, to be precise—to work part time on a philanthropic project.
This connection to the unloved investment bank, some critics suggest, should disqualify Sperling from being promoted from his current position at the Treasury Department to the bigger job. "By appointing Sperling, the president would fuel perceptions that his administration is overly close to Wall Street, installing a policymaker who has not only overseen monumental deregulation of the financial sector, but has also collected hefty paychecks from its leading firms," William Alden of the Huffington Post writes.
This Main Street Puritanism epitomizes the ethical confusion that has grown up around public service in the wake of the financial crisis. Felix Salmon, the prolific business blogger, objects not only to Sperling but also to NEC mentionees Roger Altman and Richard Levin because of their Wall Street ties. (Altman runs a private-equity firm. Levin, the president of Yale, sits on the board of American Express.) As the first wave of officials leaves the Obama administration, objections are also raised about their career choices. Former Budget Director Peter Orszag was recently slammed by James Fallows for taking a highly paid investment-banking position at Citigroup. Fallows called Orszag's move "damaging and shocking" because of the way it underscored cozy ties between Wall Street and Washington. Treasury Secretary Timothy Geithner has suffered similar complaints, although he has never even worked on the private side of the financial sector.
To sort this out, we need to return to first principles. What is clearly wrong, and under some circumstances illegal, is for people to leave government and then sell their influence as lobbyists. The most egregious offenders, in my book, are greedy guns-for-hire like Tony Podesta or—at the outer limit of clownish Beltway parasitism—Lanny Davis, who under pressure recently gave up a $100,000-a-month contract lobbying for the despotic president of the Ivory Coast.
It is also wrong, of course, for those in government service to be influenced by their future employment prospects. And there are secondary issues about fueling negative perceptions, which is essentially what Fallows charges Orszag with. He doesn't think Orszag is being rewarded by Citi for helping arrange a government bailout, since there is no evidence the former budget director had anything to do with it. Fallows worries that Republicans may be able to hurt and embarrass Obama by using Orszag to paint the administration's connection to the TARPed-up bank in dark tones.
Whatever one thinks of Orszag's political judgment, it is important to remember that creating a potential appearance of conflict does not constitute unethical conduct. Sperling, however, can't even be accused of poor judgment. He hasn't done anything worthy of criticism at all. Ezra Klein writes: "It is very hard to believe that Goldman Sachs wasn't attempting to buy influence with a politically savvy economist who had good relations—and would later go to work for—the incoming Democratic administration."