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Newsletter | Revolving Door Project Newsletter | January 25, 2023

Biden’s Choice of Chief of Staff Threatens Populist Potential

Corporate CrackdownEthics in GovernmentExecutive BranchHealthRevolving Door

How can Biden crack down on exploitative corporations when their go-to man is his Chief of Staff?

This edition of the Revolving Door Project newsletter was originally published on our Substack. View and subscribe here.

Last Friday marked the exact midway point of Biden’s presidential term. With this newly divided Congress, there are scant possibilities for legislation in the next two years. By and large, this next stage of Biden’s presidency should be all about the executive branch: implementing recent laws, enforcing existing laws, and enacting much-needed regulation. (Biden should have been overseeing these things all along, of course—that’s what the Presidency is for!)

The departments and agencies tasked with executing that big agenda have not recovered from decades of budget cuts, erosion which was drastically exacerbated by the Trump administration. The agencies are facing down a Congress even less inclined to equip them with the money and resources they need. The New York Times reported Monday on how the Environmental Protection Agency is struggling to get back on track; the latest data on white-collar prosecutions shows that the Justice Department took on the fewest corporate criminals in 2022 since tracking began under Ronald Reagan. 

So the Biden administration has a steep hill to climb. But there’s a difference between struggling to find a foothold, and willfully sliding back down. 

On Sunday, Biden announced that Jeffrey Zients would be his next Chief of Staff. Zients is a career management consultant and private equity man, neck-deep in the kind of corporate profiteering that Biden and the Democratic party at large need to scrutinize, not embrace, if they are to build trust with Americans.  

A Businessman’s Businessman

Jeffrey Zients has a net worth somewhere between $89 million and $442 million; almost enough to buy the White House, were it up for sale. He made at least some of those millions from the exact kind of exploitative business practices that the Biden administration should be cracking down on. As my colleagues put it for The American Prospect back in April 2022: 

“Over the span of two decades, the health care companies that Zients controlled, invested in, and helped oversee were forced to pay tens of millions of dollars to settle allegations of Medicare and Medicaid fraud. They have also been accused of surprise-billing practices and even medical malpractice. Taken together, an examination of the companies that made Zients rich paints a picture of a man who seized on medical providers as a way to capitalize on the suffering of sick Americans. In the end, it seems to have all paid off.”

We’d encourage you to read the full piece over at The American Prospect, which details a number of instances of known corporate misconduct over the last two decades by companies in which Zients had a significant stake. These include but are not limited to Medicare and Medicaid fraud settlements of $150 million and $7 million by companies that Portfolio Logic, the investment firm Zients founded, owned or had substantial stakes in. 

Moving into the public sector in 2010, Zients spent seven years in the Obama administration, at the Office of Management and Budget and then the National Economic Council. Notably, Zients, a former Bain & Company consultant, ran Obama’s OMB in 2012, when Obama was campaigning against Bain’s malicious influence to defeat fellow alumnus turned private equity mogul Mitt Romney. 

Across all of his specific roles, though, Zients’ overall job in the Obama administration was essentially to be an ambassador to the business community in the White House. Don’t take our word for it; that’s what the Wall Street Journal called him in 2012. Among other lowlights, Zients publicly went to bat for weakening the Dodd-Frank Actnominating Wall Street bankers for key jobsexempting corporations from foreign courts under trade agreements, and repeatedly promoted the Trans-Pacific Partnership by saying it was “a massive tax cut for businesses.” He once referred to corporate CEOs as the “customers” of his economic policies. All of this was while he was the National Economic Council Director, the period in his career that Zients’ defenders point to to assert progressive bona fides on minimum wage increases and overtime pay.   

When Zients left the government, he became CEO of Cranemere Group, a private equity firm with over $1 billion in assets (and a track record of investing in companies which committed medical malpractice and surprise billing—two practices for which there is wide public support for a crackdown by the federal government). He also secured a position on Facebook’s board of directors shortly after the Cambridge Analytica scandal broke and made Facebook anathema to even (most) corporate Democrats. 

Zients’ career arc doesn’t indicate any degree of skepticism about corporate overreach in his personal belief system. Case in point: Biden has worked to brand himself as a pro-labor President trying to rebuild the New Deal social contract between workers and bosses. How did Zients make all of that money in the first place? By running a management consultancy that, according to the Washington Post, advised corporations against trying to establish a social contract with their employees: “Don’t bother. The social contract is never coming back and your employees know it.” 

The Chief of Staff, often called the president’s gatekeeper, has great discretion to choose which  bridges are built with which outside interests. We would hope that this crucial person would have a track record aligned with the best of their president’s ambitions, and which shows commitment to the public interest. Zients has no such track record. In the Obama administration, he was the “businessman’s businessman.” Politico reported that a CEO on Obama’s Jobs Council “remarked that he thought Zients, then a top Obama aide, was a Republican.”

Public Health Policy, According to the Economic Elite

Zients revolved back into government as Biden’s White House Covid Response Coordinator from January 2021 through mid-April 2022, departing the job just after the massive Omicron wave, a month before the US hit the devastating milestone of 1 million COVID deaths. 

Zients’ trajectory as Covid czar charts a course of steadily waning ambition. As our former colleague Dan Boguslaw wrote just over a year ago, Zients largely “left the virus to run its course, charging ahead with a domestic strategy based on little more than hope that enough people will take vaccines to resolve the nation’s ongoing nightmare.” Infamously, actual epidemiologists warned Zients in October 2021 that the US was headed toward a massive surge over the holiday season, and were completely ignored. We live now in the long tail of the decisions that Zients made to prioritize economic concerns over a robust, long-term public health response.

Dan outlined several steps that Zients could have taken. “With DPA powers legally entrusted to Zients, a mass mobilization unseen since the Second World War was potentially at his fingertips. He could have spent the year mobilizing against a shared enemy in the virus, stockpiling enough personal protective equipment (PPE) and pharmaceutical products to protect the public.” Also damning was “his refusal to allocate resources to aid vaccination efforts abroad,” which would have been and remain essential to preventing the development of new COVID variants (not to mention preventing millions of people from becoming sick and dying). 

Corporate Profiteers Don’t Make Good Public Servants

What accounts for Zients’ “passive refusal” to take these steps? Well, as Dan pointed out, “doing so would have required angering powerful forces in corporate America.” 

But we think that angering powerful forces in corporate America in order to make the economy more fair is exactly what Biden should be doing. Choosing Zients as his new right hand man makes a corporate crackdown that much less likely. That’s bad news for Biden’s electability, as the overwhelming popularity of populist—not corporatist—Democratic candidates in the 2022 election makes clear. The Congressional Progressive Caucus is now the largest sub-caucus for House Democrats, and all of the Democrats who lost re-election in 2022 were part of the centrist New Democratic Caucus. But more importantly, Biden’s corporatist turn is bad news for the public. 

Zients has spent his entire career profiting from a status quo that treats corporate bottom lines as more important than patients’ health and workers’ financial stability. In order to be the Chief of Staff the public needs, Zients would have to disavow the kind of extractive business practices that created his wealth—an unlikely turn of events, to say the least.

Some Democrats tend to believe that political actors can firewall their past preferences and experiences in the private sector—disregard their entire adult lives, that is—to serve the public interest while in government. It is necessary to believe this for one to believe that Zients can be a good pick for Chief of Staff. The logic goes that he will suddenly apply his supposed managerial skills to the public good. 

Let’s be generous and assume for now that Zients is, in fact, a skilled manager. (We don’t believe this, and will have more to say about it later this week, but let’s set that aside for the sake of argument.) What makes anyone think that Zients won’t do the bidding of corporate America in office, besides blind faith? As laid out earlier, doing the bidding of corporate America was Zients’ specific job in the Obama administration. That’s why he entered public service in the first place. 

When elite voices argue that a wealthy businessperson may use their skills for good in a public sector role, we should all be suspicious. There simply are not enough examples of appointees who actually left their self-interest at the (revolving) door to consider that the norm, not the exception. Ordinary people are the ones who suffer the consequences of elites’ willingness to extend the benefit of the doubt all the way to the Oval Office, until it’s too late. Jeffrey Zients is taking on far too important a job to be exempt from such scrutiny.

Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:

Biden Risks Legacy by Choosing Zients as Chief of Staff

Senate Democrats Finally Control Committee Majorities. What Now?

Corporate Hypocrites Celebrate MLK Day While Suing To Protect Discrimination

Two Years into Biden Administration, the Government Maintains Trump-Era Legal Positions in Dozens of Cases

Hack Watch: The Fairness Doctrine Strikes Again: Media Outlets are Calling Republicans’ Austerity Pushes a Debt Ceiling “Showdown”

Thirty Percent of US Attorney’s Offices Are Still Without Nominees

Biden’s Second Chance Not To Nominate Casey T. Arrowood

Independent Agency Spotlight Update January 2023

The White House Must Heed Tenants, Not Corporate Profiteers, To Enact New Tenant Protection Measures

Tech ties haunt Biden’s next chief of staff

Progressives Slam Biden’s Choice for Chief of Staff as Health Care “Profiteer”

President Biden picks a new chief of staff: Jeff Zients

Incoming Biden chief of staff Zients is nearly wealthy enough to buy the entire White House

The Problem With Jeff Zients, Biden’s New Chief of Staff

The FAA is struggling. Who can save it?

Two Years into Biden Administration, the Government Maintains Trump-Era Legal Positions in Dozens of Cases

Former Treasury Secretary Taken to Task for Role in Crypto Collapse

Corporate CrackdownEthics in GovernmentExecutive BranchHealthRevolving Door

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