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Blog Post | November 8, 2023

Secretary of Commerce Gina Raimondo Is Undercutting Bidenomics

Secretary of Commerce Gina Raimondo Is Undercutting Bidenomics

The most tech-friendly Cabinet member should not be the one regulating artificial intelligence.

At the outset of the Biden administration, Gina Raimondo as Commerce Secretary was viewed by most progressives as an unsatisfying but generally not too worrisome outcome. Since Raimondo, a runner-up possibility as vice president, was viewed as an inevitable member of the Biden cabinet, the Commerce Department seemed a more acceptable landing spot than other positions she was rumored to be in contention for, namely running HHS or, worse, the Department of the Treasury. There was some sense to this view. Commerce has, traditionally, been seen as a relatively sleepy cabinet post, simply the administration’s ambassador to the business world—though we at the Revolving Door Project have long argued it is important, even if less central than Treasury. 

But under Biden, Commerce’s importance has become incontrovertible. Commerce has emerged at the forefront of policymaking, thrusting Gina Raimondo and her staff of Goldman Sachs alums into the spotlight. And with the added responsibility has come increased media coverage, with Raimondo quickly moving from a figure reserved for the pages of the business section into prime time. And what is the latest responsibility entrusted to Commerce? Regulating artificial intelligence entities like ChatGPT. Progressives ought to be concerned. 

The context here is important. Biden’s biggest legislative victories have been on industrial policy, forming the core of what some have termed “Bidenomics.” Major industrial investments like the CHIPS Act and the Inflation Reduction Act have become a point of pride for the president who hopes that the domestic manufacturing of computer chips and green energy will become boom industries, creating both jobs and necessary, socially positive products. This is undoubtedly good. 

Both the IRA and CHIPS Act are a departure from the neoliberal approach to economics that has ruled the Democratic Party since the Carter administration. Motivated by the supply chain failures of the Covid years, Biden’s industrial policy aims to reverse the offshoring of manufacturing fueled by the neoliberal free trade agreements of his predecessors. And while Biden’s approach is far from perfect, progressives ought to be excited by a president willing to question the logic of markets designed by Wall Street. But progressives should be concerned that much of Biden’s industrial policy is being implemented by his most Wall Street-friendly cabinet secretary, Gina Raimondo. 

To implement this policy, Raimondo has turned to a team of Wall Street alums, delighting Bloomberg. Perhaps this is because of her own work in private equity and venture capital. Prior to holding public office in Rhode Island, Raimondo worked for an investment firm backed by Bain Capital and later founded her own venture capital firm, Point Judith Capital (PJC) in 2001. Though she left the firm in 2010 when she was elected general treasurer, she retained equity and continued to make money off of it well into her years as governor. PJC became a recurring media story when Raimondo was in office as it had received a $5 million investment from the Rhode Island state pension fund, so she, as an elected official, profited from the unprecedented fees PJC charged the pension fund. PJC also repeatedly made headlines for making it difficult for the pension fund to remove its assets from PJC after its ten-year contract expired.  

Raimondo seems convinced that financiers are the key to the development of industry, not experienced contractors, engineers, developers, factory managers, or skilled laborers. Not only has she avoided hiring from organized labor, think tanks, the academy, and other common sources of Democratic administration officials, but she shows clear deference to finance over other industries. 

But industrial policy is not the only realm where Raimondo is exerting her influence over the administration. Biden recently granted her more responsibility over artificial intelligence than any other administration official. While some (Revolving Door Project included) are skeptical about the absurd valuations surrounding the industry, it is notable that Raimondo will be taking point on regulating a developing industry that McKinsey believes could generate $4.4 trillion a year. 

Raimondo’s accession to the administration’s AI leader was met with immediate celebration by AI executives. In The Washington Post, an anonymous AI executive compared Raimondo to Golden State Warriors superstar Steph Curry, saying, “It looks like a team sport, but they’re really giving Steph Curry all the biggest shots.” 

While the comparison to Curry—a world-class athlete if ever there was one— falls flat when applied to a tepid neoliberal financier, they are correct to say that it seems like Biden is entrusting his secretary of commerce with a lot of key plays. On AI, this should be worrying. Not only did Raimondo receive praise from the anonymous executive, but OpenAI CEO Sam Altman also lavished praise on her, saying “Gina listens.” Perhaps it’s unsurprising the two are on first-name terms, as Raimondo has a myriad of ties to big tech and to AI specifically. 

Raimondo was described by Axios as “Tech’s favorite Biden official” for defending US tech companies from European consumer protection laws and has used her role in negotiating the Indo-Pacific Economic Framework (IPEF) trade deal to ensure big tech is exempt from other regulations. But while her work as the international defender of big tech is relevant to her approach to AI, her husband’s job at an AI company is far more illustrative. 

Until recently, Raimondo’s husband, a longtime McKinsey & Co. partner, worked at PathAI, receiving a salary and exercising stock options of up to $150,000 as of last fall. This arrangement was significant enough that she signed an ethics agreement in January 2021 agreeing to seek an ethics waiver before working on anything that “has a direct and predictable effect on the financial interests of PathAI.”

While Raimondo’s husband may have left the firm, there has been no confirmation that he sold his equity in the company. When I reached out to the Department of Commerce for comment they did not comment on whether the secretary or her husband continue to hold equity in PathAI, instead saying “Secretary Raimondo complies with her ethics agreement and her husband’s assets are disclosed under federal law.  The Senate reviewed her financial disclosures and ethics agreement before confirming her on a bipartisan basis.” Even if he has divested his shares, given the tight relationship between Raimondo and AI, we can expect more of the approach that made her so popular with more established tech companies: light-touch regulation that won’t interfere with profits.. 

Concerns about AI abuse aren’t merely theoretical, either. Probably the greatest immediate threat is a huge increase in the spam and fraud that already clogs American email inboxes, text messages, and calls. A Texas local news channel recently reported that an 82-year-old man was scammed out of $17,000 by someone who faked his son-in-law’s voice using AI. 

This kind of thing is likely why the share of Americans concerned about AI is almost double the number excited by the technology, which makes Raimondo’s lax approach yet another own-goal for the administration. Elsewhere, Biden has appointed champions of consumer protection, policymakers who could not only shield Americans from the most dangerous parts of AI but assuage fears. But he has opted to have the most business-friendly and out-of-touch member of his administration take the reins on this issue. 

And Raimondo’s closeness to financial behemoths has not gone unnoticed by the media either. The Wall Street Journal reported early this year that “Wall Street likes Biden’s steady hand and cabinet picks like Commerce Secretary Gina Raimondo” and Axios reported last year that she “maintains close ties with Wall Street.” This would normally be coverage relegated to the niche financial media, but she has been emboldened by her expanding role in the administration to seek out more mainstream press coverage. 

Of late Raimondo’s positive media coverage has moved beyond the Journal and Bloomberg. She was recently reported to have been filming a segment with the legacy program 60 Minutes, and her recent trip to China received a bevy of coverage from outlets big and small.  This should be concerning not just to those who are questioning her conflicts of interest, but to those hoping for a Democratic victory come 2024. Biden has worked hard to position himself as a pro-union, blue-collar president. But that image cannot co-exist with a wealthy venture capitalist favored by Wall Street and Silicon Valley alike making herself central in the media’s conception of Bidenomics. 

When the administration inevitably complains that its popular economic programs aren’t breaking through the media coverage they’ll have no one to blame but themselves. The actual Steph Curry is often ridiculed for having become a high-profile spokesperson for the crypto industry. The Biden Administration should be wary of having one of its own fall for the same futuristic promises of an emergent tech industry. 

More articles by Henry Burke

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