Nepotistic Hires Are BAD. Corporate Corruption is Bigger & Worse!

Newsletter 85: Biden, is it worth it?

Infrastructure talks have stalled. Prospects for other marquee pieces of legislation are not looking much better. At this point, there’s no denying that Biden is going to have to lean on executive action if he hopes to get much more done. (Of course, as we’ll always say, he should execute long-standing law regardless of the prospects for new legislation.)

The administration’s “Unified Agenda,” for regulation, released last week is an encouraging indication of its intention to use its regulatory power to advance the public interest. The path from these strong ideas to actual regulatory implementation, however, is not clear of obstacles. There’s the fact that many independent agencies still don’t have Democratic majorities, or even pending nominations to fill vacant spots. There’s also the issue of limited staff capacity which could slow or limit agency action. And then, there is the reality that corporate America is gearing up to fight it all. Hard.

One way they’re building their defenses? Snatching up key officials fresh out of the Trump administration to guide them through the halls of power. In the last week alone we’ve learned that former FDA Commissioner Stephen Hahn has joined a venture capital firm closely tied to Moderna (whose vaccine he approved last year) and that two former EPA officials will now be in the American Petroleum Institute’s lobbying shop. And those are just the most recent examples. For the blog, our Dorothy Slater detailed how the investment giant BlackRock plucked up the former head of the SEC’s Investment Management Division Dalia Blass just as it is set to come under the agency’s scrutiny. Meanwhile, the former head of the SEC, Jay Clayton, is now at private equity goliath Apollo and the former head of the CFTC, Heath Tarbert, is at… a different private equity goliath Citadel. 

Late last year, we argued that this ongoing evidence of the Trump administration’s fealty to corporate America would offer a slam-dunk opportunity for Biden to make clear that his administration would be different. We warned, however, that that comparison could be undermined by even relatively small or isolated ethical missteps (hence our call for iron-clad ethics rules).

Fast forward to this week and the mounting scandal over nepotism in the Biden administration. People are starting to notice that the children and relatives of senior White House officials, including Steve Ricchetti, Bruce Reed, Mike Donilon, and Jen Psaki, are doing very well getting jobs in this administration. They are not happy about it.

Of course, in terms of both scale and consequence, this doesn’t even come close to the corruption that we saw under Trump. There simply is no equivalence between, for example, high level officials trading inside knowledge of government to undermine the public interest and privileged kids getting a low-level job with their well-connected parent’s helping hand. But that fact will not stop many bad faith commentators from trying to make the two out to be the same thing. Nor will it stop many Americans from being angry about this latest example of favor-trading. 

Maybe it’s not entirely fair, but it is a fact that even small examples of palm-greasing like this one will erode Biden’s credibility on ethics in government and distract from the prior administration’s much more egregious corruption. If he’s serious about rebuilding trust in government, it will need to stop. 

Governance

Attorney General Merrick Garland and other senior departmental officials like Deputy Attorney General Lisa Monaco continue to take heat for repeatedly coming to the former administration’s defense. Rather than reconsidering, the DOJ appears to be digging in. This week it asked the Supreme Court to reinstate the death penalty for Dzokhar Tsarnaev in the Boston Marathon Bombing case, adopting the Trump administration’s position. This is despite Biden’s professed opposition to the death penalty (something that many likely hoped would translate into, you know, actual policy). 

While shocking litigation positions like this one have garnered a lot of attention in the past week, it’s important not to lose sight of the fact that Garland is failing in many other ways as well. While Attorneys General Jeff Sessions and Bill Barr moved quickly and aggressively to make the immigration system even more dysfunctional and cruel than it already was, Garland has failed to bring a similar sense of urgency to the task of making it better. For example, the country’s immigration courts face an astounding backlog that has made it even more difficult to ensure immigrants receive a fair hearing. Garland could easily strike hundreds of thousands of those which concern minor violations, like overstaying a visa, from the court’s dockets. But he hasn’t.

As Ankush Khardori argued in Slate last week, Garland is also failing “to root out Trump-era corruption at DOJ.” Garland and the White House have been content to let Trump holdovers remain in place as they drag their feet filling key spots. And the AG has shown little appetite for asking the hard questions about the role senior career officials and the structure of the DOJ as an institution played in making way for the Trump administration’s crimes. 

A charitable interpretation of this hesitancy to look backwards might be that Garland fears being compared to Trump if he takes steps to investigate or move career officials. That is a risk, one that we’re seeing come into play at the CFPB where new political leadership is shaking up the top ranks and scrutinizing senior hires from the Trump-era. But it should not be hard to make the case that corrupting hiring practices and/promotion pathways to install politically loyal officials and scrutinizing officials installed that way are not the same thing. Further, a careful look at the abuses and mistakes that occurred under Trump need not lead to punishment or any of the variety of retaliatory tactics that were so popular in the last administration. Rather, a sober assessment of the problems could lead to broader solutions like institutional reforms and new hiring.

A hiring spree, in particular, could address problems of politicization without running into accusations of Trumpian behavior. It is difficult to deny, after all, that most corners of government are in desperate need of reinforcements. Take, for example, the Civil Rights Division which will be ramping up its enforcement of the Voting Rights Act beginning with staffing levels at barely over 50% of the high point under President Obama. No matter how committed or motivated the Division’s staff, this capacity gap will inevitably affect how much the Department can do to uphold the landmark voting law. 

Recent reporting has further underscored the damage that lack of capacity at the IRS has wrought. Last week, ProPublica published the first in a series of blockbuster reports on how the top 25 wealthiest Americans managed to pay pennies on the dollar in income taxes over the last decade. The news, which used data provided by an anonymous source, prompted widespread outrage over the wealthy tax dodgers (and protests by some of the profiled billionaires that their privacy had been violated).

The agency tasked with ensuring that the wealthy pay their taxes, the IRS, has been in severe decline for over a decade with a 20 percent decline in agency funding since 2010. With a concurrent decline in experienced tax auditors, the agency has been less capable of performing its statutory duties to ensure the wealthy pay their fair share and don't abuse the system. ProPublica's report shows the unjust results of IRS defunding and the immediacy of the need for thousands of more employees, beyond even 2010 levels.

Even with sufficient staff, the agency still needs a leader committed to justly administering the tax code. But IRS Commissioner Rettig, when prompted to comment on the ProPublica reports, ignored the issue of potential tax cheating and the insufficiency of our current tax administration entirely. Instead, he stated his absolute intention to prosecute the whistleblower and his concerns over the violation of rich tax dodgers' privacy. Clearly, his fundamental priority is to protect the rich, something to which he devoted thirty years of his life before joining the IRS.  If President Biden is committed to tax justice, we continue to argue that Charles Rettig needs to go.

Congressional Oversight

While we’re on the topic of people who need to be fired, FBI Director Chris Wray will be testifying before the House Oversight Committee. Just Security has compiled a compelling list of questions that Wray should be made to answer about the Bureau’s actions in the lead up to January 6 and since. We’d only add that the Committee should make clear that the FBI’s ongoing refusal to furnish information about its January 6 investigation is unacceptable and will result in subpoenas if it continues. 

It’s also time that lawmakers get more engaged on questions of executive branch action. So far, Democratic leadership has shown little interest in this question, as evidenced by this Congress’ failure to use the Congressional Review Act maximally to roll back Trump’s midnight regulations. But there’s good reason for Democratic lawmakers to push this administration to do more and do it faster. House Democrats’ prospects for a majority in 2022, in particular, will be closely tied up with Biden’s ability to deliver for regular people. It’s in their interests not to let the administration leave consequential powers untouched. 

Independent Agencies

Yesterday, Lina Khan was confirmed to the Federal Trade Commission and then promptly named Chair. We allowed ourselves a moment’s celebration before we returned to lamenting how long it took and how many seats there are still left to fill. 10% of Biden’s term has passed and we’re just seeing a complete commission. What’s more, Democrats’ majority on the FTC will only hold until Rohit Chopra is confirmed to lead the CFPB, at which point we’ll have to wait many more months for an as-of-yet unnamed nominee to be confirmed. We also lack nominees for an open seat on the Federal Communications Commission (FCC) and for the lead role in the Antitrust Division, all of which will slow the realization of a new direction in antimonopoly policy. 

Build Back Faster, please!

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

Fire the IRS Chief Who Doesn’t Care if the Rich Don’t Pay

Should Biden Reappoint Jerome Powell?

BlackRock's New Hire Embodies The Polluting Giant's Revolving Door Regime 

The Trump Administration Made a Mockery of the Law. Why Hasn't Biden Tossed its Cases? 

One Shockingly Easy Step For Government Transparency: Staff Pages 

Jerome Powell Went Easy On Wall Street 

Why is Merrick Garland defending Donald Trump?

Biden Nominates Lawyer Who Represented Exxon to Major Treasury Role

Dems Pass on Using Key Power to Kill Trump Rules

Merrick Garland Underscores Justice Department's Independence

Biden DOJ wants to “vigorously” defend religious right to discriminate against LGBTQ students

Jeff Hauser: MacBride nomination is a return to administrations that ended 'rule-of-law' and 'rich-person accountability'

The slow leak of Trump's corruption is a problem for Biden's DOJ

Garland sparks anger with willingness to side with Trump

Why Garland's DOJ is siding with the Trump administration in several cases

Trump’s FDA commissioner takes job at Moderna backer

GOP Lawmakers Question Ethics Waivers for Former Union Officials at OMB, OPM

The Ricchetti brothers -- one a Biden adviser, the other a lobbyist -- test president's vow to reverse Trump ethics conflicts.

Why is the DOJ still defending Trump?

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