After New Round of Disclosures, We’re Still Left Wanting More
Newsletter 75: Key takeaways from a thorough look at White House officials' finances
Biden’s transition is closing up shop. According to Politico, its public-facing email has been shut down and just a few people are still on staff to tie up loose ends. For the journal Democracy, our Jeff Hauser and Demand Progress’ David Segal took the opportunity to zoom out from the day-to-day fights that have filled our days and take stock of the past year-plus of transition-focused work. The result is a meaty piece that dives into the historical context, including the key fights that helped pave the way for this push, and the opportunities and risks that remain in many different policy areas. One overarching theme that emerges throughout is that this degree of success keeping the most egregious revolvers out of government would have been unimaginable in 2008 and, certainly, in 1992.
Of course, just because the official transition is winding down doesn’t mean that the transition effort is actually over. Sure, Biden is just two officials away from a complete Cabinet. But we’re still awaiting nominations to hundreds of positions throughout the government, and most of the critical decisions will be made, or at least shaped, by these largely anonymous people. (RDP exists to both monitor the who and assess how they perform) As long as this administration remains so incomplete, it will be difficult to accurately predict its course of action on countless important issues.
Take, for example, criminal justice reform. On the campaign trail, Biden promised to make our criminal justice system more humane and more just. He need not wait for Congress to make those promises a reality when it comes to federal criminal enforcement. Through his choice of U.S. Attorneys, Biden can increase the reliance on diversion programs, reduce sentences, and shift enforcement priorities towards the sort of corporate wrongdoing that threatens communities across the country. To make it happen, he will need to look to new sources of talent, like a growing movement of reform-minded state and local prosecutors or the deep bench of qualified public defenders, rather than the same old corporate lawyers and tough-on-crime prosecutors. Last week, over thirty groups, representing a cross-section of criminal justice, financial, good government and environmental reform advocates, came together to deliver that message to Biden. We’ll be watching closely for signs that he’s received it.
Transition:
The RDP team is hard at work pouring over newly available personal financial disclosures for White House officials. The forms reveal that senior White House figures have spent recent years consulting for such admirable clients as Lyft (Jen Psaki and Jen O’Malley Dillon), AT&T, Facebook (O’Malley Dillon), the Walton Family Foundation (Bruce Reed), facial recognition company Any Vision (Psaki), and Microsoft (Jake Sullivan), among many others.
They also reveal extensive investments in oil and gas companies (an increasingly baffling choice given the realities of climate change and mounting evidence that these investments are financially imprudent). If, as we know, averting climate disaster will require an all-of-government approach it follows that oil and gas holdings are likely to pose a conflict of interest for all government officials. That’s certainly true for Domestic Policy Council Director Susan Rice who is maintaining a multimillion dollar investment in Enbridge, a Canadian oil and gas distributor behind multiple controversial pipeline projects across the country, even as she holds tremendous sway over domestic climate policy.
We could go on about the particulars of individuals’ disclosures for some time, but we’ll refrain for the moment (although if you’re interested, keep an eye on our blog for updates). Instead, we’d like to highlight a few broader takeaways about the limits of existing disclosure requirements and ethics rules.
Merely disclosing conflicts of interest in not enough. Senior appointees should be made to divest. These disclosures reveal holdings both large and small in practically every sector of the U.S. economy. Senior White House officials, no matter their particular policy focus, will be exposed to market-moving information on a regular basis. And many have already been tasked with overseeing policy areas where their decisions will have a direct, sizable impact on the specific companies in which they hold shares. As we saw under Trump, ethics officials have neither the necessary legal authority nor the capacity to identify wrongdoing and punish officials when they cross the line. So, instead we rely on officials to self-police, which is, frankly, a joke. Instead of asking the public to take officials at their word -- despite countless examples demonstrating that many use their positions to enrich themselves, friends, and benefactors -- our ethics rules should leave no room for doubt about who officials are working for.
While in government, senior officials should divest from individual stocks and other assets that could pose a conflict of interest.
Appointees should not be allowed to hide clients behind nondisclosure agreements or other facades. Ethics rules demand that officials disclose any client who paid them or their employer more than $5000 for their services within the past two years. At least one official, Jonathan Su, is withholding the names of over thirty-two clients, citing a D.C. Bar rule that prevents attorneys from revealing a client’s information when it “would be embarrassing, or would be likely to be detrimental” to that client. That reasoning does not really stand up, as law professor Kathleen Clark explained to the Intercept several years ago; ““Between a D.C. bar rule and a federal financial disclosure, the financial disclosure wins out.” Unfortunately, whether it’s Arizona Senator John Kyl (whose omissions were the subject of that earlier Intercept story) or Counsel to Senator Chuck Schumer, Mark Patterson, people keep getting away with non-disclosure shenanigans. Why? Because there’s no enforcement mechanism for noncompliance.
In the long run, this points to the need for legislative reform, but for the time being, Biden should make clear that his administration will not stand for these evasions by laying out an ultimatum: full disclosure or resignation.
Many ethics rules are too easily gamed and need to be strengthened. Almost as interesting as the disclosures we did see were those that we did not. Anita Dunn, who is serving as a senior adviser, will reportedly not be required to file a disclosure. That would seem to indicate that Dunn took a salary well below what would be usual for her role in order to fall under the minimum salary above which appointees must file public financial forms. If that is the case it is an outrageous abuse of the system. Unfortunately, there is precedent for this maneuver. Trump’s acting Comptroller of the Currency, Keith Noreika, similarly took a salary lower than his office’s median salary in order to reduce ethical restrictions on post-government revolving door behavior. If Biden is serious about restoring integrity to the federal government, he needs to make clear that his appointees cannot follow the Trump playbook.
Over the longer-term, a system that allows people to forego disclosure if they’re wealthy enough to take a sizable pay cut is clearly deeply flawed.
Even these takeaways just scratch the surface of what there is to learn from these disclosures. Watch out for more on this from us in the coming days!
Governance:
With the latest stimulus bill out the door, the Biden administration is already turning its attention to the next big legislative package: a long-awaited infrastructure bill. As others eye that new vehicle for reform, however, we will be focusing our attention elsewhere: on Biden’s first White House budget. After decades of attrition, we need a budget proposal that not only fills but exceeds the federal government’s staffing and general capacity-related shortfalls. This will be essential to the success of every other initiative Biden undertakes, including the infrastructure bill.
Increasing government capacity will also bring significant, tangible benefits to at-risk communities in the short-term. For Truthout this week, Mariama Eversley and Mariko Lewis detail how limited funding and staffing at the Department of Interior has led it to fall far short of its mission when it comes to monitoring and managing abandoned oil and gas wells which are a source of dangerous pollutants. The consequences of that failure have fallen disproportionately on indigenous communities. It’s time the Department has the resources it needs to advance the public interest and help the most vulnerable.
Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:
John Kerry Must Choose: Wall Street or the Planet
Biden Must Nominate U.S. Attorneys Who Will Implement Needed Criminal Justice Reforms
Public Financial Disclosures Reveal Conflicts Of Interest Facing Biden Appointees
Revolver Spotlight: Jonathan Su
Revolver Spotlight: Abigail Seldin
Public Financial Disclosures Reveal Conflicts Of Interest Facing Biden Appointees
Congress Must Examine Biden Admin Possibly Trading Vaccines For Anti-Migration Enforcement
The Industry Agenda: Military-Industrial Complex
Looks Like Scranton Joe Has a Little Swamp Problem, Too
Biden Appointments, BigLaw Hires Signal Hot Antitrust Scene
It’s Time To Look Beyond Career Prosecutors For U.S. Attorney Gigs
Watchdog Urges Congress to Probe Whether Biden 'Bartered' Vaccines for Mexico Migration Crackdown
What Janet Yellen Can Do at Treasury
A Year After Ending Her Presidential Bid, Warren Wields Soft Power in Washington
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