Further Wall Street to Washington revolving door thoughts


In the post below I noted that the selection of William Daley as chief of staff to the President (now official) would be a terrible idea not only for the message it sends to the public, the banks are more important than you, but that Daley’s role would be to stovepipe information to the President, all the while with an eye towards his future employment.

Felix Salmon points out that a similar problem is unfolding in the appointment of a new chairman of the National Economic Council. With the selection of Gene Sperling, a Goldman Sachs executive who makes an ungodly sum writing a column for Bloomberg, the Wall Street to Washington pipeline is not just alive, but fully institutionalized.

Salmon wrote a few days ago:

The problem, of course, is that Wall Street became so big and so pervasive over the course of the boom that it’s hard to find people to run the NEC who haven’t been paid large sums by banks at some point. And even if they are relatively pure on that front, there’s every reason to expect that they’ll pull an Orszag and start taking millions of Wall Street dollars the minute they leave. Obama can try to distance himself from Wall Street, but it isn’t easy.

The examples of the Wall Street to Washington expressway can be seen all across town. The amount of influence that the finance sector has in Washington is crushing and provides for the circumstances that help feed this constant revolving door.

Last month I wrote about this influence and showed that the finance sector is far and away the biggest influencer in Washington. The sector spent over $6 billion on lobbying and campaign contributions over the past 12 years–about a billion more than any other sector. According to the Center for Responsive Politics, they employed 1,390 former government employees as lobbyists in 2010. That doesn’t even count those who aren’t registered lobbyists.

The problem with this trend isn’t that lawmakers are being bribed under the table, but rather that connections and contacts create closed communities of thought. Lawmakers talk to lobbyists because lobbyists have information. That information is invariably skewed to fit their client’s interest, even if it isn’t factually inaccurate. This creates a situation where lawmakers are influenced by this professionalized community, disregarding other streams of information.