POLITICS JANUARY 13, 2011
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When President Obama appointed William Daley as the new White House chief of staff, a great cry of relief was heard in the land, especially those parts of the land that happen to be corporate boardrooms. “His moderate views and Wall Street credentials,” reported The Washington Post, “make him an unexpected choice for a president who has railed against corporate irresponsibility and tried, with limited success, to appease restive liberals who think he has not been tough enough on bankers.” “All of these are excellent, pro-business moves,” enthused Fred Smith, CEO of FedEx. Even Senate Minority Leader Mitch McConnell had rare praise to offer. At last, a centrist who could reign in the Reign Of Terror endured by American capitalism.
Yet one stray thought occurred to me. Who was the previous, left-wing chief of staff orchestrating Obama’s bolshevism? Why, it was none other than Rahm Emanuel—Clintonian deal-maker extraordinaire and Scourge of the Left. So what could account for the overjoyed reaction?
The answer is that Daley is not just a garden-variety centrist like Emanuel. He is a “pro-business” centrist, which accounts for both his immense popularity and the enduring role played by his type.
Daley’s appointment reflects Obama’s determination to placate business and especially Wall Street, which are angry that Obama broke up the large banks and clamped down on executive compensation. No, wait, that’s not right. He furnished the banks with a massive bailout and then subjected them to modest regulation.
The greatest offense seems to be that Obama decried what he called “an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, D.C.” I would call this a fair summation of an industry’s decision to make massive bets it didn’t understand. The Wall Street view is that it’s not fair to condemn a whole program because of a single slip-up.
No, wait again. That was General Buck Turgidson’s argument in Dr. Strangelove. The Wall Street view is actually sillier than this: “Lincoln could have denigrated all Southerners,” complained JPMorgan CEO Jamie Dimon. “He didn’t.”
Now, I’d say, in asserting that an era of irresponsibility “stretched” from the boardroom to Wall Street, Obama was not condemning all of the business world any more than he was condemning all of Washington, D.C. (a category whose members included, among others, Senator Barack Obama). And yet, the hurt feelings of Wall Street in particular and business in general have not only persisted; they have persuaded Obama to take it upon himself to placate them.
Daley could not be more perfectly suited to this task. Born into a political family, he learned the value of the private sector early in his career. After some early success as a political operative, he joined a law firm where he specialized in using his Democratic connections. (“Bill is obviously not a lawyer whose strength is in drafting complex documents and arguing nuanced cases in appellate courts,” a partner at the firm later told reporter Carol Felsenthal.)
From that job it was back to politics, then on to the vice-chairmanship and later the presidency of Amalgamated Bank. Hoping for a Cabinet spot in the new Clinton administration in 1993, Daley instead got a well-remunerated seat on the board of Fannie Mae. He was subsequently appointed commerce secretary, then ran the Al Gore campaign, after which it was back to the good-old free market. First, Daley joined an investment bank, Evercore Partners. (Colleague testimonial: “I’m not sure that Bill is the first guy [I’d] ask to help me in a derivative mathematical calculation.”)
From there, Daley moved to the telecommunications firm SBC, the heir to the old local telephone monopoly. A heavily regulated utility whose success depended almost entirely on a favorable political environment, SBC offered the perfect milieu for Daley’s talents. SBC’s president announced that Daley’s appointment “signals the importance of governmental matters to our company’s ability to grow revenues.”
In 2003, Daley spearheaded a massive lobbying blitz for an Illinois law that would have allowed SBC to charge its competitors nearly twice as much for access to its network. The bill would put consumers “at the mercy of a local phone service monopoly,” noted Crain’s Chicago Business. Liberals were aghast. “Ramroding bills through because you’ve got the clout to do so—rather than because you’ve got arguments on your side—is not a good way to do the people’s business,” scolded then - State Senator Barack Obama. (The measure passed, but was later struck down by the courts.) In his last year at SBC, Daley earned nearly $3 million.
Having been pulled into the warm embrace of several business (or quasi-business) enterprises despite lacking any non-political qualifications, Daley developed an appreciation for the corporate world, much as one might fondly regard a generous relative. This sentiment seems to form the basis for Daley’s argument that the Obama administration must chart a more centrist course or risk “electoral disaster.” Daley’s centrism is not that of, say, a Larry Summers. Rather, he appears to believe that the position of the business community is ipso facto sensible. If business opposes health care reform and regulation of Wall Street, then health care reform and regulation of Wall Street must be dangerously left-wing. Thus his rapturous reception by Obama’s foes.
One recent news story about Daley’s moderation and bipartisan goodwill cited a 2004 TV appearance Daley made, on behalf of SBC, in support of a court ruling that overturned Federal Communications Commission rules governing telephone competition. Such deregulation, one economics paper concluded, would “strengthen a de facto monopoly.” Daley, though, argued that it would lead to lower prices for consumers “if the government would just get out of the way.” Arch-right-wing co-host Lawrence Kudlow marveled, “Mr. Daley, you sound awfully like a capitalist.” “Oh, we’re all capitalists, Larry,” Daley replied. Well, capitalist, monopolist-what’s a little terminological distinction among friends?
Jonathan Chait is a senior editor for The New Republic. This article ran in the February 3, 2011, issue of the magazine.
15 comments
The Chief of Staff doesn't require congressional confirmation, so what's Obama afraid of? President "O" is dreadfully unimaginative and status-quo. We need change agents, not grey mice. We need to crack the whip on the banking industry. Increase the reserve requirements, break up the banks that are too big to fail. Banks must expect regulation in return for the low-priced (or no-priced) money that they get at the Fed window.
- amidut
January 13, 2011 at 6:45am
Yet more evidence that Obama is afraid of the Wall Street/corporate crowd, afraid of them and embarrassingly anxious to be liked by them. Look back at the 60 Minutes interview after the mid-terms. He more or less accepts the criticism that he has been or at least has justifiably been perceived as being anti-business. Time to heed the advice of Paul Krugman and Robin Wells in the NY Review of Books: "Democrats need to make it clear that if Obama isn’t going to be the leader of the Democratic agenda—and all indications are that he can’t or won’t—they will advance that agenda anyway, with or without his help."
- AaronW
January 13, 2011 at 7:25am
Awesome piece JC - a much needed barbaric yawp from the best liberal/progressive writer in the US.
- WandreyCer
January 13, 2011 at 7:34am
With a restless (some would say hostile) new Republican majority in the House and disarray in the Democrats in the Senate, what Obama really needs now is someone with the experience and credibility with Congress to help maintain order in Congress and assemble a working majority of legislators to pass essential legislation. Somebody, a tactician, like Emanuel. During his first term, with an imploded economy and panic in both Wall Street and Main Street, what Obama needed then was someone who would help calm the fears and craft both a program and a narrative that would appeal to the public and suited to Obama's strength as a communicator. Somebody, a huckster, like Daley.
- rayward
January 13, 2011 at 7:40am
Bailing out Wall Street, not restoring Glass-Steagall destroyed by Clinton, health insurance preserving illness for profit. Don't forget that he is a millionaire that protected what? The tax cut for millionaires! Obama's change is much more of the same appointing Daley, a Wall Street Bozo if ever there was one available. This is it! You voted for him. Don't look at me. I never voted for this anti- Semite liar that promised change and gave you more of the same.
- Poupic
January 13, 2011 at 9:36am
I don't get the preemptive criticism. Why not wait at least till the SOTU to see the president's agenda before deciding that Daley is going to do him (and us by extension) wrong?
- NR409654
January 13, 2011 at 10:14am
Just a thought. Is it possible that Obama knows exactly what he plans to do on the economy, taxes, the deficit, etc. in the face of the political realities facing him and wants a known messenger to represent him to the business community-plus Daley has proven skills in managing a staff. Let's wait to be critical when we hear the State of the Union speech, not on the basis of hiring an experienced pro-no matter what his background. I suspect Daley may surprise you, as may Obama from the tone of your writing.
- egoldman
January 13, 2011 at 10:22am
Hard to believe the chief of staff will be running around lobbying the Hill -- he's got a staff to run. The real question is how, in his direct personal relation with Obama, he advises him on handling the business and financial communities (a fine distinction: the business community is supposed to produce things, the financial community to steal the money). And then there's the question of how much weight Daley will have on these questions with Sperling and Goolsbee around. Daley still has to run the staff.
- gaffneyh
January 13, 2011 at 10:34am
The word "terrible" is over the top. I do agree with President Obama that we all should try to be more civil. Let's wait and see what Bill Daley says and does before we decide what we think of his performance as Chief of Staff. This appointment does show, though, that President Obama is more concerned about placating the business community than about placating people like me, who wanted a public option, Glass-Steagall, etc. What we get is Elizabeth Warren (temporarily) and a good scolding.
- ElleninCA
January 13, 2011 at 11:51am
I'm with egoldman and NR. If Obama proposes crappy policies, then it wouldn't matter if Krugman or Marcy Wheeler was COS. If he proposes good policies, and Daley actually helps in some way in getting them passed, whether by running an efficient WH (the COS's most important role) or by twisting some arms, then the fact I disagree with some of the stupid stuff he's said is irrelevant.
- Geoff G
January 13, 2011 at 11:55am
Oh I dunno. Daley represents unity, an end to squabbling and unseemly uncivility! As a commentator on CNN points out - sorry I forgot who it was - now we both sides of the equation: Goldman Sachs AND JPMorgan Chase. Progress! :)
- Sophia
January 13, 2011 at 2:57pm
Thank God. I was starting to despair for this mag. Daley's only one personalilty; it's the policy that counts but if this is supposed to signal that Obama is going to "reverse course and be more pro-business", then we are living in a nightmare Orwellian world where language means nothing anymore. Obama couldn't be more more pro business if he outlawed weekends and locked up union members in concentration camps. (Well...you know what I'm getting at.) Daley was against healthcare reform; against the consumer protection agency; against the really mild regulatory reform of the banks. He might well be an effective COS but surely there has to be some ideololgical coherence to an administration? Forget DINO's, there's too many RINO's in this admin already.
- IggyPop
January 13, 2011 at 4:36pm
@Poupic "I never voted for this anti- Semite liar..." Say what? I did vote for Obama, and I have been mightily disappointed by him, but labeling him an anti-Semite is over the top. On what basis? Reverend Wright? Would an anti-Semite have tapped Rahm Emmanuel for Chief of Staff or turned to Larry Summers as his chief economic advisor? If your answer is "yes" then I'm afraid I don't understand your definition of anti-Semitism.
- AaronW
January 13, 2011 at 5:37pm
Once upon a time Presidents were close to people who made things besides money. Follow on Twitter @HarveyJKaye
- hkaye
January 13, 2011 at 7:35pm
I find Obama more clever than even Jonathan Chait. Let's see how it goes.
- membermiss
January 14, 2011 at 10:15am