President Obama's former director of the Office of Management and Budget Peter Orszag fired back over criticism for his move to Citigroup as an example of the revolving door between big government and big business. He claims he had nothing to do with the White House's financial rescue efforts, which is such a distortion of fact, it's hard to know where to begin.
According to The Daily, Orszag explained:
"I'm going to have no interaction with federal officials, unless I run into them at the Starbucks by accident and we're not talk talking about anything work related,” he told The Daily on Friday. His work in the White House on health care and budget issues had "almost nothing" to do with the administration's financial rescue or reform programs, he said. Orszag joined Citi four months after he left the administration and less than one month after the government sold off the last of its $45 billion investment in the banking giant.
Orszag could have been more careful about suggesting an accidental venue, actually -- Starbucks is a venue of choice for lobbyists to meet with White House officials without having to disclose the session as required by Obama's own ethics policy. The New York Times reported on the ease of meeting with lobbyists at the popular coffee shop last June:
“I’ll call and say, ‘I want to talk to you about X,’ and they’ll say, ‘Sure, let’s talk at Starbucks,’ ” said another lobbyist who counted six or seven off-site meetings with White House officials on financial issues.
But most flawed about Orszag's reasoning is his belief that a conflict of interest would result only from interacting with federal officials. Or that he had "almost nothing to do with the administration's financial rescue or reform programs."
Wait. Wouldn't it be problematic for the main budget guy at the White House to not be involved in those decisions? Wouldn't his non-involvement in the financial rescue actually be a sign of incompetence or worse? If, as director of the Office of Management and Budget, he didn't run across the $700 billion bailout in the course of his work, shouldn't he be disqualified from doing any work with budgets or numbers at all ever? What did he do with all that free time?
Orszag, who, as you may recall, has been in the news lately, was making the argument that $30 billion worth of the unspent TARP funds should be used to help out small businesses.
That really set off Gregg, who withdrew a nomination from the Obama White House to be commerce secretary.
"No, no, no, you cannot make that kind of statement with any legitimacy," Gregg responded, his voice rising, Reuters reports. "You don't appear to understand the law."
Orszag tried to respond, beginning, "Okay ..."
But Gregg would not hear it. He began reading from the TARP authorization law saying that unspent TARP funds must be used to pay down the national debt.
Here he is again in National Journal, defending TARP:
Orszag: If you take $30 billion contained within TARP and pass a new law to move it out [of the bailout fund], then the net budget impact depends on what you do with that $30 billion. If you use it to inject capital into banks [and then] the repayments [to the Treasury] are equal to what you put in, then there are no net budgetary costs.
The second point is that we are projecting a net cost from [the initial $700 billion] TARP [authority] overall of $117 billion. We've put forward a financial services fee to try to offset that over time, as required by the [TARP] law. [The fee would recoup] $90 billion over [the next 10 years], and then it would continue until the TARP is repaid in full.
Citigroup, by the way, received $50 billion from taxpayers, which according to this New York Times chart, makes it a recipient of one of the largest bailouts overall!
So when Orszag argues that he had "almost nothing" to do with the financial rescue, what the heck does he mean? When he took the job, James Fallows at The Atlantic expressed his own disappointment in Orszag's decision:
The idea that someone would help plan, advocate, and carry out an economic policy that played such a crucial role in the survival of a financial institution -- and then, less than two years after his Administration took office, would take a job that (a) exemplifies the growing disparities the Administration says it's trying to correct and (b) unavoidably will call on knowledge and contacts Orszag developed while in recent public service -- this says something bad about what is taken for granted in American public life.
In fact, in the same article where he disputes his involvement with the bailouts, he goes on to boast the same as he boasted while in office -- that banks had cleaned up their balance sheets. This was made possible by -- you guessed it -- TARP:
... could Citi, America's third largest bank, be doing more to put Americans back to work? “Look, I don't think it's up to an individual firm to drive national employment growth,” he said, while also making the case that the recovery looks stronger in America than Europe precisely because big banks like Citi had aggressively cleaned up their balance sheets.
Another part of the problem is more general. Does Orszag really believe he could have gotten such a lucrative position at Citi had he not worked as Obama's budget czar? Whether or not he interacts with federal officials doesn't matter, because the message is clear: Play your cards right while in the White House and make sure not to ignore any deep-pocketed businesses, and you don't even have to worry about your job prospects. They'll be coming to you, just as Citi came to Orszag.