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Understanding the Wall St-Washington Relationship Understanding the Wall St-Washington Relationship

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Understanding the Wall St-Washington Relationship

President Obama has tapped Gene Sperling to replace Larry Summers as director of the National Economic Council, The New York Times' Michael D. Shear reports, and it's a pick that most find unsurprising but some find unsettling. Sperling is certainly qualified for the job, having held the job under President Clinton and currently serving as a counselor to the Treasury Department. But there are a few other items on his resume with which some take issue: working for Goldman Sachs, pulling in $70,000 a month.

revolving doorWashington and Wall Street

  • Goldman Wanted Something in Return, The Washington Post's Ezra Klein writes. Sperling's work for Goldman was mostly charitable, "but in some ways, that makes the transaction more peculiar: You tend not to get paid that much for offering guidance to charitable endeavors. It is very hard to believe that Goldman Sachs wasn't attempting to buy influence with a politically savvy economist who had good relations--and would later go to work for--the incoming Democratic administration."
  • He's the Best Progressives Can Hope for, Mother Jones's David Corn writes. Under Clinton, Sperling worked on many liberal causes, including maintaining child labor laws abroad, the earned income tax credit, Head Start, debt relief, and strengthening Social Security. "Sperling is hardly a Wall Street insider. ... After the Clinton administration ended in 2001, Sperling... spoke to several 'wise men' about what he should do next." They all told him to cash in while he waited out the Bush administration. "Instead, Sperling devoted most of his time to addressing the challenge of global poverty, particularly promoting the need for basic education in developing nations," though, "Sperling didn't don a sack cloth and follow the example of Mother Teresa." When Goldman asked for help on the charity, Sperling just "requested that he be paid what the investment firm might pay a top lawyer or dealmaker." "Fairly or not, he's become associated with Wall Street but he never went Wall Street. He's been more interested in making policy than in making mega-money." Sure, there are more liberal candidates, but "with Summers as the benchmark, a Sperling appointment, for progressives, would be a step in a better direction."
  • Enough with the 'Main Street Puritanism' Slate's Jacob Weisberg argues. That way of thinking "epitomizes the ethical confusion that has grown up around public service in the wake of the financial crisis." Selling influence to lobbyists is wrong, and letting future employment prospects shade your government service is wrong. But Sperling didn't do those things. "Now when your big cause is an issue like women's economic empowerment, and Goldman Sachs comes calling with $100 million to spend on it, with a nice salary for you into the bargain, you can say: A) No way will I help you spend your money, you dirty capitalist bastards; B) I will help you, but only if you don't overpay me like one of your own; or C) sounds good to me, Lloyd. There are crazed purists who might choose option A, saints who might choose B, but please cast your stones after you tell me that your answer would not have been, like Sperling's, C."
  • We Need to Keep Perspective, Weisberg continues. "I suppose that in a perfect world, officials would be members of a flagellant order, coming to Washington from their monastic cells and reaffirming their vows of poverty afterward. But that wouldn't work, either, because economic policymakers would have no feel for markets, business, or life in the real world. We should demand ethical behavior, not public servants untainted by money or any effort to make it."
  • No You Need Perspective, Feliz Salmon writes at Reuters to those defending hte Sperling pick. [I]t's fascinating to see how Corn reports on the institutionalization of the revolving door between Wall Street and Washington, to the point where taking $887,727 from Goldman Sachs is positively self-abnegatory." Salmon writes. The revolving door, contra Weisberg, is not a good thing.
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