Austerity-minded Jeff Zients’s appointment as White House chief of staff signals Joe Biden’s return to the fiscal hawkishness that has always been his sweet spot.
US president Joe Biden makes an announcement on additional military support for Ukraine in the Roosevelt Room of the White House on January 25, 2023 in Washington, DC. (Alex Wong / Getty Images)
With the grand ambitions of Joe Biden’s first year or so dead and buried, the 2022 midterms seemed to serve as a chapter break ending the first, pseudo-Rooseveltian phase of his presidency. We can’t know exactly what the next phase is going to entail, but we may have just gotten a big clue.
Among the big news out of DC this week is that Biden is replacing outgoing chief of staff Ron Klain with Jeff Zients, millionaire and former COVID-19 czar. This has, for good reason, sparked outrage among progressives, who view Zients’s panoply of conflicts of interest, private equity past, and mishandling of the pandemic as disqualifying.
Despite Klain’s questionable record, he won progressives over through what seemed like genuine efforts at outreach, making them feel — unusually, for a modern White House occupied by either party — that their ideas were being factored into policymaking. Zients would’ve struggled to fill his shoes no matter what. But his sketchy past has made that a particularly tall order, and possibly signals that Biden is ready to ditch the already tenuous progressive populist approach of his first two years.
So Long, Social Contract
Progressives and good government groups were already less than enthused by Zients when he was picked to head Biden’s pandemic response, given his corporate background. For one, Zients got his start out of college, as he explained in 2014, at “a company that I didn’t talk a lot about for a period of time but now I talk openly about, which is Bain & Company in Boston,” where he had a “great experience.” The reason he hadn’t talked about it was that Bain, once headed by Barack Obama’s 2012 election opponent Mitt Romney, had been the target of a quite justified demonization campaign by the Obama camp, which depicted it a ruthless corporate raider.
Zients made his real break at the Advisory Group, and then its spin-off, the Corporate Executive Board, a management consulting firm that compiled confidential details from executives into reports about best and worst business practices, which it then sold back to the corporate world. What did that advice entail? Don’t bother trying to reestablish the social contract between worker and boss after a round of layoffs because it’s gone forever.
As groups like the Revolving Door Project pointed out, this wasn’t even the worst of it. One of the companies Zients’s investment firm Cranemere bought had a history of allegations of surprise billing and other shady practices, a pattern common to several other companies owned by the firm. Other health care firms Zients was involved with over the years had to pay out tens of millions of dollars to settle accusations of fraudulent Medicare and Medicaid billing, with the whistleblower who brought the offense to light claiming she’d been told by management to let it go in case the government never noticed.
Cost-Cutter in Chief
Zients’s time in government isn’t much more encouraging. There was one thing, and one thing only, that you hired Jeff Zients for in 2009, when Barack Obama tapped him for the Office of Management and Budget (OMB): cost-cutting. A week into his first ever management job, the story went, Zients had cut his staff from six to two employees before replacing one of the remainders.
In the specially created post of chief performance officer, Zients was tasked with streamlining government and rooting out inefficiencies as part of Obama’s big show of taking on waste and shrinking the expense of government. In this role, he later explained, he worked to “bring corporate best practices into government” by putting together a “board of advisors coming from the private sector.” His ongoing presence in the White House got the fiscal hawks over at the Committee for a Responsible Federal Budget very excited, celebrating his eventual moving up to acting director of OMB in 2010 as “very useful as the government shifts from stimulus to cutting back over the next few years.”
Zients told the Fiscal Times in 2010 it was the call of history that led him to join the administration: not the worst economic crisis since the Great Depression that Obama was elected to solve, but the “rising deficits and debts” that meant the government had “to make sure every taxpayer dollar count.” This made him an ideal partner for then vice president Joe Biden, his fellow penny-pincher in chief, who Obama had likewise tasked with drawing on his career-long obsession with deficits to cut often infinitesimal amounts of waste from federal spending.
A Congressional Research Service analysis from 2011 gives a sense of Zients’s efforts. An OMB memorandum influenced by Zients mandated that federal agencies pick at least five “significant” possible terminations or reductions it could make to its budget submissions, with the aim of either freezing it or cutting it by 5 percent. Agencies were encouraged to set targets and get feedback from “private sector managers” and other “outside experts.” Among the five “key principles” Zients outlined for creating a “performance management system” were “relentless” performance reviews at every level of government; any practice that didn’t meet these principles was to be cut.
What exactly did all this look like in practice? Sometimes it meant relatively uncontroversial measures like finding savings in contract spending, rooting out improper payments for government services, or shortening the lengthy and complicated federal hiring process. But sometimes it was more questionable.
One high-profile Zients-led initiative involved saving a few billion dollars worth of maintenance and upkeep costs a year by “getting unneeded properties off our books” — a fire sale on thousands of pieces of federally owned real estate, in other words, sales sometimes done over the vehement objections of locals, and which could have at least been used to develop much-needed affordable housing.
“Most of these properties have little or no market value. But the ones that do, we will sell,” Zients said, as he pushed for the creation of a board made up partly of private sector representatives to carry out the task. The board would leapfrog the onerous rules around selling federal real estate by presenting “bundles” of properties for Congress to vote up or down on. This was all despite the Congressional Budget Office multiple times finding the proposal would actually add to government spending and the deficit.
Particularly relevant now, as Biden pushes for permitting reform favored by the fossil fuel industry, was his promotion of a program expediting permitting and environmental reviews for certain infrastructure projects, an initiative that came to encompass the controversial Keystone XL pipeline. Obama eventually tasked Zients with leading the effort to slash the time it took to approve such projects.
The “Customer” Is Always Right
Zients eventually moved to the National Economic Council (NEC), where he could advise the president on economic policy. As one might expect, his approach was firmly a supply-side one. He viewed public-private partnerships as the future of infrastructure and wondered how to “scale that form of infrastructure development” from the state level. He pointed to Virginia specifically as having done a good job using such initiatives, even though by that point, the actual experience in that state, as elsewhere, has meant decades of sometimes increasingly pricey private toll roads and additional propping-up from taxpayers.
Zients estimated that “a good 10-15 percent of my time is meeting with CEOs, entrepreneurs, labor leaders” to work out economic policy, with a particular emphasis on the first two, because “in many ways business people on the front lines are our customers” and “they are creating the jobs.” Once asked if someone in the private sector who wanted to lobby or give their views on economic policy should simply call him up directly, he responded that it was he who went out of his way to be in close touch with these “customers,” by attending forums of business leaders multiple times a week and “meet[ing] one-on-one with several CEOs a week” to get feedback.
“What are we doing well? What are we missing? What are we doing that is getting in the way of your creating jobs and growing the economy?” were the questions he asked, he said.
He pointed to the explosion of fossil fuel production under Obama, boasting that “we’re now the number one producer of oil and gas in the world” and that “we will be exporting significant sums of LNG [liquid natural gas] in the future.” At one point, he was part of a White House standoff with Elizabeth Warren over the ultimately doomed nomination of Wall Street banker Antonio Weiss to a Treasury post. Zients sang Weiss’s praises to the end, explaining that government needed “a broad set of experiences and skills and talents,” including “people who have not served in government before that bring a certain perspective, people with business experience, people with financial experience.” It’s not clear why Zients seemed to think former Wall Street bankers were an underrepresented minority in government ranks.
Other initiatives Zients was enthusiastic about while on the NEC included the unelected austerity board that disastrously handled Puerto Rico’s finances, the corporate-friendly Trans-Pacific Partnership Agreement that may well have put Donald Trump in the White House, and an ill-fated initiative, aimed at getting more “autonomous” cars on the road, that quickly sent someone to the hospital (as so many have over the years). At one point, he was “optimistic we can get something done” on corporate tax reform when it turned out Obama’s proposal overlapped with a key Republican’s plutocratic plan to slash the corporate rate into the twenties while closing loopholes and ending deductions.
Jeff Zients speaks during a press briefing at the White House on April 13, 2021. (Brendan Smialowski / AFP via Getty Images)
Zients probably became best known for the work he did after this, fixing the malfunctioning Obamacare website, which helped him solidify the whiz-kid reputation that got him appointed COVID chief seven years later. Unfortunately, overseeing website repairs, cost-cutting, and administrative streamlining turned out to be poor preparation for managing a deadly pandemic.
Under Zients, nearly seven hundred thousand people have died of the virus in the United States, a number far higher, proportionally to population, than in other rich countries. And the pandemic response he was overseeing can’t be let off the hook for it. The administration had to be pressured, not always successfully, to do basic things like provide Americans with masks and ramped up testing, and it used the Defense Production Act to gather pandemic-fighting resources less than even Trump had, something which Zients was personally responsible for — ironic, given that “federal contracting that does not take advantage of the government’s purchasing leverage” was one of the barriers to effective government Zients had learned about during his “listening tour” under Obama.
As a grim winter approached at the close of 2021, Zients’s genius strategy for boosting vaccine uptake was to tell unvaccinated Americans that they’d soon experience “a winter of severe illness and death for yourselves, your families, and the hospitals you may soon overwhelm.”
Next Stage of Evolution
One might ask: How does a man whose career is checkered with corporate malfeasance, chumminess with CEOs, austerity-driven cost-cutting, and advocacy for lower corporate tax rates and more fossil fuel drilling fit with a Rooseveltian vision of expanded government and a new, green economy for the working class?
The answer is it doesn’t — which might be the point. Rather than jeopardizing Biden’s populist vision, Zients’s appointment may well signal that the version of Biden’s presidency sold to us and briefly entertained by the president is well and truly over, that it might be reverting back to something more typically expected from Biden and his party. Ominously, this comes just as the GOP has taken the House, and is preparing an attempt to force the president to accept Draconian spending cuts.
The Left couldn’t stop Zients’s ascent. But it should be prepared to stand against any regressive measures it ends up producing.Original post