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Former Presidents Have Used the Presidency to Enrich Themselves, Generating Conflicts of Interests and Undermining the Democratic Integrity of the Presidency

Published: January 19, 2018; Updated: October 16, 2018

Wall Street in New York City. Photograph: Corruption Watch

From the White House to Wall Street

 

Within four months of him leaving the White House, it was reported that Barack Obama would be paid $400,000 to speak at a conference on healthcare organized by Wall Street firm Cantor Fitzgerald in September of 2017.

Obama has since given paid speeches to the Carlyle Group and clients of the Northern Trust Corporation.

He has also given paid speeches to non-financial institutions.

Precedent

 

Obama is not the first ex-president to cash-in after leaving the White House.

 

The monetizing of the presidency began after Gerald Ford finished out the term of disgraced former President Richard Nixon, whose resignation elevated Vice President Ford to the presidency in 1974.

 

On the domestic policy front, few will remember Ford for anything other than his pardon of Nixon.

 

But his most significant innovation came in the years following his short presidency.

 

After leaving the White House Gerald Ford not only gave paid speeches to private sector firms, but also took seats on numerous corporate boards and was hired as a consultant by several companies.

 

And just like that the cache of the highest public office in the United States was reduced to a mere bullet point on a resume drafted in the pursuit of a corporate paycheck.

 

With the exception of Jimmy Carter, every subsequent ex-president has followed in Ford’s footsteps, though they have shunned positions as corporate consultants and board members in favor of paid corporate speeches.

 

Reagan would become the first former-president to make his services available to a foreign corporation.

 

In 1989, he was paid $2 million by Japan’s Fujisanki Communications to make two 20-minute speeches and partake in several other company events.  

 

The commercialization of the presidency continued with George H.W. Bush who has given speeches for the Washington D.C. based Carlyle Group for undisclosed sums.

 

And, as too often appears to be the case when discussing precedents for presidential corruption, the Clinton name surfaces here too.

 

When it comes to monetizing the presidency, Bill Clinton is the undisputed champion.

 

Millions of dollars for speeches at Wall Street’s largest firms. Check. $11,100 per minute for a 45-minute speech in Israel. Yup. $750,000 for a single speech in Hong Kong. Why not?

 

The net result is that Bill Clinton has earned over a $100,000,000 in speaking fees since leaving the White House.

Even George W. Bush, who is widely viewed as having lied the country into war with Iraq, presided over an economy en route to the most severe economic crisis since the Great Depression, and left office in 2009 with a dismal 61% disapproval rating, has managed to pocket six figures per speech on the speakers circuit.

Analysis

 

Viewed as individual cases, it may not seem like a big deal that these former presidents have chosen to cash-in: what’s wrong with a speaker earning a fee that someone is willing to pay them?

 

But this view fails to consider the implications of ex-presidents hitting the corporate speakers circuit for the presidency as an institution.

 

The problem is not just that Obama has decided to join the speakers circuit after eight years in the White House; it is that every president since Gerald Ford - with the sole exception of Jimmy Carter - has used the highest public office in the country as a financial asset: the source of a future revenue stream.

 

And if this is what the presidency is reduced to, it permanently degrades the independence of the office and creates possible conflicts of interests: sitting presidents may think twice about supporting legislation that is opposed by firms who will be soon be writing their checks.

 

Today Obama gives paid speeches for six figures to Wall Street’s biggest firms.

 

But it’s not hard to remember a time when a young Obama administration was tasked with overseeing the reform of a Wall Street that had led the country into the most severe financial crisis since the Great Depression.

At the time, the Obama administration had several possible responses it could have adopted. 

Some (e.g. Simon Johnson, former chief economist at the IMF; Sheila Bair, former head of the Federal Insurance Deposit Corporation; Richard Fisher, the former Dallas Federal Reserve President; Alan Greenspan, the former Federal Reserve Chairman who presided over the boom before the bust) called for the too-big-to-fail banks to be broken up.

Multiple bills pursuing this policy option were introduced in Congress during the post-crisis debate on how to prevent the recurrence of such a calamity. 

Others (e.g. Ben Bernanke, the former Federal Reserve Chairman who presided over a waning boom and the immediate response to the bust; Daniel Tarullo, a former member of the Federal Reserve's Board of Governors) argued that the solution was not breaking up the too-big-to-fail banks, but introducing more modest new regulations and tools that would allow the government to better respond to future crises.  

And of course, the too-big-to-fail banks themselves aggressively pushed for the status quo

Ultimately, Obama signed the Dodd-Frank Act into law, which introduced some new regulations while leaving the too-big-to-fail banks in tact.

 

In fact, not only have the too-big-to-fail banks remained in tact, but many of them have actually grown larger than they were before the financial crisis

The young Obama administration was also faced with the issue of how to respond to allegations of criminal wrong-doing by some Wall Street bankers in the run-up to the financial crisis. 

Ultimately, it opted to let them off the hook rather than aggressively pursue prosecution. 

All this begs the question: was it always President Obama's intention to earn Wall Street pay checks after leaving the White House? If so, did it affect his response to the financial crisis?

 

Might a desire to hit the Wall Street speakers circuit after leaving the White House have influenced Obama's choice between breaking up the banks or implementing more modest reforms?

 

Did it play a role in the administration's decision to not bring criminal charges against Wall Street bankers following the financial crisis? 

 

In short, did a desire by Obama to cash Wall Street checks mean his presidency was subject to capture by private interests from the start?

 

(This is all to say nothing of the massive campaign contributions Obama received from Wall Street as a candidate for both his 2008 and 2012 campaigns.)

Of course, this is all conjecture: we don't know whether Obama always planned to hit the Wall Street speakers circuit after leaving the White House and whether that desire influenced his policy decisions.

But accountable government means never having to ask: former holders of public office should not engage in actions which call into question the objectivity of the decisions they made while in office. 

 

Note that the issue here is not the former president earning a buck in his post-White House years; the issue is doing so in a manner that calls into question the independence of his presidency from conflicts.

 

For example, Obama and his wife have signed a $65 million deal to each publish a book on their time in the White House.

 

 This method of generating an income avoids the possible conflicts of paid corporate speeches: when was the last time you heard of the book publishing industry's army of lobbyists descending on Washington to oppose the adoption of even the most minimal new regulations immediately after it led the country into an economic crisis and was bailed out with taxpayer money?

 

It is unlikely that any conflicts of interest may arise when a sitting president knows he plans to sign a lucrative book publishing deal after leaving the White House because the book publishing industry does not have business interests that are often antithetical to those of the majority of voters and is not the subject of continuing and intense regulatory debate.  

 

The same is not true when a sitting president who is tasked with reforming Wall Street knows he will seek a lucrative career as a paid speaker to Wall Street firms after leaving office.

 

By giving paid speeches to the financial sector his administration oversaw the reform of, Obama is profiting off his presidency in a manner that raises legitimate questions about conflicts of interest he may have faced while in office.

 

If the presidency is viewed by Oval Office occupants as a bullet point on a resume whose objective line states “To secure hefty post-presidential speaking fees from the private sector,” then presidents will operate in a permanent state of conflict of interests, threatening the capture of the executive branch by private interests.