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Posted at 8:50 AM ET, 12/16/2010

Orszag and Citigroup

By Ezra Klein

Thumbnail image for orszagleaving.JPGJames Fallows gently chides me and my paper for not writing more on Peter Orszag's decision to take an executive position with Citigroup. He's probably right to do so, though my silence was in part motivated by terror at having to try and add anything to this brilliant post by Will Wilkinson, and in part just being busy with other subjects. But reading the coverage, I've been struck by a few things.

1. I'm not nearly so sure it's about the money as other people seem to be. Orszag is fairly wealthy already (my understanding is he sold off an economic consulting firm when he became director of the Congressional Budget Office), and his lifetime of public service positions does not suggest a man particularly motivated by income. Rather, I think people are underestimating the lure of the job itself.

Orszag has gone as high as he's likely to go in government, and he's 41 years old. The guy isn't done, but there's not much more for him in Washington. So what is left for him?

Well, he could do academia or a think tank. But that's a pretty sedate, low-stress existence compared with the tempo he's kept up over the past few decades. Let's say he doesn't want to move into a wiseman or advisory role. New York Times columnist didn't seem like a bad gig to me, but then, I've chosen to devote my life to similar pursuits. I'm not really sure why anyone would want to be a university president. You sometimes hear people say that he should've sat around and been fairly rich and respected, but I imagine that gets boring after the first decade or so.

Citigroup is a really big, really powerful institution. Orszag's position in it is the sort of position that could one day lead to being president of Citigroup. If you're him, and you're trying to figure out an interesting and high-impact way to spend the next 40 years, I can see why it's appealing. But it's the power and the job and the opportunity, more than the money, that make it appealing.

2. The problem is less why Orszag wanted to go to Citigroup than why Citigroup wanted to hire Orszag. In Citigroup, you're dealing with a bank that's simply much more reliant than other banks are on connections with the American government, and other governments. Bank of America has similar needs, and so too do a couple of others, but it's a short list.

Whether Orszag was a smart hire on these grounds is hard to say. It's difficult to overstate how much bad will has developed between Orszag and the White House he used to serve. Some of that comes from perceived disloyalty in Orszag's public statements -- like his first New York Times column, which called for a short-term extension of all the tax cuts when the White House was arguing for the permanent extension of most of the cuts and the expiration of the cuts for the rich -- but this move, which many in the administration consider politically problematic and personally distasteful, added considerably to the anger.

What Citigroup gets in Orszag is a brilliant policy mind and a deep understanding of government, not to mention a thick rolodex that certainly still has some friendly names on it. The reasons those things are valuable to Citigroup make most of us uncomfortable, and that goes double after the government bailed Citigroup out during the financial crisis. I highly doubt that the meetings between Orszag and Citigroup left him with the impression that he was getting hired to help with governmental affairs. His portfolio, in fact, is explicitly international. But I don't know anyone who believes that it will stay that way.

3. And on some level, it doesn't really matter if it does. There's no prior record of unscrupulous behavior with Orszag. He's someone who could've cashed out long ago but instead worked his way up through the government and was then instrumental in designing and passing a series of bills that will make the country a much better place. In my dealings with him he's been uncommonly honest about what is good policy and what isn't. He seemed, in general, much less intellectually captured by being in government than most people I've spoken to. His is a record to be proud of, and I doubt he intends to tarnish it.

But the problem isn't what he intends to do, and it's not even what he actually does. Federal law bars Orszag from even contacting his former colleagues as part of this job, at least for a few years. The problem is what it will make the public think. Orszag now becomes part of a long list of public servants whose subsequent career decisions make people trust the government less. Maybe that conclusion is incorrect on their part, but it's not unfair.

It's asking a lot of federal employees -- even famed and powerful ones -- to view themselves as having a duty not just to their ideals and their bosses and their constituents, but even once they're done, to the very idea of serving in government, and to the trustworthiness of others serving in government. But it's also asking a lot of the public to resist cynicism when they see bankers serving in White Houses and White Houses saving banks and banks hiring the people who saved them.

4. The question I've had trouble answering is what I'd have told Orszag to do instead. Life doesn't end at 41. Writing columns isn't for everybody. And what does serving in government -- even high up in government -- prepare you for in the private sector? And if the answer is "helping firms navigate government," which formulation of that answer wouldn't seem sleazy? Being a lobbyist isn't better than being global VP for Citigroup. If anything, it's worse. Perhaps becoming head of public policy for a company like Google plays better in the media, though it's really not different on a fundamental level, and in its explicit focus on Washington, may be worse. Waiting to take the job might have quieted some of the criticism, but the job might not have been there for him in five years, and at the end of the day, it would've had the same problems.

What's difficult about Orszag's decision to go to Citigroup is that I can see how it was the right decision for him even as it was the wrong thing to do. But pile up enough of those decisions -- this one, for instance -- and it is very hard to explain to anyone why they should trust government, even when the people in question haven't yet worked outside the public sector.

Photo credit: Carolyn Kaster/AP.

By Ezra Klein  | December 16, 2010; 8:50 AM ET
 
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Comments

Brilliant analysis, Ezra.

Posted by: bratschewurst | December 16, 2010 9:12 AM | Report abuse

thoughts on this, and the meaning of so many things this year, before christmas comes, and disappears again.

Well, so that is that
by w.h. auden

Well, so that is that. Now we must dismantle the tree,
Putting the decorations back into their cardboard boxes--
Some have got broken--and carrying them up to the attic.
The holly and mistletoe must be taken down and burnt,
And the children got ready for school. There are enough
Left-overs to do, warmed up, for the rest of the week--
Not that we have much appetite, having drunk such a lot,
Stayed up late, attempted--quite unsuccessfully--
To love all our relatives, and in general
Grossly overestimated our powers. Once again
As in previous years we have seen the actual Vision and
failed
To do more than entertain it as an agreeable
Possibility, once again we have sent Him away
Begging through to remain His disobedient servant,
The promising child who cannot keep His word for long.

Posted by: jkaren | December 16, 2010 9:22 AM | Report abuse

Orzag is now simply earning a paycheck directly from those he so ably served for free when working at the White House, nothing more and nothing less.

Posted by: johninflorida | December 16, 2010 9:35 AM | Report abuse

Orzag and others like him did not take jobs in the government to serve the public. They did it for power and money. His decision to go to Citigroup proves this. Mother Teresa was a public servant, 99% of government workers are in it for the money. Liberals still cling to this notion that people like Ted Kennedy sought and performed their jobs for the greater good of mankind. If Orzag wanted to serve the public he could have formed a non profit or done some work for a charity.

Posted by: cummije5 | December 16, 2010 9:39 AM | Report abuse

> So what is left for him?
> [...]
> Citigroup is a really big, really powerful
> institution. Orszag's position in it is
> the sort of position that could one day
> lead to being president of Citigroup.
> [...]
> The question I've had trouble answering is
> what I'd have told Orszag to do instead.
> Life doesn't end at 41

How about, I dunno, going to work for US Steel or General Motors or General Electric [*] in their _US manufacturing_ divisions, with the goal of becoming VP of Manufacturing and perhaps from there to CEO? That is, instead of taking all this brilliance and using it to increase the stranglehold of the FIRE sector on the US economy, instead of working out more ways for Wall Street to demand that US businesses cut jobs/ship jobs elsewhere, that he work to _improve the competitive and employment position of the citizens who entrusted him with these policy positions over the years_?

Naw, too much to ask. Better to hit Wall Street for a quick $20 million bonus than take a position where you might have to put on a hard hat and get some lubricating oil on the Armani.

sPh

[*] Now that GE has realized that it might not have been such a good move to try to kill all its manufacturing in favor of swapping mortgage securities.

Posted by: sphealey | December 16, 2010 9:41 AM | Report abuse

back when we were on the topic of federal employee salaries, and there were those saying they could get a lot more money moving to private industry,

i made the point that "they sure could, as long as they bring along that fat rolodex".

in industry, we have to sign 'non-compete' agreements, where we agree not to work for a competitor for X years after a separation with our current employer. I don't see why regulators and other government officials don't have to sign comparable documents.

Anyway, I will never begrudge someone like Orszag for picking up money off the street. I will begrudge the set of policies we have in place that deem the street a good place to leave taxpayer money.

Posted by: eggnogfool | December 16, 2010 9:46 AM | Report abuse

Orzag is really just the latest, shiniest example. What is the career path for any smart civil servant once they hit the top few levels? It's not just up-or-out, it's also up-and-out. And for government workers who aren't independently wealthy, there's also the matter of sending your kids to college and watching your peers (and the people you sit across from when negotiating policy) having far more comfortable lives and ultimately treating you with contempt because you aren't making their kind of money. I'm sure that the comingpay freeze and ongoing massive rise in animus toward government workers isn't helping. (Oh, and what Orzag intends also isn't important, because his attitudes for the next 20-30 years are going to be thoroughly formed by the people he spends time with every day.)

Perhaps there should be more public-service institutions where more smart people can wield useful power. The whole billionaires-divesting-their-wealth movement could have an impact.

Posted by: paul314 | December 16, 2010 10:01 AM | Report abuse

Ezra, I just read about your clueless performance on a panel the other day, directed there by Digby. You and everyone else in Washington have NO CLUE about the front lines of this economic crisis. Why should you--you're tucked well behind the lines in a castle. You would do well to stop writing and do some research. For God's sake and ours.

Posted by: kmblue | December 16, 2010 10:03 AM | Report abuse

Ezra, I just read about your clueless performance on a panel the other day, directed there by Digby. You and everyone else in Washington have NO CLUE about the front lines of this economic crisis. Why should you--you're tucked well behind the lines in a castle. You would do well to stop writing and do some research. For God's sake and ours.

Posted by: kmblue | December 16, 2010 10:05 AM | Report abuse

> n industry, we have to sign 'non-compete'
> agreements, where we agree not to work for
> a competitor for X years after a
> separation with our current employer.

They are: Congressmen and senior executive staff have been prohibited from lobbying their former colleagues/departments for 1 year after leaving federal service since 1978, and the restrictions were tightened in 2008.

I'd be deeply surprised if you had ever signed a private sector non-compete that was good for more than a year. IANAL, but courts are deeply skeptical of all non-compete agreements (and they are illegal in California), but even for a very key person (say the CTO of a technology company) a term of more than one year would be a very hard sell. HP didn't bother to go after Mark Hurd when he showed up at Oracle the day after being fired, for example, probably because they were sure they had no case.

sPh

Posted by: sphealey | December 16, 2010 10:12 AM | Report abuse

What you said to defend his decision was exactly right. He did exactly what a reasonable man would do in this society at this moment. But it is also exactly what is wrong with this society.

I really admire your analysis on policies. But your analysis on politics is really wrong. Just too naive. I think it is why the progressives are losing because they are all too reasonable. Take the tax cut deal for example. If Just looking at the numbers you posted, it looks like Obama won. But the what he did was validating the republican narratives of tax cut creating jobs, rich or not. It will set him up being attacking next time.

Posted by: amicus_mass | December 16, 2010 10:17 AM | Report abuse

Change We Can Believe In

Changing The Way Washington Works

Posted by: jnc4p | December 16, 2010 10:27 AM | Report abuse

Well your a little late at 26 to be losing your virginity, but congratulations anyway!

Posted by: 54465446 | December 16, 2010 10:29 AM | Report abuse

Best definition of crony capitalism I've read in a while:

"Progressives laudably seek to oppose injustice by deploying government power as a countervailing force against the imagined oppressive and exploitative tendencies of market institutions. Yet it seems that time and again market institutions find ways to use the government's regulatory and insurer-of-last-resort functions as countervailing forces against their competitors and, in the end, against the very public these functions were meant to protect."

http://www.economist.com/blogs/democracyinamerica/2010/12/rigged_revolving_door

Posted by: jnc4p | December 16, 2010 10:34 AM | Report abuse

sphealey wrote:

"[*] Now that GE has realized that it might not have been such a good move to try to kill all its manufacturing in favor of swapping mortgage securities"

In the interest of simply knowing what you're talking about GE is the leading employer in manufacturing in the US although on any given month that may alternate with IBM and depending on how the counting is done.

Posted by: 54465446 | December 16, 2010 10:43 AM | Report abuse

i think you as much as anyone should know Ezra that there's "fairly wealthy" and there's Wall Street Executive VP Wealthy and they're not even close to each other. He's about to become "Wall St Wealthy" and your not calling him on the carpet for this maybe shows you get a little too close to those you cover. I'd also expect that if he was working in the Bush Administration and went to go work for Wall St. we'd NEVER hear the end of it. The continuing double standards are maddening.

Posted by: visionbrkr | December 16, 2010 10:53 AM | Report abuse

This just illustrates how insulated top government employees are from how most of the world lives their lives. Orszag looks at what he did as an accomplishment, because amongst his peers it is a big one, while amongst the vast majority of those of us who live in the real world it is sleazy and corrupt. But, I suppose he doesn't have to associate with us peons any more so he will never know.

Posted by: AuthorEditor | December 16, 2010 10:57 AM | Report abuse

All of your points could have been made about Dick Cheney and his stint at Halliburton, but funny how partisan identifications drives labels of greed.

Posted by: HenryBemis | December 16, 2010 11:05 AM | Report abuse

nothing mysteious EZRA....in Washington DC it's always about Power and Control .... money and political influence ... who isn't for sale? His knowing the DC characters, makes him a valuable commodity for CITI.

Posted by: Hazmat77 | December 16, 2010 11:18 AM | Report abuse

amicus_mass ... I think your analysis is incorrect.

The Republicans have not been making any claims as you indicated. Their position is merely what Obama himself said: You don't raise taxes in a deep recession!

No Republican has been saying that retaining the present tax rates was going to create jobs...they've maintained that increasing the rates will PREVENT the economy from growing - which would naturally create jobs on its own.

Your partisanship is getting in the way of your critical thinking. grow up!

Posted by: Hazmat77 | December 16, 2010 11:25 AM | Report abuse

amicus_mass ... I think your analysis is incorrect.

The Republicans have not been making any claims as you indicated. Their position is merely what Obama himself said: You don't raise taxes in a deep recession!

No Republican has been saying that retaining the present tax rates was going to create jobs...they've maintained that increasing the rates will PREVENT the economy from growing - a job killer. - Your partisanship is getting in the way of your critical thinking. grow up!

=================================

Posted by: Hazmat77 | December 16, 2010 11:29 AM | Report abuse

The man is an economist. He worked in the government for a number of years, and then took a very good job. The job duties fit very well fit his government CV, and his pre-government CV.

It seems like some of the people posting here believe that he should simply toss his career in the dumpster after his government service is done.

Be real people. If working in the government means you can't work in industry afterwards, then no one worth his salt is going to work for the government.

"Come work for us for a few years. You won't have a career afterwards, but you'll get to reminisce about your years of public service for decades to come!"

And for the person who said go to work for GM to work on manufacturing, why on earth should he take a job that he is completely unqualified for? All financial types are not the same, and his experience doesn't fit with GM (at leat on the manufacturing side) AT ALL.

Posted by: WEW72 | December 16, 2010 12:58 PM | Report abuse

"In Citigroup, you're dealing with a bank that's simply much more reliant than other banks are on connections with the American government, and other governments. Bank of America has similar needs, and so too do a couple of others, but it's a short list."

I'm willing to bet this list is comprised mostly, if not solely, of institutions deemed "too big to fail."

And you can bet that Citigroup has hired Orszag to keep it that way.

Possibly, Orszag may think he was hired to be a liberal conscience for Citi's management, rather than well-connected lobbyist.

The test will be how long he lasts. If he's there but a short time, it's the former. If he lasts longer, it actually was the latter.

Posted by: tomcammarata | December 16, 2010 1:13 PM | Report abuse

I have to agree that this was a bigger story than WaPo treated it as. This would be news in any circumstance but the crash, the bailout, the White House being chock full of high-finance insiders, and this? It's an extraordinary story.

Posted by: TomCantlon | December 16, 2010 1:28 PM | Report abuse

Your assumption that it was the "right thing to do" for him personally, assumes that he has no need or interest in "meaning" in life beyond the exercise of power. "Going higher" in his profession, be it business or government, means ascending a ladder to the top. Given that he may already be pretty wealthy, why not apply himself to any number of business or social problems in organizations that are not corrupt? This decision, as a personal decision, only appears rational in a world that lacks a sense of moral values of a deep nature. If he has achieved all you say he has achieved at 41 he might consider what else there is to do (and there is a lot).

Posted by: michaelterra | December 16, 2010 1:42 PM | Report abuse

Hazmat77:

I never said they were arguing that keeping the present tax rate would create jobs because the option as not on the table.

but they did argue as you said raising tax on the rich == job killer;

is it the same as arguing tax cut creates jobs?

Posted by: amicus_mass | December 16, 2010 2:33 PM | Report abuse

Ezra, no one forced Peter Orszag to leave government. He could have continued public service by continuing at OMB or serving diligently in the Treasury as a political appointee or even as a career civil servant. Many people have long, fulfilling careers in nonprofit or public service till the day they retire and it's frankly arrogant and elitist to suggest that you can't be fulfilled doing that. Poor Peter Orszag, what will he do at 41? Good grief.

Posted by: jfung79 | December 16, 2010 3:20 PM | Report abuse

Republicans love to rage against bureaucrats, but that is exactly who we should trust.

The elected/appointed class is much less trustworthy than a career civil servant. Maybe that's why the party that hates gov, hates them...

Posted by: rat-raceparent | December 16, 2010 3:22 PM | Report abuse

Of course he chides you! Nothing against Mr. Orszag, and I doubt there's anything underhanded going on, but OF COURSE this is news. I'm ashamed I learned this from the Huffington Post, instead of a real paper.

Posted by: EvilOverlord | December 16, 2010 5:14 PM | Report abuse

HenryBemis:

It is funny how the media failed to report both instances of cronyism. It took a bunch of liberals jumping up and pointing for either Orszag's or Cheney's merry-go-round careers to become part of the public discussion. For your side it's always about the letter behind the name. For liberals, it's an acknowledgment that they all need to be leashed.

Posted by: gjcomm | December 16, 2010 6:49 PM | Report abuse

The problem with the Washing Post, Mr. Klein, is summed up with one statistic.

Not a single article about Orszag's move. Now tell me again why this paper exists?

The Washing Post dot com. Where the sins of the political elite go to be washed away. Try it. It leads you right here.

Posted by: gjcomm | December 16, 2010 6:53 PM | Report abuse

Klein, you slay me. Can you honestly say that you'd be writing the same vapid, intellectually dishonest defense of a former Bush administration key employee -- say, a John Bolton or Alberto Gonzalez or Michael Mukasey -- if the same thing was done by one of them? (And you can be sure LOTS of Bushies did the same thing.)

-- A former Obama voter

Posted by: jcbarrett44 | December 16, 2010 7:40 PM | Report abuse

Give me a big Bill Clinton I feel your pain 2.5 - 5.0 million dollar wedding break! When they say it's not the money........it's the money!

Posted by: Rlupodimare | December 16, 2010 8:51 PM | Report abuse

It never ceases to amaze me that the liberals who want to aggregate all power and money in Washington, DC are surprised that their liberal icons have feet of clay.

Wake up! It's human nature, not evil Republicans and selected evil Democrats, that is the problem. If you want less corruption in DC, shrink the size and power of the federal government!

Posted by: ElmerStoup | December 17, 2010 10:36 AM | Report abuse

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