Government by revolving door

Recently Brian Grove, Pennsylvania senator Lisa Baker’s chief of staff, announced that he will become a director of corporate development for Chesapeake Energy Corporation, one of the principal natural gas players in our area. This type of move is nothing new on the American scene. In fact, we’ve gotten pretty much used to government by revolving door: the continuing migration of some individuals back and forth between government positions in which they can influence laws that may benefit certain industries and lucrative employment within those same industries.

But the fact that this has become business as usual is all the more reason to raise a red flag. If this phenomenon continues unchecked, government of, by and for the people will be replaced by government of the people by a select group of industry insiders. In fact, on a national level, that pretty clearly has already happened.

We should hasten to note that we have no beef with senator Baker, who has distinguished herself as a champion of the environment and Marcellus Shale residents when their interests conflict with those of the natural gas drilling industry. If there were some kind of quid pro quo for Grove getting a job with Chesapeake, we can’t imagine what it might be, as we haven’t seen anything coming out of Baker’s office that looks like a favor to the gas drillers.

Nevertheless, the move raises some disturbing issues. Grove has long been employed in government—before working with Baker, Grove served as deputy director of operations for governor Tom Ridge and as director of the Office of Public Liaison for both Ridge and governor Mark Schweiker. Now this erstwhile public servant can use the personal contacts and specialized knowledge gained while on the public payroll to benefit a corporation that by definition cares about nothing but its own bottom line.

It’s not clear whether this particular turn of the revolving door will wind up causing any damage, but we should certainly be vigilant to note whether Grove eventually turns the door one more time to come back into government, especially in a regulatory agency. To see the potentially pernicious effects of that kind of move, one need look no further than the current financial fiasco.

Clinton Treasury Secretary Robert Rubin, for example, was a previous vice chairman of Goldman Sachs and played a major role in financial industry deregulation that led to unsustainable excesses—along with another Goldman Sachs alumnus, former Federal Reserve Chairman and deregulation champion Alan Greenspan. After his stint with Clinton, Rubin signed up with Citigroup, where he specialized in the securitization of loans—another key ingredient in the recent financial collapse. Most recently, he became head of President Obama’s transition team, and though he himself is not now in the administration, Treasury Secretary Tim Geithner and Director of the White House Economic Council Lawrence Summers are two of his top protégés,

Henry Paulson, Secretary of the Treasury under George W. Bush, is another Goldman ex-chairman. Though Paulson decided to let Lehman Brothers collapse, he is one of the chief authors of the $170-billion-plus AIG bailout. He named Edward Liddy, formerly a Goldman board member, to replace AIG’s chief executive. Thirteen billion dollars of the AIG taxpayer bailout have since been used to pay off Goldman Sachs in various transactions in which it was a counter party.

No wonder Goldman announced a nice profit for the first quarter last Tuesday.

We bring up the Goldman case not because Grove has any connection with the financial crisis, but because it makes clear a point of principle: the fluid boundaries between government and the industries that it is supposed to regulate can leave the interests of ordinary citizens out in the cold—and that’s regardless of which way the door revolves. If public service is regarded as a take-off point for people hoping to land cushy jobs in the private sector, it is difficult for the public to retain confidence that their servants are working in the public interest, rather than in the interests of a potential employer.

There are now some laws to control the revolving door process at the federal level, though in our view they are woefully inadequate. They impose a two-year waiting period for private industry members who have entered government to engage in activities related to their one-time employer, and vice versa for government employees entering the private sector. We think such laws could and should be strengthened at the Federal level, and that similar restrictions should be imposed at the state level. Meanwhile, keep your eye on Grove if he ever rotates back into government.

Also in this issue:

• Finally, Spring

Dr. Punnybone

Shear Exhaustion