How To Get Filthy Rich in Obamaworld

The growing list of folks getting a juicy return on their association with the President.

When I was in DC about a month ago, speaking at the Atlantic Economy conference, the keynote speaker was Paul Volcker. Tall Paul could not refrain from starting his remarks by commenting on how prosperous the capital looked and made it clear he regarded it as unseemly. And indeed, at least to someone breezing in and out, the town is ostentatiously well turned out, with lots of new construction and upscale stores and restaurants. The cab driver pointed out a new commercial building which he said had been built on spec and was leasing up well.

It has become depressingly normal to hear of senior Administration officials going immediately for the golden ring when they leave public service. But for every Mary Shapiro joining Promontory and Lanny Breuer returning to Covington & Burling for $4 million a year, there are even more operatives at similar or lower levels who make a very juicy return on their association with Obama but don’t get the same level of attention in the mainstream media.

Norm Scheiber, in a must-read article in The New Republic, “Get Rich or Deny Trying:
How to make millions off Obama
,” chronicles how this process works. It’s even uglier than you might imagine.

In theory, there are some bounds of propriety:

Within Obamaworld, there are a few unwritten rules about how to parlay one’s experience into a handsome payday. There is, for example, a loose taboo against joining a K Street lobbying shop and explicitly trading on administration connections. And while joining a consulting firm is acceptable, those who do are reluctant to work for clients reviled by liberals: gun makers, tobacco companies, Big Oil, union busters. Above all, there is a simple prohibition against excessive tackiness. “It’s like: Don’t embarrass yourself. You were part of something special,” says a longtime Obama adviser. “I think if [Obama] were to send an all-staff e-mail, it would be along the lines of Ron Burgundy—‘Stay classy, San Diego.’ ”

But of course, these protocols are often violated in practice. One assumes that as long as one isn’t too flagrant about it, no real harm done, right? Scheiber uses major Obama fundraiser, former UBS chairman Richard Wolf as an example. Wolf never held an Administration post, so he can’t necessarily be expected to hew tightly to the unwritten code. But one of the no-nos is trading, or being perceived to trade, on one’s connection to Obama. Wolf has staffed his consulting firm 32 Advisors with Obama luminaries such as Austan Goolsbee and important insiders like Kevin Varney, the former chief of staff of Ex-Im Bank. Wolf maintains that Obama would never lift a finger to help him while also saying the President is supportive and playing up official relationationships in his website and marketing materials.

While Scheiber discusses some of the places that offer a lucrative landing for former Obama team members, like SKDKnickerbocker, he makes clear how easy it is to profit if you’ve acquired the right connections:

But it turns out the highest-profile White House grads don’t so much join consulting firms these days; they found them. A boldfaced Obama name can rake in upward of $25,000 per month from a client just by dialing into a conference call and drafting a memo from time to time. Four clients means more than a million dollars a year with virtually no overhead. “You can run a business like that on an iPad and a cell phone,” says the former administration official. The godfather of this approach is ex-Clinton strategist Doug Sosnik, famous for conducting his business meetings in jeans from coffee shops and hotel lobbies. David Plouffe and Stephanie Cutter have both adopted the Sosnik model.

The alternative is to rent out office space and staff up, in hopes of one day growing into a consulting powerhouse. This is the Glover Park Group model, based on the firm a group of former Clinton and Gore hands opened in 2001 and nurtured into a 160-person juggernaut. Jim Messina appears to have ambitions in this vein, having procured office space and hired support staff. Former Obama press secretary Robert Gibbs, who briefly flirted with trying to return to the White House, is in the process of launching a similar firm with Ben LaBolt, the 2012 campaign press secretary.

Oh, and if you care about inside baseball, Scheiber also describes some of the rifts among the Obama alumni. But of course, if there is any problem with propriety, it’t the other guys who have it:

Of course, this being the Obama tribe—a group of people who promised the most ethical, transparent administration in history; who gave themselves migraines by refusing to hire lobbyists (except when they did); who, during the 2008 primaries, held up the influence-peddling ex-Clintonite Lanny Davis as a shorthand for everything wrong with Washington—there is more than a little anguish over all the newfound riches. “Axe [David Axelrod] thinks all of us are lobbyists,” says one Obama campaign adviser. In conversations with other Obamans, several were willing to damn former colleagues as ethically suspect. (Naturally, they downplayed their own transgressions.)

There are paths outside the Beltway too, such as tech consulting firms, big technology companies, and Hollywood. But one “protected zone is Organizing for Action, which is a permanent campaign apparatus, now focused on Obama’s legislative agenda (catfood futures!) and one presumes, early legacy-building. It managed to earn a rebuke from the New York Times over its post-campaign fundraising. But it’s such a powerhouse that former operatives curry its favor.

This story makes the outrage over the Clintons’ selling the Lincoln bedroom seem so…quaint. For every anecdote Scheiber presents, it’s certain there are a dozen more like it. No wonder people like Gene Sperling, director of the National Economic Council, use the phrase “middle class” as if it was an alien phenomenon. The people in the Beltway money bubble don’t need to care about ordinary Americans, and so they don’t.


Yves Smith is the founder of Naked Capitalism and the author of "ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism."