I Am Now, and Have for Eighteen Years Been, a Rubinite...
You know, Robert Rubin spent six years working full-time to raise his own taxes and decrease his own market power...
Robert Rubin went to work for the Clinton Administration in 1993 with four goals: (1) to make the decision-making process work smoothly; (2) to match the tax revenues of the federal government to its spending commitments; (3) to make the tax and transfer system more progressive so that people like him paid more and America's working class paid less; and (4) to make the financial system work more smoothly and transparently and so diminish the rents earned because of market position and institutional connections by people like him.
(1), (2), and (3) were big successes. (4) was a failure--the belief that financial deregulation would diminish Wall Street payouts because organizations like Goldman Sachs would face new competition from deep-pocket commercial banks--turned out to be wrong. Why it was wrong I do not understand. But it was a failure. However, it was not a catastrophic failure--it was not the repeal of Glass-Steagall that caused our current downturn, but rather other and different regulatory failures long after Rubin had left office. Against the failure of (4) you have to weigh the successes of (1), (2), and (3), in which Rubin served President Clinton, the American people, and the world very well--and you have to weigh a career spent raising lots and lots of $$$$$$$ for Democratic and progressive causes, many of which involved increasing his taxes and making him poorer. As best as I can judge, Bob Rubin's politics put him squarely in the middle of the Democratic senatorial caucus. And Rubin has proven to be very good at almost every job he has held--the only even half-serious complaints I have heard have been about his role at Citigroup in the 2000s, where he seems to have played somewhat the role of the Earl of Kent in the production of King Lear that was the Citigroup succession.
Thus I am somewhat surprised when I read things like this from Felix Salmon:
Replacing Summers with a Wall Street millionaire: [Gene] Sperling has done nothing to counter the general impression that he’s one of many Rubinites in the administration, in the context of a political atmosphere where one of the few points of agreement between the right and left is that the departure of Summers can and should be taken as an opportunity to finally put as much distance between Obama and Rubin as possible...
I think that if you are a shareholder of Citigroup you have a beef with Rubin: senior management are supposed to make sure that institutions take bet-the-farm risks only after great and sober thought and do not take them accidentally as a lack of oversight allows an originate-and-distribute business model to slip into originate-and-don't-distribute-fast-enough or simply originate-and-don't-distribute.
I think that if you are an American or a citizen of the world you have a beef with Rubin for believing--as I did--in the "Greenspanist" doctrine that the Federal Reserve had the tools to put a firewall between finance and employment and should thus regard bubbles principally with benign neglect.
But I think you have a much bigger beef with the American voters who put Phil Gramm at the head of the Senate Finance Committee and with the Supreme Court justices who put George W. Bush in the Oval Office, for theirs were by far the most serious failures of governance.
And I understand the view that because Bob Rubin's entire career cannot help but have created a man who thinks that Wall Street is a national asset--"what's good for America is good for General Motors, and vice versa"--rather than a debilitating parasite, should play no role in shaping financial regulatory policy today. I do not agree with that view, but I understand it.
But to say that Gene Sperling should be banned from a high position in the administration because he "has done nothing to counter the general impression that he is a Rubinite"?!?!
That seems to me to be foolish.
Gene is extremely able, extremely hard-working, extraordinarily well-qualified to be Assistant to the President for Economic Policy, and would do a very good job at it. When Bloomberg paid Gene $13 a word to write columns, it wasn't because Bloomberg thought that was a way to bribe Gene but rather because Gene's previous service in the Clinton Administration had made him somebody whose byline would attract eyeballs and thus sell Bloomberg terminals. When Goldman Sachs paid Gene $1,000,000 to "consult" on its charitable contributions, it may have been a bet on their part that Gene actually knew something nobody else they could quickly find and trust did about the flow of money to social-service organizations. It may have been an attempt to make Gene think that Wall Street was overtaxed and should be cut a break. If it was the second, it failed. Sperling has not been a voice within the Obama Administration for kinder, gentler treatment of Wall Street--rather, the reverse.
Felix quotes Mark Thoma saying:
A break from the Wall Street connected side of the Clinton administration would have political value. Even better, no matter the choice, would be to show through action that the administration is, in fact, determined to reduce the chances of another meltdown by being tough on the financial sector. But, so far as I can tell, that doesn't seem to be the direction Obama intends to go.
As I read Mark, he is saying that (a) since the Obama administration is not determined to do anything more to reduce the chances of a financial meltdown, (b) then there is political value from purging Rubinites from the administration.
And Felix closes:
The problem, of course, is that Wall Street became so big and so pervasive over the course of the boom that it’s hard to find people to run the NEC who haven’t been paid large sums by banks at some point. And even if they are relatively pure on that front, there’s every reason to expect that they’ll pull an Orszag and start taking millions of Wall Street dollars the minute they leave. Obama can try to distance himself from Wall Street, but it isn’t easy.
I would put it differently. I would say that you want to draw your White House staff from successful managers--people who have had lots of experience bossing other people and who have done very well at it--and that there are only three groups of successful managers who are Democrats: Hollywood studio executives and their ilk, people who have made careers in government and academia, and executives who have worked for traditionally-Jewish investment banks. If you want managers in a Democratic administration, that's where they have to come from. And I don't think you want to throw out a third of your potential talent pool at the very start.
DISCLOSURE: Robert Rubin was my boss's boss for six months while I was a Deputy Assistant Secretary of the Treasury for Economic Policy, and Robert Rubin's son and my brother have been good friends for more than two decades. There are other, looser, and more indirect ties as well: the social network graph is fairly dense when you try to trace it out--six degrees of separation, you know.