On “Speaking Fees,” Biden and Yellen

In the 90s there was a scandal about “buckraking,” where journalists were reporting positively about certain moneyed interests while raking in huge “speaking fees” from them. (A good example was 1996’s Money Talks by Howard Kurtz, Part 1, Part 2.)

While Congress has since banned honoraria for its members, the market for reporters and pundits who speak to business audiences has never been hotter. Some big-name media people routinely receive $15,000, $30,000, even $50,000 for a single speech. And the bulk of that money comes from corporations and lobbying organizations with more than a passing interest in the issues the journalists write about and yak about for a living.

Chris Matthews

Many years ago several of us “bloggers” looked into why Chris Matthews was doing things like comparing Osama Bin Laden to Michael Moore. Matt Stoller, Peter Daou, myself and others posted an Open Letter To Chris Matthews and Matt set up a a website that became popular. I did some research and discovered that he was raking in huge “speaking fees” from the usual suspects. See The Matthews Speaking Fee Controversy.

Reward For Good Service

Since then I’ve written about this several times, most notably in Eric Cantor Goes To His Reward,

Cantor will receive a huge, fat, lucrative, awe-inspiring, 1-percent-making, mansion-jet-and-yacht-buying, zillion-figure paycheck from his Wall Street/corporate constituents.

Take Our Gold Or Take Our Lead

That piece referenced Neil Barofsky’s book Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street. Barofsky explained that people in government are given two choices, “the gold or the lead.” From the NY Times review, (emphasis added, for emphasis)

Mr. Barofsky, wearing an unseasonal wool suit at odds with a “Washington-appropriate wardrobe,” is poised to let the hostess seat them at a front table of her choosing, but Mr. Allison insists on a private table in the rear. Then he gets down to business.

“Have you thought at all about what you’ll be doing next?” Mr. Allison asks Mr. Barofsky, soon adding, “Out there in the market, there are consequences for some of the things that you’re saying and the way that you’re saying them.”

“Allison was essentially threatening me with lifelong unemployment,” Mr. Barofsky concludes, and alternatively suggesting a plum government appointment some day if Mr. Barofsky would simply “change your tone.”

When Mr. Barofsky tells his deputy of the exchange, the deputy says, “It was the gold or the lead,” resorting to the lingo of their joint experience prosecuting Latin American drug kingpins in New York: Cooperate and share the riches, or don’t and get plugged.

“Have you thought at all about what you’ll be doing next?” There are “consequences” if you don’t play ball. But if you do play ball, there are rewards. And everyone knows it.

Biden, Blinken, Yellen

So now President-elect Biden (who made millions from public service, $200K per “speech”) is making some appointments that are getting attention because they have been making serious money after leaving previous public service.

Biden has nominated Janet Yellen to be Secretary of the Treasury. Politico: Janet Yellen made millions in Wall Street, corporate speeches,

In the past two years, President-elect Joe Biden’s pick to be Treasury secretary, Janet Yellen, has raked in more than $7.2 million in speaking fees from Wall Street and large corporations including Citi, Goldman Sachs, Google, City National Bank, UBS, Citadel LLC, Barclays, Credit Suisse, Salesforce and more.

Biden nominated Tony Blinken to be Secretary of State. WSJ: Biden’s Pick for Secretary of State Took Up Consulting, Venture Capital During Trump Administration, Disclosures Show,

The firm, WestExec Advisors LLC, paid him $1.2 million, not including an expected payment of between $250,000 and $500,000 for 2020, according to the disclosures, filed through the U.S. Office of Government Ethics.

Biden nominated Avril Haines to be Director of National intelligence. NYT: Washington Has Been Lucrative for Some on Biden’s Team,

Mr. Biden’s choice for director of national intelligence, Avril Haines, was paid $180,000 to consult for the data-mining company Palantir, which has raised liberal hackles for providing data and surveillance services to law enforcement, including the United States Immigration and Customs Enforcement.

Why This Is Bad

The problem is not that Yellen, Blinken or Haines will do anything in these jobs because they received big money, it’s that it shows other people currently in government that big money can be made.

If people currently in government believe they can make serious money after they leave government there is a temptation not to do things now that would upset those who might be providing that serious money later. Regulating, investigating, prosecuting or refusing to do favors for future money-givers risks your future lucrative retirement from government.

Conviced bribery lobbyist Jack Abramoff explains in a 60 Minutes segment how it worked for him.

But the “best way” to get a congressional office to do his bidding – he says – was to offer a staffer a job that could triple his salary.

ABRAMOFF: When we would become friendly with an office and they were important to us, and the chief of staff was a competent person, I would say or my staff would say to him or her at some point, “You know, when you’re done working on the Hill, we’d very much like you to consider coming to work for us.” Now the moment I said that to them or any of our staff said that to ‘em, that was it. We owned them. And what does that mean? Every request from our office, every request of our clients, everything that we want, they’re gonna do. And not only that, they’re gonna think of things we can’t think of to do.

De-Normalize Corruption

Leaving government and then accepting big money from they very interests you were involved with while in government is corruption, legal or not, and it encourages corruption of those still in government. It normalizes a culture of corruption, and that’s how we ended up with a Trump.

Trump and the rest were bad and corrupt. Really bad and corrupt. Historically bad and corrupt. They way to prevent another Trump from coming back is to de-normalize corruption.

There should be a 5 or 10-year ban on making big money from industries you were involved with while in government. (Let hearings determine how much is too much. Mayne more than twice your govt compensation?) And that includes “speaking fees.”