Cabinet of the well-connected

February 11, 2009

Barack Obama is filling his administration with fixtures of the Washington establishment.

TWO NOMINEES for top positions forced to withdraw because of tax "issues," and another confirmed, but under a cloud because of the same thing. Others granted unexplained waivers to new rules barring former lobbyists. And plenty of career politicians who made easy money off the private sector as corporate "consultants."

Barack Obama promised his administration would be the most ethical in modern history, held to new and higher standards of conduct.

But he's also filling his Cabinet and administration with political insiders and thoroughly mainstream veterans of the Washington political establishment.

And there's no way to do both things at once--because no one becomes an insider in Washington without being compromised by the system of legalized bribery that greases the wheels in the "world's greatest democracy."

The low point came when Tom Daschle, the Democrats' former leader in the Senate, was forced to withdraw as Obama's nominee for Health and Human Services Secretary after it came to light that he had failed to pay nearly $150,000 in taxes, much of it because of a car service "donated" by long-time friend Leo Hindery, a prominent Democratic Party fundraiser.

Tom Daschle and Barack Obama
Tom Daschle and Barack Obama

When he lost his Senate re-election race in 2004, Daschle claimed that he would stay a "regular Joe." He said he wouldn't "become a lobbyist, telling friends that salesmanship was beneath him," the New York Times reported. But, the Times continued, he was also "eager for Washington's financial rewards. He had benefited from his wife's pay as an aviation lobbyist; they share a $2 million home in a fancy Washington neighborhood."

It turns out that Daschle made more than $2 million in consulting fees and $182,520 in the form of "company-provided transportation" by chairing the advisory board of Hindery's private equity firm.

Actually, Daschle's failure to pay taxes is less shocking than the fact that this "regular Joe" managed to earn $5 million in the four years since he left office--all for being politically connected in Washington, if temporarily out of formal office.

The same day that Daschle withdrew, Nancy Killefer was forced to drop out of consideration as chief White House performance officer, also over failure to pay taxes. A few weeks earlier, Treasury Secretary Tim Geithner was revealed to have paid $34,000 in back taxes to the IRS that he didn't pay while working for the International Monetary Fund from 2001 to 2004.

And that's not to mention the fortunes that some members of Obama's team amassed legally because of their Washington connections. Case in point: Leon Panetta, a former congressman and Obama's nominee for head of the CIA. Last year, Panetta took in $1.2 million from various sources, including "consulting" and speaking fees, and sitting on corporate boards.

OF COURSE, after eight years of Bush in the White House and the Republicans running Congress, it's not like anyone could be stunned to learn of the existence of corruption and influence-peddling in Washington.

The difference now is that the Democrats will get a bigger share of the spoils--no matter what Barack Obama said on the campaign trail about an era of change.

And that's a sorer spot than Obama and his advisers expected with the millions of people who voted for the Democrats. As former Clinton Labor Secretary Robert Reich wrote on his blog:

Typical Americans are hurting very badly right now. They resent people who appear to be living high off a system dominated by insiders with the right connections. They've become increasingly suspicious of the conflicts of interest, cozy relationships and payoffs that seem to pervade not only official Washington, but our biggest banks and corporations.

In short, many Americans who have worked hard, saved as much as they can, bought a home, obeyed the law and paid every cent of taxes that were due are beginning to feel like chumps...

The public wants change, real change, big change. There's no tolerance any longer for the way things used to be done.

At the same time, as New York Times columnist Frank Rich pointed out, the ethics scandals are exposing a larger reality--that an administration which promised "change" is filled with people who represent business as usual. As Rich wrote:

As with Daschle, the political problems caused by Geithner's tax infraction are secondary to the larger questions raised by his past interaction with the corporations now under his purview...

[H]e still has not satisfactorily explained why, as president of the New York Fed, he failed in his oversight of the teetering Wall Street institutions. Nor has he told us why, in his first major move in his new job, he secured a waiver from Obama to hire a Goldman Sachs lobbyist as his chief of staff. Nor, in his confirmation hearings, did he prove any more credible than the Bush Treasury secretary, the Goldman Sachs alumnus Hank Paulson, in explaining why Lehman Brothers was allowed to fail while AIG and Citigroup were spared.

Real change won't come from within the Washington system. It will come from people taking a stand--and struggling for jobs, health care, education and more.

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