White House billionaires club
Wealthiest Cabinet will be tasked with serving populist agenda
WASHINGTON — Dwight Eisenhower surrounded himself in the White House with such wealthy individuals that his Cabinet was mockingly referred to as “nine millionaires and a plumber.”
President-elect Donald Trump is about to do him one better.
Trump won the election by appealing to America’s disaffected working class, promising to drain the Washington swamp of insiders, and railing against segments of the financial elite. But the New York businessman has tapped a slate of people very much in his own vein to serve alongside him — billionaires and multimillionaires, including Wall Street financiers, industrialists and scions of the superrich.
“Trump’s appointees will probably wind up being the most wealthy group of people who have served in a presidential Cabinet in history,” said Robert Spitzer, author of five books on American presidents and chairman of the political science department at SUNY in Cortland, N.Y.
Trump’s choice for Commerce secretary, investor Wilbur Ross, is worth some $2.5 billion by Forbes’ account, and Ross’ likely deputy, Chicago Cubs co-owner Todd Ricketts, is in the billionaires club too. Betsy DeVos, selected to head the Department of Education, is a billionaire philanthropist whose husband is heir to the Amway fortune.
Banker and movie financier Steven Mnuchin, Trump’s pick for Treasury secretary, and others who are key members of Trump’s transition team or in the running for still-unannounced Cabinet posts, including secretaries of State
and Energy, are by and large very well off.
Spitzer and other scholars note that there is nothing unusual about a president appointing rich people to top administration positions. President Obama’s Cabinet includes Commerce Secretary Penny Pritzker, a billionaire businesswoman.
Nor is doing so necessarily an indicator of success or failure. Eisenhower, a career military man who was not particularly wealthy, liked being around self-made people, and is regarded by historians as an effective commander in chief. George Washington and Thomas Jefferson, two of the most highly acclaimed American presidents, were very rich by the standards of their day.
Trump stands to become the wealthiest person to occupy the Oval Office, with a net worth estimated by Forbes at $4.5 billion.
And just as his wealth did not bother his supporters, many of them don’t seem to mind that he is now tapping others from the super-rich club.
“I’m not surprised he’s appointing billionaires. He’s going to pick what he knows,” said Gayle Stafford, 49, a middle school teacher who lives in a suburb of Cincinnati and voted for Trump. She acknowledged that Trump “talked about getting rid of that kind of thing,” but added, “I would hate to classify anyone who’s wealthy as someone who can’t get the job done.”
Of course, today’s economic times are different from Eisenhower’s, which launched a kind of golden age of broad-based prosperity when there seemed to be little downside to globalization and technology.
The recent decades of manufacturing decline, stagnant earnings and growing income inequality have hardened feelings that the nation’s richest 1%, and the politicians who support and protect them, are out of touch with ordinary citizens and their needs.
“Part of the point of a diverse Cabinet, besides the PR value — a Cabinet that looks like America — is the diversity of views and experience it brings, shaping the advice the president gets,” said Andrew Rudalevige, professor of government at Bowdoin College in Brunswick, Maine. “There might not be a variety of political or policy instincts in a Cabinet of ‘14 billionaires and a millionaire’ — or however it comes out.”
Referring to Martin Durkin, Eisenhower’s Labor secretary and former head of the plumbers union who was singled out in the old joke as the only nonmillionaire, Rudalevige said,“Trump’s picks seem far more ideological. And no plumber yet.”
Even Stafford said she was worried that DeVos may end up sapping public schools in a drive to promote school vouchers and charter schools.
“She is very wealthy .... She’s sent her own kids to private schools,” said Stafford, who has 22 years of teaching experience at both public and private schools. “Is she going to give public schools a chance?”
During his campaign, Trump argued his own elite status and wealth actually made him more qualified to take on the establishment and change the rules that once served him.
But critics wonder whether Trump’s Cabinet choices will share that goal, or be tempted to skew policies toward the wealthy, not the working class.
Mnuchin this week sought to allay such concerns: “There will be no absolute tax cut for the upper class,” he said on CNBC.
However, that doesn’t square with the tax plan proposed a few months ago by Trump and his economic team — to cut taxes by roughly $6 trillion over 10 years, with a sharp lowering of top tax rates and other changes that would largely benefit corporations and higher-income individuals.
Democratic leaders fear that the Trump administration will be overly pro-business and weaken regulations against banks and other firms.
Beyond policy, government watchdog and ethics lawyers are concerned that the extraordinary wealth of Trump and his White House create personal temptations and conflicts. Graft scandals marred Presidents Warren G. Harding and Ulysses S. Grant, whose Cabinets also were stacked with rich individuals.
After Watergate there were stronger conflict-of-interest rules for executive branch officials, including Cabinet members. Trump’s appointees would have to divest any holdings relevant to their new jobs and recuse themselves from areas where they might have a financial interest.
“Presidential appointees may not have personal financial interests that will be directly and particularly affected in a substantial way by their decisions as government officials,” said Robert Lenhard, a senior attorney at Covington & Burling who was a member of the Federal Election Commission in 2006 and 2007.
Obama took the additional step of requiring his Cabinet members to resign from company boards they sat on.
Former Goldman Sachs chief Henry M. Paulson sold several hundred millions of dollars in Goldman stock after the Senate confirmed his appointment as President Bush’s Treasury secretary in 2006, although he also reportedly took advantage of a tax break designed to make it easier for the rich to accept government jobs, which allowed him to defer paying capital gains when he sold.
The rules are likely to trigger extensive vetting of Trump’s super-wealthy Cabinet members, who will face pressure to step down from corporate boards, sell off certain stock holdings and put assets into blind trusts for the duration of their terms.
Ross, in particular, faces a lot of work to clear all his financial tie-ups, including board seats and interests with companies involved in banking, energy and transportation. Mnuchin, like Paulson, may have to convert his investments into Treasury notes.
The president, however, is exempt from such federal ethics laws. By tradition presidents in recent decades have put their investments in blind trusts, in which stocks and other assets are managed, bought and sold by an independent third party, without the knowledge of the owner. It is intended to remove the appearance and possibility of self-dealing.
Government ethics lawyers and watchdog groups have urged him to sell off his vast businesses, which include hotels, golf courses and office buildings, and put the assets in a blind trust, but Trump said last week that he had been turning over operations of his businesses to three of his children, who already have senior positions at the Trump Organization.
And he said this week that on Dec. 15 he would reveal a plan to avoid conflicts of interest while serving as president, although there was no indication that he was preparing to sell his businesses.
Ethics experts and political analysts are already concerned such steps will not go far enough or set the right example for his Cabinet.
“Here, the message sent by the person at the top, in this case the president, sets parameters and gives underlings a sense of what is — and is not — permitted,” said Michael Genovese, an American presidency scholar at Loyola Marymount University in Los Angeles. “President Obama set very strict guidelines from Day One, and emphasized over and over how important it was to not only obey the law, but do the right thing in the right way. This message filtered down the chain of command, letting everyone know what a top priority honest and transparent government was. The boss sets the tone for good or ill.”
Spitzer said Trump’s relaxed attitude about his own business dealings may affect how he views potential conflicts of his Cabinet members.
“It certainly suggests he will be lenient, tolerant, forgiving of people around him who may be less than scrupulous in maintaining a wall between their government service and their own private fortunes, private wealth, private business interests,” Spitzer said. “It’s a pretty hard wall to police.”