John E. Sununu

A glut of bureaucrats

Obama needs skilled, motivated business leaders on his tea

By John E. Sununu
July 18, 2011

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‘I HAVE never been in banking.” Those words sounded pretty defensive when Treasury Secretary Tim Geithner uttered them two years ago. The financial crisis had left nerves raw, and Damon Silvers, my colleague on the congressional panel watching over the federal bailout, had just referred to Geithner’s supposed banking background. Silvers pushed on, suggesting, ”It was a very long time ago.” The secretary was visibly irritated. “Actually never.” Silvers pressed a third time, as though Geithner were some kind of amnesiac: “Investment banking, I meant.”

It might have been simpler if, from the beginning, Geithner had just shouted out the complete story - “I’m a lifetime bureaucrat!” - and been done with it. (His polite attempts to make the point over the crosstalk fell on deaf ears.) Throughout a distinguished career with the Clinton administration, the Federal Reserve Bank of New York, and the Treasury Department, he has been a policy-maker, a regulator, and an overseer. But he has never had to make a business work.

The same is true for most of President Obama’s Cabinet secretaries. Consider Shaun Donovan at Housing and Urban Development, Steven Chu at Energy, Ray LaHood at Transportation, and Gary Locke, who just left Commerce. They have spent almost every day of their adult lives as academics, government staffers, or elected officials.

That doesn’t make them bad people, but it means they have no firsthand experience with how their policies affect businesses’ investment and economic growth. There is no substitute for the private-sector demands of hiring and firing, managing cash flow, and putting capital to work. By comparison, this experience has been abundant in previous administrations.

Critics might contend that putting former private-sector CEOs in the president’s Cabinet places the fox in the henhouse. But it’s unlikely such executives would expose themselves to the headaches if they weren’t genuinely motivated by the call to service. All successful CEOs have achieved financial security. They view any government role as temporary, are driven by the challenge of improving organizational performance, and focus on completing the job with their reputation intact. That’s no small task.

Bureaucrats behave very differently than a private-sector manager because their motivations are different. Permanent bureaucrats, no matter how senior, worry about their next job. They worry about getting the boss angry; they worry about getting their employees angry, for nothing is more vicious than an officeful of disgruntled bureaucrats; they worry about getting the voters angry; and they worry about bad press, which could result in any and all of the above. That’s a lot of worries that might easily distract from actually developing good policy.

Of course, that never seems to stand in the way of pushing out a few more rules. To the contrary, a careerist will search for initiatives that show their bureaucracy “in action’’ - while never questioning the role, relevance, or mission of their organization. They make their living writing and enforcing new regulations that, all too often, are far removed from common sense.

As a result, the Department of Transportation continues to pursue regulations to restrict the shipment of lithium batteries as “hazardous” cargo, even though little or no evidence exists that they present any unique danger to transportation. As any consumer knows, these batteries are everywhere from computers to smartphones. The costs of the regulations are large; the benefits, quite unclear.

Similarly, the Environmental Protection Agency presses ahead with demands that New York City spend $1.6 billion for a microbial treatment system that would prevent 100 cases of intestinal disorder each year. Think about that. The city could instead give $1,000 to anyone who gets the cryptosporidium infection, and be covered for 16,000 years.

President Obama can write all of the executive orders he wants to about “reviewing regulatory costs” and “streamlining government.” But few in his Cabinet can distinguish a well-crafted and necessary rule from a waste of time and money. With unemployment at 9.2 percent and rising, Obama needs experienced business advisers in the White House.

Countries like France and Switzerland handed the reins of government to a class of professional bureaucrats decades ago. The United States has a choice. We also have a constitutional foundation that is designed to resist tyrannies of all kinds. We’ll always have bureaucracies, but bureaucracies led by bureaucrats might be too much of a bad thing.

John E. Sununu, a regular Globe contributor, is a former US senator from New Hampshire.