When President Obama appointed William Daley as the new White House chief of staff, a great cry of relief was heard in the land, especially those parts of the land that happen to be corporate boardrooms. “His moderate views and Wall Street credentials,” reported The Washington Post, “make him an unexpected choice for a president who has railed against corporate irresponsibility and tried, with limited success, to appease restive liberals who think he has not been tough enough on bankers.” “All of these are excellent, pro-business moves,” enthused Fred Smith, CEO of FedEx. Even Senate Minority Leader Mitch McConnell had rare praise to offer. At last, a centrist who could reign in the Reign Of Terror endured by American capitalism.
Yet one stray thought occurred to me. Who was the previous, left-wing chief of staff orchestrating Obama’s bolshevism? Why, it was none other than Rahm Emanuel—Clintonian deal-maker extraordinaire and Scourge of the Left. So what could account for the overjoyed reaction?
The answer is that Daley is not just a garden-variety centrist like Emanuel. He is a “pro-business” centrist, which accounts for both his immense popularity and the enduring role played by his type.
Daley’s appointment reflects Obama’s determination to placate business and especially Wall Street, which are angry that Obama broke up the large banks and clamped down on executive compensation. No, wait, that’s not right. He furnished the banks with a massive bailout and then subjected them to modest regulation.
The greatest offense seems to be that Obama decried what he called “an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, D.C.” I would call this a fair summation of an industry’s decision to make massive bets it didn’t understand. The Wall Street view is that it’s not fair to condemn a whole program because of a single slip-up.
No, wait again. That was General Buck Turgidson’s argument in Dr. Strangelove. The Wall Street view is actually sillier than this: “Lincoln could have denigrated all Southerners,” complained JPMorgan CEO Jamie Dimon. “He didn’t.”
Now, I’d say, in asserting that an era of irresponsibility “stretched” from the boardroom to Wall Street, Obama was not condemning all of the business world any more than he was condemning all of Washington, D.C. (a category whose members included, among others, Senator Barack Obama). And yet, the hurt feelings of Wall Street in particular and business in general have not only persisted; they have persuaded Obama to take it upon himself to placate them.
Daley could not be more perfectly suited to this task. Born into a political family, he learned the value of the private sector early in his career. After some early success as a political operative, he joined a law firm where he specialized in using his Democratic connections. (“Bill is obviously not a lawyer whose strength is in drafting complex documents and arguing nuanced cases in appellate courts,” a partner at the firm later told reporter Carol Felsenthal.)
From that job it was back to politics, then on to the vice-chairmanship and later the presidency of Amalgamated Bank. Hoping for a Cabinet spot in the new Clinton administration in 1993, Daley instead got a well-remunerated seat on the board of Fannie Mae. He was subsequently appointed commerce secretary, then ran the Al Gore campaign, after which it was back to the good-old free market. First, Daley joined an investment bank, Evercore Partners. (Colleague testimonial: “I’m not sure that Bill is the first guy [I’d] ask to help me in a derivative mathematical calculation.”)
From there, Daley moved to the telecommunications firm SBC, the heir to the old local telephone monopoly. A heavily regulated utility whose success depended almost entirely on a favorable political environment, SBC offered the perfect milieu for Daley’s talents. SBC’s president announced that Daley’s appointment “signals the importance of governmental matters to our company’s ability to grow revenues.”
In 2003, Daley spearheaded a massive lobbying blitz for an Illinois law that would have allowed SBC to charge its competitors nearly twice as much for access to its network. The bill would put consumers “at the mercy of a local phone service monopoly,” noted Crain’s Chicago Business. Liberals were aghast. “Ramroding bills through because you’ve got the clout to do so—rather than because you’ve got arguments on your side—is not a good way to do the people’s business,” scolded then - State Senator Barack Obama. (The measure passed, but was later struck down by the courts.) In his last year at SBC, Daley earned nearly $3 million.
Having been pulled into the warm embrace of several business (or quasi-business) enterprises despite lacking any non-political qualifications, Daley developed an appreciation for the corporate world, much as one might fondly regard a generous relative. This sentiment seems to form the basis for Daley’s argument that the Obama administration must chart a more centrist course or risk “electoral disaster.” Daley’s centrism is not that of, say, a Larry Summers. Rather, he appears to believe that the position of the business community is ipso facto sensible. If business opposes health care reform and regulation of Wall Street, then health care reform and regulation of Wall Street must be dangerously left-wing. Thus his rapturous reception by Obama’s foes.
One recent news story about Daley’s moderation and bipartisan goodwill cited a 2004 TV appearance Daley made, on behalf of SBC, in support of a court ruling that overturned Federal Communications Commission rules governing telephone competition. Such deregulation, one economics paper concluded, would “strengthen a de facto monopoly.” Daley, though, argued that it would lead to lower prices for consumers “if the government would just get out of the way.” Arch-right-wing co-host Lawrence Kudlow marveled, “Mr. Daley, you sound awfully like a capitalist.” “Oh, we’re all capitalists, Larry,” Daley replied. Well, capitalist, monopolist-what’s a little terminological distinction among friends?
Jonathan Chait is a senior editor for The New Republic. This article ran in the February 3, 2011, issue of the magazine.