KEENE: An Obama renaissance of crony capitalism

Competence matters little as the president rewards his loyalists

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During his initial 2008 run for the presidency, Barack Obama attacked no-bid and sole-source federal contracting as wasteful and at least marginally corrupt. He promised that when elected, he would end “the abuse of no-bid contracting once and for all.” His administration, he said, would be the most transparent in history and would do away with the cronyism that plagued his predecessors.

President Obama repeated his promise just after being sworn in, issuing a memorandum to federal agencies ordering them to minimize resorting to such contracts, which he claimed were inherently “wasteful, inefficient, subject to abuse.”

He was right, of course, but then, he was making many promises back in those days that he would later ignore and which are now coming back to haunt him.

No president in recent times has done more to channel contracts, subsidies, grants and other taxpayer-funded goodies to his friends and political allies than Mr. Obama, and none since Warren Harding appears to be facing a bigger cost for having done so. All presidents reward their friends and supporters, but most are wise enough to play favorites in ways that do little harm to the economy or to their own political prospects.

Thus, big givers are often rewarded with comfortable ambassadorships to countries that aren’t crucial to U.S. security and intelligence interests. During the Cold War, for example, presidents resisted the temptation to send their buddies to Moscow, but rather to London and other capitals where they could acts as social ambassadors while the real work of the embassy was being handled by career Foreign Service and intelligence personnel.

Some really important givers or friends sometimes even make it into a president’s Cabinet, but they don’t usually end up as secretary of defense, state or the Treasury, but are more likely to be sworn in as secretary of commerce; the Commerce Department seems, in fact, to exist for this very purpose.

When presidents do start appointing their cronies to really important jobs, they tend to get into trouble. Thus, when Harding found himself in the White House after vanquishing Woodrow Wilson’s progressives, he began appointing his friends, neighbors and poker buddies to important government jobs. Some of them were contributors, but a few were simply neighbors or people he met while vacationing. He appointed an old friend and neighbor from his hometown to head the Federal Reserve, his former paperboy became chief military adviser, and, the infamous Albert Fall was confirmed as secretary of the interior. As a group they proved incompetent, corrupt and, but for Harding’s untimely death, would have led to the undoing of his presidency and his reputation.

Our current president has at least resisted the temptation to appoint his old Chicago neighbors such as Bill Ayers to his Cabinet, but he has given important positions and responsibilities to men and women with little demonstrated talent other than the ability to beg, threaten or cajole their friends and neighbors into channeling money toward the president’s campaigns.

Companies like Solyndra and Fisker sidled up to the federal trough after Mr. Obama was sworn in because their principals had contributed mightily to his campaign. The rewards came not because of superior business plans or products, but because of good old-fashioned cronyism. After forcing Obamacare through Congress, the president set about exempting friends and contributors who might be harmed by his health care reform scheme and almost immediately began ladling out tax dollars to friends and supporters to implement his plan.

It was a time to return to sole sourcing, to avoid those messy and time-consuming competitive-bidding requirements that could slow things down and cut one’s friends out of the action. Outside community organizers found themselves being shoveled buckets of money to help get the word out about Obamacare and the need to sign up early. Past corruption and criminal activities were no bar to participation as even minimal criminal-background checks were waived and even as the administration expected people to provide sensitive information to these folks who then posted it on massive, open databases.

It all came crashing down, however, when the software allowing people to sign up collapsed. CGI, the Canadian information-technology group that contracted through a U.S. subsidiary to do the bulk of the work on the Obamacare rollout, was close to the president, his wife and Valerie Jarrett, his chief White House adviser on all things strategic and political. No matter that the company had failed to deliver on similar contracts in Canada and was being investigated by the Canadian government. In the world of political cronyism, friends in high places almost always trump ability, so CGI got a contract worth hundreds of millions of dollars to undertake a task that proved well beyond its abilities.

Former Louisiana Gov. Edwin Edwards, who ended his career as an inmate living in a small room in a federal correctional institution, when accused by an opponent of cronyism, replied that he divided the political world into enemies or adversaries on the one hand and competent and incompetent friends and allies on the other. “I always try to reward my competent friends,” he snapped, asking his opponent from which group he would recruit his appointees.

Edwards had it all over Mr. Obama on that one. At least he recognized the need to avoid rewarding incompetence even if found in friends and cronies.

David A. Keene is opinion editor of The Washington Times.

About the Author
David Keene

David Keene

Opinion Editor — David Keene, a trusted adviser to presidents, a longtime champion of personal liberty and one of conservatism’s most respected voices, serves as the opinion editor of The Washington Times – overseeing the newspaper’s editorial page, commentary section and online opinion strategy. An author, columnist and fixture on national television, Mr. Keene has championed conservative causes for more ...

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