As a Democrat, I sometimes wonder why I bother. Don’t get me wrong — there are many excellent reasons to remain a Democrat, in spite of it all. The Dems do occasionally pass some desperately needed pieces of legislation, and of course the Republicans are far worse, on every conceivable issue. But it’s important to bear in mind that while the lesser of two evils is always preferable, it’s still an evil. Our soon-to-be new Treasury Secretary, Jack Lew, is a perfect case in point.
Many progressives were unhappy with his nomination from the outset. In any halfway functional political system, one of the most powerful economic officials in the most progressive mainstream political party would not be an unrepentant union basher (as Lew most certainly was when he was an administrator at NYU. As In This Times’ Josh Eidelson has reported, at NYU, Lew was “the point man” for a management that practiced “every single ruthless tactic from the playbook of union-busting”). Nor would he be a former investment banker (Lew was a chief operating officer at Citigroup) who doesn’t believe that deregulation caused the financial crisis.
Okay, those items are pretty awful. And yet it turns out . . . there’s worse! Credit where credit is due: like a stopped clock, even the Wall Street Journal editorial page is correct once in a while. And their piece about Lew in yesterday’s edition of the paper amounts to a devastating bill of indictment. Consider the following:
— During his time as an executive VP at NYU, Jack was a busy lad indeed. When he wasn’t crushing labor unions, he was helping to engineer scams that were stone rip-offs of the students. NYU is anything but cheap, and as the Journal points out, “NYU students shoulder one of the highest collective debt burdens in the country.” But when he was working for NYU, Lew acted like a reverse Robin Hood, shaking down the students and enriching the already obscenely wealthy school. He helped set up a scheme whereby NYU would steer students to make loans with preferred lenders. This didn’t work out so well for the students, who were charged higher than average interest rates. But it turned out to be totally awesome for NYU, which got kickbacks from the lenders, in the form of a cut of the loan revenue. Better yet, it worked out swimmingly for Mr. Lew personally, who, after leaving NYU, got hired by Citigroup . . . which just so happened to be one of those “preferred lenders” Lew had been working with back at NYU. Oh my, what a coinkydink!
— But even before moving on to investment banking land, Jack Lew was doing quite well for himself at NYU. Amazingly well, actually. His compensation at NYU was generous, to say the least. During one year, he made $840,339, which, as the Journal notes, was “more than most of the country’s university presidents that year, including his own boss, John Sexton.” And that’s not all. During his tenure at NYU, the school lent Lew “at least $1.4 million” for “housing assistance.” Now I know that rents in New York are high, but seriously . . . over $1.4 million? Couldn’t he at least go to a bank to get a loan, like the rest of us mere mortals? And btw, do keep in mind that Jack Lew was raking in all these bucks on the taxpayers’ dime, because NYU, as a not-for-profit institution, is tax subsidized.
— And yet, compensation that ginormous apparently still was not enough to gratify the likes of Jack Lew. Like Mitt Romney, Lew invests a substantial portion of his income in the Cayman Islands, a strategy that enables him to legally avoid paying his fair share of taxes.
Even by 2013 standards, this is a remarkably sleazy record, and kudos to the Journal for reporting on it, and other far-from-populist sources like the New York Post and Senator Charles Grassley, for uncovering much of this info. But I want to emphasize one thing: while clearly I believe that Jack Lew is a bad apple, it’s equal clear that he’s the product of a rotten system. He did some exceedingly sketchy things at NYU, but his actions seem to have been perfectly legal, and besides, if it wasn’t him, some other cog in the machine would likely have done the same.
And while I and many others may believe that working for an investment bank should be a strong disqualifier for anyone who wants to work for the U.S. Department of the Treasury, the sad fact is that these days, such stints seem to be de riguer. Indeed, any Democratic candidate who had never worked for an investment bank would probably be unlikely to be nominated in the first place.
But this doesn’t mean we have to accept the Jack Lews and the Tim Geithners without a fight. Silence will be read as acquiescence, which will get us more of same. Progressives need to think long and hard about how to create a powerful mass movement. It’s only by building our collective political strength that fwe will be able to force the president’s hand to nominate a treasury secretary that works for ordinary Americans, not Wall Street.