US President Joe Biden Photograph:( Reuters )
In a sign of the pushback to come, the Revolving Door Project, which has been urging Biden to keep corporate influence out of his administration
Five years ago, Jeffrey D. Zients was the head of the Obama administration’s National Economic Council, working to push across the finish line a federal rule that would prevent financial advisers from taking advantage of retirees. He won praise from progressives for fending off fierce resistance from Wall Street and fighting for consumer protections.
These days, Zients is a co-chairman of President-elect Joe Biden’s transition team who is being watched warily by members of the Democratic Party’s left wing. Progressive advocacy groups such as the Revolving Door Project and Justice Democrats, concerned he would defend corporate America if given a top economic policy job in the Biden administration, pushed to keep him out of such a role. They view his recent work running an investment fund — Cranemere — and sitting on the board of Facebook as a detriment.
The preemptive resistance to Zients (pronounced ZYE-ents) from the left is the latest indication of how the Democratic Party has shifted in the dozen years since former President Barack Obama took office amid the financial crisis. Now, business and finance experience can turn otherwise qualified White House candidates into pariahs for progressives.
Zients, 54, has emerged as an important power center in the Biden transition team and was mentioned as a possible candidate to once again lead the National Economic Council or head the Office of Management and Budget, a role he held in an acting capacity during the Obama administration. With those jobs set to be filled by others, Zients is the front-runner, according to people familiar with the transition team’s plans, to be the Biden administration’s COVID czar, steering the government’s response to the coronavirus pandemic.
In a sign of the pushback to come, the Revolving Door Project, which has been urging Biden to keep corporate influence out of his administration, has compiled a 13-page document about Zients. The file highlights his wealth, his appetite for deficit reduction during the Obama years and his recent work as chief executive of Cranemere.
In the Obama administration, “his role was essentially to be a management consultant for the executive branch: cutting costs, finding efficiencies and looking at things like a businessman,” the Revolving Door document says.
The group points to the majority stake that Cranemere took in NorthStar Anesthesia, a company that provides anesthesia services to hospitals and medical offices, in 2018. It cites negative reviews that NorthStar Anesthesia received through the Better Business Bureau, including allegations of surprise billing and a threat to send a dental patient’s bill to a collection agency during a dispute over insurance coverage. That matter was resolved, according to The Philadelphia Inquirer<em>.</em>
A spokeswoman for NorthStar said that within two months of Cranemere’s acquisition of the company, it had ended its practice of “balance billing” — charging patients the difference between the cost of their services and what their insurers will pay. Jennifer Psaki, a spokeswoman for the Biden transition team, said Zients opposes surprise billing practices.
“Jeff, like President-elect Biden, supports legislation to stop surprise billing by forcing the entire health care system to limit patient payments to in-network rates for all procedures and providers not preapproved by the patient,” Psaki said.
Progressives have been pushing the Biden transition team to install their preferred candidates in top roles and have been fairly supportive of some of Biden’s early picks. These include Janet Yellen, the former Federal Reserve chair, to be Treasury secretary; Cecilia Rouse, a Princeton University labor economist, to run the Council of Economic Advisers; and Neera Tanden, chief executive of the Center for American Progress, to lead the Office of Management and Budget.
But others are triggering a backlash, including Brian Deese, whom Biden has tapped to head the National Economic Council, and Adewale Adeyemo, the president-elect’s choice for deputy Treasury secretary. Both men have worked at asset management firm BlackRock, and many in the progressive wing view deep industry ties as a red flag.
“Democrats should overall be alarmed by any Democratic administration considering filling the White House with Wall Street insiders and corporate lobbyists,” said Waleed Shahid, spokesman for Justice Democrats, a political action committee.
Early in his career, Zients worked as a consultant at Bain & Co. before joining Advisory Board Co., a health care research and consulting firm, where he rose to chief executive. He helped lead a spinoff of that business, which became the Corporate Executive Board, and both companies ultimately went public, in 1999 and 2001. According to Fortune, the Advisory Board’s profitable initial public offering helped fuel Zients’ net worth, which the magazine placed at nearly $150 million by 2002.
In 2009, Zients joined the Office of Management and Budget as “chief performance officer,” rising to prominence within the Obama administration as a “Mr. Fix-It” with strong operations skills and a knack for solving tough problems. Obama administration officials remember him for reviving the Affordable Care Act’s website, HealthCare.gov, after glitches plagued its rollout.
“I call him the ultimate firefighter on these jobs,” said Denis R. McDonough, Obama’s chief of staff, who asked Zients to take on the project of fixing the website in 2013. “He runs into the burning buildings. He doesn’t ask why. He doesn’t ask when. He doesn’t ask who’s going with him.”
Later in Obama’s second term, Zients led the National Economic Council, where he shepherded new regulations to crack down on payday lending and steered the development of the so-called fiduciary rule — a requirement that financial professionals put the interests of their customers with retirement accounts ahead of their own. The Labor Department rule, which the financial services and insurance industries strongly challenged, was struck down by a federal appeals court in 2018.
Those efforts earned him accolades from some progressive Democrats.
“The government needs talent and experience,” said Dennis Kelleher, president of Better Markets, which promotes Wall Street reform, and a member of Biden’s transition review team for the Fed, banking and securities regulators. “People who are going to try to regulate an industry as complicated as finance can’t say we’re only going to hire people who know nothing about finance.”
But his role as a bridge to business during the Obama administration has raised some eyebrows. Zients was one of the administration’s chief liaisons to executives and lobbyists when anger at Wall Street over the 2007-08 financial crisis was at its peak. Top lobbyists such as the Business Roundtable and the U.S. Chamber of Commerce have praised Zients as someone who heard them out.
Describing his desire to listen to business leaders, Zients told executives at a 2014 event at the Economic Club of Washington, “You are the customers, all of you as business leaders, in terms of growing the economy.”
After Obama left office, Zients joined private equity investor Vincent Mai’s Cranemere fund as chief executive. The private holding company has investors from the United States, Europe, Latin America and the Middle East and takes a long-term investing approach in the mold of Warren Buffett.
Zients, who is on leave from Cranemere, also spent two years on the board of Facebook and was a member of the company’s audit committee. He has told people that he had concerns about the company’s direction and governance, and opted not to seek reelection to the board this year. Facebook has come under fire from Democrats for allowing the spread of disinformation and from Republicans who accuse it of censorship.
Jeff Hauser, director of the Revolving Door Project, said Zients’ experience working in private equity and at Facebook was particularly problematic and could portend trouble for progressive causes in a Biden White House. And while he sees Zients’ experience in the health care industry as useful for managing the pandemic response, Hauser said he was concerned that Zients could be too accommodating to business as vaccines are rolled out next year.
“Dissemination and delivery of the vaccine will be a significant undertaking,” Hauser said. He added that Zients understood how to do it, “but whether or not he would be too sympathetic to businesses in management of that power is to be determined.”
In a role directing the virus response, which will require coordination across government agencies and the private sector, corporate management experience could be an asset.
Fred P. Hochberg, who was president of the U.S. Export-Import Bank from 2009-17, said that ideological labels evolved over time and that business experience should not be a blemish.
“I think Jeff is certainly progressive, but there’s a pragmatism, a ‘what can we get done to move things forward?’ ” Hochberg said. “In government, it’s about accomplishing things. It’s not just about making a statement.”