The Obama Cabinet Is A CEO Black Hole

In President Barack Obama’s Cabinet, there is a Nobel Prize winner, a former mayor and a veteran CIA agent. Surrounding him in the White House West Wing are a former four-star general, one of the nation’s most eminent economists and a handful of this generation’s most talented political operatives.

This constellation of talent, however, has something of a black hole. There is virtually no one on Obama’s team with outsized achievements or a high-profile reputation earned in the world of business.

There are no former CEOs in the Obama Cabinet. And among the people who make up his daily inner circle, there is only a dollop or two of top-level private sector experience.

This is a notable absence, particularly for an administration whose domestic reputation will hinge on whether it can reverse one of the steepest economic downturns in decades. Most recent administrations — Democratic as well as Republican — have included several people who were bold-faced names in the corporate world before assuming influential jobs in Washington.

Whether it is a signifcant absence, however, is far more debatable. As it happens, only a small number of the business leaders in recent administrations were stand-outs. And several were ostentatious flops. It would be hard to argue that there is a close correlation between success in business and success in Washington.

Still, some long-time White House observers find it noteworthy that when Obama convenes his best minds, there will be few people who have answered to shareholders as well as voters — people who know by intuition how the business community is likely to react to any given day’s news.

“It tells us a lot about Barack Obama, that these executives are just not part of his most inner circle,” said Stephen Hess, a senior fellow emeritus at the Brookings Institution. “There’s always been a place in government for these people who come from the business world, whether at Commerce, Defense, Treasury or on the White House staff. But suddenly they’re not there.”

Among Obama’s inner circle, the most well-known former executive is senior adviser Valerie Jarrett, who was CEO of a real estate firm called The Habitat Company before joining Obama on the campaign trail and in the White House. It was Jarrett that Obama turned to when he needed an emissary to dispatch to the World Economic Forum earlier this year in Davos, Switzerland.

That relative paucity of corporate experience doesn’t bother John Castellani, the president of the Business Roundtable, an association of chief executive officers of leading U.S. corporations. Asked whether the relative absence of CEOs is good, bad or indifferent, Castellani said, “It’s indifferent. They’ve been very aggressive in reaching out to the business community.” Castellani said his organization was able to offer plenty of input into the debate over the stimulus, including suggestions for business tax cuts, health information technology and other issues.

After the implosion of Obama’s picks for secretary of commerce and secretary of health and human services, the president has two remaining chances to place a high ranking corporate executive in the Cabinet. But so far, he’s shown little inclination to do so: His first two selections for Commerce were a governor (Bill Richardson of New Mexico) and a senator (Judd Gregg of New Hampshire). Across the rest of his cabinet, Obama has shown a penchant for picking people with deep political experience, showing a particular fondness for ex-senators.

That’s in contrast with other recent administrations, which have seen a host of ex-CEOs and businesspeople in the president’s inner circle. George W. Bush, for example, selected three consecutive ex-CEOs as Treasury secretary: Paul O’Neill, former CEO of Alcoa, John Snow, former CEO of CSX, and Hank Paulson, formr CEO of Goldman Sachs. By contrast, Obama’s pick for the same position is Timothy Geithner, a veteran bureaucrat who served as president of the Federal Reserve Bank of New York.

In the wake of the 1992 election, President Bill Clinton arrived in Washington with two veteran executives in his inner circle: Robert Rubin, who had been co-chairman of Goldman Sachs, and Thomas “Mack” McLarty, the former CEO of natural gas company Arkla. They were soon joined by Erskine Bowles, who had been involved in launching an investment firm in North Carolina.

If anything, though, the revolving door between the Fortune 500 and the White House has been on the wane in recent years. In earlier decades, famous corporate faces routinely found their way into the White House: For example, President Dwight Eisenhower appointed General Motors President Charles Wilson as his secretary of defense. Wilson famously suggested there couldn’t be a conflict of interest between the two positions: “What’s good for the country is good for General Motors, and vice versa,” he said. In an era of economic calamity and automaker bailouts, a Cabinet nominee would be hard-pressed to make the same statement today.

In a new economic climate, and with populist resentment growing against the trappings of CEO life like corporate jets, golden parachutes and massive layoffs, it might be a long time before Fortune 500 executives are welcomed back into government, argued Michael Franc, vice president of government relations at the Heritage Foundation. “You have to ask yourself: Are CEOs tainted now? Is there an untainted CEO type out there who is not one of the people who got us into this mess in the first place?” But Franc also sees the influence of Obama’s own life story in the makeup of his inner circle. “Obama’s more academic, intellectual and political,” Franc said. “He comes from a whole different tradition.”

Former Hillary Clinton presidential campaign chairman and current Virginia gubernatorial candidate Terry McAuliffe says Obama won’t be limited by the paucity of executives at the White House. “He reaches out,” McAuliffe said. “It’s not like the business community can’t get to him and give him ideas. He’s very open.”

Indeed, in early February, Obama announced the formation of the White House Economic Recovery Advisory Board, a body stocked with economic experts who the president can turn to as a sounding board for ideas. Among the new panel's members are Jeffrey Immelt, chief executive of General Electric, and Caterpillar CEO James Owens. “I’m not interested in groupthink, which is why the board reflects a cross-section of experience and expertise and ideology,” Obama said at the time.

And Obama has been careful to court CEO-level opinion. In late January, he invited a group of top executives to discuss the economic stimulus package, the most prominent of whom was Google CEO Eric Schmidt, who became a valuable public supporter of the president’s stimulus package.

To be sure, veteran business people have not always had success in government: All three of President Bush’s Treasury secretary-CEOs, for example, left office with their reputations tarnished by their tenure in Washington. And many of the high-ranking CEOs who have served in government in recent decades now find themselves poster boys for corporate mismanagement, including Robert Rubin, who was forced to step down from his role as chairman of Citigroup in January in the wake of disastrous financial results at the company.

And sometimes, the culture clash between corporate America and the federal government can spark memorable friction. General Motors CEO Wilson’s constant raw language and impolitic commentary provoked his boss, President Eisenhower, to exclaim in frustration: “Damn it, how in the helldid a man as shallow as Charlie Wilson ever get to be head of General Motors?”