Government officials bring expertise, relationships, & credibility to businesses.
Government officials bring expertise, relationships, & credibility to businesses.
Ron Klain’s resignation as White House Chief of Staff made him the highest-profile of many administration departures. His next job isn’t known; but he’ll likely follow many former Biden officials who since mid-2021 have turned their knowledge and relationships into big private-sector bucks at lobbying firms, public relations agencies, and businesses which want more access to Washington, D.C.
Kathryn Dunn Tenpas, a nonresident Senior Fellow at the Brookings Institution, tracks senior-level White House departures and researches their post-White House job selection. An unpublished analysis provided to Zenger News shows that from 1981-2016, presidential aides who leave government service most often go to the private sector, followed closely by the nonprofit sector.
Former officials are attractive to businesses for many reasons, said Stephen Nelson, executive principal of The McCormack Group, an executive search firm which places about one-third of its talent from Capitol Hill and federal agencies, often into law firms.
“They are definitely hired because they know the [regulatory] process. Not just the law, but the way the agency is going to enforce the law,” Nelson said in an interview with Zenger News. “A business development mindset” is also highly sought because firms often expect recent officials to “participate in discussions with potential clients, and to articulate how they can help prospects solve the regulatory problem.”
Former officials bring valuable and broad experience
Klain’s announcement and Tenpas’ tracker represent just a fraction of top officials who leave federal service for the private sector. Many cabinet secretaries, attorneys, and smaller agency heads join former Members of Congress and their staff in finding lucrative private-sector jobs. They make up what is often described as the “revolving door,” where public officials go to the private sector, often to return later.
Businesses clearly see a need, and former elected officials likewise seem to find the work appealing. The left-leaning government watchdog group Public Citizen tracked that a majority of Members of Congress who didn’t go into government or political work after the 115th Congress went to jobs that influenced government, including as lobbyists and with trade associations.
“A lot of private-sector companies don’t have a good grasp of how Congress works – the calendar, process, and personalities which are intuitive for those who have worked in Congress for years,” said Ryan Ellis, a tax lobbyist who often consults with large firms like Akin Gump. “People are hired because they know when the time is ripe, how to work through committees, and how to work with stakeholders and constituents.”
“Most former officials truly care about the industries they serve, and they know what it’s like to sit on the other side of the table,” said Lee Rashkin, an entrepreneur who has worked with many regulators and former regulators in multiple states. “They know codes, how to file appeals, and alternatives to the most-known methods.”
“Most importantly, they know people, so they can help with the delicate balance of pushing for change without burning bridge.” Rashkin said this expertise enabled his first company, wastewater product manufacturing firm Presby Environmental, to overcome larger competitors’ efforts “to regulate us out of existence in multiple states.”
It’s not all about the money
Whether they work for established enterprises or up-and-coming start-ups, former government officials have the same concerns as any job applicant: selecting the job offer that best suits their talents, experience, and personality. Culture is critical to where government officials end up in the private sector.
Culture was part of how Rashkin and Presby won their battles, and how they attracted multiple former officials to work for the company as vendors or as direct staff. “We didn’t have the biggest budget, but we did something that really mattered.”
“Compensation is going to be part of” the decision-making process, but so is thinking about “where is the best fit for both parties,” said The McCormick Group’s Tim Horgan. He described how partisanship can influence job selection: Conservatives are not the best fit for left-leaning industries, and vice-versa. Similarly, companies often want to hire an official who belongs to the same party as the politicians they seek to cultivate.
And that best fit includes having a genuine interest in work connected to prior government roles and responsibility in “an area [that] people care about” like white-collar investigations or international aid work, said Nelson.
The small business connection
Well-established large firms and start-ups with investor funds alike may see substantial growth after providing the hefty salary necessary to hire a former government official. But that doesn’t always benefit the wider business community even as it provides advantages to the companies making the hires.
“The revolving door creates an economic mismatch that gives well-financed companies an advantage over their smaller competitors,” said American Enterprise Institute Senior Fellow Timothy Carney. “When government gets bigger, it shifts the playing field in favor of whoever can hire former cabinet members and senators – and that’s never Mom-and-Pop businesses. The revolving door results in a political economy that creates new and bigger barriers to entry.”
Ellis defended lobbying as a public good in line with the Constitutional right for citizens “to petition the Government for a redress of grievances.” But large companies often “collude with regulators to keep small start-ups from competing under the guise of ‘weeding [out] bad actors,” he said.
But both Carney and FreedomWorks Vice President John Tamny said that small businesses shouldn’t despair about lacking connections and cash to attract former officials. “They aren’t eyed as much by Washington, and if they have a good idea, it’s probably because they are observing signals not being tried by the powers-that-be,” said Tamny. “Entrepreneurs reject most convention.”
Additionally, because government is always late to the regulatory game, “ideas and business plans in new industries mean more” to a small business’ profit margin “than when resources are tied up in navigating complex government rules and regulations,” said Carney.
Rashkin also said that small businesses aren’t as outflanked as it might seem, at least at the state level. “Companies often think that participating in rule-making is reserved for big companies and academics. But I’ve seen local contractors become incredibly influential in states the size of countries by simply being present and making their voice heard.”
The revolving door: Business’ feeder system of government talent and knowledge
The private sector’s $4.1 billion nominal-record spending on lobbying may tempt former government employees to join the ranks of the nation’s 12,609 registered lobbyists. Businesses may also need their skills to navigate the labyrinthine federal code, assist with public affairs messaging, or predict how regulations will create economic challenges and opportunities. But no matter where they end up, Nelson said that giving former public employees the opportunity to use their skills in the private sector is a net positive for the economy and country.
“The revolving door includes a tremendous amount of talent and institutional knowledge coming out of government,” Nelson told Zenger News. “We all benefit from keeping the folks who were very active in government engaged in new roles outside of government.”
