Thursday, April 27, 2017

Et tu, Obama?

Obama at University of Chicago, 4/24/17 (Getty photo)
The Washington Examiner has reported that Obama will earn $400,000 for what may be the first paid speech of his post-presidency, a keynote address at the Cantor Fitzgerald Healthcare Conference this September. Cantor Fitzgerald is a private partnership engaged in investment banking and trading; they have a strong presence in health care.

Obama's main legacy is arguably the passage of the Affordable Care Act, which is hanging on by a thread in light of seven years of scorched earth opposition by Republicans. Unable to muster a vote to repeal, the Republican Congress and the Trump White House seem determined to let it whither on the vine.

A key ingredient, if the ACA is to survive, is for insurers and their investors to compete in the insurance exchanges. This means insurers need to be willing to play ball. Many insurers, however, have stopped participating in the ACA exchanges in many states. In 2017, five states (Alabama, Alaska, Oaklahoma, South Carolina, and Wyoming) have no competition with only one company participating in the exchange; in 12 states (AZ, Conn, Del, DC, HI, Miss., Neb, NJ, RI, SD, Vt, WV) there are just two companies participating.

What the ACA needs is pretty clear: more people enrolled, more government subsidies, and more insurance companies competing. Making progress on these fronts will be difficult with Republicans in charge of government hell bent on sabotaging the ACA.

For these reasons, the Cantor Fitzgerald health care conference is important for the ACA. It's important for insurers and investors who may be thinking about participating in the ACA exchanges in 2018 and beyond, and so it's important to get a dynamic keynote speaker. There could not be a more dynamic speaker to address this conference than Obama.

We know what Obama will say at this conference: he will defend the ACA, and he will promote ideas that will help it survive. We know what he will say there whether he is paid, or whether he appears pro bono. Obama needs to be at that conference; and the conference needs him.

Should Obama be Paid?

Obama will be paid a hefty fee, in line with speaking fees president Clinton commanded shortly after he left office. 

I was critical of Hillary Clinton's speaking circuit tour in the years leading up to her presidential campaign. But I drew a distinction between current office holders, or politicians known to be running (or planning to run) for public office, and past office holders. I continue to think that's a valid distinction. 

President Obama is done with political office. For him to be paid a substantial sum to make a keynote address to defend his signature accomplishment to hedge fund mangers is not corrupt. I don't begrudge him the money. 

Matt Yglesias at VOX disagrees, and Henry Farell at Crooked Timber piles on. And so do the commenters there. Yglesias points out that Harry Truman, who left office in January 1953, left with just his army pension of $112.56/month and retired to his modest home in Independence Missouri. Truman turned down a lucrative board position in a real estate company in Florida; he refused to make commercial endorsements, accept consulting fees, or engage in lobbying. "I could never lend myself to any transaction, however respectable, that would commercialize on the prestige and dignity of the office of the presidency," said Truman.

Now there is an example for an ex-president to follow, suggests Yglesias. Truman, however, did sell the rights to his memoirs to Life Magazine for "well over $500,000" (~$4.5 million today).  But the game of politics is expensive and the salary is not much. So Truman's is an unrealistic example. In 1958, responding in part to Truman's financial difficulties, Congress passed the Former President's Act in order to “maintain the dignity” of the office of the President. The Act provides former Presidents with a pension, funds for travel, office space, support staff, and mailing privileges. Obama will receive a life-time pension of $207,800. 

Shouldn't that be sufficient? asks Yglesias. 
In order to beat the populist demagogues of today, argues Yglesias, mainstream politicians should show some self-sacrificing spirit and moral leadership, like Truman did. Obama should make an ostentatious show of living off his government issued pensions (and his $60 million book contract), and otherwise refrain from leveraging his former office for personal gain. No paid speechifying! Embarrass those "other" ex-office holders (read Hillary and Bill). 

Everybody does it is no excuse, says Yglesias. And that's surely true, but when I look at former President George W. Bush, I don't see a problem. Per Politico, Bush delivered more than 200 paid speeches between 2009 and 2015, collecting up to $175,000 per speech. These speeches were given to an eclectic conglomeration of groups, mostly in private, below the radar screen. Bush made speeches to the National Grocers Association, the National Association for Home Care and Hospice, the National Association of Chain Drug Stores. He spoke to global wealth management firms and multinational energy companies. He delivered speeches at motivational seminars, to boat builders, and for the Work Truck Show. He has given speeches to the chambers of commerce in San Diego and Wichita. He spoke for an event put on by a homeless shelter in McKinney, Texas. "We paid his normal fee," said Lynne Sipiora to Politico, "which is $100,000."  

This does not seem like corrupt activity to me. These events are enhanced by having a star politician make remarks. In the position of past president, there is not much in terms of political power to sell. Ex-presidents are paid for speeches because they are stars, like actors. They are not paid because anybody thinks they are purchasing political advantage in Washington DC. 

The Obama speech to the Cantor Fitzgerald Health Care conference will be helpful to the cause of having the ACA survive. Obama should give this speech. To jump up and down about how Obama should demonstrate a self-sacrificing spirit and do this speech for free, seems pointless.  To expect that such abnegation by Obama would be the key to get voters to reject a nationalist demagogue like Trump in the next election, seems naive. And why should Obama speak for free? This group of wealthy investors can afford to pay, more so than a homeless shelter, for example. Cantor Fitzgerald is marketing to wealthy investors and hedge fund managers out to make money. If you're ever going to charge for a speech--this would be it. 

On the other hand, insofar as Obama wants to be influential in setting and example for the next generation of politicians, Yglesias is surely correct that he will need to be sensitive to the optics of leveraging his status for personal gain. For him to find a way to set an example with some self-sacrifice and moral leadership is a worthy goal, and good advice. 

But charging a fee to hedge fund managers to promote the ACA? I'm fine with that.

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