When Peter Orszag, director of the Office of Management and Budget, stepped down from his cabinet post last July, observers were surprised by the speed with which members of Obama’s economic team were abandoning their posts. Christina Romer, chair of the Council of Economic Advisers, followed in August, rushing back to Berkeley in time for the fall semester. In September National Economic Council head Larry Summers announced his intention to return to Harvard. Policy types usually wait until after the midterm routs to bail. Of course, this gang has always been precocious (Summers was granted Harvard tenure at 28).
Though he’s a policy wonk’s policy wonk, Orszag didn’t go to academia. He started a regular gig at The New York Times op-ed page. And in mid-December he joined Citi as vice chairman of the investment-banking division—a move that led to shock and dismay among the bien-pensant.
Citigroup? Of all the financial joints in the world, he had to choose the megabank whose unmatched combination of incompetence and recklessness led it to seek some $45 billion in government aid? He had to go to the place that best emphasizes the corrosive relationship between Wall Street and Democratic Party elites? (Citi is where Robert Rubin got paid a ton for hanging his hat after serving as Clinton’s Treasury secretary.) Worse, at the time Orszag was negotiating with Citi, Treasury still owned a huge chunk of the bank’s shares.
For a host of reasons, the Orszagadelic move was both obvious and inevitable. In Obama’s economic team, the numbers are working against you, even if you’re already a cabinet member, as Orszag was. Treasury secretary is the ultimate goal for economic-policy strivers. Bill Clinton and George W. Bush each went through three Treasury secretaries in their two terms, which gave comers reason to stick around. But Obama’s first Treasury secretary, Tim Geithner, may be his last. His close-cropped hair is graying, but Geithner, 49, doesn’t have the beaten-down look of most financial-crisis survivors. Being a bureaucrat in governmental financial institutions is the only thing he’s done in his adult life, and it’s all he wants to do.
With the path upward blocked, Orszag’s existing cabinet-level job was becoming increasingly unpleasant. Being the top budget official in an era of trillion-dollar deficits and no new taxes is a little like managing the storehouses of Egypt in the third of the seven lean years. Then there’s the compensation issue. The Obama administration is of the mind that making $250,000 puts you in the middle class. By these standards, Orszag, who has a somewhat complicated personal life (an ex-wife and two kids, a new wife, and a former girlfriend with whom he has another child), is barely making it. (The OMB director is paid $196,700.) But there’s a degree to which banking is a step up from the Beltway in both compensation and impact. For someone interested in having an impact on the fate of nations, a big post at a multinational bank is as good a place as any, maybe as good as in the White House.
“War is a mere continuation of politics by other means,” Prussian theorist Karl Von Clausewitz wrote. Today, banking—broadly defined as lending and borrowing money through institutions and bond markets—is a continuation of politics, or war, by other means. In the 20th century, Germany wielded power over European neighbors through brute military force. In the 21st century, Germany, abetted by France, uses its influence with the European Central Bank and the European Union to dictate terms to Greece and other weak nations. On the other side of the globe, the great conflict between the U.S. and China is over currency rates, not proxy wars. And the effort to halt Iran’s march to nuclear prominence relies as much on the international banking system’s willingness and ability to enforce financial sanctions as it does on the threat of bombs.
Orszag couched his move in banker-ese. “I am pleased to be joining Citi, with its unmatched global platform and dedication to providing clients with quality service and advice.” But for someone who longs to be at the center of the action, the appeal of this job is much more about the global platform than providing clients with quality service. Now more than ever, international banking gives professional Beltway wonks the opportunity to be professional policy players—all while getting paid like professional basketball stars.
Gross is economics editor at Yahoo Finance.