“We came out of the White House not only dead broke, but in debt,” Hillary Clinton complained in an interview in 2014, justifying her spree of paid speeches on Wall Street and elsewhere.
Those speeches have now turned into a major political controversy, with the campaign refusing to agree to release the transcripts of what was said.
Despite Clinton’s protestations, however, the reality is that this country does not allow its former presidents to live “dead broke.” Running the country has great retirement benefits. Ex-presidents are given pensions of nearly $200,000 annually as well as funding for office space and custodial staff.
The new normal is that our ex-presidents rely on huge paydays from private interest groups to fund their lifestyles. But that flies in the face of the original intent of the presidential pension, which was to preserve the dignity of former presidents and prevent corruption.
The origins of the presidential pension
The first proposal for a presidential pension system came from steel industry magnate Andrew Carnegie, who was the world’s richest man when he retired in 1901. In 1912, Carnegie offered to privately fund a $25,000 annual pension for future ex-presidents, arguing that our chief executives should be able to “spend their latter days free from pecuniary cares in devoting the intimate knowledge they have gained of public affairs to the good of the country.”
Then-President Teddy Roosevelt, the trust-buster, criticized the proposal — not because it wasn’t enough money, but because it was too much. “My interest isn’t in pensions for ex-presidents but in pensions for the small man who doesn’t have a chance to save, and who, when he becomes superannuated, faces the direst poverty,” he said.
Roosevelt’s successor, William Howard Taft, refused Carnegie’s offer, and the idea of a presidential pension whatsoever went nowhere for decades.
When Harry Truman was getting ready to leave the White House in 1953, he was approached by numerous employers. The Los Angeles Times reported that if he was “unemployed after he leaves the White House it won’t be for lack of job offers … but [he] has accepted none of them.”
One of those job offers was from a Florida real estate developer, asking him to become a “chairman, officer, or stockholder, at a figure of not less than $100,000” — the sort of position that is commonplace today for ex-politicians.
“I could never lend myself to any transaction, however respectable, that would commercialize on the prestige and dignity of the office of the presidency,” Truman would later write of his refusal to influence-peddle to get by.
Although he had access to a small pension from his military service, Truman had little financial support after leaving office. He moved back into his family home in Independence, Missouri. He eventually agreed to write a memoir for Life magazine, but it was a lengthy project that provided far from luxurious stipends.
In 1958, Dwight Eisenhower and Congress finally acted, partly in response to Truman’s plight, establishing the pension system for ex-presidents we have today.
The presidential path to riches
But modern presidents expect to live in luxury after they leave office, and to people with that sense of entitlement, $200,000 a year is chump change. By comparison, the median private pension benefit of individuals age 65 and older was $9,227 a year in 2014 — for those people lucky enough to have a pension in the first place.
The first ex-president to aggressively supplement his pension was Gerald Ford. He joined the boards of corporations such as 20th Century Fox, hit the paid speech circuit, and was made an honorary director by Citigroup.
Ronald Reagan, known for slashing the taxes of America’s richest and crushing trade unions opposed by large businesses, quickly cashed out. Almost immediately after leaving office, he joined the speaker circuit, doing “two or three” speeches a month before Fortune 500 companies. It was estimated that Reagan earned $50,000 a speech.
At a time when Japan was a major trade rival with the United States, Reagan flew to Japan for a series of paid speeches. He accepted $2 million for a pair of 20-minute speeches to the Fujisankei Communications Group. An additional $5 million was arranged for expenses related to the visit.
Prominent business consultant Chin Ning Chu, looking back in her 1991 book on Asian business culture, wrote that the Japan speeches “demonstrated to the world that Japan has arrived … [it] put a price tag on the president of the United States.” She noted that “By paying Reagan a sum so disproportionately large for his services, they sent a clear message to American political leaders: If during a politician’s career he cooperates with the Japanese, then the Japanese will take care of him after retirement. There is no law against paying a former member of government for a few speeches after he has retired from public service.”
Then-President George H.W. Bush was asked about the practice of ex-presidents getting private sector paydays. “I have no problem with that, provided it’s not overdone. Everybody’s got to make a living,” he replied.
His son George W. Bush made at least $15 million from over 100 paid speeches between 2011 and 2015. The exact number is a mystery because former presidents are not required to disclose their income.
We know how much Bill Clinton made only because he shared a bank account with his wife when she was a senator and then secretary of state, making his income a required disclosure. The two have earned at least $139 million from speeches, including $35 million from the financial sector.
And despite the fact that his wife is running for president, Bill Clinton has not stopped. “I gotta pay our bills,” he explained. One of those paid speeches last summer was before America’s Health Insurance Plans, the primary lobbying group that plowed money into trying to defang and defeat the Affordable Care Act.
“I never made any money until I left the White House,” Bill Clinton told a student group in 2009. “I had the lowest net worth, adjusted for inflation, of any president elected in the last 100 years, including President Obama. I was one poor rascal when I took office. But after I got out, I made a lot of money.”
Reforming the system
Congress appropriated $3.5 million for presidential pensions and other benefits in 2015.
Members of Congress in both parties are sponsoring legislation that would reduce ex-presidents’ pension payouts if they earn more than a predefined threshold in private sector earnings annually.
“Taxpayers should not have to pay for a former president’s allowance if the former president is making a comfortable living earning more than $400,000 a year after leaving office,” said Rep. Elijah Cummings, D-Md., about the bill. The bill passed the House in January.
One recent ex-president who didn’t cash out, of course, is Jimmy Carter. Perhaps not coincidentally, in a Quinnipiac University poll released in November, a plurality of Americans said Carter has had the best post-presidency.
Carter “seldom accepts speaking fees and when he does he typically donates the proceeds to his charitable foundation,” noted the Associated Press; Carter has instead built a comfortable life by writing dozens of books.
Top photo: Former Presidents Bill Clinton and George W. Bush laugh together during a Presidential Leadership Scholars program at the Newseum, September 2014, in Washington, D.C.