President Joe Biden is naming Jeff Zients to be his next chief of staff. Zients, a corporate Democrat, was previously in the White House helping steer its pandemic response and leading vaccination efforts. Before that, Zients helped oversee two health care companies embroiled in Medicare and Medicaid fraud allegations, which they paid tens of millions to settle. This week on Deconstructed, Intercept reporter Daniel Boguslaw and The American Prospect’s Robert Kuttner join Ryan Grim to discuss Zients’s past in the world of for-profit health care. Zients is also a former Facebook board member, worrying progressives pushing for the administration to rein in Silicon Valley.
Ryan Grim: Hi, I’m Ryan Grim. Welcome to Deconstructed.
Over the weekend, we learned that White House Chief of Staff Ron Klain will be leaving his job, making way for Jeff Zients, who played a variety of different roles in the Obama administration but has spent most of his time in the private sector.
Now, Bob Kutner, writing in The American Prospect, described Zients like this on Monday: “For starters, Zients is from the plutocratic wing of the Democratic Party, having become very rich from taking two David Bradley ventures public, the Advisory Board Company and the Corporate Executive Board. When he was 35, Fortune estimated his net worth at $149 million.”
Now, my colleague Dan Boguslaw, back when he was himself at The Prospect, wrote a piece diving deep into Zients’ background in the world of for-profit health care. And both Dan and Bob are joining me now on short notice, and I appreciate it. Bob, thanks so much for joining me.
Robert “Bob” Kuttner: Well, thanks for reconnecting me with my old friend Dan.
RG: There you go. And, Dan, thank you for joining me on short notice, too.
Daniel Boguslaw: Thanks for bringing in my old friend Bob.
RG: Alright, so Bob, the thrust of your piece is looking forward to the negotiations — or, if there will be negotiations — around the upcoming debt-ceiling fight. Congressional Democrats are saying there will be none. But already you’ve got people like Josh Gottheimer, Joe Manchin, Kyrsten Sinema entering into some talks, despite Hill leaders saying: No, we’re just going to raise the debt ceiling, we’re not going to talk about it.
Your piece is about the real fear that Zients might be somebody who gives away the store. Where does that fear come from?
RK: Well, that’s the history of how Biden as vice president and Zients kind of enabled each other as incredibly weak negotiators. And in Zients’ case, that was compounded by the fact that he’s an authentic fiscal conservative. So you go back to the negotiations over the fiscal cliff, Biden was sent to the Hill to undercut Harry Reid, who was prepared to hang tough. And Reid had a very solid strategy because you had the Bush tax cuts expiring. And so if the Democrats just waited the Republicans out, you’d have a massive tax increase on rich people.
And behind Reid’s back, Biden cuts a deal with his old friend Mitch McConnell. And Reid was so apoplectic that in the next round of budget negotiations, he specifically demanded that Obama cut Biden out from the negotiations. And Obama complied because Obama belatedly realized that he’d been rolled.
And so the guy who takes over the negotiations is Jeff Zients, who had been OMB director, who had been acting OMB Director, then OMB director, then director of the National Economic Council, and was a dedicated deficit hawk, along with Bruce Reed, and so you’ve got the deficit hawk-wing [laughs] of the Biden administration really taking over at a time when the Democrats have a pretty good hand if they play the hand they’ve been dealt.
I mean, the Republicans are saying: We are willing to have the United States default on its public debt to force cuts in Social Security. And so the right answer to that is: Be my guest. Go ahead and do that, and let the Republicans take the fall for that. But the risk is that the Gottheimers of the world and the Manchins of the world, enabled by Jeff Zients will make a lot of concessions going in, which is stupid, because no concessions that they make will satisfy Kevin McCarthy and the loonies. And so you’ve been dealt a pretty good hand and they’re going to squander it. So I did some interviews with very senior congressional leadership people who were telling me what a bad job Klain did in the negotiations over the 2023 omnibus during the lame duck. And they said: Well, at least maybe the next guy will be better than Klain. Well, Zients is notably worse than Klain, if that’s possible.
RG: And Dan, there’s a little bit of irony in Zients being an austerian, particularly when it comes to Medicare, given that what you’ve uncovered in your own reporting is that some of the healthcare companies he owned were alleged to have committed Medicare fraud.
So what kind of business executive are we talking about here? What were the types of healthcare companies he was making his money from?
DB: Yeah, so there was a wide spread of companies. I mean, he basically amassed this private fortune, as Bob wrote, taking these huge companies public, but afterwards, he started sucking up all kinds of different health conglomerates and health firms. Now, two of those firms that were eventually folded into his company surfaced in these DOJ suits that basically showed the companies were overcharging through Medicare, they were creating all types of different false billing practices. And, in one case, the whistleblower basically said that this was not a clerical oversight. This was coming from the highest levels of these different companies’ management, and that they’re being encouraged to see in the whistleblowers’ words, whether they could get away with this. And beyond the obvious complaints that were surfaced, a lot of these companies were effectively preying on a weakened American healthcare system. Companies that were outsourcing all different types of medical practices, from radiology to hospice care, and basically, trying to cut costs in the private equity model, and at a cost to the people trying to rely on these different companies for care.
I think the other element here is what Zients’ more recent record as Biden’s Covid czar shows. Unlike the willingness of Ron Klain to at least meet and hear progressive advocacy groups out, Zients was extremely resistant to any of the calls from progressive organizations advocating for things like a waiver of vaccine IP rights to try to boost access in third-world countries to cheap vaccines; there was a lot of pressure on him to try to supercharge the Defense Production Act. And I think, in this case, his unwillingness to mobilize on the sort of wartime scale that the DPA was created for, had disastrous results. I mean, there was this incredible series of powers that could have enabled him to mobilize massive domestic production of PPE tests, and I think that type of mobilization could have gone a long way, not only to provide direct resources to people during the pandemic but also push back on some of the fear-mongering from the anti-vaccine voices from the GOP by saying: Look, there’s this economic explosion that’s going to happen from this. There’s the ability to create new production facilities to do all kinds of expansion in that sector. And ultimately, he shut it down and really phoned it in with the bare minimum.
RG: Yeah. And Bob, the progressive world, as you know, didn’t have a whole lot of high expectations for Biden when he came in. But in some ways, maybe the 2023 ombuds bill aside, Ron Klain really kind of exceeded a lot of those expectations for the left, in the sense that he seemed to be governing in coalition, at least, with progressives, rather than kind of trying to destroy them, like, say, White House Chief of Staff Rahm Emanuel. You would never describe Emanuel as working in coalition with the progressive wing of the party.
RK: I think people often overlook the important role of Elizabeth Warren in all this, because part of the Biden administration, in effect, is a Warren administration. So when Biden becomes the inevitable nominee, after the South Carolina primary, Elizabeth Warren very astutely folded her own campaign, backed Biden, and, in exchange, ended up with a ton of influence over who Biden hired.
And so Biden hired a lot of people who I never thought I would see serving in government: progressives who really know what the hell they’re doing. And so you’ve got a coalition between the Biden old guard and the progressives. And I think the progressives also had influence in the administration, in part, because of circumstances — Covid, the supply chain crisis, the fact that neoliberalism was finally shown to be a fraud, the fact that we had a Covid recession — and so you had a much more progressive Biden administration than many of us expected and God bless Biden for that.
However, what’s easy to forget is that the inner circle who are closest and longest-tenured with Biden are people like Zients and other relatively conservative old boys — or in the case of Anita Dunn, old girls — and the one exception to that was Ted Kaufman, who sort of aged out and ended up not getting a senior position with Biden. So that the default setting of Biden, leaving aside the industrial policy, and the climate change, and some of the labor stuff — which is fabulous, much better than we expected — but the default setting of the Biden administration is guys more like Jeff Zients, tragically
RG: And you mentioned Bruce Reed briefly, and also you mentioned him briefly in your piece. He was, I believe, the lead staffer for Biden when Biden was on that austerity commission, the Biden Committee, I think it was him and Eric Cantor, trying to do what has been elusive to them for so long — trying to cut a grand bargain that cuts social security, Medicare, Medicaid, and raises some taxes on the edges.
Reed has been a close ally and friend of Biden’s his entire career, it seems like. Do you see Reed kind of being elevated here? And is that part of your concern about a coming crisis of Biden’s faith when it comes to negotiation?
RK: Well, to the extent that you’ve got a real fiscal hawk as chief of staff, the guy who he is going to look to is Bruce Reed. Bruce Reed ran the Bowles-Simpson commission; Bruce Reed, before that, was the chief policy guy for the DLC. So in terms of the Democratic firmament, it doesn’t get much worse if you’re looking at it as a progressive. You don’t really have counterweights to these guys in the inner circle; you have to go to the next circle out, which includes some fabulous people, and I hope the next circle out fights like hell.
And the people who are going to save Biden and Zients from themselves, if they do, are the Hill leadership, who don’t want any part of this. And as I wrote in this column today, there are basically two scripts here: One script is the Neville Chamberlain script, let’s figure out a way to appease Kevin McCarthy. And you can’t appease Kevin McCarthy, but you can throw him all kinds of bones that would be really costly in terms of the Democrats’ core beliefs, and the Democrats’ credibility with the voters.
The other way to go is to say, if you want to preside over a shutdown where people don’t get their social security checks, you go right ahead. And I think that’s the winning game. Even Bill Clinton, of whom I’m not a fan, managed to humiliate the then-Speaker of the House Newt Gingrich, by hanging tough after Clinton had lost his majority in both houses. And when Gingrich shut down the government twice, it was Gingrich who paid the political price for that. So it’s the one time the Democrats, in recent years, have hung tough on this kind of stuff.
RG: One point of clarification, I was just realizing, Warren actually hung in through South Carolina into Super Tuesday — which actually Biden probably appreciated as well.
RK: Yes. Because that helped Biden —
RK: I mean, it split the Bernie vote.
RG: And then she dropped out immediately and endorsed him.
RK: Yeah. But she very quickly became a Biden loyalist. And her aphorism that personnel is policy: she infiltrated a lot of personnel and a lot of policy. And they have a close relationship. They almost ran as a ticket together. And so she’s the counterweight, to the extent that anybody is the counterweight, Elizabeth Warren and some of the House Democratic leadership are.
RG: And Dan, that brings us to Facebook, which you might be surprised if you’re just casually following things, or you wouldn’t be surprised if you’re following a little more closely, that the new White House chief staff was on the board of directors, very recently, of Facebook.
DB: Yeah. And I think this gets to something that Bob mentioned about the good old boy network, which is that Zients has had his fingers enhanced all over D.C. I mean, when he left the Covid czar position, there were lots of write-ups about the big cocktail party he had to make sure that he saw everyone he needed to see on his way out the door.
He owns these bagel shops across Washington. And even though he was floated as one of these potential picks months ago, alongside Susan Rice and Ricchetti, he kept a pretty low profile and did a lot of his networking and back-channeling in a quiet way. But you see spikes of that effort in instances like when I published several pieces on him. And they were some of the only criticism that was out there. The Times had never looked into his financial history. And these revelations were so novel that the entire Washington Post editorial board ended up responding to my article and trying to refute it. And you see these backchannel ways that Zients has done very well for himself in Washington, even though they only emerge in the media through glimmers.
RK: My first boss, the legendary I.F. Stone, used to rip out articles from the print press. I’ve continued that habit. And here’s today’s The New York Times piece, former COVID czar is said to be the next Chief of Staff.
And just listen to these nauseating quotes:
“‘He’s got a lot of the same sort of skills and talent that made Ron Klain so successful,’ Senator Chris Coons said,” blah, blah, blah.
“‘… best manager that I’ve ever worked with,’ said Mr. Gitenstein.”
“‘Jeff is a great choice for chief — first-rate talent, demeanor and experience,’ Mr. Bolten.”
So the stuff that you and I kind of looked up this morning and reminded ourselves of was a few hours’ work of Googling. What the hell’s the matter with these people? Don’t they know anything about looking up Zient’s past record as the uber-fiscal hawk? I mean, it’s just — this is the Times. It’s a disgrace.
RG: Wasn’t Josh Bolten the chief of staff to George Bush?
RK: George Bush! Yeah.
RK: Yeah, so, right. Just the kind of encomium you need.
And one anecdote that really gets at this was when Zients was called in as this sort of consultant guru to fix the Obamacare website rollout debacle. And basically, he just oversaw a team of consultants. There’s reporting that he brought them, I think, pies, I believe; maybe it was bagels, I’m not sure. But he was instantly hailed across all the publications as Mr. Fix it, she had saved not only the website but Obamacare as a whole. It was all taken at face value, like a straight press release, copy and paste.
RG: And Bob, was there anything progressives short of winning the White House could have done to influence Biden on this choice or to stop this from drifting towards Zients? Was there some organizing that didn’t happen? What went wrong here?
RK: I think if you look at the other people who were mentioned by what James Reston used to call the Great Mentioner, I mean, the seven or eight names who were floated as possible successors to Klain — none of them were any good. They were all terrible. And so there was nobody on the A list who would have been much better. And I have not done any reporting on this, so I don’t know if progressives on the Hill or other progressives in our community tried to influence this. My sense is no, we would have heard about it.
RG: Yeah, my sense is that other than hoping that Klain would stick around, that because the entire list was —
RK: — worse.
RG: — that the task of just trying to go through, because all you can do really is eliminate people by making it toxic for them to be chosen. But if there’s nobody decent that you have as an alternative who has a chance of Biden picking them …?
RK: Do you think Podesta would have been any better?
RG: Yes. Yeah, I do, too.
RK: I do too. Because he’s got skin in the game. I mean, he’s got all this money that he’s shoveling out. He’s in charge of that. And he’s a tough negotiator. He’s not a fiscal hawk, per se. And he’s the one guy who wasn’t mentioned by the Great Mentioner who is sort of able to get Obama on the phone. Personally, I think he would have been better. But I don’t recall anybody talking about any kind of a push for Podesta.
RG: And he doesn’t have private-equity brain, but it feels like you need private-equity brain to get those kinds of encomiums that you described in the New York Times.
But, Bob and Dan, thank you so much for joining me. I really appreciate this.
RK: Thanks for the invitation, Ryan. Thanks for your work.
DB: Thanks, Ryan.
[End credits music.]
RG: That was Dan Boguslaw and Bob Kutner, and that’s our show.
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