As the economic recovery is already beginning to stall with millions of Americans out of work amid the resurging coronavirus, Deese’s record is stoking fears on the left that Biden’s administration will follow the same Wall Street-friendly policy playbook as Obama, which they say ultimately resulted in a drawn-out, sluggish and uneven recovery after the financial crisis.
“It is disturbing and discouraging to see people in key positions in the White House who played such a prominent role in getting us to where we are now,” said Consumer Federation of America director of investor protection Barbara Roper, about the impact the 2012 deregulatory push had on financial rules. “And Brian Deese is part of that.”
For his part, Biden has not suggested austerity measures will be on the docket, although he has said some of his longer-term priorities will require new revenue, such as higher taxes on the wealthy. He has argued instead that expansive economic relief measures will help reduce government deficits going forward.
“By acting now, even with deficit financing, we can add to growth in the near future,” Biden said in a speech in Delaware on Friday.
In announcing Deese, 42, as Biden’s main economic adviser, the transition team has touted his leading role in the government bailout of the U.S. auto industry and his efforts on climate change policy. Obama alums describe him as brilliant and compassionate and say he impressed White House officials so much back then that his portfolio of responsibilities rapidly grew even though he was only in his 30s. Some on the left, such as Sen. Ed Markey (D-Mass.), have come to his defense.
“The positions he took during the Obama administration were largely implementing policy decisions other people made,” said Dennis Kelleher, who sits on the Biden policy transition team and heads of the nonprofit Better Markets, which advocates for more financial regulation.
Obama even singled Deese out in an exit interview in 2016 with Rolling Stone at the end of his presidency.
“He engineered the Paris Agreement, the [Hydrofluorocarbons] Agreement, the Aviation Agreement, may have helped save the planet, and he’s just doing it while he’s got two babies at home, and could not be a better person,” Obama said.
When asked to comment on Deese’s economic agenda, a transition team spokesperson pointed to Biden’s comments earlier this week praising him and outlining the administration’s priorities.
But Deese has already garnered considerable blowback for his post-administration job as global head of sustainable investing at BlackRock, a Wall Street titan that manages $7 trillion in assets; climate change advocates fear he will be too sympathetic to the finance industry.
His past statements suggest the fissures between him and those further to the left could be more extensive.
“Brian Deese may be a very good NEC Director,” tweeted Tyler Gellasch, a former aide to retired Sen. Carl Levin (D-Mich.), a key lawmaker who opposed passage of the 2012 financial rollback. “He’s really smart and works hard. But when he was in the Obama admin, he pushed FOR financial deregulation and austerity.”
Consumer advocates are concerned about Deese’s association with that 2012 legislation that Obama signed, known as the JOBS Act, which relaxed rules for financial securities in a bid to boost startups.
Obama’s White House backed the measure despite objections from several Senate Democrats who warned that it exposed investors to harm. Deese was part of the push to enact the legislation, said three sources involved in the debate at the time.
These advocates fear Congress and the Biden administration may pursue a repeat. The legislation was sold as a way to bolster the economy as it recovered from a global financial crisis — a motivation that may reemerge as the U.S. moves past the Covid-19 pandemic.
“We’re in an environment where there’s going to be a strong push to create jobs,” Roper said. “Sen. [Pat] Toomey, who’s going to be chair of the Senate Banking Committee if the Republicans retain control of the Senate, has already indicated he’s interested in making further deregulation under the securities laws part of that strategy. We need to be confident the White House isn’t going to buy into that again. And it’s kind of hard to feel confident.”
The Obama White House’s handling of that legislation left some Democrats and consumer watchdogs feeling burned. Opponents of the bill who raised concerns about insufficient investor protections say they believed the White House was working against them in the effort to make it law as Obama prepared to campaign for reelection.
The bill, which became law less than a month after the then-Republican-controlled House first passed it, allowed growing companies to abide by fewer public disclosures as they sought to raise capital. Critics say that encouraging more companies to take investments in private — outside of publicly traded stock markets — could work against efforts that Democrats are now pursuing to require firms to report climate risks and the diversity of their organizations.
“Information and rights are essential for making smart investment decisions, but they’re also essential for holding companies accountable for addressing important issues like climate change and diversity,” said Gellasch, now executive director of the Healthy Markets Association. “Efforts to combat climate change aren’t just all about government spending and programs, but also informing and empowering investors to make better decisions.”
Some prior statements by Deese are also troubling to those on the left. In a February 2011 appearance at an event hosted by The Atlantic, he backed Obama’s vision of tempered spending and a focus on reducing the federal budget deficit.
Deese pointed to the president’s call at the time for a five-year freeze on discretionary spending, which he called “a disciplining device to do exactly that.”
“We have a theory on how to constrain the size of government, but it has to be focused on how to make the U.S. competitive, and it has to be about jobs and wages for American workers,” he said then, which means “investing in areas of the economy where you can get a higher return and being aggressive about cutting where you can’t.”
“At the same time, it is mindless to try to reduce that in the immediate term and cut off the legs of an economic recovery because we do know the pace of economic growth and the capacity to constrain our fiscal problems are interrelated, so we need to have a strategy where you can do both,” he said.
A couple of years later, Deese faced questions when he was deputy to NEC Director Gene Sperling on why the administration was pushing to close tax loopholes on multinational companies that stash cash abroad but offering to sweeten the deal by lowering corporate tax rates, rather than using that revenue to offset automatic spending cuts.
“What the president has said is twofold, which is if we can move to close those loopholes, let us do so,” Deese said at a hearing on his nomination as deputy OMB director in May of 2013.
“But if there is a good faith commitment to try to do comprehensive corporate tax reform and if that can be done in a way that actually is pro-growth and actually would increase incentives to invest in the United States, then he is willing to consider doing that in a revenue-neutral manner.”
Still, Biden allies caution that it is not clear how much Deese’s prior statements really say about his personal positions, and note that he’ll be working for a different president with the benefit of hindsight.
Said Kelleher of Better Markets: “At the end of the day, President-elect Biden made it clear that he picked Deese based on his personal working relationship with him and Deese’s commitment to marshal all the forces of the economy to tackle the existential crisis of climate change. He has all the appearances of being a pretty qualified guy to do that.”