Sunday, May 22, 2022

The Real Scandal Behind Ex-Google CEO Eric Schmidt Paying for Biden’s Science Office

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Former Google CEO Eric Schmidt has since faced a backlash Politico reported: earlier this week that he is indirectly funding and exercising unusually large influence over a key White House office charged with advising President Joe Biden’s administration on technical and scientific issues.

The ethical concerns surrounding this news are distressing: A tech billionaire with a clear personal interest in shaping government technology policy is giving money to an independent government agency dedicated to technology and science, albeit through his private philanthropic foundation.

The real scandal, though, is that a government office needed philanthropic help to fund its work, raising an ethical dilemma over potential conflicts of interest.

The White House Office of Science and Technology Policy (OSTP) is responsible for advising the president on a vital and broad breadth of government policy — or it is “a Bill of the People’s Rights for Automated Technologies” or the mammoth effort to prepare for future pandemics. It also has a meager $5 million annual budget — meaning it has to be creative to do its job.

“The use of personnel from other federal agencies and the armed forces, universities and philanthropic-funded nonprofits dates back to five presidential administrations — but President Biden was the first to bring the office up to cabinet level,” an OSTP spokesperson said in a statement to Recode. . †

According to the office, of the 127 people currently working there, only 25 are OSTP employees. The rest are a mix of temporary appointees from other federal agencies, as well as people from universities, scientific organizations or scholarships that may be funded by philanthropy.

Join Schmidt Futures, Schmidt’s private nonprofit that supports initiatives that use technology to address “hard-to-solve” scientific and societal problems. According to Politico, there was direct coordination between OSTP and a Schmidt Futures employee named Tom Kalil to secure funding for the office staff. Kalil was also an unpaid advisor to OSTP for four months while still working for Schmidt Futures, leaving the agency following ethics complaints in October 2021. The ties between Schmidt, his foundation and OSTP go even deeper than that, with Politico reporting that “more than a dozen officials in the [then] The 140-strong White House office is associated with Schmidt’s, including some current and former Schmidt employees.”

Both OSTP and Schmidt Futures claim their connection has been misconstrued as nefarious; they say this kind of partnership is the norm.

In a statementHighlighting how the OSTP is “chronically underfunded,” Schmidt Futures said it prides itself on being one of the “leading organizations” providing funding to OSTP. In other words, Schmidt Futures makes it clear that it is not the only private organization providing charities with much-needed financial support to government agencies.

“The United States government and the OSTP have used pooled philanthropic funding for more than 25 years to ensure proper staffing at all agencies,” the statement continues.

It is true that cooperation between governments and the philanthropic sector is not new. “Over the past two decades, there has been a growing focus on public-private partnerships at the federal level, including using private resources to fund public and government capacity,” said Benjamin Soskis, senior research associate at the Center on Nonprofits and Philanthropy at the Stedelijk. Institute. “Where this gets really tricky is when the funding involves regulatory bodies overseeing areas the funder has been interested in.” That’s why Schmidt’s connections to OSTP have raised the alarm.

“This has been a real problem for philanthropy and democracy from the beginning of the rise of large-scale foundations in the early 20th century,” Soskis continued. “Several of them, especially the Rockefeller Foundation, realized that shaping public policy and helping staff at federal institutions and federal agencies was a way to use their resources as effectively as possible.”

Many government agencies, such as OSTP, also work with outside private sector advisors. Some are what are known as “special government employees” (SGE) – they can work for the government for up to 130 days over a 365 day period, are subject to various ethical rules and can be compensated by outside funding. According to Walter Shaub, a senior ethics officer at the Project on government supervisionabout 40,000 SGEs currently work for the government, most of them on federal advisory committees.

“Outsiders are not subject to government ethics or government transparency requirements,” Shaub continued. “They may be putting their own interests ahead of the American people, and we don’t know how that changes the results.”

It’s one thing for the public and private sectors to coordinate and contribute to a project – it’s another for a government office to accept money from philanthropy that creates potential ethical conflicts. That indicates a systematic underfunding of the public sector that virtually guarantees some reliance on private interests, and accepting such money creates a problematic trade-off.

Speculation about the true motive behind Schmidt’s involvement with OSTP is almost beside the point. It seems inevitable that the money quietly flowing from him and his foundation into the office would exert pressure that furthers Schmidt’s personal and business interests.

“It’s a form of government policy shaping,” Soskis says. “You can do that by trying to promote certain laws, but you can also do that through staff. And I don’t think that’s necessarily nefarious, but it’s definitely a form of influence.”

“There should at least be a clear understanding of what money is coming into the arena, from whom, and for what purpose,” said Peter Goodman, a New York Times economics journalist and author of Davos Man: How the Billionaires Devoured the World† “In a post-Citizens United world, combined with these ‘innovative’ – I use that term in aerial quotes – approaches to philanthropy, they raise very troubling questions.”

What’s at stake here is a much bigger problem than Eric Schmidt and the OSTP. It’s a matter of what kind of presence private philanthropy should have in government. Government is expected to be fairly transparent and accountable to the public, while the philanthropic world is often opaque and subject to the whims of private, ultra-wealthy individuals like Schmidt, whose estimated net worth is $27 billion

What could more reliably keep government agencies charged with developing public policy at a distance from the wishes of the private sector? It could start if the government finances them enough.

When Politico’s investigation into Schmidt Futures made headlines, President Biden unveiled an annual federal budget proposal that includes a 20 percent tax on households worth more than $100 million. It’s important because it would tax unrealized capital gains — as in, the profit someone would make if they sold assets like company stock. It is an attempt to tax indirect wealth rather than income alone. The White House estimates that more than half of the estimated $360 million in revenue that would be generated from the tax would come from billionaires like Schmidt.

That kind of funding would have been helpful two years ago, when the slow failure of a pandemic response by the federal government led billionaires, especially tech billionaires like Bill Gates, to step up to help the public.

But Goodman wondered if billionaires filling in for the government have anything to celebrate. “Why do we depend on a tech brother who is generous, in what is believed to be the richest country in the world during the worst pandemic in a century, to equip our medical workers?” he asked.

Fiscal austerity tends to increase the government’s reliance on public-private partnerships as government agencies are strapped for resources, helping to normalize the idea that the private sector can tackle crises and other matters of public interest more efficiently or innovatively than the government can.

Goodman described the typical script for expanding private sector reach: “First you cut the budget for government programs, then you do a study that shows that government programs are not as effective. Then you say, ‘the government is a hopeless failure, let’s just dismantle this government program altogether,’ he said. Then whatever problem is handed over to the private philanthropic sector, whose proponents will say they can do more good than the government could — and have more reasons why they should pay less in taxes.

“This is the story of American capitalism for the past 50 years,” Goodman said.

At the very least, this playbook tries to argue that government cannot rule alone. It needs the considerable support of private generosity. And that generosity is fueled in part by a tax system that allows the very wealthy to pay very little. The 25 richest Americans pay a “real tax rate” of about 3.4 percent

Many of these billionaires give significant sums of money to philanthropic causes, often establishing their own private foundations where they can control how their wealth affects society, while also boosting their reputation. “But when we publicly exercise our democratic rights to determine how much tax [billionaires are] start paying so we can finance things in a reliable way on a regular basis, suddenly [the reaction is]”No way,” Goodman said.

A positive sign is that OSTP’s budget is likely to increase. Congress increased its budget to $6.65 million in the omnibus spending account earlier this month, and Biden’s annual budget proposal would bring OSTP $7.9 million a year. But how much this increase would change the makeup of OSTP-funded workforce remains to be seen.

“It’s not that [Schmidt] not allowed to sit at the table,” Goodman said. “It’s that we can’t just outsource our problems to billionaires who will always have a conflict of interest.”

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