Published on December 13th, 2016 | by David Isenberg4
Mattis and the Revolving Door
by David Isenberg
In 1953, President Dwight Eisenhower nominated former General Motors president Charles Erwin Wilson as secretary of defense.
That sparked a controversy during his confirmation hearings based on his large stockholdings in General Motors. Reluctant to sell the stock, valued at the time at more than $2.5 million, Wilson only agreed to do so under committee pressure. During the hearings, when asked if he could make a decision that would be adverse to the interests of General Motors, Wilson answered affirmatively. But he added that he could not conceive of such a situation “because for years I thought what was good for our country was good for General Motors, and vice versa.” This statement has frequently been misquoted as “What’s good for General Motors is good for the country.”
Nearly 40 years later in 1989, Carlyle, the private equity firm, took off when it hired Frank Carlucci, a former defense secretary and deputy director of the CIA. Carlucci was able to open doors in Washington, allowing Carlyle to participate in many lucrative deals.
And now, 27 years later, Donald Tump has nominated retired Marine Corp general James Mattis, the former director of General Dynamics, as the next secretary of defense. For the military-industrial-congressional complex it doesn’t get much better than this.
As this article in International Business Times notes:
Financial filings reviewed by International Business Times show that since taking the position in 2013, Mattis has been paid $594,369 by General Dynamics, and has amassed more than $900,000 worth of company stock. While on the General Dynamics board, Mattis testified before Congress, where he called caps on defense spending — known as the sequestration— a national security threat. “No foe in the field can wreak such havoc on our security that mindless sequestration is achieving,” he said during the 2015 hearing.
Much of the commentary regarding Mattis’s nomination to date has focused on his admirable military career. Many commentators assume, rightly or wrongly, that he is more moderate than, say, retired Lt. Gen. Michael Flynn, who has been nominated to be Trump’s national security advisor.
But that ignores the dual role of a secretary of defense. Although he is expected to weigh in on national military and security strategy, his mandate does include running the Pentagon. The text of the original 1947 National Security Act which, among other things, created the position of secretary of defense, stated that his duties include running the “National Military Establishment,” which meant establishing, directing, and supervising the funding of its general policies and programs
Even though he has a deputy secretary of defense, who is traditionally expected to focus on the day-to-day management of the Pentagon bureaucracy, the secretary still bears primary responsibility. And, as The Washington Post recently reported, there is a lot to be responsible for, including staggering amounts of waste. The Post article noted that the Pentagon hired an outside consulting firm to identify ways to streamline its bureaucracy and found $125 billion worth of unneeded spending.
For even the most qualified person, running the Pentagon is daunting. There is not much in Mattis’s record to suggest that he is up to the challenge. Admittedly, it has just been a bit over three years since he retired from the Marine Corps, and there is not an extensive record of his dealings with corporate America. But what’s there suggests that his interest in and ability to stand up to corporate pressure may be lacking. His connections to Theranos, a Silicon Valley biotech company involved in blood-testing technology, suggests that he will go to great lengths to use his military connections to help his corporate buddies. He pushed the new technology while serving in the military and then, on retiring, joined the company’s corporate board. Theranos currently faces various lawsuits and regulatory compliance issues.
Mattis is far from the first flag rank officer to retire and take up a far more lucrative career in corporate America. Once upon a time it was considered unseemly for a high-ranking officer to do so, but those days are long gone. What this really reflects is the reality and allure of the revolving door.
One of the more harmful, albeit under-appreciated, aspects of the revolving door is how it affects those who begin their careers unassociated with the military sector. As one scholarly analysis noted:
Not only can it be individually profitable to enter the revolving door, but a future revolver is incentivized to conform to the system in order to create the necessary political connections that define his future value. Those who are unable to conform will not maintain their value as they will not be able to maintain their connections.
James Mattis has already demonstrated how well he has conformed to the system. If he becomes the head of the Pentagon, he will only further reinforce the connections between the military and corporate sectors.