New Nepotism

02.27.14

Get Elected, Get Your Kids Rich: Washington Is Spoiled Rotten

A governor’s daughter is made CEO without a MBA. A senator’s son starts a hedge fund right out of college. Democrats have joined Republicans in the new nepotism.

Joe Manchin’s daughter Heather was looking for a job. The now-senator and one-time governor of West Virginia was only a state level rep when he ran into Milan Pushkar—the head of Mylan Inc., a Fortune 500 pharmaceuticals company—at a West Virginia University basketball game. Heather was hired for an entry-level position at the company soon after. Records show Mylan benefitted from millions of dollars worth of corporate tax breaks in the state during Manchin’s gubernatorial tenure. And these days, after stints as Mylan’s director of government relations and strategic development, Heather Bresch (née Manchin) is the company’s CEO, one of Fortune’s 50 Most Powerful Women in Business. All this without even an MBA—a 2008 investigation found that Bresch did not actually earn her degree from WVU as claimed. Officials had altered her official records and covered up for it, perhaps motivated by Mylan’s lucrative relationship with the University—co-founder Pushkar (Bresch’s business world fairy godfather) donated over $20 million and had the football field named after him.

Connected children of political families catching a break is something we Americans are plenty used to—there would be no Kennedy or Bush dynasties without the public’s acceptance that some people just raise their kids up all square-jawed and rolled shirtsleeves, ready to run for office. But the nexus of private business and politics is always one that’s skated over lightly in high school civics classes. Perhaps that’s why there was so much consternation over the recent revelations that Wall Street banks had hired the children of prominent Chinese politicians with hopes of currying favor with those who wield power over business decisions in the rising economic superpower. The hiring of so-called “Chinese Princelings” has been a widespread one in the banking community; JPMorgan Chase had a “Sons and Daughters” program that separated applications of Chinese elites’ children from the wider pool and held them to less rigorous standards. Documents have been uncovered indicating that the bank directly tracked the hiring of influencers’ children to the success of business deals.

The banks’ cozy arrangements with the Chinese have been difficult for many to stomach, but others have scoffed at what they perceive as prissy outrage, framing the affair as simply the ways of the world revealed. Writing in the Wall Street Journal, Arthur Levitt, head of the SEC under President Clinton (and son of a former New York State comptroller), called the accusations, “scurrilous and hypocritical,” pointing out that wealthy and powerful Americans employ many of the same nepotistic practices on behalf of their own children. The right schools, the right friends, the right job out of college.

In Arab countries, such wielded power is known as wasta, and throwing it around is often the accepted way of doing business.

But it might be that Americans are less aware of political family power plays when they’re not accompanied by gripping and grinning and kissing our babies for cameras and votes. Business is the less ostentatious version of trading on one’s family political connections—for the scion desirous of a cream-interior country home lifestyle rather than the comforts of a post-war split level hastily bought in a congressional district up for grabs next election cycle. “Members of Congress basically are profit centers for their entire families,” says Melanie Sloan, Executive Director of Citizens for Responsibility and Ethics in Washington. “Some people can get by solely on talent, but talent and connections is a much better combination—and if you have to have one or the other, it’s probably the connections.”

Take Senator Ron Wyden’s son, Adam—directly upon graduation from his Columbia MBA program he started his own hedge fund, no doubt capitalizing on contacts he made interning at the $19-billion fund of one of his father’s supporters, David Shaw.  “Not many college kids get to intern on a D.E. Shaw portfolio for the summer,” Brian Marshall, who once ran the fund, was quoted as saying in a 2011 Bloomberg article on the younger Wyden.

It’s also fair to speculate that former Clinton Treasury Secretary Robert Rubin’s son James might have had a few family friends numbers in his Rolodex starting out as well. Rubin worked for a big New York law firm directly out of school (Harvard, then Yale), went on to hold a few policy jobs in Clinton’s FCC, then found himself at a series of investment and private equity jobs (including the private-equity arm of JPMorgan), where his employers were no doubt heartened by the thought of one of the nation’s most powerful influencers in finance talking shop over the family dinner table with their guy.

By the time she landed a spot as a Deputy Director of Public Affairs for International Trade in the Obama administration from 2009-2011, Valeisha Butterfield-Jones, daughter of North Carolina Congressman G.K. Butterfield, had already turned an internship with Russell Simmons into a position as the Executive Director of his Hip Hop Summit Action Network (in the span of three years), founded a non-profit focused on portrayals of women in the media, and done campaign work. She now has a production company, is president of a communications and management firm, and married Dahntay Jones of the Dallas Mavericks. Her personal website also lists Buttefield-Jones as a “lifestyle expert.”

Nathan Daschle, son of former Senate majority leader Tom Daschle, went the mixed media route as well; the Harvard Law School graduate did a stint at a D.C. firm before heading to the Democratic Governor’s Association (where he eventually served as Executive Director), and now works for Clear Channel Media as its Executive Vice President for Political Strategy. 

And lest we forget the telegenic kids—Chris Cuomo, Abby Huntsman, Maria Shriver, Meghan McCain, and Jenna Bush Hager have all parlayed their family names into a lifetime of pancake makeup. No doubt network execs like the idea of having a friendly face—a member of the tribe–on hand to cajole reluctant political interview subjects on air.

Amelia Warren-Tyagi, a former McKinsey Consultant, has written two books with her mother, Massachusetts Senator Elizabeth Warren, and co-founded The Business Talent Group, a hybrid headhunting and consulting firm—industries whose bread and butter is leveraging connections.  

Zeno Baucus, son of Senator Max Baucus, worked at a D.C. law firm after his graduation from Georgetown Law, but has since moved back to Helena, Montana, where he’s working as an assistant U.S. Attorney. In a funny coincidence, Max Baucus once recommended his then-girlfriend and now-wife to be the U.S. Attorney in the state. It didn’t go over well.

And then there are the lobbyists—that professional amalgam of business and politics—the litany of which reads something like an Old Testament family tree. There’s Andy Blunt, son of Senator Roy Blunt and brother of former governor Matt Blunt; Andrew Coats, son of Senator Dan Coats; Scott Hatch, son of Senator Orrin Hatch; David Roberts, son of Senator Pat Roberts; Shantrel Brown Fields, daughter of Rep. Corinne Brown; Giliane Carter, daughter of Representative John Carter; Sean King, son of Rep. Peter King; Clark Mica, son of Rep. John Mica.

Of course, sometimes there is trouble in the paradise where business and politics and family meet. There’s the case of Brad Enzi, son of Mike, Senator from Wyoming. Enzi the younger has been overseeing the building of the Two Elk Power Plant in Wyoming for North American Power Group. The clean coal project has been notoriously slow going (it’s known to locals as “No Elk” and was supposed to be on-line during the Clinton administration). Senator Enzi pushed for Department of Energy funds to go towards clean coal research projects in his state and Brad Enzi’s company benefitted from them; it received nearly $10 million in funding to drill a well to study the site surrounding the plant, and Enzi himself earned $128,000 in compensation from the federal money. As of April of 2013, the well had not been drilled and the administration of the grant had been referred to the U.S. Attorney’s office for accounting irregularities.

Chaka Fattah Jr., son of Pennsylvania Congressman Chaka Fattah, has similarly felt the double-edged blade of intertwining family, business, and political ties. The management consulting company he founded was paid $450,000 by an education firm with lucrative contracts with the Philadelphia City School District—turns out Chaka’s father requested a $375,000 earmark for the firm from a 2009 transportation bill. Both father and son are currently under federal investigation. "My company was awarded a contract for $450,000 in October 2010, based on a business decision by my client, it had nothing to do with my family ties," the younger Fattah told The Daily Beast via email. Both father and son, who are are currently under federal investigation, deny any wrongdoing.

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So how are we, a nation rife with egalitarian pretensions, supposed to feel about all this nepotism emanating from Washington into every corridor of American power?  Other societies are, let’s face it, less squeamish than we about the advantages accompanying a good bloodline. In Arab countries, such wielded power is known as wasta, and throwing it around is often the accepted way of doing business, if not always admired. Brits can still sniff out whether a manicured hereditary estate goes with a person by dint of their Oxbridge accent and how ridiculous their daughter or sister’s first name is (see: Cressida, Plum, Poppy).

American Children born today with silver spoons in their mouths looking to use the family name ought to be given a hair shirt and a Rodney Dangerfield DVD on their 18th birthdays—they’ll spend the rest of their lives alternatively seeking absolution for their privilege and getting no respect on account of it. That’s because these scions stand at the crux of a national crisis of conscience, battling our collective, half-hearted-but-still-existent belief in the American mythology of the heroic individual and the reality of the ease with which success comes to those in possession of high-profile connections.

If you’re one of these law firms or lobbying shops or Wall Street banks that thinks of yourself as pretty important in the world and you have the chance to hire a senator’s kid, all else being equal, you might want to hire that senator’s kid,” says Lee Drutman, Senior Fellow at the Sunlight Foundation. “That person probably has a pretty good insight into how Washington works and how political power works and so is somebody you would want on your team.

And while it’s not quite the gauche tit-for-tat discussed in the Wall Street princeling emails, Sloan says that similar expectations of capitalizing on key relationships are likely clearly communicated to the children of the powerful without breaking any ethics codes or bribery laws. “You can easily have somebody in the room when you’re talking about, ‘this is a key deal and the firm really needs this, and do you have any thoughts on how we might approach it?’ 

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While nepotism—or canny networking, however you choose to look at it—might be something we accept only begrudgingly as a fact of life, Adam Bellow, son of Saul and author of In Praise of Nepotism: A Natural History, thinks that the stock of legacy and politically-connected hires is probably better than it’s ever been in American history. What he terms “the New Nepotism,” isn’t driven by the top-down ambitions of parents for their children but instead by children choosing for themselves a family-trod path. Only a kid that really wants to make a go of it will run for office (or hedge a fund), and take on the burdens of a business and a name. These modern children of privilege have absorbed our general cultural sense that this inherited advantage is unfair. “It doesn’t mean that we’re going to give up those privileges,” Bellow says. “But what it does mean is that we have to prove our merit not only to other people but to ourselves by being exemplary and successful and models of merit.” In other words, rich, connected kids these days have more guilt than, say, during the Boston Brahmin age, when a man of the Harvard caste wouldn’t give a hoot what a tenement dweller thought of him.

Modern angst aside, those with those with specialized grooming simply seem to have a better chance of shining and profiting. Griffin Perry, son of Texas Governor Rick Perry and the co-founder of a nascent energy startup based out of Dallas, chalks much of his capital-raising ability for the firm (he’s the head of fundraising) to what he learned from watching the day-to-day business of politics. “You learn to talk to people and manage highs and lows,” Perry says. “And on the financial side, you get used to asking people for money, and that is not an easy thing to do.”

 “There’s maybe a few thousand people in this class who are super well connected,” says Drutman. “With rare exception, they’re not going to work on behalf of a homeless shelter—they’re going to go work for a Wall Street bank or a white shoe law firm because their market value says to them, ’you can earn low to medium six figures. Everybody wants to do well financially.”

That class of people has the natural tendency to regenerate according to Bellow. “You can make an argument,” he says, “that from the sociological point of view, elites are necessary. All societies have elites. Which is to say, a hereditary specialized group of people who perform certain necessary social functions and because they have families, they’re going to gradually monopolize the functions they perform.”

And in 2014, the place that’s increasingly being chosen as a place to call home by American “elites” happens to be Washington, D.C. The city’s greater metropolitan area boasts the largest number of “Super Zips”—those areas with the highest combined wealth and level of education—in the country.[34] Greater numbers of women entering high-powered jobs helps account, Bellow says, for the “formation of a kind of proto-dynastic system in Washington, D.C.” So, even in the midst of an era of heighted awareness about inequality—both financial and social—we might well be experiencing the beginning of another historic cyclical upswing of powerful family bias. In other words, those go-getter couples meeting over drinks at Café Dupont in their baggy suits and department store pencil skirts might just be the matriarchs and patriarchs of the next legendary American families. But even a proponent of the nepotism’s place in our society isn’t sure that’s a good thing.

“You see these articles that come out occasionally that talk about who’s married to who in Washington,” Bellow says. “It’s starting to look like the Renaissance papacy.”