Obama Aides ‘Pissed Off’ About Anita Dunn

White House and campaign officials privately are voicing chagrin and surprise over the extent of presidential confidante Anita Dunn’s extensive consulting work for firms lobbying the administration on policies and regulations at the very time she is a key reelection adviser.

“It smells,” said one Obama campaign official. He asked for anonymity, as did at least three other White House and campaign aides, as well as one close personal friend of the president who responded to disclosures by The New York Times.

A White House aide conceded being “pissed off” by the story, expressing concern that Mitt Romney could use it to ridicule Obama’s pledges to change Washington’s political culture. He cited several other consultants working on the reelection campaign and said, “You don’t hear stories about them so obviously exploiting their access.”

A campaign aide said: “The timing is terrible. I bet it comes up in the debate [Monday] as a question of Obama ethics. I think she is well over the line.”

White House and campaign spokesmen defend Dunn’s dual roles, saying that all relevant ethics rules have been heeded. Dunn left a post as White House communications director in 2009 and, soon after, doubled to the size of her firm, SKDKnickerbocker, which now employs some 60 people.

White House spokesman Eric Schultz said, "This administration has adopted the strongest ethics policy in history, beginning on the President's first day in office when he implemented unprecedented reforms to reduce the influence of the revolving door in Washington. In all instances, the administration takes steps as to avoid any conflicts of interest. Both past and present members of the administration, have contributed to a successful record of compliance."

Since leaving her White House position, Dunn has visited the White House 100 times, according to The Times, and is a paid adviser to the Democratic National Committee. She’s also kept her hand in as the president prepared for debates, playing the role of moderator Candy Crowley before the second debate, and assisting Obama again over the weekend for the final presidential showdown Monday night.

Reached Sunday amid the debate prep, Dunn apologized for being unable to comment, and asked a colleague to respond on her behalf. The spokesman for her firm said: “We’re a public relations not a lobbying firm. Our job is to help clients with media,” though she said it will give lobbyists with whom it works suggested statements, or “talking points,” to use on behalf of clients.

As a consultant, not a registered lobbyist, Dunn is not covered by the same ethics rules that mandate disclosing clients or activities. She was required to heed rules for exiting political appointees, effectively barring direct communication with administration officials on behalf of clients for two years.

Still, her activities have troubled even some of her allies, who point to revolving door precedents in Washington and worry that Dunn’s work may have strained those standards. She maintained frequent contacts with the White House while her firm was representing a growing list of companies with interests in government policy.

And some of those companies are at odds with the administration’s stance. Both a White House and a campaign aide cited her firm’s work on behalf of the Keystone XL Pipeline; the for-profit higher education sector; and a business coalition desiring to reduce tax rates on offshore earnings as examples of clients with interests at odds with administration policy or rules being proposed.

A Democratic policy consultant in Washington, who has worked with Dunn, called her “smart, strategic, and ethical. So I’m willing to give her the benefit of the doubt.”

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“The idea that anyone and everyone should be able to call up the White House or Congress and get a meeting is absurd,” he said. “But,” he added, “so too is the notion that you have to be a firm with direct connections to the White House or Congress. Her firm grew so fast because people stupidly think they’re getting something that they are not.

“Yes, this is the way things work in Washington,” he said, “but I don’t necessarily see that as bad. There is a middle ground between Abramoff and not playing the game at all, which means being out of the game,” referring to D.C. superlobbyist Jack Abramoff, who was sentenced to six years in prison in 2006 for his role in a major scandal in which he ripped off Native American tribes for whom he lobbied.

A close Chicago friend of President Obama, who does not work for the administration or campaign, said Saturday that he assumed that Obama was “simply not aware until he picked up The Times of the extent of her firm’s work. I bet he won’t be happy.”

Criticism of Dunn came, too, from a former high-ranking Clinton administration official who remains friends with many in the Obama administration and thus also requested anonymity.

“I cannot imagine anyone with that kind of ongoing practice being allowed to be a regular participant in White House meetings under Clinton—or any other president,” he said.

Under Clinton, [Chief of Staff] Leon Panetta would have shut it down in a minute,” the former Clinton official argued in an email regarding Dunn’s White House visits. “And it is accentuated by the fact she is obviously profiteering massively and quickly from perceived access—firm doubling to 60 employees since she came back from the White House in 2009!”

The Washington universe of consulting and lobbying is a well chronicled one in which the mere illusion of access often lures clients to pay huge sums of money for preservation of a policy or regulatory status quo. The chance to cash in on contacts and experience has long attracted administration officials of both parties to public-affairs and lobbying work. Says a senior White House official: “She is held in high regard here and we continue to call on her often for advice and to help manage particularly tricky projects like debate prep. And people here are really grateful for her continued willingness to help.”

One lobbyist who competed to represent the same business coalition seeking to reduce tax rates, but lost out to Dunn, believes that the aura of her close ties to the West Wing surely played a role in helping her win the client.

And despite her firm’s lack of success so far on the coalition’s behalf, this lobbyist said, the client has stuck with Dunn, who is clearly well-connected. The Times reported that within an hour of its contacting the Treasury Department press office with a Dunn-related inquiry, her firm was informed of the call.

After some White House upheaval, Dunn was asked by the president to come back to government as an interim communications chief for eight months in 2009.

Upon then returning to her firm, she was essentially covered by a two-year ban on political appointees having direct contact with the government departments where they previously worked. The first year is a statutory ban which carries criminal penalties for violation; the second is a function of an early Obama administration extension of the one-year ban that does not carry criminal sanctions.

For a White House appointee like Dunn, those rules mean no contacts with any administration official. A spokesman said that during her involvement as an adviser both to Obama and the Democratic National Committee, she has voluntarily extended that ban.

“She will not call anybody in the administration in behalf of any client, be it Planned Parenthood or AT&T,” said the spokesman for her firm. “She’s taken it way beyond what the rules allow.” Coincidentally, those same rules were largely crafted by Robert Bauer, her husband, in his then-position as White House counsel (he now works solely on Obama’s reelection campaign).

"Anita is smart, capable and competent, and has access to many people in important, influential positions,” said a Washington media consultant. “But whether she uses that time with those special people to also advance client objectives is the issue. Everyone similarly involved insists it never happens. But that doesn’t mean it doesn’t smell a bit.”

But he and others suggested that such a “smell" is inherent in the Washington worlds of lobbying and consulting, especially as many decide against registering as lobbyists and thus avoid more formal ethics strictures. In theory, one must so register if 20 percent of one’s time in any three-month period involves advocacy on behalf of a client. There are many gray areas and loopholes.

Cynics might suggest that the success of many such firms explains the journalist Michael Kinsley’s oft-repeated notion that the real scandal in Washington is what’s legal, not what’s illegal, in seeking to influence decision-making.

And it is surely naïve to believe that consulting means only representing saints or those with progressive aims. But some of Dunn’s work involves clients passed up by other key players in Obama’s camp—including top strategist David Axelrod.

One involves Rod Blagojevich, the former Illinois governor convicted and imprisoned for corruption. Axelrod helped Blagojevich on his congressional campaigns but, despite the guarantee of a big payday, declined to be his strategist when he first ran for governor in 2002. Axelrod thought he was immature and not up to the job.

Dunn’s firm took on the job, handling Blagojevich’s TV ads not just for the 2002 race but for his successful 2006 reelection campaign. The second campaign took place amid mounting evidence of the slimy “pay to play” politics that would eventually entrap the governor and lead to his impeachment, indictment and conviction.

A second example in the president’s home base involves Blair Hull, a once obscure but wealthy Las Vegas card player and trader who was prepared to spend virtually anything to win the 2004 Democratic Senate primary in Illinois.

Several firms, including Axelrod’s, were approached by the political neophyte, but took a pass despite his wealth—in part because of sordid details of a messy divorce that threatened to spill into public view, including allegations by his ex-wife that he was physically abusive (Hull declined to discuss the matter in press accounts at the time). These firms believed such allegations had to be dealt with upfront and would be detrimental.

Dunn took the job as chief media strategist for Hull, who spent a stunning $29 million in his campaign. As details of the divorce became public, his political stock plummeted; he wound up with 10 percent of the vote in a six-way race, losing to a previously little-known state senator named Barack Obama.