Krugman, Gruber and non-disclosure issues

Undisclosed government payments to a health care analyst raise familiar ethical issues

Published January 16, 2010 10:17AM (EST)

[updated below (Sun.)]

In the midst of my lengthy discussion yesterday of Cass Sunstein's proposal to "cognitively infiltrate extremist groups" by employing covert agents and secretly paying so-called "independent" analysts to tout the government line, I noted the recent controversy surrounding MIT Professor Jonathan Gruber.  Specifically, Gruber was receiving large, undisclosed payments from the Obama administration at exactly the time when the Obama White House (and Gruber himself) were holding him out as an "objective" expert endorsing various parts of the President's health care plan.  Consistent with Sunstein's view that certain actions may be wrong when done by Bad People but acceptable when done by those who are "well intentioned" and trying to "improve social welfare," I noted that many Democrats who strenuously objected to non-disclosure scandals during the Bush years have been minimizing the conduct at issue in the Gruber matter, and cited Paul Krugman as an example.  Krugman responded last night on his blog, and I want to discuss a few of the points he makes because I think they have significance beyond the Gruber issue.

Krugman accuses me and others of "claiming that there’s a huge scandal" here and of conducting a "crusade against Gruber," but I did no such thing.  "Huge scandal" is just a rhetorical straw man to rail against.  I didn't even mention the Gruber matter until yesterday, and did so only because of its obvious relationship to the Sunstein scheme I was discussing.  Ironically, the only reason the Gruber matter has received as much attention as it has is because Gruber's defenders began aggressively attacking the people who uncovered, documented and objected to the undisclosed payments, as Krugman did when he equated the sober and cautious Marcy Wheeler with "the right-wingers with their endless supply of fake scandals."  People can characterize the magnitude of the failings here however they want ("huge" or otherwise), but the indisputable fact is that Gruber was running around publicly and favorably commenting on the President's health care plan -- while the White House and its allies were centrally relying on him and characterizing him as an "objective" analyst -- at exactly the same time that the administration, unbeknownst to virtually everyone, was paying Gruber many hundreds of thousands of dollars.   The DNC alone sent out 71 emails touting Gruber's analysis without even once mentioning the payments.  Those are just facts.

Nobody suggests that there's anything wrong with hiring Gruber to perform modeling analyses and paying him to do so.  That's all perfectly appropriate; I'm all in favor of the Government's retaining genuine experts (as Gruber is) for analysis.  Nor has anyone claimed that Gruber changed his views because of these payments.  The issue is the non-disclosure, and -- most serious of all -- the misleading attempts by the White House and others to depict him as being "objective" and independent rather than disclosing that he was being paid a significant amount of money by the very party whose interests his advocacy was advancing (which happens to be one of the misleading schemes Sunstein explicitly advocated in his 2008 paper).  An email Krugman printed yesterday from Gruber said that, as part of his contract, he worked "mostly" with the Senate Finance Committee, yet when John Kerry -- a member of that Committee -- went to the floor of the Senate to defend that health care bill on December 18, he relied on Gruber's arguments to do so.  Listen to how he tried to depict Gruber as some sort of independent analyst:

Don't listen to me on the transformational changes. Listen to a fellow by the name of Jon Gruber, who is a very respected and renowned economist from MIT, and here is what he writes . . . .

Anyone listening to this would have had no idea that Gruber wasn't just some independent authority, but was actively working with both the administration and Kerry's Committee in exchange for large payments.  Not disclosing that -- and instead affirmatively selling Gruber as some kind of detached, objective expert ("hey, don't listen to me; listen to that independent expert over there") -- is just wrong.  As Sunstein himself argued, people who are truly "independent" have more credibility in the eyes of many than those who are on the government payroll.  For that reason, to depict someone who is actually in the latter category as being in the former is simply deceitful.  How could anyone possibly defend that? 

Indeed, from what I can tell, few people other than Krugman are trying to defend it.  Krugman's own newspaper, which had published an Op-Ed by Gruber about health care, issued a fairly harsh "correction" once these payments were uncovered, in which they said:  "Had editors been aware of Professor Gruber’s government ties, the Op-Ed page would have insisted on disclosure or not published his article."  They appended a similar note to Gruber's Op-Ed indicating that "Professor Gruber signed a contract that obligated him to tell editors of such a relationship," yet failed to do so.  The Atlantic's Ron Brownstein, a fervent defender of the President's health care plan and someone who relied heavily on Gruber, wrote:

With disclosure, I don't think I would have completely put him outside the pale of people to talk to -- he's really about as sharp as they come on this stuff and I still believe that readers would (and did) benefit from his perspective. But I am confident that knowing about his relationship would have led me to emphasize other analysts to a greater extent, and again, to definitely disclose the connection any time I did quote him.

That's the only issue here:  for many people, there's a big difference between hearing from a truly independent authority about Obama's plan and hearing from someone being paid many hundreds of thousands of dollars by the administration.  Not disclosing that arrangement, and worse, affirmatively describing him as "objective," is just misleading -- not because Gruber changed his views, but because honest debate requires disclosure where a commentator is being paid by a party whose interests his advocacy advances.  Even Krugman, in his two separate defenses of his fellow academic, has acknowledged that "he should have taken more pains to reveal that role" and "more disclosure would have been a good idea."  Once that's conceded, how can anyone possibly attack Marcy Wheeler for having helped bring to light those undisclosed payments?

* * * * *

Krugman objects most vehemently to my comparison of Gruber to Armstrong Williams, arguing that Williams (unlike Gruber) was explicitly paid to advocate an opinion --  a distinction I expressly noted and, in response to commenters here, addressed almost immediately in an update.  Contrary to Krugman's suggestion, Williams' contract did not require him to express any particular view about No Child Left Behind, but rather, only to offer commentary on the policy.  Williams presumably could have offered whatever opinions he wanted on that law consistent with his contract.  Obviously, the fact that Williams was being paid $220,000 by the administration provided a strong incentive for him to provide favorable commentary, which is the whole point:  that's why such relationships must be disclosed and why concealing them is misleading.  Krugman adds:

[W]hat Gruber has had to say about health reform in the current debate is entirely consistent with his previous academic work. There’s not a hint that he has changed views, or altered his model, to accommodate the Obama administration.

I explicitly acknowledged that to be the case.  But that's always the defense offered in non-disclosure scandals, and it's usually true.  Nobody claimed that Armstrong Williams -- a loyal, right-wing, doctrinaire Bush follower -- supported Bush's policies only because he was paid to do so; indeed, Williams' defense was that he had a long record of passionate advocacy for those education policies long before he was paid. 

Nobody claimed that Maggie Gallagher, a long-time social conservative, only supported Bush's "pro-marriage" policies because she had a $20,000 contract to do so; the issue was non-disclosure.  Nobody claimed that Peter Galbraith -- whose undisclosed conflicts were recently the subject of a major front-page story in The New York Times -- advocated anything different about the Kurds because of his undisclosed oil contracts.  Indeed, Galbraith's advocacy was completely consistent with his long-time belief in Kurdish independence; again, the scandal was that he failed to disclose the relationship while publicly advocating these policies.  Keith Olbermann recently took Richard Wolffe off the air when Wolffe's undisclosed conflicts were brought to light -- again, not because of any evidence that Wolffe had offered opinions he didn't believe on behalf of his clients, but because the undisclosed relationships provided an incentive for him to do so and thus called his independence into question.

Perhaps a better comparison than Williams is the military analyst scandal uncovered by David Barstow.  Unlike Gruber, the retired Generals in question weren't paid anything by the Bush administration.  The problem was that (like Gruber) the Generals were being held out as "independent analysts" even though they had a relationship with the Pentagon (secret briefings and messaging meetings) which called into question that independence; the scandal was about the non-disclosure of that relationship and the misleading nature of calling them "independent."  Or consider Bartsow's exposé of Barry McCaffrey, who was on television commenting on Pentagon policies at exactly the time -- unbeknownst to the viewing audience -- he sat on multiple Boards of companies that did business with the Pentagon.  Unlike Gruber, McCaffrey wasn't being paid directly by the Government.  The issue is that he had business relationships that incentivized him to offer pro-Government views, and those relationships -- which could jeopardize his objectivity -- were undisclosed.  Isn't that the same thing as with Gruber?

There, too, nobody suggested that the retired Generals, including McCaffrey, ever uttered a word they did not believe.  Indeed, the Generals' self-defense was precisely that they believed everything they said and did not alter a word of it.  If the fact that Gruber did not change his views as a result of his contract means his non-disclosure is "no big deal" (as Krugman calls it), why isn't that true for Williams, Gallagher, Galbraith, Wolffe, and the retired Generals, none of whom was accused of changing their views either?  One can argue that the Bush-era scandals had a larger or more damaging impact -- I'd certainly agree with that -- but the common strain is clear:  it's the false depiction of commentators as "objective" and independent, achieved only by concealing relationships which call that independence into question.

* * * * *

The most important issue raised by Krugman is in this paragraph of his:

And here’s the thing: by claiming that there's a huge scandal when nothing worse happened than insufficient care about disclosure, Greenwald and the people at FDL are actually reducing our ability to call foul on real corruption. After all, if everything is a scandal, nothing is a scandal. One of these days, perhaps soon, we'll have a genuinely corrupt administration again -- but when whistleblowers try to call attention to the misdeeds, you can be sure that there will be claims that "even liberals said that Obama did things just as bad or worse."  The crusade against Gruber is getting really destructive.

For me, this is the nub of the matter.  I couldn't disagree more with Krugman's claim here, as he has it exactly backwards.  What will make it impossible to effectively call out wrongdoing by future corrupt administrations (by which Krugman seems to mean:  Republican administrations) is the willingness of some people to tolerate and defend corruption when done by "their side."  The next time we have what Krugman calls a "genuinely corruption administration" which, say, secretly pays people they're holding out as "independent" experts, the administration's defenders will say:  "how can you possibly object to our doing this when Obama did it, and not only did you fail to object then, but you defended it?" 

Minimizing or excusing unethical behavior when done by Your Side is exactly what normalizes the behavior, and turns ethical failures into nothing more than a partisan tool cynically used by each side, which in turn trivializes these issues.  If the Bush administration had repeatedly relied on a Professor or other expert to publicly support their positions in a highly contentious policy debate and continuously held him out as "objective" -- only for it to be revealed that the administration was paying that person many hundreds of thousands of dollars in undisclosed payments -- would Paul Krugman and others really be claiming that it was all "no big deal"?  That's hard to envision.

Non-disclosure issues are, in my view, so important precisely because Washington is rife with these sorts of overlapping, hidden relationships.  All kinds of people holding themselves out as independent commentators are, in fact, being secretly paid or otherwise rewarded by those whose interests they're serving.  Many times -- as is the case with Gruber -- there is nothing wrong with the relationship itself.  It's the total lack of transparency that becomes misleading.  

Just think about what the Republicans did for virtually the entire Bush administration.  They refused ever to criticize anyone on their own side for ethical or even legal transgressions.  They believed that even when the evidence of wrongdoing was overwhelming, the fact that the people involved were on the Good Side -- or were striving for good outcomes -- meant that it was "no big deal."  They not only refused to police their own side, but vehemently attacked anyone on their side who tried to hold Republicans to some standards.  And the outcome of all that was clear and predictable:  the party became a cesspool of ethics-free, anything-goes sleaze and corruption.  That's the inevitable result of an "it's-okay-when-we-do-it" mindset.  The fact that the Obama administration isn't in the same league as the prior one in terms of corruption (they're plainly not), or that the Gruber matter isn't a "huge scandal" (it isn't), is irrelevant.  If it's wrong, it's wrong, and in terms of exposing and condemning it, that should be the end of the consideration.


UPDATE:  Along with people like Brad DeLong and Krugman himself, Yves Smith is one of the economics experts whose analysis I trust most on those issues.  Today, at her Naked Capitalism blog, Smith notes this exchange with Krugman and observes:

I was completely gobsmacked by Krugman’s evident lack of a moral compass (this is "ends justify the means" in fancy dress), and was glad to see Greenwald do the heavy lifting of taking his argument apart.

I tried very hard to avoid speculating on Krugman's motives in defending Gruber -- I have a lot of respect for Krugman's conduct as a commentator and analyst over the last decade -- but an "ends justify the means" mentality does seem to pervade his arguments in this particular case.

Meanwhile, in The New York Times this morning, that paper's Public Editor, Clark Hoyt, condemns the Gruber non-disclosures:   "[Gruber] did not tell Op-Ed editors, nor was the contract mentioned on at least 12 other occasions when he was quoted in The Times after he was consulting for the administration."  Hoyt analyzes this case in the course of discussing what he calls "five embarrassing editors' notes in the last two months -- two of them last week -- each of them saying readers should have been informed of the undisclosed interest."  Hoyt ties together the five cases -- including Michael Chertoff's failure to disclose his financial stake in companies selling body scanning technology at the same time he was advocating for them; the Galbraith non-disclosures discussed above; and Gruber -- and notes that they all share the common element of having run afoul of the principle that "readers are entitled to disclosure so they can decide if there is a conflict that would affect the credibility of the information."

By Glenn Greenwald

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