Gingrich pushes debunked claim on private sector experience of Obama Cabinet

During the December 2 edition of Hannity, Fox News contributor Newt Gingrich claimed that the stimulus has “failed” and cited “a study at the American Enterprise Institute” indicating that “only 8 percent of the senior appointees have a private sector background.” In fact, there is a broad consensus among economic experts that the stimulus has boosted the economy, and after analyzing the “study” Gingrich cited, concluded that the claim that less than 10 percent of Obama's Cabinet appointees have private sector experience is “False.”

Gingrich falsely claimed “only 8 percent of the senior appointees have a private sector background”

From the December 2 edition of Fox News' Hannity:

SEAN HANNITY (host): What does that say about the stimulus plan? Does that mean it failed?

GINGRICH: Of course it's failed. The stimulus plan was a politician payoff to other politicians. It allowed governors and mayors and county commissions to avoid hard choices, and it wasted an enormous amount of money while creating virtually no jobs.

The fact is there's a study at the American Enterprise Institute that indicates that this is the worst administration in American history at appointing people who have had any kind of private sector experience. I think 92 percent of this administration has government background or academic background; only 8 percent of the senior appointees have a private sector background.

So you've got folks trying to sit around in a room at the White House who have never created a single job, talking to each other about job creation as though they know what they're doing.

In fact, 7 of 9 appointees study identified as jobs-related have private sector experience. The study Gingrich cited, which was promoted by the American Enterprise Institute, was authored by Michael Cembalest, chief investment officer for J.P. Morgan Private Bank, who examined the private sector experience of “secretaries of State, Commerce, Treasury, Agriculture, Interior, Labor, Transportation, Energy, and Housing & Urban Development” for several administrations. After Fox News host Glenn Beck stated that "[u]nder 10 percent of [Obama's] appointees have any experience in the private sector," called the claim “False,” noting that Cembalest said he “discount[ed] the corporate experience of the three lawyers we identified -- Clinton, Vilsack and Locke -- and added that he awarded nothing for Donovan, Chu or Salazar, even though we found they had a fair amount private sector experience”:

In Obama's Cabinet, at least three of the nine posts that Cembalest and Beck cite -- a full one-third -- are occupied by appointees who, by our reading of their bios, had significant corporate or business experience. Shaun Donovan, Obama's secretary of Housing and Urban Development, served as managing director of Prudential Mortgage Capital Co., where he oversaw its investments in affordable housing loans.

Energy Secretary Steven Chu headed the electronics research lab at one of America's storied corporate research-and-development facilities, AT&T Bell Laboratories, where his work won a Nobel Prize for physics. And Interior Secretary Ken Salazar, in addition to serving as Colorado attorney general and a U.S. senator, has been a partner in his family's farm for decades and, with his wife, owned and operated a Dairy Queen and radio stations in his home state of Colorado.

Three other Obama appointees had legal experience in the private sector.

Secretary of State Hillary Rodham Clinton, Agriculture Secretary Tom Vilsack and Commerce Secretary Gary Locke spent part of their careers working as lawyers in private practice. Clinton and Vilsack worked as private-sector lawyers at the beginning of their careers, while Locke joined an international law firm, Davis Wright Tremaine LLP, after serving as governor of Washington state. At the firm, Locke “co-chaired the firm's China practice” and “helped U.S. companies break into international markets,” according to his official biography. That sounds like real private sector experience to us.

Finally, Treasury Secretary Timothy Geithner worked for Kissinger Associates, a consulting firm that advises international corporations on political and economic conditions overseas.

The occupants of the two remaining Cabinet posts cited in the chart do not appear to have had significant private-sector experience: Labor Secretary Hilda Solis and Transportation Secretary Ray LaHood.

Obama's Cabinet has even more private-sector experience if you go beyond the nine. Two of the Obama appointees could be considered entrepreneurs -- the very people Beck would “unleash.” Vice President Joe Biden, officially a Cabinet member, founded his own law firm, Biden and Walsh, early in his career, and it still exists in a later incarnation, Monzack Mersky McLaughlin and Browder, P.A. (The future vice president also supplemented his income by managing properties, including a neighborhood swimming pool.) And Office of Management and Budget director Peter Orszag founded an economic consulting firm called Sebago Associates that was later bought out by a larger firm.

It's also worth noting that if you examine a larger group of senior Obama administration appointees, you'll find that more than one in four have experience as business executives, according to a June study by National Journal. That compared with the 38 percent the magazine found eight years earlier at the start of George W. Bush's administration. That's at least three times higher than the level claimed by Beck.

Author of study “acknowledged fault in missing Salazar's business background.” PolitiFact noted that “Cembalest acknowledged fault in missing Salazar's business background, saying he would have given him a full point if he had it to do over again” and that he “said any effort to address the topic is heavily subjective, and he expressed regret that his work had been used for political ends, saying that it was not his intention to provide fodder for bloggers and talk show hosts.”

Chart accompanying study was circulated by conservative blogs. In a November 24 article about his study, Cembalest included a chart which compared the Obama administration's “Prior Private Sector Experience” to the appointees of presidents. After the chart was featured by Nick Schulz on the American Enterprise Institute's blog, it was picked up by numerous other prominent conservative blogs, including National Review Online's The Corner, The Washington Examiner's blog, Outside the Beltway, Big Government, Reason's Hit & Run, and the blog of House Republican Leader John Boehner.

After posting Cembalest's graph, The Volokh Conspiracy “decided to take it down.” Law professor Kenneth Anderson wrote in a December 2 update to a Volokh Conspiracy blog post: “After discussions with the person who created the chart, I've decided to take it down and the rest of my commentary as well. He tells me that he has had a chance to re-think the whole thing, and thinks it was a big mistake to try and quantify with a graph things -- in this case, what constitutes private sector experience -- that are inherently subjective.”

Gingrich's claim that stimulus “failed” contrasts with broad consensus among experts

Nonpartisan analyses agree: current GDP, total employment figures would be worse without Recovery Act. According to impartial, nonpartisan analyses of key economic indicators since the first quarter of 2009 conducted by several companies specializing in macroeconomic forecasting, the stimulus package boosted both the gross domestic product (GDP) and total employment figures relative to how those metrics would have fared in the absence of that legislation. According to The New York Times, such “dispassionate analysts” have produced a “consensus that the stimulus package, messy as it is, is working.” [The New York Times, 11/21/09]

CBO estimated GDP increase of 1.2 percent to 3.2 percent, additional 600,000 to 1.6 million people employed due to Recovery Act. In a November report, the Congressional Budget Office (CBO) stated:

CBO estimates that in the third quarter of calendar year 2009, an additional 600,000 to 1.6 million people were employed in the United States, and real (inflation-adjusted) gross domestic product (GDP) was 1.2 percent to 3.2 percent higher, than would have been the case in the absence of ARRA (see Table 1). Those ranges are intended to reflect the uncertainty of such estimates and to encompass most economists' views on the effects of fiscal stimulus. [CBO's Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output as of September 2009, November 2009]