the inside game

Could Biden’s Post-Midterm Pivot Start at Treasury?

Photo-Illustration: Intelligencer. Photos: Getty Images

The pivot is coming. On this much Washington can agree.

There is a strong political tradition of chastened presidents waking up after electoral wipeouts and reshuffling their teams and approaches, and so far — five months ahead of what are likely to be brutal midterms for Democrats — no one in D.C. expects Joe Biden to be an exception. The question marks are around what changes he will make. While some insiders hope he doubles down on his early progressive goals, the more likely course is that, probably confronting a Republican Congress, he tacks toward the political center in the name of compromise, especially on issues of economic policy.

Any pivot that Biden attempts will probably involve both changes to policy strategy and to the makeup of his senior staff. Treasury Secretary Janet Yellen, in particular, has been the subject of increasing speculation in Washington — including among some antsy Democrats within the administration and others close to it. The administration’s biggest domestic political problem is raging inflation, and Yellen has become one of the faces of that issue. No one blames her entirely for this inflation, but her role in pushing massive spending legislation early in Biden’s tenure has received extra scrutiny in the past few weeks, and her recent admission that she hadn’t anticipated the scale or contours of the inflation challenge only complicated the administration’s attempts to insist it had the matter under control. (“I was wrong,” she told CNN.) A major midterm rebuke of Biden’s party would likely be rooted in voters’ dissatisfaction with the economy, and it’s not hard to envision the president opting to scramble his economic leadership in response. Such a move could go hand in hand with a centrist-friendly policy shift, which would fit the pattern of previous presidents’ post-midterm policy shuffles. (Recall that Bill Clinton’s embrace of strategic “triangulation” came after the 1994 washout for Democrats.)

Older Cabinet secretaries — former Federal Reserve chair Yellen turns 76 this summer — facing difficult policy challenges are often “free to depart” (read: encouraged to depart) after two years. Yellen has made no indication that she intends to quit, and as an economist who is uninterested in internal D.C. machinations, she may not be inclined to heed this sort of political cue. But within the administration and among Capitol Hill Democrats, lobbyists, and representatives, there is already growing buzz about a favorite to replace her: Commerce Secretary Gina Raimondo. To many of her fellow party members, Raimondo has proved herself as a politically deft operator in Washington. To some, she represents a specific kind of political moderation they think Biden would be wise to embrace. “Raimondo is the only one [in the Cabinet] who’s viewed as a counterweight to the left’s craziness,” one longtime Democratic operative now working on Wall Street told me recently. “She has been really available for businesspeople.”

Yet this is what worries her skeptics in the progressive wing of the party, who view the 51-year-old former Rhode Island governor and open centrist as too close to major corporations, especially tech companies. The fact that she co-chaired Michael Bloomberg’s 2020 campaign is often cited as a worrying data point by this crowd. This loose collection of left-leaning operatives and elected officials has been making a case against her for months. They agree that nominating her as Treasury secretary would send a clear signal about the administration’s intended direction — and they plan to fight to avert it.

Late last month, Data for Progress, the left-leaning research firm, presented a group of likely voters with a headline and a question. The pollsters shared that, just weeks earlier, Axios had dubbed Raimondo “tech’s favorite Biden official.” The respondents had just been asked whether they agreed that big-tech companies “avoid accountability in Washington because of their outsized political influence” and were now prompted for their take on Raimondo. They were unlikely to have had many thoughts on her at all before considering the poll, but now about half said Axios’s descriptor made them less inclined to approve of her, compared with fewer than one in five who thought it was to her advantage. The survey — the existence and results of which were shared with Intelligencer this spring — also asked explicitly what the voters thought of the prospect of Raimondo as Treasury secretary.

Those results weren’t overwhelming — about one-third said they would support her for the top economic job, slightly less than half said they would oppose the move, and roughly one-fifth said they didn’t know — but the poll’s intention underscored a broader determination on the left to have a say in setting the administration’s course in its second half. It came after Senator Elizabeth Warren in March argued that the Commerce secretary shouldn’t take the lead on negotiating a new trade framework with Asia to confront China, and soon thereafter an organization called Fight Corporate Monopolies began running a digital ad casting Raimondo in an unflattering light because her office wouldn’t release her calendars, suggesting that may be because she’s “hiding her meetings with Google, Amazon, Facebook, and Apple.”

The question of how Biden regards the pressure from his left, and whether it might nudge him away from giving Raimondo a higher-profile role in the administration, is an open one, especially so far before November. He is focused, for now, on the same thing Yellen is, after months of downplaying the risk: inflation. On that matter, it’s not obvious how Raimondo’s theoretical approach would differ from Yellen’s; she may simply be a new general in a slog of a war.

Biden may also reject the idea that Raimondo alone represents a signal about his policy intentions or his broader political posture. Following his victory in the 2020 election, he backed off from appointing Raimondo to the role of Health secretary after progressives objected, citing her clashes with unions in Rhode Island; he found a Cabinet-level position for her anyway, but one further from the headlines. Since then, she has become a favorite of some of Biden’s longtime aides, including as an advocate within the business community for Biden’s infrastructure legislation and for his original Build Back Better bill. More recently, the White House has relied on her to argue that passing some remaining politically palatable pieces of the Build Back Better plan would help ease inflation.

But Warren’s ongoing scrutiny of Raimondo — and the department she leads, which is peppered with aides who worked at big-tech companies — is no doubt registering in the White House. (She has lines of influence with Biden and confers regularly with his chief of staff, Ron Klain.) After her past few months of pressure on the secretary, it would be no stretch to assume Warren may use this influence to try to complicate a possible Raimondo promotion. The latest face-off began in December, when Raimondo said in remarks to the Chamber of Commerce, the business-lobby behemoth, that she was worried that proposed European legislation could “disproportionately impact the U.S.-based tech firms and their ability to adequately serve E.U. customers and uphold security and privacy standards.” Raimondo maintained that she was simply concerned about the targeting of American companies, a view backed by the White House and Warren’s progressive Senate colleague Sherrod Brown.

But this defense was dismissed by some European officials — the E.U.’s internal-market commissioner accused Raimondo of lobbying for the big-tech companies — and Warren replied in a letter that Raimondo was contradicting Biden’s own policy and clearly trying to “defend these monopolists from scrutiny.” A coalition of left-leaning advocacy organizations soon added a letter of its own pressuring her to publish her schedules, and Warren then resumed her criticism of Raimondo with a follow-up letter demanding answers.

The suspicion from the activists paying close attention only intensified that month with the publication of the Axios profile, which referred to Raimondo as “the industry’s key advocate within the Biden administration,” and though Raimondo in April then backed an antitrust bill put forth by Republican senator Chuck Grassley and Democrat Amy Klobuchar, it was still viewed by her critics on the left as unremarkable since the policy in question already matched the administration’s position.

Raimondo, however, has opted against engaging with such criticisms or dwelling on the matter of her calendar and her meetings with tech executives. Although she has worked with union leaders on tariff negotiations and even struck up a relationship with “Squad” member Rashida Tlaib of Michigan, she has nonetheless found herself the subject of intensifying commentary about the administration’s — and Democrats’ — direction. The ad criticizing her opaque schedule was intended to ramp up public pressure on her, but it was widely interpreted by the professional political class as a very early warning from the left against her possible eventual presidential prospects — it ran briefly in New Hampshire and Nevada, two states that would likely be important in any future Democratic primary. That was just two months after a Washington Post columnist called her the “party’s future” in a glowing column that explicitly set her up as a foil to Warren and Alexandria Ocasio-Cortez.

The internal tension within the party over how to regard Raimondo was illustrated pointedly in May with the publication of an Insider profile. When the piece was first posted, the headline nodded to Raimondo’s role as the Cabinet secretary chosen to skip Biden’s State of the Union address to ensure the continuity of government if disaster struck the Capitol. “Joe Biden’s Designated Survivor,” it read, as if to underscore his trust in her and possibly her long-term political future. But before long, the headline was changed to more directly address Raimondo’s immediate political standing. It began by quoting her: “‘I Talk to CEOs Constantly,’” it read. “Gina Raimondo Is Corporate America’s Best Friend in the White House.”

Could Biden’s Post-Midterm Pivot Start at Treasury?