SENATOR WARREN’S EFFORTS TO REDUCE FEDERAL OFFICIALS’ CONFLICTS OF INTEREST
Senator Warren (D-MA) has worked relentlessly to expose and reduce federal officials’ conflicts of interest, thereby reducing corporate influence on government decision making. Here are three examples of her work involving the oversight of Medicare, the Internal Revenue Service (IRS), and the Defense Department.
(Note: If you find my posts too long to read on occasion, please just skim the bolded portions. They present the key points I’m making. Thanks for reading my blog!)
Senator Warren (Democrat of Massachusetts) has worked relentlessly to expose and reduce the conflicts of interest of federal officials. She regularly advocates for stronger ethical standards for federal employees and for closing or at least slowing the revolving door between public and private employment where conflicts of interest arise. One of her goals is to prevent or at least reduce corporate influence over government decision making. Here are three examples of her work on this issue.
First example: President Biden has nominated Demetrios Kouzoukas for a spot on the Board of Trustees for the Medicare and Social Security Programs. His specific role would be as a Public Trustee, charged with overseeing the finances of Medicare and Social Security to ensure they are able to provide promised benefits to seniors in perpetuity.
Senator Warren raised concerns at Kouzoukas’s confirmation hearing about a potential conflict of interest due to his membership on the Board of Directors of Clover Health, a for-profit health insurance company. Clover Health receives a substantial portion of its revenue from Medicare Advantage plans, which provide privatized Medicare services to seniors. Kouzoukas receives over $100,000 a year from Clover Health for his position on its Board. He also owns 25,000 shares of Clover Health stock. [1]
As you may know (and as I have written about previously here, here, and here), there are multiple problems with Medicare Advantage plans’ privatization of Medicare. These plans cream the crop so they only serve healthier seniors. Nonetheless, they have successfully lobbied to get paid more per patient than Medicare spends on other patients. They often deny coverage for needed services and have high overhead for advertising, administration, and executive pay. Most damningly, every major provider of Medicare Advantage plans has fraudulently over-billed Medicare. Many health care experts worry that the current growth of Medicare Advantage plans will, ultimately, bankrupt Medicare.
The Board of Trustees that Kouzoukas has been nominated for will, among other things, oversee the efforts of Medicare to stop fraud by Medicare Advantage providers, which is estimated to be $75 billion a year. That role presents a direct conflict of interest for Kouzoukas given his position on Clover Health’s Board, from which he has refused to resign. [2] (Note: This footnoted press release from Senator Warren lists nine examples since July 2021 of her successful efforts to get federal appointees to commit to higher than required ethical standards that reduce conflicts of interest.)
Second example: In February 2022, Senator Warren requested that the Department of the Treasury Inspector General for Tax Administration (TIGTA) investigate potential conflicts of interest resulting from the revolving door of personnel between the Internal Revenue Service (IRS) and the big accounting, tax, and audit companies. The New York Times had reported that tax lawyers from these companies were taking senior jobs at the IRS, writing policies that frequently were favorable to their former employers, and then often returning to their former employers where they received promotions and pay raises. [3]
TIGTA’s recent report revealed that 496 federal employees had received income from those big accounting, tax, and audit companies before taking government jobs. An undisclosed number went back to those firms after working for the government. At least eighteen IRS employees had worked on official tax administration rulings for clients represented by the company they had worked for either before or after their IRS job. For 232 IRS employees, TIGTA could not determine if they had conflicts of interest with previous private sector work because their previous employers would not cooperate with the investigation. Furthermore, an undetermined number of IRS executives did not properly disclose, as is required, private sector job searches while they were working for the IRS.
The IRS has agreed to implement two recommendations from the TIGTA report: 1) improving training for employees on ethics and impartiality, and 2) collecting better data to identify potential conflicts of interest. Senator Warren is pushing the IRS and its officials to do more. She has communicated with Marjorie Rollinson, who has been nominated to be the IRS’s top internal lawyer, and has asked her to hold herself to a higher ethical standard than is currently required by law. Rollinson has committed to do so by extending the two-year requirement to four years for recusing herself from matters concerning previous clients and employers. In addition, for four years after she leaves the IRS, she has promised not to lobby the IRS or to seek any employment or compensation from companies she interacted with while at the IRS.
High ethical standards at the IRS are particularly important right now because the IRS is receiving additional funding and implementing several important policies contained in the 2022 Inflation Reduction Act. These include the Corporate Minimum Tax (that Warren has championed) and new tax credits. In addition, the IRS is implementing a new, free, income tax filing system that would allow most Americans to easily file their income tax returns (and avoid paying for tax preparers or software to do so). Having these policies implemented by staff that don’t have conflicts of interest is critical to their success and effectiveness.
Third example: Senator Warren is investigating conflicts of interest involving the Defense Department’s Office of Strategic Capital (OSC). The OSC was created in 2022 by Defense Secretary Austin to identify and finance technologies critical to US national security. It provides loans, financing guarantees, and other financial supports to companies involved with such technologies.
Warren has expressed concern that at least two advisers at OSC have senior positions at private consulting and venture capital firms that might present conflicts of interest. Both advisers were hired as “special government employees,” which exempts them from many of the ethics standards that apply to regular federal employees. For example, they are not barred from lobbying federal agencies or receiving outside income. However, their access to non-public information might benefit them in making investment decisions or assisting clients in getting defense contracts, for example.
Warren has proposed a bill in Congress, the Anti-Corruption and Public Integrity Act, that would subject “special government employees” to the same ethical standards as other federal employees and would require them to recuse themselves from any matters that would provide a financial benefit to them or to an employer or client of theirs from the preceding four years. [4]
[1] Johnson, J., 9/29/23, “Warren grills Biden Medicare Trustee pick over ‘shocking’ ties to Medicare Advantage firm,” Common Dreams (https://www.commondreams.org/news/warren-grills-biden-medicare-trustee-pick-over-shocking-ties-to-medicare-advantage-firm)
[2] Warren, E., 9/28/23, “At hearing, Senator Warren slams Medicare and Social Security Public Trustee nominee over ‘shocking and deeply unethical’ financial conflicts of interest,” Press release (https://www.warren.senate.gov/newsroom/press-releases/at-hearing-senator-warren-slams-medicare-and-social-security-public-trustee-nominee-over-shocking-and-deeply-unethical-financial-conflicts-of-interest)
[3] Facundo, J., 9/28/23, “Warren and Jayapal raise revolving-door concerns at the IRS,” The American Prospect (https://prospect.org/power/2023-09-28-warren-jayapal-revolving-door-concerns-irs/)
[4] Conley, J., 7/10/23, “Warren demands answers from Pentagon on ‘cozy’ relationship with Wall Street,” Common Dreams (https://www.commondreams.org/news/warren-pentagon-office)