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Given her legacy from her time as CEO of Xerox, Burns could very well undermine Biden’s credibility on a number of his most important priorities.
One of the few remaining unfilled slots in Joe Biden’s Cabinet is the commerce secretary. The oddball Commerce Department is a strange mélange of different agencies that don’t really fit together, but in the hands of someone committed to reviving U.S. industrial policy, it could prove fearsome and important.
Leaks to the press, however, have shown Biden flirting with the notion of doing something on the inexplicable/infuriating continuum, picking a Republican to prove his fondness for a party that still isn’t certain he won, or a Wall Street–friendly steward to build relationships with a business community that has already staffed much of his administration. In turn, Republican Meg Whitman and Democrat Gina Raimondo have dominated the rumor mill.
The “apolitical” option, as Axios calls it, seems to be former Xerox CEO Ursula Burns. As a woman of color, she would satisfy the Biden administration’s diversity mandate; and as a onetime executive, decidedly pro-corporate, she would satisfy the one area where there is no taste for diversity. Unlike ex-Quibi CEO Whitman (who, like Burns, has also run a very large printer company into the ground), she doesn’t have an extremely recent titanic business failure on her résumé; unlike Raimondo, she isn’t in the midst of presiding over one of the worst COVID outbreaks in the world.
It’s hard to believe that the business community needs yet another goodwill ambassador within the Biden administration. It’s even harder to understand why corporate executives (think Penny Pritzker or Wilbur Ross) are almost always floated for the post of commerce secretary. But adding Burns to the mix would be anything but apolitical. Given her legacy from her time atop Xerox, Burns could very well undermine Biden’s credibility on a number of his most important priorities, and bring with her a ton of baggage from some of the most high-profile scandals in the corporate world.
Burns rose quickly at Xerox, named president in 2007, then CEO in 2009, and chairman of the board a year after that, becoming the first Black woman to helm a Fortune 500 company in the process. Her signature, splash move upon becoming CEO was the purchase of Affiliated Computer Services, a business outsourcing firm, for $6.4 billion in 2009.
Actively pursuing an outsourcing company looks bad enough as is, but that wasn’t all ACS did. They also had as part of their portfolio one of the most notorious student loan servicer operations in the country. Just this year, the American Federation of Teachers and the Student Borrower Protection Center released a scathing report detailing over five million ACS servicing errors that helped undermine the Public Service Loan Forgiveness (PSLF) program, intended to allow graduates who pursued public-service jobs in government or nonprofits to have their loan balances canceled after ten years of payments. “Rather than alleviating the debt burden of students committed to public service, ACS ran roughshod over them, making careless errors and pushing them into forbearance and onerous repayment plans,” said AFT president Randi Weingarten in a statement.
The failure of PSLF exacerbated the already shameful state of the student loan crisis, after nearly every single person who applied for federal loan forgiveness was denied. Thirteen years after its establishment, over 98 percent of PSLF applications from teachers, firefighters, police, and other public servants have been rejected, good for a 1.7 percent approval rate. Student loan debt nationwide now tops an incomprehensible $1.6 trillion.
The profound failure of PSLF wasn’t just due to its poor design, but also to the sweeping misconduct of ACS in particular. The company served as the sole middleman for all student loans made directly by the federal government until 2009. All borrowers eligible for debt forgiveness under PSLF for its first few years had their loans serviced by the firm. And when those applications for forgiveness were denied, it was often because of rampant errors, miscalculated payments, lost records, and the enrollment of borrowers into ineligible payment plans, all of which cost otherwise eligible borrowers their shot at forgiveness. ACS’s mishandling of those documents was so egregious that by 2012 the Department of Education terminated its contract with the company, transferring its portfolio of 35 million student loans elsewhere a year later. All of this took place while ACS was part of Xerox, Burns’s company.
Xerox was soon under federal investigation by the Consumer Financial Protection Bureau. In 2019, the state of New York fined ACS for illegal practices. And it wasn’t like this rampant misconduct even made for a successful business. After the merger, Xerox’s stock sagged substantially, and revenues declined for four straight years, between 2012 and 2016, under Burns’s leadership. The company became a target for activist investors like Carl Icahn, who pushed to break up the company and sell off pieces, including ACS, to juice the bottom line. Months later, Xerox got cleaved in half, its operations spun off into parts. At the end of 2016, Burns stepped down.
Joe Biden loves restoring norms; he also loves reinstating former Obama administration officials.
But the damage was done. ACS hobbled PSLF severely, which is part of the reason more expansive student debt forgiveness has become a political necessity, one that the president-elect has acknowledged. At this point, Biden’s top-line commitment upon his arrival in the White House has been student debt forgiveness (amount to be determined), which would amount to him cleaning up the mess to which Burns’s company was perhaps the outstanding individual contributor. Biden is no stranger to contradiction, but bringing her into the administration would at a very basic level make no sense.
Burns left behind a battered and scandal-ridden Xerox, but she didn’t wear out her welcome in corporate America. She became a senior adviser for Teneo, a global consulting firm, and took up board seats at Uber, ExxonMobil, and Nestlé, three of the most ignominious corporates in the country (both Uber and Exxon are in fairly dire financial straits as well, for what it’s worth). Uber’s reputation on labor and Exxon’s reputation on climate are irreconcilable with Joe Biden’s commitment to expand union enrollment and worker protections, and take on climate change boldly.
And remember that recent controversy that had former Obama lawyer Neal Katyal arguing before the Supreme Court that a company shouldn’t be held responsible for using child labor? Katyal was defending Burns’s Nestlé in that hearing.
Joe Biden loves restoring norms; he also loves reinstating former Obama administration officials. A Burns appointment would satisfy both. She served on Obama’s Export Council, and the elevation of a former Fortune 500 executive with an extremely spotty record of leading that company to the Commerce Department is about as business-as-usual as it gets. But Burns, in particular, represents a situation where the cost of a traditional pick threatens the functioning of the Biden administration and its basic policy and governance ambitions. Biden cannot afford another Wilbur Ross in his Cabinet.
Obama appointed Republicans to top posts in the Departments of Defense and Transportation, and tried and failed to get GOP Sen. Judd Gregg to run Commerce (Gregg withdrew over disagreements about the stimulus package). Looking back, it’s clear those appointments did little for him. That elusive Republican goodwill never showed up. It’s too much to expect Biden to pick a pro-worker or pro–industrial policy representative to run Commerce, though it would be nice. But the least he can do is pick someone who doesn’t have a lengthy and controversial track record, and a reputation for causing the problems he’s trying to fix.
