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The U.S. Environmental Protection Agency building in Washington
The Revolving Door Project, a Prospect partner, scrutinizes the executive branch and presidential power. Follow them at therevolvingdoorproject.org.
Between the legislative effort to ban stock buying and trading for members of Congress and the revolving door openly swinging during House hearings, congressional conflicts of interest are top of mind for many in Washington at the moment.
But as a new Wall Street Journal piece makes clear, corruption isn’t exclusive to the legislative branch—even the civil servants who keep the executive branch functioning have been operating with a distressing number of conflicts of interest.
The Journal found that over 2,600 officials—1 in 5 senior officials—“at agencies from the Commerce Department to the Treasury Department, during both Republican and Democratic administrations, disclosed stock investments in companies while those same companies were lobbying their agencies for favorable policies.”
The investigation uncovered over 200 senior Environmental Protection Agency officials (nearly 1 in 3) who reported investments in companies that were lobbying the agency. Between 2016 and 2021, EPA employees and their family members collectively owned between $400,000 and nearly $2 million in shares of oil and gas companies per year, averaged over that period.
Some federal agencies’ responses to potential conflicts of interest were just as troubling. The Journal found that in many agencies, ethics officials “simply waived the rules” when an employee’s financial holdings caused a conflict.
As former Office of Government Ethics General Counsel Don Fox told the Journal, it’s important not to forget that executive branch employees, though largely unknown to the public, wield great power and influence over things that impact the daily lives of people in the United States, from food safety to regulating trade. Insufficient oversight of executive branch officials will likely add to existing issues plaguing the executive branch, most notably further eroding the public’s wavering trust in government, but also actually corrupting the governance process.
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One might think that there should be an agency that is supposed to prevent this kind of blatant ethical breach. One would be right—it is just falling down on the job.
The primary agency in question is the Office of Government Ethics, which is charged with leading and overseeing the executive branch’s ethics program. There’s also the Designated Agency Ethics Officials, or DAEOs, who carry out the ethics program at their respective agencies—one of the laws DAEOs are supposed to enforce includes a provision that federal employees shouldn’t work on matters that affect their personal finances.
Former OGE General Counsel Don Fox said the conflicts of interest the Journal found “clearly violate the spirit behind the law, which is to maintain the public’s confidence in the integrity of the government.” Further, while OGE and DAEOs have clear authority to investigate violations of existing law and regulation, the real test is enforcement. In that regard, ethics officials have also failed.
The Journal highlighted the case of an SEC official who barely received a slap on the wrist for repeatedly failing to comply with ethics rules. The unnamed SEC official, their spouse, and their families owned stock they weren’t allowed to own, which the SEC inspector general was aware of and shared with Congress. On top of that, the official failed to report or clear his and his spouse’s financial holdings and trades for at least seven years.
Congress can support legislation to create stricter ethical guidelines for federal employees across all three branches of government.
Despite these flagrant violations, the SEC and Justice Department let the family skate. A U.S. attorney declined to prosecute, and after the SEC’s inspector general reported the findings to SEC management, the official was ultimately suspended for only seven days and gave up a measly 16 hours of leave time.
Agency inaction is not the only thing perpetuating conflicts of interest in the federal government. The Journal also noted that some of the conflicts stemmed from agencies’ misunderstanding of their own ethics rules. For example, the FDA prohibits employees, their spouses, and their minor children from investing in companies significantly regulated by the agency. Yet FDA official Malcolm Bertoni claimed he and his wife held prohibited stocks despite the bans because they received faulty advice from the FDA ethics office.
It might be true that ethics officials are confused, overwhelmed, or demotivated, but it’s also true that enforcement is sometimes toothless by design. Famously during the Trump administration, former OGE Director Walter Shaub found that Kellyanne Conway’s promotion of Ivanka Trump’s business was an ethics violation. But the office was powerless to actually carry out any punishment, because even though “OGE can recommend punishment, it has no enforcement mechanism, and only an employee’s boss can dole out sanctions.” Clearly, ethics officials need both the authority to investigate ethics violations and the authority to carry out enforcement, even when the administration in power doesn’t like it.
Aside from the revelations that conflicted stock buying and trading is shockingly common among executive branch employees, the civil service has long been in a precarious position with the public. A recent UChicago poll found that a majority of Americans think the government is “corrupt and rigged against everyday people,” and 2021 Data for Progress polling of 1,323 likely voters nationally found voters agree that “wealthy people and corporations are regularly not punished for breaking the law.” Likely voters also agreed that “when wealthy people and corporations are not punished for breaking laws, people lose trust in the government and the rule of law.”
In short, the public no longer trusts the government at any level. When top officials are hawking the president’s daughter’s garbage clothing line, it’s hardly surprising.
However, it’s not only that kind of penny-ante corruption undermining trust in government. Another key factor is that over the past decade, and especially during the Trump years, inadequate funding and staffing levels and structural workplace issues have undermined federal agencies’ ability to fulfill their mandates. The Revolving Door Project (RDP) has paid close attention to the scale and impact of capacity issues in agencies across the federal government. We’ve argued that Democrats should push to give agencies the resources they need to meet their obligations to the public and implement this administration’s goals. Undoing the damage done to federal agencies’ budgets, in addition to strengthening ethics oversight to minimize conflicts of interest, can help Democrats show the electorate they are willing and able to “de-Trumpify” the government.
Clearly, a lot is at stake here. Executive branch decision-making and investigations are almost always hidden from public view. The public can’t and shouldn’t be expected to keep track of which decisions particular officials are making, and whether or not those decisions are made with conflicts of interest. For the regulatory entities to retain legitimacy in their actions, the public has to trust that their officials are acting in the public interest. That requires ethics officials fully versed in the law and regulations, armed with aggressive enforcement power.
So what can Congress do to make this happen?
First of all, it can support legislation to create stricter ethical guidelines for federal employees across all three branches of government. A prime example is Sen. Warren (D-MA) and Rep. Jayapal’s (D-WA) Anti-Corruption and Public Integrity Act, a bill that would ban “members of Congress, cabinet secretaries, federal judges, and other senior officials from owning or trading individual stock to eliminate financial conflicts of interest.” One key reform would be creating a “single, new, and independent agency dedicated to enforcing federal ethics and anti-corruption laws.” This agency, the U.S. Office of Public Integrity, would consolidate and expand upon existing investigative and disciplinary powers, giving the agency enough breadth to avoid the demonstrated pitfalls of our current weak, fractured federal ethics enforcement. Other provisions in the bill include banning members of Congress from serving on corporate boards, establishing new ethics accountability measures for Supreme Court justices, and overhauling campaign finance laws.
In addition to setting higher standards, Democrats should support efforts to bolster the civil service, including (but not limited to) passing an omnibus bill that will adequately fund and staff non-defense agencies. Democrats should also work to prevent future attacks on the civil service from Republicans looking to creatively demoralize and defund such agencies.
That said, the agencies don’t have to twiddle their thumbs while Congress deliberates on this bill. OGE and ethics officials within agencies should start enforcing the laws and regulations that already exist. The plain fact is even the inadequate anti-corruption rules on the books are not being enforced. Conflicts of interest should be investigated thoroughly and promptly, with effective sanctions that disincentivize other government employees from making similar decisions.
Agencies themselves could go further to strengthen ethics laws internally. The Journal noted that “the Federal Energy Regulatory Commission explicitly bars its officials from investing in natural gas, interstate oil pipeline, utility and other energy firms.” Our research into the pervasive revolving door at the antitrust enforcement agencies specifically recommends the FTC and DOJ implement stronger ethics regulations to combat corporate influence. These are steps that agencies with conflict-of-interest issues could implement through internal processes without Congress weighing in.
Finally, what can the Biden administration do? The White House can recommend executive branch agencies implement stronger ethics regulations through an executive order. The president could also set a stronger example for senior officials by creating stricter ethical guidelines for political appointees specifically and expanding on the existing ethics pledge.
In addition, some inspectors general offices (which are charged with investigating mismanagement within their respective government agencies) are still filled with Trump appointees, including people chosen specifically to threaten democracy. Moreover, several inspectors under the Trump administration who were not hand-picked cronies allowed their offices to go effectively dormant, calling into question whether they can be trusted with the crucial task of holding our government accountable to the people it alleges to serve.
Anyone appointed by Trump is associated with a president who tried to install himself as dictator for life. At the very least, Biden should fire holdover Trump-appointed IGs immediately and put in place conflict-free inspectors general who can restore their offices’ reputations for effective agency oversight and accountability to the public.
The reality that a significant portion of officials within the executive branch have egregious conflicts of interest is distressing, but the Biden administration has clear steps to rein in these ethics violations. The Democratic Party can also help with both substance and politics by fixing these issues brought into stark relief by Trump administration corruption with new legislation. Democrats should embrace a role as the protector of a strong and ethical civil service, in loud contrast with Republicans who undermine the parts of government that can actually improve the lives of everyday people.
