Case Study In The Fallacy Of Obama's Ethics Pledge

Question: What good is a pledge if it is not adhered to?

Answer: Not very good.

And that’s the state of Obama’s pledge to end the practice of allowing industry insiders involved in lobbying to affect public policy from within the government.

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Like with so many other things in the Obama agenda, the audacity is the degree to which rules are broken and job-killing policies enacted.

Today’s case study is an individual by the name of Robert Shireman. He happens to be Deputy Undersecretary at the Department of Education.

Mr. Shireman’s role in the transition and at Education violated both Obama transition and administration ethics policies. Why?

Prior to joining the Obama Administration, Shireman was the Founder and President of The Institute for College Access and Success or TICAS, which is a “registered lobbying client.”

As someone advising the Obama transition team and later becoming a political appointee, Shireman basically enacted TICAS’ policy positions into law, meaning a provision to eliminate private college loans in favor of direct government lending was stapled to President Obama’s health care reform bill with little to no public debate.

Upon election, Obama promised lobbyists and members of organizations that lobby would not be appointed to his administration. Shireman clearly fell into that category, yet he became a member of the administration.

The intention behind these rules was to prevent lobbyists and special interests from writing our laws, but in Shireman’s case, that’s exactly what happened.

Shireman was the principal advocate for and architect of Obama’s student loan reform, which led to the government taking over yet another industry.

Who was Shireman involved in lobbying? As head of TICAS, Shireman’s group hired Nelson Mullins Riley & Scarborough to lobby anyone who would listen on the changes to the student loan industry, namely the agency he currently works for and the U.S. Congress.

He even wrote former Secretary of Education Margaret Spellings on TICAS letterhead saying, “When the Department releases cohort default rates next month and in future years, simply denote those colleges that have low proportions of students who borrow. This could be accomplished by marking the default rates of these colleges with an asterisk, or by publishing a separate list of rates for colleges that fall below the participation rate threshold as defined by statute.”

In February 2009, Shireman became a consultant to the Department of Education dealing with higher education initiatives specifically and exclusively.

And at the same time Shireman was advising Secretary Arne Duncan, he continued to involved with TICAS, who was actively lobbying in favor of the radical student loan overhaul.

In April 2009, in spite of his relationship with TICAS, which was a direct and obvious violation of Obama’s ethics rules, Shireman’s role with Education became formalized with an appointment as Deputy Undersecretary for Postsecondary Education.

Shireman’s deal at the Department of Education was in-and-of-itself a special favor being that it was created exclusively for him and did not require Senate confirmation.

Whether Shireman was in private industry, on the Obama transition team, consulting for Education or a political appointee in the administration, his company continued to actively play a role in lobbying government officials with regard to abolishing private lending in the student loan industry.

But now, the difference was that TICAS had someone on the inside advocating on their behalf.

And the result?

In passage of President Obama’s health care legislation, student loan changes were included resulting in the pending layoffs of 2,500 employees at Sallie Mae. The strategy and execution of tucking this radical reform into a larger piece of legislation securing passage with little to no attention was the brainchild of Shireman, which his financial benefactors lobbied on behalf of, representing a clear and unmistakable conflict of interest.

And it appears Shireman is not content with breaking every ethics pledge Obama made, costing us jobs and enriching his friends… Apparently, he now wants to cause even more damage by attacking for-profit education companies.

It was recently reported in The Wall Street Journal, “For-profit education companies were under pressure Thursday after a U.S. Department of Education official did an about-face and bashed the companies and the accreditation process in a speech late Wednesday, allegedly comparing the sector with Wall Street firms whose actions brought about the financial turmoil of the last few years. In a speech to state regulators who oversee for-profit colleges, Robert Shireman, the man behind the Education Department’s strategy, called out the colleges one by one for the increasing amounts of federal student aid money they’re getting, according to an article in industry publication Inside Higher Ed.”

BMO Capital Markets analyst Jeffrey Silber was quoted as saying, “The ‘fear factor’ has certainly risen this morning.”

And while Shireman’s prepared remarks were not made available by the Department of Education and they did not respond to media inquiries, one thing was apparent at the conclusion of the event…

“Shares of Career Education Corp. (CECO) fell 10% to $30.07, while Corinthian Colleges Inc. (COCO) dropped 7.2% to $15.70. ITT Educational Services Inc. (ESI) declined 5.4% to $104.73, Apollo Group Inc. (APOL) slid 6% to $57.83 and Grand Canyon Education Inc. (LOPE) declined 2.4% to $24.37.”

Robert Shireman’s role in government and shaping public policy is in violation of both the spirit and letter of Obama’s ethics code and possibly the law. This clearly merits Congressional scrutiny.

Shireman should be exposed for his underhanded dealings on behalf of this administration and his private sector friends. Both he and the White House should be forced to defend their actions and answer questions about their dealings.

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