A now-former Brookings Institution scholar said he thought he had resolved months ago any concerns the nonprofit think tank had over an industry-funded study he did, only to have it abruptly reverse itself Tuesday after Sen. Elizabeth Warren sent a letter stating that she was “concerned” over the independence of its scholars’ research.
“I thought the matter had been put to rest,” Robert Litan, an economist who until Tuesday was a nonresident scholar at the left-of-center think tank, told the Washington Examiner in an interview Wednesday. “There was never an inkling that this was going to be a problem until she sent her letter.”
Litan declined to discuss the exact details of his departure but said he received a call Tuesday from Brookings officials during a which “a high-ranking individual told me that there was a lot of distress over the whole situation.” Litan said he offered his resignation and it was accepted.
The controversy arose over a study Litan co-wrote in July with fellow economist Hal Singer for Economists Inc., a consulting firm. It was underwritten by the Capital Group, a top investment manager company. The report was titled “Good Intentions Gone Wrong: The Yet-To-Be-Recognized Costs of the Department of Labor’s Proposed Fiduciary Rule.” The report criticizes the department’s plan to crack down on conflicts of interest in retirement financial advising by increasing brokers’ legal liability. Litan and Singer argued that would drive many advisers out of the industry, which would harm investors more than any potential conflicts of interest would. They argued that increased disclosure of potential conflicts of interest would be a better approach.
Litan, who was an unpaid nonresident fellow at Brookings, testified before the Senate Health, Education, Labor and Pensions Committee in July regarding the department’s proposal, drawing on his research from his study and offering sharp criticisms of the Obama administration. He was also listed as a Brookings fellow in the official announcement for the hearing, which Warren, a committee member, also attended. The Massachusetts Democrat is a strong supporter of the Labor Department proposal.
The Brookings identification was, Litan concedes, a violation of the nonprofit’s rules, which prohibit nonresident senior fellows from citing their affiliation in congressional testimony.
Brookings President Strobe Talbott said he had accepted Litan’s resignation “with regret” but added that the economist “made a mistake in not following Brookings regulations designed to uphold the independence of the institution.”
Dave Nassar, spokesman for the nonprofit, stressed that Litan was speaking on his own during his testimony. “His study on which his testimony was based was not connected with Brookings in any way,” he said.
In his defense, Litan says it was a new Brookings rule that he was not aware of. “I did not read the revised conflict of interest [rules] before I gave my testimony,” he said.
Brookings officials told him of the violation shortly after the hearing. Litan says he apologized and promised not to make the mistake again. He thought his superiors had accepted his mea culpa. Litan has a four-decade history with Brookings, having previously been vice president and director of its economic studies program.
“This was a minor infraction as far as I am concerned,” he said. “The institution had never expressed any concern about the situation for three months, nothing until Senator Warren wrote that letter. They hadn’t even expressed any concern to me specifically until the following morning when the news stories came out. Then everything changed.”
Nassar did not respond to a question about why the rule became an issue only after Warren’s letter. “We have have nothing further than what is in the [public] statements,” he said.
Kevin Hassett, a friend of Litan’s and director of the economic policy studies at the conservative nonprofit American Enterprise Institute, said Brookings’ reaction was unfortunate. Litan was a part of a “dwindling minority” of serious scholars at Brookings unafraid to stand by conclusions that irritated liberals.
“This makes Brookings look like the Elizabeth Warren Rapid Response Team,” Hassett said. “It’s chilling to see him go.”
Litan never hid that the Capital Group underwrote the study. Even Warren concedes in her letter to Brookings that he disclosed the fact both in the paper and in his congressional testimony. When the senator approached him after the hearing to request more information about the funding, he voluntarily provided her with “specific details on the amount of financial support provided.” He was paid $38,800.
Warren does not take any specific issue with any of the economic arguments in Litan’s paper other than to say that they were “wildly inconsistent” with studies from the Labor Department, the White House’s Council of Economic Advisors and the National Bureau of Economic Research, an independent nonprofit.
Her main criticism is that Litan conceded to her that he and Singer did allow the Capital Group to review the report prior to it being published and provide the authors with “feedback.”
“This statement appears to be inconsistent with Dr. Litan’s testimony before the Senate that ‘Dr. Singer and I are solely responsible for the analysis’ in the study,” she said in her letter to Brookings. She then asked that the institution provide, among other information, “any communications between Brookings employees or affiliated researchers and the Capital Group” regarding its involvement in any institution-related project.
Litan stands by his research and takes issue with Warren’s insinuation.
“She gives the impression in her letter that somehow the Capital Group unduly influenced the report, and that is certainly not the case,” he said. “She never asked me any questions at the hearing about the report. She has never engaged the substance of the report.”
