“I HOPE you’re sitting down for this,” said Ali Velshi, the CNN anchor, staring into the camera, his voice booming with incredulity about a campaign promise issued by Mitt Romney: that, if elected, Mr. Romney would create 12 million jobs in four years.
Having framed this idea as preposterous, Mr. Velshi introduced R. Glenn Hubbard, the dean of Columbia Business School, a Romney campaign adviser and a “very smart man,” as the host put it. So smart, Mr. Velshi told Mr. Hubbard, that “you couldn’t have been involved in the writing of that policy.” Why? “Because you would know that that is just not possible.”
Wearing a dark suit and projecting an air of geeky, avuncular calm, Mr. Hubbard appeared before a blue backdrop festooned with the words “Columbia Business School.” If he was supposed to be cowed or disarmed by the bluster or flattery, he did not show it.
“It is absolutely possible, Ali, both in terms of models of policy effects on the recovery and historical experience,” he said, in a tone that was professorial but not patronizing, “If you look at the recovery from ’74, ’75, or ’81, ’82, you can easily get job growth in this range. We have the wrong policy mix. We’ve had a nasty shock, we’re in a different situation, but we could do a lot better.”
Succinct, authoritative and unabashedly partisan. Leave aside that most economists see a vast difference between the recessions of the ’70s and ’80s and the crisis that began in 2008. This was exactly the sort of performance Mr. Hubbard has been delivering for the Republican candidate, both on television and in op-ed articles, for more than a year. Straddling the occasionally uncomfortable line between academia and politics, Mr. Hubbard is playing a role now familiar in modern campaigns: the in-house economist.
Mr. Hubbard has helped to draft many of Mr. Romney’s economic and tax policies, and, at least implicitly, lent his imprimatur to others he did not conceive. The benefits are potentially mutual. If Mr. Romney is elected, Mr. Hubbard is considered a strong candidate for the job of Treasury secretary and even, after Ben S. Bernanke’s term expires, chairman of the Federal Reserve. (Robert Zoellick, former president of the World Bank, is another possible contender for the Treasury job.)
To the job of in-house economist, Mr. Hubbard brings a rare ability to translate complex policy into plain English, as well as a conservative’s love for small government and a faith that cutting taxes will spur growth. During a stint as chairman of the Council of Economic Advisers for President George W. Bush, from 2001 to 2003, Mr. Hubbard was known as the principal architect of the Bush tax cuts.
Mr. Hubbard also brings to this job a certain amount of baggage. He appeared briefly in “Inside Job,” a scathing and Oscar-winning 2010 documentary about the financial crisis. The film has a segment about high-profile professors who blessed many of the financial instruments that led to the fiasco. Enter Mr. Hubbard, who is presented as a leading thinker far too cozy with industries he ought to be assessing at a critical distance.
“You have three more minutes,” he tells an interviewer who is pressing for the names of his consulting clients. And then, as his face contorts with rage, he adds, “Give it your best shot.”
MR. HUBBARD is hardly the only marquee economist to parlay his experience and stature into millions of dollars, for speeches, papers and expert witness testimony. Lawrence H. Summers, once the Obama administration’s top economic adviser, pocketed about $5.2 million in compensation for giving advice to a hedge fund. But in Mr. Hubbard’s case, some of his amply compensated work takes policy stands that buttress the viewpoints of the corporate interests that are paying him.
That’s been true of the mutual fund industry, which has paid him more than $1 million over the years. In an academic paper and a book, he took a strong position favoring the industry’s approach to fees, which critics say hurt everyday investors. He was paid what he called an honorarium of $150,000 for the academic paper by the insurance arm of the Investment Company Institute, the mutual fund industry trade and lobbying group.
“Dean Hubbard is a mercenary,” says John P. Freeman, emeritus professor of business and professional ethics at the University of South Carolina School of Law, who has accused the mutual fund industry of profiteering, “out to protect fund managers who are taking advantage of investors.”
Mr. Hubbard says the source of funding is irrelevant because his academic writing stands on its own.
Some of Mr. Hubbard’s extracurricular activities have also made faculty members at his Columbia Business School unhappy, because, they say, they reflect poorly on the institution. Others complain that he has run the school with a somewhat autocratic hand and feel that they have been buffaloed into casting votes and rallying behind causes that they haven’t necessarily supported.
One of those causes was Mr. Hubbard himself. It’s been a well-kept secret, but faculty members say that in 2008, the president of Columbia, Lee C. Bollinger, wanted to bounce Mr. Hubbard from his job. Why? Nobody has offered an explanation, not even to the senior faculty members who were asked at a meeting to rally behind their leader by signing a petition of support. Neither Mr. Hubbard nor Mr. Bollinger would answer questions on the subject.
Mr. Hubbard’s friends and fans note that he is a conservative leading an institution dominated by liberals, and that some friction is inevitable. As for calling Mr. Hubbard a mercenary — that suggests that he will fight for causes he doesn’t believe in. Which, one former colleague says, is not so.
“Glenn is ideologically conservative,” says Ron Miller, a former economics professor at Columbia who now works for NERA, an economic consulting firm. “Nobody has to pay him to say this stuff. That’s what he believes.”
Mr. Hubbard declined to be interviewed for this article, citing a busy schedule. He agreed to answer questions via e-mail, though many seemed the answers of a man striving to come across as nothing-to-see-here bland. He also provided the names of some friends, many of whom wanted to underscore the same idea: the guy is not bland.
“Did you know, for instance, that he has a brother who is a country music star?” asked Kevin A. Hassett, a friend and scholar at the conservative American Enterprise Institute.
Hubbard’s younger brother, Gregg — known to fans as Hobie — is a member of Sawyer Brown, a country rock band that gained fame via “Star Search,” a sort of precursor to “American Idol.”
“He’s always had a great sense of humor,” says Gregg Hubbard, speaking by telephone before a flight to a concert. He recounts celebrating his 40th birthday in New York City and sharing a gift he had just been given, a Razor scooter, with his brother. “We were with my older nephew,” he says, “and we took turns, the three of us, riding up and down Broadway on a scooter.”
Glenn Hubbard was raised in Apopka, Fla., a suburb of Orlando known as the “Indoor Foliage Capital of the World,” because of its many greenhouses. His father taught at a community college, and his mother taught at the high school he attended. She is remembered by her students as both pleasant and exacting, a formidable presence whom Mr. Hubbard’s friends regard as the wellspring of her son’s discipline and ambition.
“I write a column for a local paper,” says Bryan Nelson, a state representative and a onetime pupil of Ms. Hubbard’s, “and to this day, when I run into her she has no qualms about telling me what I got wrong — the grammar, the spelling.”
Glenn Hubbard was an Eagle scout, a star of the chess team and a stellar student who graduated at the top of his class. He scored high enough on College Level Examination Program tests to enter the University of Central Florida with enough credits so he could graduate with two degrees in three years.
“At the age of 8 or 9, we both began collecting coins,” says Nelson Smith, a childhood friend and now a physician. “That led to questions about currencies: how the concept of money evolved over the centuries, how systems of finance are set up. He never said, ‘I’m going to be an economist,’ but you could see that’s where his mind was headed.”
Mr. Hubbard received his master’s and Ph.D. at Harvard and became a hugely productive scholar with a wide range of interests. Fellow conservatives view his work with pure reverence. From the left, you hear grudging caveats like, “He’ll never win the Nobel Prize.” He is best known for research in tax policy and government spending programs. One influential study quantified the major role that cash flow plays in driving corporations to invest.
“The lesson,” says James Poterba, an economist at the Massachusetts Institute of Technology and an admirer of Mr. Hubbard, “is that if someone is looking for policy instruments that might raise investment, then lower corporate rates could do it because you change the current availability of cash for firms.”
On behalf of the Romney campaign, Mr. Hubbard has argued that the Obama administration has “stuck the economy in a slow growth trap,” as it was put in a recent position paper, “The Romney Program for Economic Recovery, Growth and Jobs,” of which he was a co-author.
The way out of this trap, he and his co-authors wrote, is to reduce federal spending, cut marginal income tax rates by 20 percent across the board and gradually reduce the growth in Social Security and Medicare benefits for more affluent seniors. He would also like to repeal the Dodd-Frank financial legislation and the Affordable Care Act.
That paper, of course, is a campaign document, but if Mr. Hubbard has any differences with Mr. Romney on economic matters, he won’t name them. “I support Governor Romney’s economic program,” he wrote when asked if his candidate had any taken positions he does not support.
If Mr. Hubbard becomes Treasury secretary, cutting taxes would very likely be his highest priority. Altering the tax code to encourage savings and bolster investment has been one of his favorite causes. While serving under President Bush as chairman of the Council of Economic Advisers, he pushed to reduce dividend taxes to zero. (Ultimately, the top tax rate on dividends was cut by more than half, to 15 percent.)
In that job, he also demonstrated great skills as political player. He turned the council, which had existed until then mainly to rah-rah administration policy, into a force in Washington.
Glenn usurped the Treasury Department on tax policy,” says Leonard E. Burman, a professor of public affairs at Syracuse University who worked at the Treasury Department during the Clinton administration. “I had friends who worked at the department after I left, and they said that Glenn shifted the balance of power dramatically.”
As Mr. Hubbard has moved seamlessly through the Republican upper echelons of Washington, he has also cultivated relationships in corporate suites. He serves on three corporate boards, which collectively paid him $785,000 last year. One of those is the board of Kohlberg Kravis Roberts, the private equity firm of which Henry R. Kravis was a co-founder. In 2010, Mr. Kravis pledged $100 million to the Columbia Business School, his alma mater, for the construction of a new building. It was the largest gift in the school’s history.
DURING his eight years as dean, Mr. Hubbard has charmed some faculty members and alienated others. A few say that despite his buttoned-up appearance, he is approachable and is always up for some banter.
“He was teaching a class across the hall and I would complain to him, ‘Glenn, why is my classroom such a sauna?’ ” says Jonathan Levav, a former member of the faculty who is now an associate professor of marketing at Stanford. “And he would say: ‘That’s funny. The temperature in my classroom is perfect.’ When the person in power can have fun with you like that, it puts you at ease. It puts a human face on your boss.”
Mr. Hubbard can take a bit of needling, too, says Raymond Horton, a professor of ethics and corporate governance at Columbia Business School.
“When Romney made his 47 percent boo-boo, I went to the dean’s office and said ‘Way to go, Glenn,’ ” Professor Horton says. He diplomatically declined to put Mr. Hubbard’s response on the record.
There is another, more prickly side to Mr. Hubbard, though it is not a side he has shown very often. One faculty member who saw it is Noel Capon, a tenured professor in the school’s marketing department. In October 2010, he received a letter from Christopher J. Mayer, a professor in the finance and economics division who was then the senior vice dean, accusing him of violating a number of Columbia University rules on outside commercial ventures. The letter had what Mr. Capon considered an aggressive tone; it took him aback. After a few months and a conversation with a fellow professor, Mr. Capon concluded that Mr. Hubbard was behind what he regarded as a carefully orchestrated campaign against him. The point, he believes, was to bully him into line.
“There were situations in the past where I might have made statements that challenged Glenn,” says Mr. Capon, who acknowledges that he has a hard time keeping his opinion to himself. One opinion he couldn’t keep to himself concerned a decision, in May 2010, to offer tenure to a professor from another university — a decision he opposed. He wrote a letter saying so, copying the provost, and stating that the process had not allowed him to air his dissenting views. (The issue went away when the outside professor turned down the job.)
Eventually, Mr. Capon met with Mr. Hubbard to discuss the issues raised in Mr. Mayer’s October letter.
Mr. Capon says Mr. Hubbard told him that “you’ve given me crap from the day I started” and that “you’ve been abusive from Day 1.”
Mr. Hubbard says that he never said those words. “I would not speak in that manner to anyone, let alone a faculty colleague,” he wrote.
Mr. Mayer did not reply to e-mails requesting comment.
The dispute ultimately fizzled away. But Mr. Capon is no longer buying Mr. Hubbard’s placid exterior.
“If he’s crossed,” Mr. Capon said, “he can be brutal.”
As dean, Mr. Hubbard has made some high-profile hires, including Patrick Bolton, a specialist in contract theory who was lured away from Princeton, and twice revamped the curriculum, to give students more flexibility in choosing classes and to shorten the time it takes to complete required courses.
Neither change was controversial, but the way some decisions have been made at the school was described as “Brezhnevian” by one professor, who like many interviewed for this article requested anonymity in order to preserve relationships with the school. In one vote, faculty members were asked to raise a hand if they were in favor of a particular change. There were no dissenters, several attendees recalled.
The most memorable vote came in the fall of 2008, when Mr. Mayer gathered senior faculty members and made a surprising announcement: Dean Hubbard’s job was in peril. President Bollinger was balking at appointing him to a second five-year term.
According to several participants, Mr. Mayer urged professors to demonstrate their support for Mr. Hubbard with a petition, which attendees were asked to sign on the spot. Several current and former faculty members used the identical word to describe the experience: bizarre.
It wasn’t just that some professors, even fans of Mr. Hubbard’s, felt a little coerced. It was that nobody had any idea why President Bollinger wanted to jettison him.
“I was not happy,” one faculty member says. “There was no way to have a view on the subject. It was like signing a contract that you haven’t read.” Mr. Mayer did not reply to e-mails seeking comment.
In an e-mail, Mr. Hubbard kept his thoughts on this subject to an anodyne minimum. “I am honored that President Bollinger gave me the opportunity to be dean,” he wrote.
Mr. Bollinger declined to discuss this episode or respond to written questions about it. He sent an e-mail that described Mr. Hubbard as “a distinguished academic economist who as dean has maintained an active, engaged voice in the public debate.”
In absence of any official word, faculty members have been left to speculate about why Mr. Hubbard nearly lost his job. Nor does anyone know why Mr. Bollinger decided to reappoint him, though current and former faculty members have a pet theory: that Mr. Bollinger was worried about losing the financial support of Mr. Hubbard’s friends, most notably Mr. Kravis.
As several faculty members pointed out, a little acidly, Mr. Hubbard had helped to cut taxes for people like Mr. Kravis. “They owed him,” one professor said.
IN conversations with Columbia Business School faculty members, you hear occasional hints of irritation with Mr. Hubbard over his cameo in “Inside Job” and the embarrassment they say it visited on the school. Part of the reason is that the fallout led to new and more stringent conflict-of-interest and disclosure rules — and that those forced many professors to drop lucrative side projects. It’s as though Mr. Hubbard was caught overeating, so everyone had to go on a diet.
Others question whether it is wise for Mr. Hubbard to take on certain clients. For instance, he served as an expert witness in the defense of two Bear Stearns hedge fund managers accused of defrauding investors in 2009. Both men were ultimately acquitted, and in a recent interview, one of their lawyers, Edward Little, praised Mr. Hubbard’s testimony as “absolutely critical.” Some at the school wonder whether it served the institution’s interests for its leader to be publicly linked with people accused in one of the only Wall Street cases to stem from the great recession.
Asked whether he was concerned about connecting the school to matters like the Bear Stearns prosecution, Mr. Hubbard wrote, “I am comfortable that I balance my scholarship and teaching, deanship, and outside activities very well.”
That balance has included work for many corporations that have generated unflattering headlines in recent years. On his résumé, in the category of “consulting or advisory relationships,” Mr. Hubbard lists Freddie Mac, Bank of America, JPMorgan Chase and Goldman Sachs. He was co-author of a paper with William C. Dudley, then the chief economist of Goldman Sachs, titled “How Capital Markets Enhance Economic Performance and Facilitate Job Creation,” which praised derivatives and the housing boom in 2004, as both were inflating into an epic bubble.
“Credit derivative obligations have become an important element that has helped protect bank lending portfolios against loss,” he and Mr. Dudley wrote.
The mutual fund industry has been a major source of income for Mr. Hubbard, and through that work he has taken a solidly pro-industry stand on a much-debated and much-litigated question: Do mutual fund advisers gouge clients by charging excessive fees? No, Mr. Hubbard argued in a paper he wrote with John C. Coates IV of Harvard Law School, titled “Competition in the Mutual Fund Industry.”
In the paper, the authors argued that it was essentially impossible for mutual fund advisers to overcharge on fees because the mutual fund business was so competitive. As the authors wrote, “fund investors may fire advisers at any time by redeeming shares and switching to other investments.”
Unlike Mr. Hubbard, who was paid that $150,000 honorarium for the paper, Professor Coates said in an interview that he had not taken any money from the Investment Company Institute and that as a matter of personal policy did not accept money in such circumstances for academic work.
Mr. Hubbard earned much more making the same pro-industry point in several court appearances, as an expert witness on behalf of corporations and mutual fund interests. One of those cases was a lawsuit by employees of ABB, a power generation products manufacturer, against the company and Fidelity, the mutual fund giant, over accusations that ABB paid excessive fees, at the employees’ expense, to manage the company’s 401(k) plan.
During a cross-examination, Mr. Hubbard said Fidelity had paid him $420,000 for his participation in the case. About $200,000 of that was direct billings — he charged $1,200 an hour — and the rest came from a company called the Analysis Group, which provides teams of experts for research projects. Mr. Hubbard earned 7.5 percent of the amount that Analysis Group researchers charged Fidelity.
A federal judge in Missouri ultimately found that ABB and Fidelity had breached a number of their fiduciary duties and in March of this year ordered ABB to pay $35.2 million and Fidelity to pay $1.7 million for losses.
But Professor Freeman at the University of South Carolina says he believes that Mr. Hubbard’s scholarship on this subject — particularly the paper he co-wrote — was shoddy and did genuine damage.
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“What Hubbard and Coates have done is pour holy water on the Investment Company Institute’s hopelessly stupid defense of fees charged by mutual funds,” he said in a telephone interview. That Mr. Hubbard took money for the paper casts doubts on his motives, Professor Freeman says.
Mr. Hubbard wrote that he did not worry that the money might appear to influence his findings.
“Any work of scholarship rises or falls on its ideas, empirical support, and argument,” he wrote. “Readers can then make whatever judgment they wish.”
IF Mr. Hubbard becomes the Treasury secretary, the job will surely mean a drastic cut in pay. What it would mean for the rest of the country is not easy to divine; the Romney campaign has been vague on many details, particularly how it would offset a 20 percent across-the-board tax cut without adding to the deficit.
But you can get a pretty good sense from looking at the economic priorities of the George W. Bush administration, says Martin N. Baily, who served as chairman of the Council of Economic Advisers under President Bill Clinton and is now a senior fellow at the Brookings Institution. Mr. Baily was a critic of the Bush tax cuts because, he says, they left the country without the wherewithal to battle the great recession.
“When I read the Romney economic plan,” he wrote in an e-mail, “it seemed to me that it was basically the Bush plan.”
There are plenty of centrist and right-of-center economists who think that Mr. Hubbard would make a fine Treasury secretary. They are impressed by his intellect, trust his instincts and commend his leadership during previous stints in Washington.
Some right-leaning economists, though, have reservations. Their worry is that Mr. Hubbard is not enough of a deficit hawk, and that if he follows through with tax cuts as articulated in the Romney plan, the results could be a disaster.
“Cutting taxes in 2001 wasn’t a crime,” says Luigi Zingales, an economist at the University of Chicago, who was one of the co-authors of an op-ed article with Mr. Hubbard. “Not fixing the deficit today is. If you think he’s a guy who’ll go ahead and play the same strategy, which I have to say most people do, then we’ll ultimately wind up with an even bigger deficit. I trust he’s smart enough not to play the same strategy.”
