Nobody cares about the secretary of commerce—at least usually. The job is something a figurehead position, loosely tasked with promoting American industry, which typically involves a schedule packed with overseas photo ops.
Wilbur Ross will not be your usual commerce secretary. The billionaire private equity investor, who advised the Trump campaign and whom Donald Trump has picked to run what is usually an executive-branch backwater, may well end up being one of the most influential economic voices within the incoming administration. This a bit disheartening, and not just because Ross is yet another gaudily wealthy Wall Streeter in the president-elect’s inner orbit. Ross also showed, over the course of the presidential campaign, that he is chock full of half-brained economic ideas.
Ross—age 79, net worth $2.5 billion—is the sort of man who regularly has words like “tycoon” or “baron” appended to his name. He’s a smart, sophisticated operator who also habitually comes off as a cartoon plutocrat. After spending a quarter-century in the bankruptcy practice at the investment bank Rothschild—he apparently met Trump in the 1990s while representing bondholders who’d backed the mogul’s busted casino—he founded WL Ross & Co., where he made his name buying up failed industrial companies and rejiggering them to sell at a tidy profit. He’s been the leader of an honest-to-God secret Wall Street fraternity, is married to a socialite third wife, and owns a $100 million-plus art collection stuffed full of Magrittes. Back in 2014, he moaned that “the 1 percent is being picked on for political reasons.”
Ross’ business record includes some unsavory chapters, but it also earned him a reputation as someone willing to bet on and invest in dying heavy industries where most finance types wouldn’t dare to tread, which my Slate colleague Daniel Gross explored in an indispensible 2004 profile. After George W. Bush was elected to the White House, Ross guessed (correctly) that the new president would impose tariffs on foreign steel to bolster struggling mills across the Rust Belt. Ross proceeded to purchase a series of bankrupt plants that he wrapped together into the International Steel Group. He got the companies up and running again—the tariffs helped—but in the restructuring process ended medical benefits for some 150,000 retirees while cutting jobs and jettisoning billions in unfunded pensions onto a federal insurance fund. He later sold ISG to Mittal Steel for more than $4 billion.
Today, steel workers seem to regard Ross as an imperfect savior. “Some of these bottom feeders milk whatever value is left there. To Wilbur’s credit, he created a viable company,” Leo Gerard, president of the United Steelworkers, told the Wall Street Journal. “It wasn’t all peaches and cream, but in the end, we have got facilities that otherwise wouldn’t be alive today.”
Ross repeated this act with the coal business, but with more tragic results. In 2006, a methane explosion trapped and killed a dozen workers in a West Virginia mine owned by his International Coal Group. The site had racked up numerous severe safety violations, and its roof had caved in 20 times the year before. But Ross insisted during an interview with ABC that he had believed the mine was safe. The billionaire’s company also set up a $2 million fund for the victims, which as ABC’s Brian Ross put it, seemed “sort of cheap.”
Ross has been criticized for some nonlethal ventures as well. After purchasing the struggling North Carolina textile makers Cone Mills and Burlington Industries, he proceeded to lay off some American workers while opening plants in China and Mexico. But in fairness, the U.S. sites might not have survived at all had it not been for Ross’ efforts. Less defensible were his adventures in the mortgage industry, which as David Dayen chronicled at The Nation helped fuel the U.S. foreclosure crisis. In short, Ross purchased the second biggest servicer of subprime loans in the country out of bankruptcy in 2007, contracted out some of its key operations to a company that engaged in mass fraud, then sold it to another corporation that was eventually fined $2.1 billion by the Consumer Financial Protection Bureau for its mistreatment of homeowners while Ross still sat on the board.
During this year’s presidential campaign, Ross emerged with University of California-Irvine professor Peter Navarro as Donald Trump’s two chief economic surrogates. The pair was tasked with fleshing out and defending the unusual combination of gonzo tax cuts, mass industry deregulation, and trade protectionism that makes up Trumponomics. Their work was, shall we say, lacking—I once described their analysis of the candidate’s plan as a “dog’s breakfast of factual errors, conceptual nonsense, and regurgitated industry flimflam.” It repeated amply discredited, lobbyist-generated statistics about the economic effects of regulations and increased oil and gas development. It fundamentally misunderstood basic international tax issues. The wonky list of sins was long. Later, Navarro and Ross unveiled Trump’s much-derided infrastructure plan, which amounted to a poorly sketched out idea to give private developers tax breaks for building roads and bridges.
Even by the standards of a septuagenarian billionaire, Ross also managed to reveal a stunning lack of awareness about the economic realities faced by American households. During an event to discuss Trump’s tax plan, an audience member mentioned that, as written, the proposal would raise taxes on many people with children, especially single parents. Au contraire, insisted Ross, who explained that, “For a married couple, with two children, and a nanny earning $50,000 a year, there’s around a 36 percent decrease in their total taxes.” Where Ross got the idea that couples earning $50,000 per year regularly hire nannies, I don’t know. Why he thought that answered a question about single parents is likewise beyond my understanding.
At the Commerce Department, Ross will have direct influence over U.S. trade policy. Though negotiations with foreign countries fall to the U.S. Trade Representative, who is also a cabinet-level pick, Commerce itself plays a major roll in setting defensive tariffs. So in a sense, some might view Ross as a comforting pick. He has defended Trump’s rhetoric about our trade deals, and has personally benefited from steel tariffs in the past, suggesting that he’s willing to entertain protectionist measures. But given that he’s offshored jobs in the process of righting a struggling American business, he doesn’t come off as a man who’d be apt to start a trade war on a whim.
Ross’ public comments give a similar impression. “There sensible trade and there’s dumb trade. We’ve been doing a lot of dumb trade. And that’s going to get fixed,” he said on CNBC’s Squawk Box this week. But asked about imposing tariffs, he was more nuanced, “Everybody talks about tariffs as the first thing. Tariffs are the last thing. Tariffs are part of the negotiation. The real trick is going to be increase American exports. Get rid of some of the tariff and nontariff barriers to American exports.” In other words, Ross wants to try getting China to buy more products made in America before he tries to stop Americans from buying products made in China.
The real concern about Ross is that, while he is a shrewd businessman with a deep understanding of issues like corporate structure and debt, he just isn’t a particularly good economic thinker, and is apparently too far removed from any semblance of normal life to realize that, even with a tax break, your typical lower-middle-class family can’t afford a nanny. Yet this Wall Street icon already has Trump’s ear, and will almost certainly have his hands on the economic tiller. I think we can all guess who will benefit from that. Hint: It won’t be your typical coal miner.