Why It Took Penny Pritzker 4 Years To Win Commerce Secretary Nomination

Barack Obama's Old Chicago Friend Has Serious Baggage

Long Time Coming: Penny Pritzker is one of Barack Obama’s earliest supporters. So why did it take more than 4 years for her to win nomination as commerce secretary.
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Long Time Coming: Penny Pritzker is one of Barack Obama’s earliest supporters. So why did it take more than 4 years for her to win nomination as commerce secretary.

By Nathan Guttman

Published May 02, 2013, issue of May 10, 2013.
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Penny Pritzker’s nomination as commerce secretary has been more than four years in the making.

The 53-year-old Jewish hotel chain heiress from Chicago was rumored to be named to the post ever since Obama first took office, in 2009. While some see the pick as a slam-dunk — not only is Pritzker close to Obama, she is also a leading national business figure — others saw red flags in the billionaire family’s strained relations with labor unions.

Now, as he enters his second term in office, Obama is set to make good on his initial plan and make Pritzker the second Jewish member of his Cabinet, alongside Treasury Secretary Jack Lew.

Supporters tout Pritzker’s early support of Obama. She was the national finance chairwoman of his 2008 campaign, and one of a handful of backers who can boast of sticking out their neck for Obama early on in his political career.

“What people miss about Penny,” said a former White House official supportive of the choice, “is that she is not only a donor, but an incredibly successful businesswoman.” The former official argued that this record makes her especially suited for leading the federal commerce department and that critics have “unfairly targeted her because she was a donor.”

On the other hand, Pritzker comes with serious big-business baggage, including her use of tax loopholes and offshore bank accounts. Unions, with the support of Jewish labor activists, have also been locked in a lengthy battle with the Hyatt management over working conditions of hotel housekeepers. They have made Pritzker a prime target of their fight, in large part because of her close ties with Obama.

“As Jews we hold ourselves to higher standards,” said Amy Dean, a Chicago Jewish labor activist and public policy fellow at the Century Foundation. “And of course we are especially disappointed when someone from our community acts not according to our standards.”

Pritzker, whose great-grandfather emigrated from Ukraine, is a third-generation member of the family business, most famously known for ownership of the Hyatt hotel chain. Despite the family ties, Pritzker made clear that she was more than a billionaire heiress. With law and business degrees from Stanford University, she successfully expanded the family hotel business and entered into real estate, banking and investment enterprises. Her personal net worth was estimated in 2012 at $1.8 billion, which would make her by far the wealthiest member of Obama’s Cabinet, if confirmed by the Senate.

Pritzker has spent much of her energy and some of her fortune in civic and philanthropic activity. She was a member of Chicago’s board of education and has focused much of her public work on improving educational opportunities for children in need.

In the city’s Jewish community, known for its strong philanthropic network, Pritzker is a top donor and organizer.

“She recognizes that she has the capacity to help others,” said Steven Nasatir, longtime president of the Jewish United Fund/Jewish Federation of Metropolitan Chicago. He noted that Pritzker, who in the past has served as chairwomen of the federation’s major gift campaign, has “always been a generous donor and was always willing to do things for us.”

Marc Stanley, chairman of the National Jewish Democratic Council, said the group was “excited” by the reports of Obama considering Pritzker for the job. Stanley also said that Pritzker is “an important leader in our community and uniquely qualified to serve in the position.”

Pritzker’s ties with Obama date back to his run for Senate, in 2004. Her financial support was considered critical for the young politician running against more experienced and well-known candidates.

In 2008, Pritzker emerged as Obama’s top fundraiser, both officially, with her role as national finance chair, and informally, as a bridge between Obama and deep-pocketed business owners and investors. She helped wipe the funding advantage of Democratic rival Hillary Rodham Clinton (Pritzker’s brother Jay Robert Pritzker was one of Clinton’s campaign co-chairmen) and later worked to ensure that Obama was able to splurge on the most expensive campaign in American history.

Although initially considered in 2008 to be Obama’s candidate of choice for commerce secretary, Pritzker withdrew her nomination. According to press reports, the decision came after Pritzker realized that her nomination could pose a political liability for the new president.

With her extensive business record came several issues potentially difficult for the president, including the use of offshore tax shelters and family ownership of a bank involved in the subprime loans bubble.

In 2012, Pritzker did not return to her leading role in the campaign. Some reports pointed to her frustration with policies of Obama that she witnessed as a member of two White House economic councils. Yet, a former official stressed that there was “no bad blood” and that Pritzker’s withdrawal from a frontline role in the 2012 campaign finance had to do with a “fatigue factor.”

Now, Obama has decided to go forward with his initial idea of making Pritzker the commerce secretary. The choice of Pritzker provides Obama with an opportunity to increase the representation of women in his Cabinet, an issue that Obama has been struggling with in his second term, and sends a positive message to the business community, especially exporters.

Pritzker will still have to face a tough Senate confirmation process in which claims are likely to come up regarding her companies’ labor practices. Still, Pritzker is expected to be confirmed, mainly because the Republicans, who showed willingness to derail Obama nominations, are closer to business than to unions.

Contact Nathan Guttman at guttman@forward.com or on Twitter, @nathanguttman

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