Biden’s German ambassador sparks concern with hefty Penn payouts.
Controversy Surrounds Ambassador Gutmann’s Payments Before Taking Office
President Joe Biden’s ambassador to Germany, Amy Gutmann, is once again at the center of controversy. This time, it’s over the payments she received before leaving her previous position as president of the University of Pennsylvania.
Gutmann, who served as the university’s president for 18 years, received two substantial sums from the institution before assuming her role as ambassador. In October 2020, she obtained a $3.7 million home loan from the university at an incredibly low interest rate of 0.38%. This loan was secured as she prepared to leave the on-campus president’s house. In addition, Gutmann received $23 million in deferred compensation in 2021, which she had earned over her tenure leading the university.
While these payments were legally obtained and disclosed on ethics reports, they have raised concerns about priorities within higher education and the Biden administration. Michael Chamberlain, director of the watchdog group Protect the Public’s Trust, commented, “Though this situation doesn’t appear to violate any federal ethics laws or the Biden ethics pledge, it’s hard to ignore the potential controversy it could cause in a different administration. It certainly seems like another example of the lucrative benefits associated with Joe Biden.”
Controversial Connections and Prior Instances
This is not the first time Gutmann has been involved in controversies. She has a long-standing relationship with Biden’s alma mater, the University of Pennsylvania. In 2017, Gutmann appointed Biden as a professor at the school, despite him not teaching any classes. He was paid $911,000 over the next three years. After winning the election, Biden named Gutmann as ambassador to Germany, along with former Penn Board of Trustees Chairman David Cohen as ambassador to Canada.
Chamberlain remarked, “The American public might view this as part of the Biden administration’s return to old norms, resembling the spoils system where plush jobs were distributed to those close to those in power.”
Gutmann was also involved in establishing the Penn Biden Center for Diplomacy and Global Engagement think tank in Washington D.C. This think tank faced controversy when classified documents were discovered there in January. During the think tank’s opening and up until 2022, the University of Pennsylvania received at least $100 million in donations from China.
Concerns within Higher Education
Regarding the recent controversy, higher education observers note that major payments to university administrators, like Gutmann’s, are problematic, although not uncommon. Joni E. Finney, retired director of the Institute for Research on Higher Education at Penn, expressed her opinion, stating, “Do I think it’s unethical? Yes. But I think a lot of compensation packages for presidents at elite institutions are unethical. The practice of having these [home] loans even as you’re leaving is fairly common at elite private universities.”
Finney also raised concerns about Gutmann and Cohen’s ambassadorships, stating, “It’s not a good look. It’s not as if she had any foreign policy experience, but she’s not the first ambassador to lack foreign policy experience. I just think the practice is not a good sign for higher education because I think it undermines public trust.”
Scrutiny Amidst Biden Administration’s Education Plans
These reports about Gutmann’s significant payout and near-zero interest home loan come at a time when the Biden administration is attempting to transfer billions of dollars in student loans to taxpayers and implementing plans to lower the cost of college. However, these plans have faced scrutiny as they primarily reduce the amount students need to repay rather than addressing the actual costs of attending college.
Adam Looney from the Brookings Institution criticized the approach, stating, “It’s a plan to reduce the cost of college, not by reducing tuition paid, but by offering students loans and then allowing them not to pay them back.” Any unpaid loans would ultimately contribute to the national debt.
The State Department referred inquiries to Penn and the Education Department, while the Education Department redirected questions to the White House, which did not respond to requests for comment.
Despite the controversy, former Penn Board of Trustees Chairman Scott Bok defended Gutmann’s $23 million payment, attributing it to her exceptional performance and the substantial growth of the university’s endowment during her tenure. Bok stated, “Amy was an extraordinary president for Penn. When you have a really extraordinary performer for a very long period of time, in a period of strong investment returns, yes, it adds up to quite a substantial number.”
Gutmann’s presidency at the University of Pennsylvania was widely regarded as successful, with the school’s endowment increasing from $4.1 billion to $20.5 billion during her tenure. Additionally, Gutmann claimed that 80% of undergraduates left Penn debt-free by the end of her term.
However, former White House chief ethics lawyer Richard Painter raised further questions about the payments, particularly regarding the amounts and the timeline. He questioned the necessity of a $3.7 million loan for a house in Philadelphia when Gutmann already received $23 million in deferred compensation and had a residence provided by the U.S. government as the ambassador to Germany.
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