VA Pick McDonald Cultivated Allies in Both U.S. Parties

June 30 (Bloomberg) – VA Secretary Nominee Bob McDonald speaks about his being nominated by President Obama to head the troubled Department of Veterans Affairs. (Source: Bloomberg)

Bob McDonald, the White House’s candidate to take charge of the troubled U.S. Veterans Affairs Department, has a list of allies in both political parties that would make most nominees envious.

They include President Barack Obama, who yesterday announced that the former Procter & Gamble Co. (PG) chief executive officer is his choice for the job, and House Speaker John Boehner of Ohio, who praised the selection. Add the Clintons -- former President Bill Clinton and former secretary of State Hillary Clinton -- who raised money from the company when McDonald ran it.

McDonald’s bipartisan alliances point to what’s expected to be a smooth confirmation by the U.S. Senate amid a scandal involving allegations of falsification of waiting times at veterans’ hospitals.

Some Democrats and Republicans already have announced their backing of McDonald to lead an agency where the medical system treating more than 8 million veterans annually has been hamstrung by little accountability and a “corrosive culture,” according to a White House report issued last week.

For Obama, picking a business executive who donated to Boehner and 2012 Republican presidential nominee Mitt Romney’s campaign makes it more difficult for Republicans to block the nomination or hammer Democrats over the VA scandal.

Photographer: Joshua Roberts/Bloomberg

A file photo shows Bob McDonald, then chief executive officer of Procter & Gamble Co., departing the West Wing of the White House after meeting with U.S. President Barack Obama in Washington, D.C., on Nov. 14, 2012. Close

A file photo shows Bob McDonald, then chief executive officer of Procter & Gamble Co.,... Read More

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Photographer: Joshua Roberts/Bloomberg

A file photo shows Bob McDonald, then chief executive officer of Procter & Gamble Co., departing the West Wing of the White House after meeting with U.S. President Barack Obama in Washington, D.C., on Nov. 14, 2012.

‘Expedite’ Confirmation

“This is the one agency where there shouldn’t be any politics at the door,” said John Engler, a former Republican governor of Michigan who leads the Business Roundtable, a Washington-based association representing CEOs of major U.S. companies. “I hope that the Senate will expedite the confirmation and that Bob can get started.”

McDonald’s political background calls attention to his good standing with Republicans.

In 2012, he gave $10,000 each to Republican campaign committees aiding Boehner, Obama’s leading adversary in Congress, and Romney, Obama’s opponent in that year’s presidential election, Federal Election Commission reports show.

He’s also given to the Clintons’ causes.

When Hillary Clinton’s State Department sought funding for an American pavilion at the 2010 Shanghai Expo, McDonald personally signed off on a $3 million corporate contribution, according to the company’s website. Later, McDonald pledged P&G to provide 2 billion liters of purified drinking water to people in developing countries through the Clinton Global Initiative.

Clinton Connections

In a 2012 State Department ceremony, McDonald accepted an award for corporate excellence from then-Secretary of State Hillary Clinton. The following year, Bill Clinton and daughter Chelsea traveled to Rwanda, where they tried their hands at purifying water held in a P&G-labeled bucket. A spokesman for Hillary Clinton declined to comment on whether she had any involvement in Obama’s selection for the VA post.

Boehner, an Ohio Republican, has issued a statement of support for McDonald, saying he is “the kind of person who is capable of implementing the kind of dramatic systemic change that is badly needed and long overdue at the VA.”

McDonald, 61, also has donated to Senator Rob Portman of Ohio, who’s among 45 Republican senators in the Democratic-led chamber who will vote on McDonald’s nomination to succeed retired General Eric Shinseki, who resigned in May. Procter & Gamble has its headquarters in Cincinnati, where Boehner and Portman were born, close to their homes now.

McDonald was P&G’s CEO from 2009 to 2013.

‘Right Direction’

“Bob stepped into Procter & Gamble when it -- like the VA -- was having lots of problems,” Ali Dibadj, an analyst at Sanford C. Bernstein & Co., said in an e-mail. “He seemed to have pushed the company in the right direction.”

How quickly and boldly he did so, however, was a matter of contention. McDonald announced a $10 billion cost-cutting plan in 2012, a year before he stepped down, only to have Dibadj and other analysts question whether the program was enough to address P&G’s bloated structure. That same year, the company cut its forecasts three times as its performance trailed competitors such as Unilever.

“He’s a West Point graduate and a veteran himself so he totally understands the customer, plus his strength at P&G was his ability to take complex problems and processes and clean them up,” said Maggie Wilderotter, CEO of Frontier Communications Corp. and a director at P&G now and when McDonald was CEO.

During McDonald’s tenure at P&G, “the company wasn’t getting to where it needed to be in the eyes of activist investors, but he certainly wasn’t a failure,” Wilderotter said in an interview.

Other Party

There is precedent for a president’s Cabinet nominee belonging to the opposing political party.

Obama kept Robert Gates as defense secretary after he held the same position in President George W. Bush’s administration. That job is now held by Chuck Hagel, a former Republican U.S. senator from Nebraska. Obama also employed former Representative Ray LaHood, a Republican from Illinois, as transportation secretary.

Bush’s first transportation secretary was Norman Mineta, a former Democratic congressman from California.

Shinseki, who resigned May 30, became a political liability for Obama as lawmakers from both parties demanded his departure from the agency that spends $160 billion annually, fifth-most among federal agencies, and provides medical care to 8.76 million veterans.

Agency’s Troubles

The agency’s troubles emerged after an investigation from the VA’s inspector general, an internal agency review and the White House’s own evaluation found systemic mismanagement at veterans’ hospitals and clinics, such as keeping secret lists of patients seeking care in order to hide months-long waits.

Improving veterans’ health care has become a top legislative priority for Americans, according to a June 13 Gallup poll that asked respondents about nine issues, including raising the minimum wage and passing new immigration laws.

Nearly nine of 10 Americans said it was extremely important or very important to improve health care for military veterans.

The VA has acknowledged that schedulers were instructed to falsify appointment records at 64 percent of VA facilities. As many as 1,700 veterans on a secret list at a hospital in Phoenix, which sparked the inquiries, were “at risk of being lost or forgotten,” according to a May 28 report from Richard Griffin, the acting VA inspector general. At least 35 veterans have died awaiting care in the Phoenix area.

Veterans’ Legislation

House and Senate lawmakers are negotiating a legislative response to the scandal that will probably result in more money for military health care, House Veterans Affairs Committee Chairman Jeff Miller, a Florida Republican, has said.

Boehner, Miller and other Republicans have faulted Obama for not moving more quickly to address the issue. More than half of all Americans disapprove of how Obama is handling problems in the VA, according to a Bloomberg National Poll conducted June 6-9.

The legislation would, among other things, let veterans seek private care if they’ve waited more than a couple of weeks to see a doctor or live far from VA facilities. Republicans want to cover the cost of the new spending, up to $44 billion over five years, by cutting elsewhere in the U.S. budget. Senate Democrats propose using emergency funds that wouldn’t need to be offset.

To contact the reporters on this story: Greg Giroux in Washington at ggiroux@bloomberg.net; Jonathan Allen in Washington at jallen149@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net Laurie Asseo

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