Baroody joined the staffs of U.S. Representative Melvin Laird and of the House Appropriations Committee in 1961, and later served as an aide to Laird at the Pentagon from 1969 to 1973. He worked at the White House from 1973 to 1977, including service as assistant to the president for public liaison.
Baroody's father, William J. Baroody Sr., had been president of the influential, right-leaning think tank since 1962. The younger Baroody became executive vice president of the institute in 1977 and president in 1978. The elder Baroody died in 1980.
William Jr.'s tenure at the institute saw increasing growth. With the inauguration of President Ronald Reagan in 1981, many AEI scholars' ideas on deregulation, the Cold War, the culture war, constitutional law, and other issues achieved currency and a receptive audience. Many AEI scholars left the institute for government service, including Jeane Kirkpatrick, Robert Bork, and James C. Miller III. Baroody expanded AEI's activities, producing more publications and introducing new research areas. But the Reagan administration saw the emergence of new think tanks, such as the Heritage Foundation, and competition for funding increased. Insiders lamented a pursuit of prestige, evidenced by Baroody's hiring of former president Ford as a distinguished fellow, at the expense of more ideological conservative scholars. Some donors were concerned about AEI's centrist trend and perceived loss of conservative principle.
Baroody was born in Manchester, N.H. Educated at Holy Cross College, he later served in the U.S. Navy. He was divorced from his wife, Mary, at the time of his death, and he had nine children and thirteen grandchildren.