Mark Lennihan/AP Photo
A man walks past the Federal Reserve Bank of New York, 2016.
For months now, CNBC has been offering a window into the Wall Street primary, befitting its role as a conduit for the financial industry to dictate demands on politics and society. CNBC’s Brian Schwartz, the network’s “politics and finance reporter,” has controlled this beat, diligently chronicling the desires of giant donors and their preferences in the Democratic primary. He’s laid out which candidates are getting the big contributions, precisely where in the Hamptons fundraisers are being held, which donors are shifting allegiances, and what advice those rich people are giving the candidates, sometimes directly.
It’s a fascinating and perfectly revolting way to cover modern politics: Just call up the richest hedge fund managers and bankers you can find and run the entire coverage through them. It’s probably as accurate as any other method of understanding how power works in America today.
But Schwartz’s latest article, really a warning from Wall Street’s highest and mightiest, actually offers a way out of this despairing doom loop of political economy. In it, Schwartz relays the message of “several high-dollar Democratic donors and fundraisers in the business community,” who vow to sit out the general election, or even back Donald Trump, if Elizabeth Warren wins the nomination. Bernie Sanders isn’t mentioned in the article probably because everyone already knows that these types of donors would have precisely the same reaction.
This is fantastic news. Anything that accelerates the split in the decades-long marriage between the alleged party of the people and Big Money should be celebrated. The transformation in policy that would ensue if Wall Street Democrats walk away from the party, freeing it from self-censorship and bad ideas, far outstrips whatever money they might raise for Democratic candidates.
“I want to help the party, but she’s going to hurt me, so I’m going to help President Trump,” said one anonymous and cowardly private equity executive, in a perfect distillation of putting personal enrichment ahead of what he claims to be his political preferences (and no, I don’t know it’s a he, I’m making an extremely educated guess). “They will not support her. It would be like shutting down their industry,” said another bank executive, warning that her policies will be worse for Wall Street than Barack Obama’s. (Well, yes.)
The most telling quote came from a hedge fund executive, who fretted that if Warren helped people discover that the Trump tax cuts only helped fatten corporate wallets, “Wall Street would not like the public thinking about that.” So their beef with “far left” Democrats is that they would tell too much truth about our broken tax code and the soaring inequality it fosters.
These warnings align with what another CNBC mouthpiece for power, Jim Cramer, said on-air earlier in the month, that Warren has “got to be stopped.” Warren responded to that with a simple tweet: “I’m Elizabeth Warren and I approve this message.”
That’s exactly the right attitude, which Sanders has backed up with his constant invocations of the old FDR line about the economic royalists, “I welcome their hatred.” And proudly rejecting the support of Wall Street isn’t just a populist pose; it’s a viable economic policy. Just about everything that has ailed the Democratic Party since the 1970s from a policy standpoint can be traced back to an ugly partnership with Wall Street money.
Post-Watergate reformers did not place themselves in opposition to financial power; their first inclination was to throw out the populist head of the House Banking Committee, Wright Patman, who had been fighting consolidation for decades. Patman’s pro-bank foes on the committee ensured his fate by allying with the Watergate babies. Later, as Brooks Jackson details in the seminal book Honest Graft, Democrats, led by chief fundraiser for the House campaign arm Tony Coelho, cozied up to Big Money to hang onto power during the Reagan revolution.
This wound up betraying just about every New Deal principle there was, and muddying the distinctions between the party and the Republicans. Seduced by an ardor for markets, New Democrats and the DLC pursued financial deregulation and spurred financialization in a host of policy arenas, from education to housing to retail. Large companies like Apple and Koch Industries are as much derivatives traders and hedgers as they are product makers and sellers.
Wall Street financiers and investors routinely demand wage suppression and job cuts. They value corporate consolidation, which has the same effect. They have created the conditions for productivity to fly away from wages, and for money to be horded at the very top. They built these giant corporate interests, which can pluck whatever they want from the political system. They are the reason for our desperate inequality, relentless outsourcing, and swaths of despair and premature death across the American landscape. By fighting for impunity for corporate crime, they have allowed bad money to chase out good, leaving us with a counterfeit form of capitalism, where engineering money out of businesses takes precedence over creating decent products.
Whether you care about our broken health care system, the boiling planet, the breakdown of economic mobility and the middle class, or practically any other failing in our country, you can eventually find large financial interests at the heart of the policies that made it happen. And Democrats needing to tend to Wall Street interests for campaign capital resisted the necessary steps to reverse the cycles on all fronts. Solutions that would have followed the New Deal tradition, from universal Medicare to caps on bank size, couldn’t find their way through a corrupted, constrained Congress. The banks “frankly own the place,” Dick Durbin said in 2009, a year after the same banks cratered the economy.
If Wall Street bigwigs suddenly bolt from the Democrats en masse in reaction to Warren’s or Sanders’s victory, suddenly nobody would have to check with some rich executive before deciding whether to endorse good policy. Suddenly, real options would be allowed to get onto the menu in Washington. Perhaps most important, you would have a clearer distinction between a party of concentrated capital and a party of the plain person in the street. That has been completely removed from our politics because of a band of predatory financiers who imagine themselves as worldly, socially liberal Democrats.
In cold electoral terms, New York and Connecticut aren’t going red even if the financial industry decides to flip entirely. But the Midwest and Sun Belt might respond differently to a Democratic Party that actually tends to their tangible needs, and not hamstrung by financial interests counseling caution and dangling campaign cash.
We should only be so lucky that the forces of concentrated capital would finally choose their allegiances. We would all benefit from having a party for the people again.
