“Democrats, Republicans And Wall Street Tycoons”: Financiers Resent Any Constraints On Ability To Gamble With Other People’s Money
Hillary Clinton and Bernie Sanders had an argument about financial regulation during Tuesday’s debate — but it wasn’t about whether to crack down on banks. Instead, it was about whose plan was tougher. The contrast with Republicans like Jeb Bush or Marco Rubio, who have pledged to reverse even the moderate financial reforms enacted in 2010, couldn’t be stronger.
For what it’s worth, Mrs. Clinton had the better case. Mr. Sanders has been focused on restoring Glass-Steagall, the rule that separated deposit-taking banks from riskier wheeling and dealing. And repealing Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis, which arose instead from “shadow banks” like Lehman Brothers, which don’t take deposits but can nonetheless wreak havoc when they fail. Mrs. Clinton has laid out a plan to rein in shadow banks; so far, Mr. Sanders hasn’t.
But is Mrs. Clinton’s promise to take a tough line on the financial industry credible? Or would she, once in the White House, return to the finance-friendly, deregulatory policies of the 1990s?
Well, if Wall Street’s attitude and its political giving are any indication, financiers themselves believe that any Democrat, Mrs. Clinton very much included, would be serious about policing their industry’s excesses. And that’s why they’re doing all they can to elect a Republican.
To understand the politics of financial reform and regulation, we have to start by acknowledging that there was a time when Wall Street and Democrats got on just fine. Robert Rubin of Goldman Sachs became Bill Clinton’s most influential economic official; big banks had plenty of political access; and the industry by and large got what it wanted, including repeal of Glass-Steagall.
This cozy relationship was reflected in campaign contributions, with the securities industry splitting its donations more or less evenly between the parties, and hedge funds actually leaning Democratic.
But then came the financial crisis of 2008, and everything changed.
Many liberals feel that the Obama administration was far too lenient on the financial industry in the aftermath of the crisis. After all, runaway banks brought the economy to its knees, causing millions to lose their jobs, their homes, or both. What’s more, banks themselves were bailed out, at potentially large expense to taxpayers (although in the end the costs weren’t very large). Yet nobody went to jail, and the big banks weren’t broken up.
But the financiers didn’t feel grateful for getting off so lightly. On the contrary, they were and remain consumed with “Obama rage.”
Partly this reflects hurt feelings. By any normal standard, President Obama has been remarkably restrained in his criticisms of Wall Street. But with great wealth comes great pettiness: These are men accustomed to obsequious deference, and they took even mild comments about bad behavior by some of their number as an unforgivable insult.
Furthermore, while the Dodd-Frank financial regulation bill enacted in 2010 was much weaker than many reformers had wanted, it was far from toothless. The Consumer Financial Protection Bureau has proved highly effective, and the “too big to fail” subsidy appears to have mostly gone away. That is, big financial institutions that would probably be bailed out in a future crisis no longer seem to be able to raise funds more cheaply than smaller players, perhaps because “systemically important” institutions are now subject to extra regulations, including the requirement that they set aside more capital.
While this is good news for taxpayers and the economy, financiers bitterly resent any constraints on their ability to gamble with other people’s money, and they are voting with their checkbooks. Financial tycoons loom large among the tiny group of wealthy families that is dominating campaign finance this election cycle — a group that overwhelmingly supports Republicans. Hedge funds used to give the majority of their contributions to Democrats, but since 2010 they have flipped almost totally to the G.O.P.
As I said, this lopsided giving is an indication that Wall Street insiders take Democratic pledges to crack down on bankers’ excesses seriously. And it also means that a victorious Democrat wouldn’t owe much to the financial industry.
If a Democrat does win, does it matter much which one it is? Probably not. Any Democrat is likely to retain the financial reforms of 2010, and seek to stiffen them where possible. But major new reforms will be blocked until and unless Democrats regain control of both houses of Congress, which isn’t likely to happen for a long time.
In other words, while there are some differences in financial policy between Mrs. Clinton and Mr. Sanders, as a practical matter they’re trivial compared with the yawning gulf with Republicans.
By: Paul Krugman, Op-Ed Columnist, The New York Times, October 16, 2015
“Marco Rubio; Let Me Be Your Front Man, Republicans”: To Continue To Advocate The Fiscal And Regulatory Policies The GOP Craves
Today, Marco Rubio delivers a speech in Detroit, where he will again make the case to Republicans that the solution to their economic vulnerabilities lies in nominating Marco Rubio. “If I’m our nominee … We will be the party of the bartenders and the maids, of the people that clean our rooms and fix our cars,” Rubio promises. The choice of working-class occupations is hardly an accident — Rubio is describing the occupations held by his parents when they came to the United States. Rubio’s idea of a “party of” is quite literal — he means the party would be identified with the classes of the parents of its candidate rather than, say, its policies.
Many Republicans blame Mitt Romney’s defeat on his personal wealth, and there has been a renewed vogue for the always-popular appeal to personal working-class authenticity. Scott Walker has a story about buying a really cheap sweater. John Kasich is the son of a mailman. (National Review’s Kasich profile begins, “Have you heard that John Kasich’s dad was a mailman? If not, then you’ve probably never been around Ohio’s Republican governor.”) Hillary Clinton, too, reaches back to her mother to cast herself as the child of working-class toil. But Clinton grounds her appeal to hard-pressed Americans primarily in terms of her policy platform, which she has emphasized in a series of detailed speeches.
Rubio is unusually clear about his strategy to respond to Clinton’s arguments about policy with appeals to his background. “If I’m our nominee, how is Hillary Clinton gonna lecture me about living paycheck to paycheck?” he said at the first Republican debate. “I was raised paycheck to paycheck. How is she — how is she gonna lecture me — how is she gonna lecture me about student loans? I owed over $100,000 just four years ago.” This is Rubio’s plan. Clinton will attack the Republican economic program, and Rubio will talk about his life story.
Rubio’s platform is not entirely devoid of appeals to the working class. He emphasizes an expanded child-tax credit, which would provide benefits to families of modest means. George W. Bush, likewise, portrayed his tax cut as a plan aimed primarily at people like a low-income waitress mom, even though the overall impact was to make the tax code much more regressive. Rubio’s program would have the same effect, but more so. Even Rubio’s tax-cut plan, the most allegedly moderate aspect of his platform, would overwhelmingly benefit the wealthy. Other elements would compound the impact. Rubio would raise the Social Security retirement age, a change with little impact on white-collar workers, but a punishing blow to people who work on their feet or in some other physically demanding way. He would repeal Obamacare, whose benefits are heavily tilted toward low-income workers:
Rubio has sketched out a vague concept that would replace Obamacare, which — to the extent its effects can be defined — would shift much higher costs onto low-income workers, like bartenders and maids.
Rubio has voted for the Ryan budget, which would effect the largest upward redistribution of resources in American history. Indeed, he has set himself to Ryan’s right, criticizing the chairman’s compromise to slightly ease the impact of budget sequestration. He was also an early supporter of the 2013 government shutdown.
Rubio promises to repeal Dodd-Frank, a position that finds immense favor on Wall Street. Rubio may be the most forthrightly pro–Wall Street candidate in the race. His undiluted attack on Dodd-Frank prompted a grateful Richard Bove to write a column headlined “Thank You, Marco Rubio.” Bove is the author of Guardians of Prosperity: Why America Needs Big Banks. Some critics of Dodd-Frank favor (or like to position themselves as favoring) even more stringent regulation. Bove makes no such pretense. His book’s own summary begins, “Since the financial crisis, amid outrage at the likes of Citigroup and JPMorgan Chase and Washington’s rejiggering of the financial system, the banking industry has had one major defender: Richard X. Bove.”
It is positions like this — along with his past, retracted but perhaps still secretly held support for immigration reform — that have endeared Rubio to his party’s donor class. “At the American Enterprise Institute’s annual donor retreat in Sea Island, Ga., one attendee says Rubio got rave reviews from a crowd that included several billionaires,” reported National Review’s Eliana Johnson. “And in late January, the senator impressed the libertarian-leaning crowd at the Koch brothers’ donor conference in Palm Springs, Calif., and came out on top of an informal straw poll conducted there.”
In 2004, Democrats did not think they could frontally attack the Bush administration’s hawkish policies, so they wanted to use their candidate’s biography instead. That was the all-but-explicit message of John Kerry, who promised Democrats his military background would insulate him from attacks. Republicans who favor tax cuts for the rich, cuts in social benefits for working-class Americans, and deregulation of Wall Street face a similar dilemma. What these donors want is a candidate who will continue to advocate the fiscal and regulatory policies they crave, but can sell it to the public. Rubio is all but explicitly making the case for himself as the front man to make that sale.
By: Jonathan Chait, Daily Intelligencer, New York Magazine, August 20, 2015
“Basically Impossible”: Chris Christie Promised To Tell It Like It Is. Here’s What That Would Actually Sound Like
In his presidential campaign announcement Tuesday, the reliably brash and blunt Chris Christie vowed that “telling like it is” would be both his campaign motto and his promise to voters.
Even for Christie, whose entire political persona is based on no-nonsense candor, consistently “telling it like it is” is basically impossible. Can you imagine if the New Jersey governor — or any of the other Republican candidates — really told it like it is about the most important issues and challenges facing America? What would that even sound like? Well, maybe something like this:
“…and that’s why I am announcing my candidacy for president of the United States! [Applause.] Thank you! Thank you! Now during my campaign, I’m going to tell it like it is. I’m going to let ‘er rip! [Applause.] Hard truths need to be spoken, and I will speak them.
‘What are these truths?’ you ask. For starters, we Republicans are way too focused on President Obama. Trust me, I’ll have a lot to say during this campaign about the president’s mistakes. Heaven knows, there’s been a lot of them. [Extended applause.] But he’s gone in a year and half. [Extended applause.]
Here’s the thing: The U.S. economy didn’t run into trouble the day Barack Obama took the oath of office. Even before the Great Recession, there were signs something wasn’t quite right. The economy grew by 4 percent annually and created 20 million new jobs during both the Reagan and Clinton booms. But in the [candidate makes air quotes] “Bush boom” of the 2000s, we couldn’t even hit 3 percent growth. And we created only about seven million jobs. Income growth was also a lot slower. I could go on and on. Productivity growth has been terrible during Obama’s Not-So-Great Recovery, but the slowdown started in 2006, when we had a Republican president. We’ve had problems with jobless recoveries and middle-income job lag since the early 1990s. Heck, the new business startup rate in this country has been falling for 30 years!
You can’t blame ObamaCare or Dodd Frank for all that. [Confused murmurs from audience.] The truth is technological automation and global competition are presenting new challenges to American workers. To meet those challenges and to turn them into opportunities means embracing new approaches, not recycling old ones. Certainly tax reform is part of the answer. I mean, we’re Republicans after all. Tax cuts are what we do. But you have to be savvy about cutting taxes when you’re already $18 trillion in the red. You need to pick your spots and get the most bang for your buck, like tax cuts and credits that boost working-class incomes — a rising tide is not lifting all boats right now — and spur business investment.
You want to do deep, across-the-board tax cuts like President Reagan did? Fine. God bless you. But keep in mind that for every percentage point you cut from those tax rates, you lose about $70 billion a year in revenue. And don’t expect to make up anywhere near that in economic growth. Even the Reagan tax cuts lost money, and the tax code was in far worse shape back then. [Unintelligible shouts from audience.] Heck, 40 percent of Americans don’t even pay income taxes.
Oh, and while we’re thinking about tax reform, keep in mind the federal tax burden will almost certainly need to rise in the future because we’ll have a lot more old folks. [Booing.] And we’ll have to pay for their pensions and healthcare. Smart entitlement and healthcare reform can reduce that tax increase — in that way it’s like a future tax cut — but it’s highly unlikely to eliminate it. Democrats need to accept that projected future benefits will need reduction, and Republicans need to accept a higher tax burden. [Extended booing.] Republicans should also be in favor of spending less money on rich people through tax breaks for homes and health insurance. [Several fist-shaking audience members stomp out.]
There’s just too much short-term thinking in this country. I mean, I’m no scientist, but we are doing something new to our planet and it hardly seems crazy to take out some insurance against a worst-case outcome. [Boos continue, get louder.] Let’s invest more in basic clean-energy research and remove regulatory barriers to more nuclear power. Maybe also eliminate the corporate income tax and replace it with a carbon tax. I note that even my friends on the Wall Street Journal editorial page said the other day that might be a good idea. And let’s not let Corporate America off the hook here. Too much short-termism there, as well, not just in Washington. Too much cash being returned to investors rather than going to fund new investment and innovation.
Now turning to foreign policy… Wait, where did everybody go?”
By: James Pethokoulis, The Week, July 2, 2015
“The Left Is So Wrong On Trade”: Playing A 78 rpm Record In The Age Of Digital Downloads
The left’s success in denying President Obama fast-track authority to negotiate the Trans-Pacific Partnership is ugly to behold. The case put forth by a showboating Sen. Elizabeth Warren — that Obama cannot be trusted to make a deal in the interests of American workers — is almost worse than wrong. It is irrelevant.
The Senate Democrats who turned on Obama are playing a 78 rpm record in the age of digital downloads.
Did you hear their ally, AFL-CIO head Richard Trumka, the day after the Senate vote? He denounced TPP for being “patterned after CAFTA and NAFTA.” That’s not so, but never mind.
There’s this skip on the vinyl record that the North American Free Trade Agreement destroyed American manufacturing. To see how wrong that is, simply walk through any Walmart or Target and look for all those “made in Mexico” labels. You won’t find many. But you’ll see “made in China” everywhere.
Many of the jobs that did go to Mexico would have otherwise left for low-wage Asian countries. Even Mexico lost manufacturing work to China.
And what can you say about the close-to-insane obsession with CAFTA? The partners in the 2005 Central American Free Trade Agreement — five mostly impoverished Central American countries plus the Dominican Republic — had a combined economy equal to that of New Haven, Connecticut.
(By the way, less than 10 percent of the AFL-CIO’s membership is now in manufacturing.)
It’s undeniable that American manufacturing workers have suffered terrible job losses. We could never compete with pennies-an-hour wages. Those low-skilled jobs are not coming back. But we have other things to sell in the global marketplace.
In Washington state, for example, exports of everything from apples to airplanes have soared 40 percent over four years, to total nearly $91 billion in 2014, according to The Seattle Times. About 2 in 5 jobs there are now tied to trade.
Small wonder that Sen. Ron Wyden, a liberal Democrat from neighboring Oregon, has strongly supported fast-track authority.
Some liberals oddly complain that American efforts to strengthen intellectual property laws in trade deals protect the profits of U.S. entertainment and tech companies. What’s wrong with that? Should the fruits of America’s creativity (that’s labor, too) be open to plundering and piracy?
One of TPP’s main goals is to help the higher-wage partners compete with China. (The 12 countries taking part include the likes of Japan, Australia, Canada, Chile, Mexico, and New Zealand.) In any case, Congress would get to vote the finished product up or down, so it isn’t as if the public wouldn’t get a say.
But then we have Warren stating with a straight face that handing negotiating authority to Obama would “give Republicans the very tool they need to dismantle Dodd-Frank.”
Huh? Obama swatted down the remark as wild, hypothetical speculation, noting he engaged in a “massive” fight with Wall Street to get the reforms passed. “And then I sign a provision that would unravel it?” he told political writer Matt Bai.
“This is not a partisan issue,” Warren insisted. Yes, in a twisted way, the hard left’s fixation over big corporations has joined the right’s determination to undermine Obama at every pass.
Trade agreements have a thousand moving parts. The U.S. can’t negotiate with the other countries if various domestic interests are pouncing on the details. That’s why every president has been given fast-track authority over the past 80 years or so.
Except Obama.
It sure is hard to be an intelligent leader in this country.
By: Froma Harrop, Loeb Award Finalist for Economic Commentary in 2004 and 2011, Scripps Howard Award Finalist for Commentary in 2010; The National Memo, May 14, 2015
“The Obstructionists”: Congress Can Still Mess Up The Iran Deal
“Now, Congress takes up the matter” are words that are ensured to send shudders down the spine, so shudder away: We’ve just entered the congressional phase of the Iran talks, with a Senate hearing next Tuesday, after which it’s up to Mitch McConnell to decide how fast and aggressively to move with the bill from Tennessee Republican Bob Corker that would bar the administration from making any changes to U.S. sanctions against Iran for 60 days while Congress reviews and debates any Iran agreement.
There are, as the Dude said, man, a lotta ins, a lotta outs, a lotta what-have-yous here. It’s all quite complicated. But here, it seems to me, is your cut-to-the-chase question: Is there enough good faith in this United States Senate for something to be worked out? Or is it just impossible?
One proceeds from the assumption that the Senate will do whatever it can to kill a deal. It’s a Republican Senate, by a pretty wide margin (54-46); history would suggest that these Republicans simply aren’t going to hand President Obama a win like this. It hardly matters what the details are, about what Iran can or can’t do at Fordow, about the “snapback” provisions of the sanctions, about the inspections regime, or about what precise oversight role Congress has. It’s just basically impossible to imagine that this Republican Party, after everything we’ve seen over these last six years, and this Republican Senate majority leader, who once said it was his job to make Obama a one-term president, won’t throw up every roadblock to a deal they can conjure.
Once again, we’re left separating out the factors the way scientists reduce compounds to their constituent elements in the lab. How much of this is just Obama hatred? How much is (this is a slightly different thing) the conviction—quite insane, but firmly held—that he doesn’t have the best interests of the United States at heart? How much is a genuinely paranoid, McCarthy-ish world view about the intractably evil nature of our enemy and the definitional Chamberlainism of ever thinking otherwise?
And how much is just self-interested politics, as it is bequeathed to us in its current form? Which is to say—if you are a Republican senator, you simply cannot cast a vote that can be seen as “pro-Obama” under any circumstances. You just can’t do it.
I asked in a column last week whether there would be one Republican officeholder in Washington who might say, “Hey, upon examination of the details, this looks like a decent deal with risks that are acceptable, and I’m going to support it?” It’s still a good question. Senator Jeff Flake of Arizona is conceivable. He called that noxious Tom Cotton letter “not appropriate.” But Flake is pretty new to the Senate and doesn’t carry a lot of weight on these matters.
Some suggest Corker himself. Corker has this reputation, in part earned, as one of the reasonable ones. He gets articles written about him like this one, from The New York Times a couple of days ago, which limned him as a Republican of the old school, a sensible fellow who still wants to horse-trade.
And he is—but only up to a point, at which the horses return to their stalls. The most notable example here is the Dodd-Frank bill. This is all detailed at great and exacting length by Robert Kaiser in his excellent book about how financial reform became law, Act of Congress. Then, Corker talked for hours and hours with Chris Dodd about the particulars—derivatives reform, oversight of the Consumer Financial Protection Bureau, more. He wanted to play ball, even thought he might deliver some votes. But as time passed, it became clear to Corker that the base just wasn’t standing for it. He faced reelection in 2012. Not tough reelection—he won with 64 percent of the vote. But reelection campaigns are great excuses for senators to do nothing, and nothing is what Corker did. He withdrew from all participation with Dodd and Frank, and he ultimately voted against the bill. When it mattered, he caved to the extremists, in other words, among his colleagues and in his base. Why that means he should be getting credit for a spirit of compromise now in New York Times articles is something that, to my obtuse mind, requires further explanation.
“He’s not Tom Cotton.” Uh, okay. Wonderful. But that’s where we’ve come, celebrating a guy because he doesn’t want to start World War III. Happily, though, all is not lost. It’s far from clear that Corker or Cotton (and yes, they are different) can block a deal. There are, I’m told, three categories of senators on this question. The first is our own mullahs—no deal no how. The second is a group of mostly Democrats and independents—Virginia’s Tim Kaine, who is a close ally of the White House, and Maine’s Angus King—who basically wants a deal but wants to be sure that it’s good, and want to influence the shape of any legislation the Senate might pass.
The third group is senators who also basically would like to see a deal but want the Senate to serve as a backstop against a deal they see as bad. I’d put Chuck Schumer in that third camp. So when these people say they back the Corker bill, as Schumer did this week, it doesn’t mean they’re against the administration or a deal per se. Democrats aren’t going to be Obama’s problem here. A few, the ones from the deep red states, may be boxed in. But most will stick with the administration, if a deal is finalized along current terms.
I don’t think our mullahs have the numbers right now. But Obama is going to have to sell this to more parties than Tom Friedman and Steve Inskeep. He has, or should have, Friedman’s readers and Inskeep’s listeners already. The way to get someone like Corker to play ball is to sell it in Knoxville. Public opinion still influences foreign policy, as Obama knows from his Syrian experiences. Put it to work.
By: Michael Tomasky, The Daily Beast, April 8, 2015
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 