Why both sides of the political aisle are turning against Wall Street
More Americans than ever believe the economy is rigged in favor of Wall Street and big business. As a result, populists on both the Democrat and Republican sides are bending toward one another and against the establishment.
More Americans than ever believe the economy is rigged in favor of Wall Street and big business and their enablers in Washington. We’re five years into a so-called recovery that’s been a bonanza for the rich but a bust for the middle class. “The game is rigged and the American people know that. They get it right down to their toes,” says Senator Elizabeth Warren.
Which is fueling a new populism on both the left and the right. While still far apart, neo-populists on both sides are bending toward one another and against the establishment.
Who made the following comments? (Hint: Not Warren, and not Bernie Sanders.)
A. We “cannot be the party of fat cats, rich people, and Wall Street.”
B. “The rich and powerful, those who walk the corridors of power, are getting fat and happy…”
C. “If you come to Washington and serve in Congress, there should be a lifetime ban on lobbying.”
D. “Washington promoted moral hazard by protecting Fannie Mae and Freddie Mac, which privatized profits and socialized losses.”
E. “When you had the chance to stand up for Americans’ privacy, did you?”
F. “The people who wake up at night thinking of which new country they want to bomb, which new country they want to be involved in, they don’t like restraint. They don’t like reluctance to go to war.”
You might doubt the sincerity behind some of these statements, but they wouldn’t have been uttered if the crowds didn’t respond enthusiastically – and that’s the point. Republican populism is growing, as is the Democratic version, because the public wants it.
And it’s not only the rhetoric that’s converging. Populists on the right and left are also coming together around six principles:
1. Cut the biggest Wall Street banks down to a size where they’re no longer too big to fail. Left populists have been advocating this since the Street’s bailout now they’re being joined by populists on the right. David Camp, House Ways and Means Committee chair, recently proposed an extra 3.5 percent quarterly tax on the assets of the biggest Wall Street banks (giving them an incentive to trim down). Louisiana Republican Senator David Vitter wants to break up the big banks, as does conservative pundit George Will. “There is nothing conservative about bailing out Wall Street,” says Rand Paul.
2. Resurrect the Glass-Steagall Act, separating investment from commercial banking and thereby preventing companies from gambling with their depositors’ money. Elizabeth Warren has introduced such legislation, and John McCain co-sponsored it. Tea Partiers are strongly supportive, and critical of establishment Republicans for not getting behind it. “It is disappointing that progressive collectivists are leading the effort for a return to a law that served well for decades,” writes the Tea Party Tribune. “Of course, the establishment political class would never admit that their financial donors and patrons must hinder their unbridled trading strategies.”
3. End corporate welfare – including subsidies to big oil, big agribusiness, big pharma, Wall Street, and the Ex-Im Bank. Populists on the left have long been urging this; right-wing populists are joining in. Republican David Camp’s proposed tax reforms would kill dozens of targeted tax breaks. Says Ted Cruz: “We need to eliminate corporate welfare and crony capitalism.”
4. Stop the National Security Agency from spying on Americans. Bernie Sanders and other populists on the left have led this charge but right-wing populists are close behind. House Republican Justin Amash’s amendment, that would have defunded NSA programs engaging in bulk-data collection, garnered 111 Democrats and 94 Republicans last year, highlighting the new populist divide in both parties. Rand Paul could be channeling Sanders when he warns: “Your rights, especially your right to privacy, is under assault… if you own a cellphone, you’re under surveillance.”
5. Scale back American interventions overseas. Populists on the left have long been uncomfortable with American forays overseas. Rand Paul is leaning in the same direction. Paul also tends toward conspiratorial views about American interventionism. Shortly before he took office he was caught on video claiming that former vice president Dick Cheney pushed the Iraq War because of his ties to Halliburton.
6. Oppose trade agreements crafted by big corporations. Two decades ago Democrats and Republicans enacted the North American Free Trade Agreement. Since then populists in both parties have mounted increasing opposition to such agreements. The Trans-Pacific Partnership, drafted in secret by a handful of major corporations, is facing so strong a backlash from both Democrats and tea party Republicans that it’s nearly dead. “The Tea Party movement does not support the Trans-Pacific Partnership,” says Judson Philips, president of Tea Party Nation. “Special interest and big corporations are being given a seat at the table” while average Americans are excluded.
Left and right-wing populists remain deeply divided over the role of government. Even so, the major fault line in American politics seems to be shifting, from Democrat versus Republican, to populist versus establishment — those who think the game is rigged versus those who do the rigging.
In this month’s Republican primaries, tea partiers continue their battle against establishment Republicans. But the major test will be 2016 when both parties pick their presidential candidates.
Ted Cruz and Rand Paul are already vying to take on Republican establishment favorites Jeb Bush or Chris Christie. Elizabeth Warren says she won’t run in the Democratic primaries, presumably against Hillary Clinton, but rumors abound. Bernie Sanders hints he might.
Wall Street and big business Republicans are already signaling they’d prefer a Democratic establishment candidate over a Republican populist.
Dozens of major GOP donors, Wall Street Republicans, and corporate lobbyists have told Politico that if Jeb Bush decides against running and Chris Christie doesn’t recover politically, they’ll support Hillary Clinton. “The darkest secret in the big money world of the Republican coastal elite is that the most palatable alternative to a nominee such as Senator Ted Cruz of Texas or Senator Rand Paul of Kentucky would be Clinton,” concludes Politico.
Says a top Republican-leaning Wall Street lawyer, “it’s Rand Paul or Ted Cruz versus someone like Elizabeth Warren that would be everybody’s worst nightmare.”
Everybody on Wall Street and in corporate suites, that is. And the “nightmare” may not occur in 2016. But if current trends continue, some similar “nightmare” is likely within the decade. If the American establishment wants to remain the establishment it will need to respond to the anxiety that’s fueling the new populism rather than fight it.
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