Heavy-hitting Wall Street political donors are withholding their money from the Democratic Party’s campaign coffers, according to a Washington Post report making the rounds on Capitol Hill today. In a political environment in which almost no group is as publicly reviled as a Wall Street executive, Democrats just scored a tremendous public relations coup. Good riddance.
The Post story from this morning reads like a campaign ad for embattled Democrats. After spending more than a year fighting for Wall Street reform, Democrats did such a good job that the bailout barons turned on them—are any Democratic strategists sorry to see that narrative emerge?
For the purposes of this post, set aside the fact that elected officials ought to answer to the public interest, rather than the narrow preferences of entrenched wealthy elites. Politics are still politics, and like it or not, money matters in elections. But the public perception of the current fundraising situation will play very well for Democrats come election season. No politician likes seeing campaign money walk out the door. But there’s one thing they hate even more than losing contributions: Losing elections. Sure, overstuffed campaign coffers make it easier to win in November. But not when the opposition can highlight those contributions as toxic money from corrupt bailouteers.
What are Democrats missing out on? Lloyd Blankfein, CEO of Goldman Sachs, the second-most-hated company in the country, has not contributed his usual $50,000 to the Democratic Party this year. Does anybody in Congress want to pose for a photo-op with Lloyd before November? Maybe give a speech explaining how betting against your own clients is a prime example of doing “God’s work”? Of course not. If I were a Democratic strategist, I’d be printing the “Goldman Sachs Hates Democrats” posters right now.
There is, however, a class of politicians from both parties who are sweating bullets as the fundraising numbers roll in. Everybody who voted against financial reform is starting to realize that they made a big mistake. Wall Street’s campaign contributions are weak overall—they’re down more for Democrats, but Republicans haven’t raised all that much, either. Our economy is still coping with an economic calamity that everyone knows was caused by banker excess and weak regulation. For all but a handful of strident reformists who believe the banking overhaul legislation does not go far enough, all of the bill’s opponents were making a naked political bet: The money I get from this vote will matter more to my electoral prospects in November than the damage to my reputation. But now it looks like that bet won’t be paying off after all. Politicians who opposed reform not only cast an unpopular vote, they won’t be getting their kickbacks, either.
But even if they did get the money, there is only so much they can do. The public outrage against banks is not unique to the progressive left. It’s a phenomenon that crosses the ideological spectrum, and has been a major motivation behind much of the Tea Party movement. Sen. Robert Bennett, R-Utah, was a down-the-line conservative who voted in favor of the bank bailout with most of his Senate Republican brethren (and most Senate Democrats). But when primary time came this year, his vote for the banks cost him his seat. Lawmakers from both parties can expect similar treatment from the general electorate this fall.
The activists who turn out the vote during midterm elections are not happy with economic policy that puts bankers and traders first, while leaving jobs and foreclosures out to twist in the wind. That dissatisfaction applies to both traditionally Republican and traditionally Democratic activists. Winning Wall Street cash by capitulating on Wall Street reform is not going to impress voters of any ideological orientation, much less the moderates who are disgusted by the bank bailouts.
Of course, the banking overhaul is unnecessarily weak. It will not prevent another financial meltdown, and it does little to realign the interests of the banking elite with those of society at large. But there’s a lesson here, too. The fact that Wall Street is doing its best to punish the Democrats right now shows how silly it is to try and curry favor with corporate interests who wreck the economy.
When you have to reform a broken industry, the executives from that industry are going to cry foul, whatever you do. The trillions of dollars in bailout money that the U.S. government funneled to Wall Street should leave no doubt in anyone’s mind that Big Finance is broken—the need for reform is as imperative a policy priority as can be imagined. Watering down the bill, adding loopholes and refusing to consider tough reforms to appease lobbyists ultimately doesn’t help much. Top executives will still be angry that you had the audacity to ask them to change something, because they spend their whole lives getting paid a fortune to do whatever they want.
Money is money. It matters in elections, and one would have to be aggressively naïve to believe otherwise. But Wall Street’s money only matters to the politicians who made the wrong choice on reform—lawmakers who gambled with the public interest, and deserve to lose. For the rest of the Democrats, Wall Street’s reluctance to fork over chests of bailout money should be seen as a political gift, not a setback.