The quote of the week belongs to EJ Dionne in his terrific column today:
If you held a contest to pick the worst thing a politician could be called at this moment, my nominee would be Wall Street Liberal.
That phrase, which seems so bizarre to those of us on the liberal side of the aisle, is unfortunately on target in a couple of different ways: first, in terms of how regular voters are perceiving Obama, and second, on how many Democratic leaders actually think.
The great tragedy of the economic policies pursued by Obama since his election is that many, many voters perceive them both as big spending liberalism and pro-Wall Street at the same time. To a lot of voters, the bailouts of the big banks and the economic stimulus package are seen as all the same thing: because they happened so close together and both cost ungodly amounts of money, the two are tied together in the perception of these voters. And this much is fair to say: Obama has simultaneously promoted (a) a bigger government role in the economy with the stimulus, health care reform, and cap and trade with (b) bailouts for the big banks without trying to break them up or push them harder on many important things. This combination has made it all too easy for working-class voters to see him as a Wall Street liberal.
The best way to dislodge that impression from voters' minds happens to coincide with the right thing to do policy-wise: be far more aggressive in taking on the big banks. Continuing to push for a strong financial products consumer safety commission and the tax Obama just proposed on the big banks are good places to start, but they should be doing so much more:
- A financial transaction tax should be imposed on every trade made by the brokers and traders on Wall Street. Europe is eager to put this in place, and many economists think this would be a good thing as it would not only raise a lot of money but would discourage reckless trading. Such a tax should be structured so that the more trades a company does, the more they are taxed, which could lead to some of the Wall Street behemoths being broken up.
- The Department of Justice anti-trust division should be far more aggressive into looking into breaking up the big banks through anti-trust law.
- Measures to reinstitute Glass-Steagall, or to use Bernie Sanders' simple fomula of breaking up companies over a certain threshold of financial concentration should be vigorously supported by this administration.
- Speaking of the Department of Justice, they and the SEC and other regulatory agencies should be far more aggressive about prosecuting control fraud, which is fraud committed by the management of these banks through deceit. When the savings and loan scandals arrived in the 1980s, control fraud prosecutors landed over 1,000 savings and loans executives in jail. With the kind of financial shenanigans that caused this economic damage, the fact that the Administration has had virtually no prosecutors is a scandal.
There are ways for Obama to shed the Wall Street liberal label, and the above suggestions are just a few places to start. The problem, though, is that too many of Obama's advisors are just the kind of Wall Street liberals that deserve the title. Tim Geithner, Larry Summers, and most of Obama's economic team, like Bob Rubin under whom they worked in the Clinton administration, are liberals in one way: they believe (to some extent) in Keynesian economics to stimulate the economy; they think poor people's programs like Head Start and food stamps should be expanded; they don't object to, expanding health insurance coverage, raisng the minimum wage, the Family and Medical Leave Act, equal pay for equal work, or affirmative action. But anything that really takes Wall Street or corporate interests head-on is verboten.
This political philosophy will doom Democrats if it is not challenged. Voters are angry with Wall Street, angry with insurance companies, outraged that wealthy special interests seem to have a stranglehold on our government. With unemployment stuck at 10%, voters are in a foul mood, and are looking to blame somebody. My view is that in November 2010 and November 2012, the choice voters will have is to blame the party in power, or to blame the true culprits of the economic maladies which have befallen us: Wall Street. I would rather have them blame Wall Street, and not associate Democrats with the financial moguls that work there.
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