The Rohrschach Candidacy of Hillary Clinton
by Gaius Publius
Schedule note: This will be the last piece for a few weeks from me. Writing will resume the third week of August. Happy summer, all!
It's been clear for a while that from the left, the biggest criticism of Hillary Clinton is her close relationship with holders of big money. One could argue that she may or may not have agreed with Bill Clinton's strategy of incorporating the interests of "big money" into the Democratic Party. But it's nevertheless clear that her current relationships, and those of the people around her, show a strong and current interest in maintaining the interests of wealth. More on that below.
This suspicion (on the part of some) and certainty (on the part of others) that Clinton will "take care of" her well-heeled friends while also (and sincerely) trying to mitigate the damage done to ordinary Americans — these form much of the reason the Sanders campaign is surging among Democratic voters. (Our own brief looks at Clinton's relationship with "money" are here and here and here, among other places. Or just click here and scan the list of titles.)
Now come a series of news stories that add to that larger story.
Hillary Clinton Will Not Repeal Glass-Steagall
From Robert Reich, former Clinton labor secretary, on Clinton's unwillingness to reign in Wall Street banks (my emphasis everywhere):
Hillary Clinton’s Glass-SteagallWhy does reinstating Glass-Steagall matter? Reich again:
Hillary Clinton won’t propose reinstating a bank break-up law known as the Glass-Steagall Act – at least according to Alan Blinder, an economist who has been advising Clinton’s campaign. “You’re not going to see Glass-Steagall,” Blinder said after her economic speech Monday in which she failed to mention it. Blinder said he had spoken to Clinton directly about Glass-Steagall.
This is a big mistake.
It’s a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall. Many will recall that her husband led the way to repealing Glass Steagall in 1999 at the request of the big Wall Street banks.
It’s a big mistake economically because the repeal of Glass-Steagall led directly to the 2008 Wall Street crash, and without it we’re in danger of another one.
Under the Glass-Steagall Act of 1933, banks couldn’t both gamble in the market and also take in deposits and make loans. They’d have to choose between the two.Two ideas — first that big banks are too big to be allowed to fail, so they must be bailed out, and second, that banks can gamble with government-insured customer deposits — add to this state of affairs:
“The idea is pretty simple behind this one,” Senator Elizabeth Warren said a few days ago, explaining her bill to resurrect Glass-Steagall. “If banks want to engage in high-risk trading — they can go for it, but they can’t get access to ensured deposits and put the taxpayers on the hook for that reason.”
For more than six decades after 1933, Glass-Steagall worked exactly as it was intended to. During that long interval few banks failed and no financial panic endangered the banking system.
But the big Wall Street banks weren’t content. They wanted bigger profits. They thought they could make far more money by gambling with commercial deposits. So they set out to whittle down Glass-Steagall.
Finally, in 1999, President Bill Clinton struck a deal with Republican Senator Phil Gramm to do exactly what Wall Street wanted, and repeal Glass-Steagall altogether.
What happened next? An almost exact replay of the Roaring Twenties. Once again, banks originated fraudulent loans and sold them to their customers in the form of securities. Once again, there was a huge conflict of interest that finally resulted in a banking crisis.
This time the banks were bailed out, but millions of Americans lost their savings, their jobs, even their homes.
- All banks will be allowed to continue to gamble on the riskiest of investments.
- All gambling ("investment") profit goes to the banks.
- Large gambling ("investment") losses go to taxpayers for reimbursement via FDIC deposit insurance or Fed and congressionally managed bailouts, like TARP.
Clearly the not-so-secret formula for ending the hostage relationship between the public's money and Wall Street banking is to (a) reinstate Glass-Steagall and (b) break up "too big to fail" (TBTF) banks so they can ... well, fail — when their business plan brings them to grief (because, capitalism, right?).
Hillary Clinton, according to Reich and others, will not reinstate Glass-Steagall, the first part of our solution, even though, according to Reich, "Hillary Clinton, of all people, should remember." There's a lot more in Reich's piece; it's a good informative read.
"Bernie Sanders backs big bank breakups, in contrast with Hillary Clinton"
Now let's look at the second piece of our "too big to fail" solution — break up the big banks so the public is never forced by their size to bail them out again. We have a pretty clear indication from the Clinton campaign that she would not pursue that policy either, and a clear indication from Sanders that he would.
Bernie Sanders backs big bank breakups, in contrast with Hillary ClintonI realize that the statement "you’re not going to see Glass-Steagall" is the same one that Reich uses, and is about Glass-Steagall only. Is Politico being unfair to Clinton in saying she would not back a Sanders-Warren–style breakup policy? I don't think so, since of the two "not-so-secret solutions" I listed above, reinstating Glass-Steagall is by far the milder of the two from a Wall Street standpoint.
Bernie Sanders is backing a bill to break up big banks after advisers to presidential rival Hillary Clinton made clear earlier this week she will not support reinstating the Glass-Steagall Act.
Noting that he’s long supported reimposing a firewall between investment and commercial banks, the Vermont senator said he’s officially rejoining an effort led by Sens. Elizabeth Warren (D-Mass.) and John McCain (R-Ariz.) to break up the big banks, saying, “If we are truly serious about ending too big to fail [TBTF], we have got to break up the largest financial institutions in this country.”
“Allowing commercial banks to merge with investment banks and insurance companies in 1999 was a huge mistake. It precipitated the largest taxpayer bailout in the history of the world. It caused millions of Americans to lose their jobs, homes, life savings and ability to send their kids to college,” said Sanders, who said that change in the financial world “substantially increased wealth and income inequality.”
Earlier this week, a Clinton campaign adviser told Reuters that “you’re not going to see Glass-Steagall.” Clinton was also interrupted by a heckler on Monday who challenged her to revive the depression-era policy, though she did not answer the question.
By moving quickly to reassert his support for a proposal from liberal superstar Warren, Sanders is highlighting the differences between his platform and Clinton’s more centrist [in DC and NY] positions on financial regulations, a major issue among progressives. Sanders actually cosponsored a version of the bill in 2013, well before he began challenging Clinton for the Democratic nomination, and in a press release reminded reporters of a speech he gave in 1999 as a House member.
And now the third news story in this story.
Hedge Fund Titans Choosing Hillary Clinton Over Top Republicans
It's hugely rewarding to Hillary Clinton professionally to maintain money-friendly policies like these. Independent of whether you think she's personally aligned with the interests of "big money" and "the one percent," or whether you think she's disgusted by their behavior but feels somehow forced to go along. Either way, it looks like she's taking their money and planning to advance their interests.
It looks like they think so too. About that "taking their money" part, here's Bloomberg:
Hedge Fund Titans Choosing Hillary Clinton Over Top RepublicansNote that this story merges two elements. The first, that even though Clinton speaks against income inequality (not the same as speaking against wealth inequality, by the way) ...
Hillary Clinton received donations from some of the biggest names in the hedge fund industry, including Paul Tudor Jones, even as the presidential candidate wants to boost their tax rate.
Jones, the billionaire founder of Tudor Investment Corp., Jamie Dinan, who started York Capital, and Neil Chriss, who runs Hutchin Hill Capital, each contributed the maximum $2,700 to Clinton’s bid for the White House, according to Federal Election Commission filings for the second quarter.
Clinton, who’s made closing the wealth gap the centerpiece of her campaign, lured more donations from boldface industry names than Republican candidates 16 months before the election. Hedge fund managers, their employees and family members donated at least $54,000 to Clinton, a Democrat, according to the FEC. Republicans Jeb Bush got at least $27,000, Marco Rubio took in at least $10,800 while Carly Fiorina received at least $4,200.
“Something is wrong when CEOs earn more than 300 times than what the typical American worker earns and when hedge fund managers pay a lower tax rate than truck drivers or nurses,” Clinton said in May.
The candidate’s populist rhetoric didn’t dissuade many managers from supporting her. They include Frank Brosens, co-founder of Taconic Capital Advisors, Mitchell Julis, co-founder Canyon Partners, David Shaw, the billionaire founder of D.E. Shaw & Co., BlueMountain Capital Management Managing Partner James Staley, Jake Gottlieb, who runs Visum Asset Management, and Richard Perry, who heads Perry Capital.
Bush, Rubio and Fiorina drew a smaller cohort of top hedge fund managers.
“Something is wrong when CEOs earn more than 300 times than what the typical American worker earns and when hedge fund managers pay a lower tax rate than truck drivers or nurses,”... the big money people are financing her anyway:
The candidate’s populist rhetoric didn’t dissuade many managers from supporting her.You can draw a number of conclusions about why this is happening. In that sense, the "Clinton and money" story is a kind of Rorschach test — you can see in this picture what you're looking for.
The Rorschach Candidacy
Put these stories together and ask yourself what this means to you. You could end up in a couple of places.
If you're Clinton-resigned — If you're a Clinton fan who was "ready for Warren," resigned rather than eager, you may see someone who cares about people but has to deal with "big money" to get elected. She doesn't like what many are calling "rule by the rich," but like many of her supporters, she's also resigned. The way of the world is regrettable, but the exclamation point at the end of "Jeb!" is a dagger to be avoided at all costs. No Republicans; vote Clinton anyway.
If you're Clinton-quite-hopeful — If you're an eager Clinton fan, you're much more positive. In a Clinton presidency, you may expect strong advocacy for "Black Lives Matter," maybe even with DoJ prosecutions of murdering police and corrupt departments. You may expect to see executive-mandated immigration reform with even more teeth. And you certainly would anticipate that all of the issues faced by women, from abortion rights to pay rights, will certainly find an eager and effective friend. All of this offsets whatever damage her "friends of money" bargaining may entail.
And if you're very hopeful, you're convinced that her presidency could be far to the left of the other Clinton presidency, even on money matters. After all, there's no proof yet that this hopeful analysis is wrong.
If you're Clinton-appalled — But if you see "capture by wealth" as the root of almost every evil in this country except our deep-seated racism, and especially if you see that the climate crisis will reach multiple additional tipping points and are certain a carbon-captured Clinton would be a disaster ... well, what's a Democratic primary voter to do?
I'll put that differently. The Clinton-appalled (on the left) see a candidate who's threading the progressive needle while trying not to anger her moneyed friends, or at least not undo their expectations that this "rein in the rich" stuff is just campaign talk. They see one who does care about people, but who also sees her role as confirming the current order, with better mitigation for the suffering worst among us.
They also see someone who will take us into a fossil fuel–heavy future — again with mitigation for the suffering worst, but with no loss of profit for the wealth-heavy carbon industry. For example, this is former Secretary Clinton speaking in 2013 at Hamilton College in upstate New York's Oneida County:
Late into the lecture portion of Clinton’s Oneida County appearance, she referenced a report that the U.S. in on track to surpass Russia in domestic oil-and-gas production.For the Clinton-appalled and carbon-aware, it means "we're cooked," literally, and sooner than anyone expects — because this crisis is always moving faster than anyone expects, or publicly claims to expect. (You should know that in private, a great many climate scientists are, frankly, freaking out, and not metaphorically. They know that what no one is saying is nevertheless true.)
That’s good news, Clinton said.
“What that means for viable manufacturing and industrialization in this country is enormous,” she said to the crowd of 5,800 in Hamilton’s athletic field house.
In other words, the full awareness of the damage we've handed ourselves — the wide-eyed Wile E. Coyote "nothing beneath me" moment — will likely come on a President Clinton's watch, and she and Obama will get the blame for not being more aggressive, for being too wealth-serving.
And that's just the "Clinton, money and carbon" piece of the story. The "Clinton, money and banking" piece says the next financial meltdown will also come on Clinton's watch, that the next bailout may be a "bail-in" (a bailout using depositor funds) as is being done in Europe, and in either case, the economy is screwed — but only for people who aren't good friends of "friends of money."
So what will hit first under a money-friendly (but better-than-Republican) presidency — climate or the next banking bailout? How about an aggressively pursued endless war that truly "comes home," the way European and Middle East wars have always come home? How about environmental disaster after environmental disaster caused by exploding oil trains, frack-poisoned ground water, burst pipelines, and oil spill after oil spill?
Or how about even more exported American jobs under a bipartisan (but decidedly Democratic) "trade" regime? Want to go worse? How about imported foreign contract labor being fast-tracked into the country when the deadliest of the coming trade deals, TISA, is signed by the next wealth-serving Democrat? The just-passed Fast Track law — the discussion of which Clinton's campaign wanted to "go away" — hands, to this president and the next, six years' worth of job-destroying, global investor–enabling power.
If you're this appalled, what's a primary voter to do? Avoid damaging Clinton so no Republican can win? Cheer all the wonderful things that a progressive Clinton might do? Or vote for Sanders and if he loses, walk away?
I'm hearing all three cases being made, and the voices are getting louder.
Leaving It to the Voters to Decide
You can look at the Clinton candidacy and see what you want by adjusting the foreground and background of your mental image. Is Clinton a woman who deserves much better than being trashed by the constant misogyny of the troglodyte Right? You can see that person.
Is Clinton a bright Sixties rebel who now wants a chance to do the best she can to fix a wealth-dominated world? You can see that person.
Is Clinton a person who's long bought into "rule by the rich" — rule by the class she hangs with, the class that knows better than us how to run things that matter — but thinks their regime can use some tweakage so the "most vulnerable" are protected? You can see that person too.
I guess this is why we are leaving it to voters to decide, and not to the few of us who pay early attention. Because if the voters choose wrong, they will pay the price, but at least they will have done it to themselves.
Unless there's friends-of-money mischief afoot, of course. Like this perhaps?
DNC Chair Says Candidates Must Meet 'Threshold' For Debates, Though Criteria And Dates Still UnclearKind of a Rohrschach news announcement, right? Starting with how you see Debbie Wasserman Schultz.
Democratic presidential candidates will have to meet a certain “threshold” to participate in the party’s six scheduled primary debates, Democratic National Committee Chair Debbie Wasserman Schultz said Thursday, though she did not specify which criteria, such as state or national polling, will be used to determine who qualifies.
“It’ll be a threshold that’ll be expansive and allows for the maximum inclusion of our major party candidates," Wasserman Schultz told MSNBC’s Ari Melber. She said the DNC hasn’t “quite finished formulating the details” for the debates, including specific dates, locations and media sponsors.
The lack of clarity has been frustrating to both campaigns and major TV networks, the latter of which produce the debates and need to book venues and handle logistical details well in advance.
In May, the DNC announced plans to hold six primary debates, four of which would be held in the early voting states of Iowa, New Hampshire, South Carolina and Nevada. The DNC said debates would begin in "the fall of 2015," though didn't specify when.