Fed up with Wall Street, Democrats look to the left
Source Dave Anderson
Date 13/09/19/10:11
Fed up with Wall Street, Democrats look to the left
By Harold Meyerson

The Democratic Party’s romance with Wall Street may finally be
breaking up. In the past 10 days, a diverse group of Democratic
senators scuttled Larry Summers’s candidacy for Federal Reserve chair
and New York Democrats voted for the mayoral candidate whose campaign
was an attack on Michael Bloomberg’s care and feeding of the
super-rich at the expense of the rest of the city. Former commerce
secretary (and JP Morgan Chase executive) William Daley’s surprise
withdrawal from the Illinois Democratic gubernatorial primary is one
more indication of Wall Street’s diminished sway.

Democrats have reached a watershed. After two decades in which the
party has moved leftward on social issues but has largely accepted the
financial sector’s economic preferences — for smaller government; a
greater role for markets; and reduced regulation, particularly of
finance — the abject failures of the market economy are pushing the
party leftward. The revolt against Summers was less about his
positions on today’s economic issues than his adamant opposition to
regulating derivatives during his tenure as Bill Clinton’s Treasury
secretary, when he invoked as an argument against such oversight the
dismay of the big banks at the one set of regulations that might have
staved off, or at least diminished, the Great Recession of the past
five years.

In a broader sense, Democrats’ turn against Summers signals both a
weariness and a repudiation of Rubinomics and its apostles. Ever since
he became the head of Clinton’s economic council, and then Treasury
secretary, former Goldman Sachs co-chairmanRobert Rubin has been the
party establishment’s foremost economic guru, and his proteges —
including Summers, former Treasury secretary Tim Geithner and White
House economic counselor Gene Sperling — have dominated policymaking.
During their reign, they successfully campaigned for the repeal of the
Glass-Steagall Act (which had separated commercial from investment
banking), the decision not to regulate derivatives, the trade deals
with China and Mexico that decimated U.S. manufacturing and a
post-2008 bailout that pumped more than a trillion dollars into the
banks but never compelled — or even persuaded — the banks to use those
public funds to help small businesses or homeowners facing
foreclosure. They blocked efforts to create a safer, more
consumer-friendly economy by women more prescient but less powerful
than they — Brooksley Born , who headed the Commodity Futures Trading
Commission under Clinton and sought to regulate derivatives, and
Elizabeth Warren, who conceived the Consumer Financial Protection
Bureau but was precluded from heading it.

Today, it’s Warren, now the senior senator from Massachusetts and the
party’s leading critic of Wall Street, who is riding high. So is Bill
de Blasio, the presumptive favorite to succeed Bloomberg as mayor of
New York. In his primary campaign, de Blasio excoriated Bloomberg for
helping transform what had once been a metropolis of thriving small
businesses and free higher education into a city where the gap between
the rich and everyone else has reached levels seen only in the
least-developed nations. The New York Times’ precinct breakdown of
last week’s Democratic primary shows that de Blasio ran first or
second in every one of New York’s hundreds of neighborhoods, save only
the Upper East Side between Fifth and Park Avenues and 59th and 90th
Streets — where New York City’s wealthiest live.

These events portend a growing conflict between those Democrats who
have hitched their wagons to Wall Street — among them soon-to-be New
Jersey senator Cory Booker and Chicago Mayor Rahm Emanuel (about whom
the ominously titled biography “Mayor 1 Percent” is forthcoming) — and
those, like Warren and her Senate colleagues Sherrod Brown (Ohio) and
Jeff Merkley (Ore.), who believe government’s role is in advancing the
interests of the middle class and protecting it from finance.

As Peter Beinart demonstrated in a brilliant essay last week, what
Warren & Co. have going for them is millennials’ pervasive
disenchantment with the market economics that have plunged them into a
nightmare of unemployment and undercompensation. Millennials have
suffered mightily from the withdrawal of government support for higher
education, from the offshoring of jobs and government’s failure to
directly create the jobs that might take their place. Polling shows
that they’re the one generation that overwhelmingly supports
Obamacare and a bigger government that provides more services. They
clearly have no use for Rubinomics — something that Hillary Clinton
would do well to realize should she seek to become the 2016
standard-bearer of what is fast becoming a more progressive Democratic

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