The story behind Wall Street support for Grand Old Party
You would think the barons of Wall Street would be giving a stiff arm to Republican Party solicitations for campaign funds after the way the Grand Old Party has been talking about them the last two years.
In their time of greatest need, the traditional party of the moneyed classes turned on its benefactors, denouncing bank bailouts and insisting that General Motors, Chrysler and AIG be allowed to fail. It looked like the party of J.P. Morgan and his ilk had morphed into a rowdy band of pitch-fork populists.
Yet the financial services companies gave 55 percent of $18.5 million in donations to Republicans in the first half of 2010, according to the Center for Responsive Politics. In the same period last year, they gave 65 percent of their donations to Democrats.
Why would they do this? Are they even more cynical than we suspect, or do they just have better BS detectors than the rest of us?
They are probably more cynical than we suspect, and they certainly have better BS detectors. The Wall Street boys know that what a congressman or senator says before a bank of microphones is basically just playing to the semi-informed masses. What really matters is the crafting of details in legislation behind closed doors, and the final vote on key provisions late at night. And Wall Street always pays up for services rendered.
Some of Wall Street’s largess for the GOP is probably nostalgia for the Bush Administration, where the Justice Department seemed to forget we have antitrust laws on the books and the Securities and Exchange Commission abdicated its responsibility to regulate the financial services industry.
To be sure, Bush made the mistake of appointing William Donaldson chairman of SEC, who promptly cracked down on some of the bigger abuses on Wall Street. But after the likes of the Business Roundtable and U.S. Chamber of Commerce complained enough, Bush replaced him with Christopher Cox, an industry sock puppet if ever there was one.
But as they are wont to say at the intersection of Broad and Wall in lower Manhattan, what have you done for me lately? Plenty, thanks in part to the GOP’s willingness to force a filibuster in the Senate if it doesn’t get its way.
The Republicans fought hard to weaken the consumer finance reform bill, particularly the parts that require lenders to state in clear terms what a loan will actually cost you, and, in the case of credit cards, the consequences of carrying a balance every month. The legislation even forces credit card companies to give you a reasonable amount of time to pay the bill after you get your statement.
Sen. Richard Shelby, the ranking Republican on the Senate Finance Committee who led the pitch fork brigade when the bailouts were being enacted two years ago, said the provisions will restrict the availability of credit to many Americans. What he really meant is that financial institutions won’t be able to charge low-income borrowers interest rates that loan sharks can only dream about.
But the GOP was able to get an exemption from the new loan rules for one of Rep. John Boehner’s biggest contributors, the auto dealers. Dealers are still free to make the financing process as confusing as they like, and to steer you into a high interest loan that will generate a bigger commission for the dealer. Think of your auto dealer as the new mortgage broker.
They’ve continued their 20-year assault on the blue collar middle class by blocking rules that would make it easier for workers to unionize, and they did their best to stop the latest extension of unemployment benefits. If we are to believe some Republicans, the jobless numbers remain high because many people are leading the good life on their unemployment insurance.
The Republicans are also digging in their heels against the Obama administration proposal to let the income tax rate for the wealthiest Americans – those making over $250,000 a year – rise from 35 percent to 39.6 percent. (Of course, nobody who’s rich actually pays those rates. According to the IRS, the 100 largest income earners in 2007 paid an average income tax of 17 percent.)
The GOP argues raising the taxes of the rich discourages investment and job creation. They don’t bother to mention that the tax cuts did little to stimulate job growth when they were enacted in 2001, and that the wealthy get most of their income from dividends and interest, not from putting money to work. And as Warren Buffet likes to point out, the Bush tax cuts gave him an effective tax rate that is lower than his secretary’s.
Little has been said by Republicans about what they will do if they get control of one or both houses of Congress, but here are two things you can count on: Cut-off funding for the health care legislation – bad news for the 40 million Americans who lack health insurance – and an attempt to privatize at least some of your Social Security contributions.
We know how well privatization would have worked in the last three years if Bush had got his way on the issue. Being Republicans, you can bet the money will have to be funneled into mutual funds or other investment vehicles that will charge you high fees for vanilla investment advice.
There’s been a lot of talk about how Republicans are now on the side of the little guy, the prudent Americans who resent the bailout of the imprudent, and how the malefactors of wealth are going to be punished. But Wall Street knows better.
George Boardman, a resident of Lake of the Pines, owns stock in one of the beneficiaries of the bank bailout.
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