Senator Chuck Schumer (D-NY) will wake up to a nasty surprise in the form of a four-page New York Times examination of his record vis-a-vis Wall Street regulations and the Street’s generous donations to Schumer and the Schumer-run DSCC. It’s a hit-piece, no doubt, but it exposes Schumer’s short-sightedness and parochial interests. It also raises larger questions of the Democratic Party’s future, now that they represent almost everyone that works in the financial sector…from Boston to Charlotte.
One segment in particular exposes Schumer’s culpability and avoidance of responsibility:
For Mr. Schumer, Wall Street’s crisis has been especially painful to watch. “It is horrible, just awful,” he said in the interview. “And it affects everybody.”
And he has already begun identifying those he faults for the devastation. Subprime lenders top the list, but he has lashed out with particular fury at the credit-rating industry, which he once defended but now says misled him and the investing public.
“The work at these ratings firms was severely compromised, and the companies were some of the biggest contributors to the current financial crisis [Ed note: and Schumer’s campaign],” Mr. Schumer said earlier this month in response to an S.E.C. move that same day to tighten control over the agencies. “The lesson from this is that the three major firms’ stranglehold on the ratings industry must be loosened.”
[Ed note: this is risible considering that Schumer told SEC Chairman Chris Cox at a 2006 Banking Hearing, ““They’ve implemented their [voluntary] codes of conduct. They’re making good-faith efforts.”]
Mr. Schumer has also blamed the Bush administration for its push to ease rules. “After eight years of deregulatory zeal by the Bush administration [Ed note: and Schumer], an attitude of ‘the market can do no wrong’ has led it down a short path to economic recession,” Mr. Schumer said on the Senate floor in September.
He has not assigned responsibility to himself or fellow Democrats, saying he had no way of knowing of the misdeeds going on on Wall Street. “I wish I was omniscient,” he said. “I’m not.”
[Ed note: he merely had to heed the testimony he heard in Banking Committee hearings, including from Republican SEC Chairman Chris Cox.]
The article credits Schumer with impressive fundraising ability that led to a 50% increase in Wall Street donations over the course of his time as chair of the DSCC. Yet, Schumer cannot take all the credit. Wall Street was reacting not only to the ineptness of the Republican-led administration, but to the Democratic takeover of Congress and the likelihood of a future Obama administration. They were hedging their bets and placing them where they had the best chance of paying off.
We also cannot discount the profound cultural alienation between the average base Republican voter, whose interests were so scrupulously looked after by Karl Rove, and your average Greenwich, Connecticut investment banker. Nowhere has the Republican Party lost more ground in the Bush years than in the tony suburbs of New York City and other East Coast financial centers. The New Democratic Party represents both Wall Street and the unionized autoworkers.
It’s a tension that is well-represented in the person of Chuck Schumer. It will also be represented by a host of newly-elected suburban Democrats. How will they interact with traditional urban/academic Democrats? And how will they interact with Iowa congressman Bruce Braley’s new Populist Caucus?
U.S. Rep. Bruce Braley, D-Waterloo, has sent a letter to his House colleagues asking them to become a founding member of the new populist caucus.
Braley said he is forming the group in order to renew focus on the issues of the middle class and working families.
“The middle class is the economic engine of America,” Braley wrote. “Unfortunately, the middle class has seen tough economic times lately, and it’s time for a renewed emphasis on those issues that serve to strengthen the middle class and improve the lives of working families.
Here is the Populist Caucus’ platform.
1. Fighting for working families and the middle class through the establishment of an equitable tax structure, fair wages, proper benefits, a level playing field at the negotiating table, and secure, solvent retirement plans.
2. Providing affordable, accessible, quality health care to all Americans.
3. Ensuring accessible, quality primary education for all American children, and affordable college education for all who want it.
4. Protecting consumers, so that Americans can once again have faith in the safety and effectiveness of the products they purchase.
5. Defending American competitiveness by fighting for fair trade principles.
6. Creating and retaining good-paying jobs in America.
The Populist agenda is somewhat vague, but it’s focus on Fair Trade and protecting consumers will no doubt come into conflict with the interests of people that make their living in the financial sector. The overwhelming majority of incoming Democrats (and those that lost their elections) campaigned on Fair Trade principles. Any time one political party in this country gains a large congressional majority, it opens up schisms within the caucus. Republicans no longer represent Wall Street and can no longer depend on them for contributions. At the same time, the Democratic Party has become much more adept at raising small-donor money, making them less dependent on both Wall Street and labor union cash.
The political world is undergoing profound shifts. The GOP is morphing into a poorly-funded regional-interest party that is dependent almost exclusively on social-values voters for financial support. Meanwhile, the Democratic Party is expanding and splintering at the same time. The previous split between progressives, Blue Dogs, and New Democrats is morphing into something much more complex. The emergence of Braley’s Populist Caucus is one sign of this. Will Southern Democrats gravitate away from the budget-minded Blue Dogs to the anti-Free Trade, anti-Wall Street Populists? Will urban progressives line-up at the Wall Street trough, or join with the Populists in pursuit of universal health care and college tuition relief?
And will the Republicans continue their drift away from Wall Street and towards anti-elitist, know-nothing populism?
Whatever happens, Chuck Schumer’s legacy will be complex. He combines a stunning level of success with a large dose of culpability for the economic conditions we now face.
