Why the Dems' Post-Election Recipe of Getting Even Cozier with the Banks Will Lead to More Disaster
After the Democrats' drubbing in the 2014 midterm elections, there have been fervent debates about whether the Party should embrace an economic populism to tap pocketbook frustrations -- or move further to the center in the hopes of capturing more independents.
One thing the Democrats did throughout Obama's nearly six years was move closer to Wall Street -- from the economic team Obama appointed, to the administration's premature embrace of deficit reduction promoted by financial moguls, to a bailout plan that shored up the biggest banks rather than breaking them up.
It was this coziness with big finance that allowed the far-right Tea Party movement to paint Wall Street and Washington with the same brush -- and to capture much of the populist rage on display against Democrats in the 2010 midterms and once again on November 4.
So the last thing Democrats need going forward is an even closer affinity with Wall Street, right? Well, the Democrats may soon get even cozier.
The Democratic Congressional Campaign Committee is one of the critical pieces of Party leadership. The DCCC not only raises money for House candidates, but also recruits them, and decides which ones to favor. The DCCC chairman thus has substantial influence over whether the future House Democratic Caucus has a more progressive or a more pro-Wall Street cast.
With current DCCC Chair Steve Israel (D-NY) stepping down, House Democratic Leader Nancy Pelosi will shortly name a new chair. One of the people running hard for the job is Congressman Jim Himes of Greenwich, Connecticut -- hedge fund country. Rep. Himes' former job, before taking his seat in 2009, was Vice President of Goldman Sachs. Of all Democrats in the House, he is probably closest to Wall Street.
As a member of the powerful House Financial Services Committee, one of Himes' prime goals has been looking out for the interests of hedge funds, private equity companies and other shadowy parts of the financial system, as well as big banks. Himes is a prime sponsor of a bill, H.R. 1105, which would exempt hedge funds and private equity companies from key disclosure protection provisions of the Dodd-Frank Act.
Himes also co-sponsored H.R. 992, whose key sections were drafted verbatim by Citigroup. The bill amends Dodd-Frank by allowing financial firms to speculate in swaps without losing eligibility for assistance from the Federal Reserve and Federal Deposit Insurance Corporation (FDIC).
Himes, if selected, would be one hell of a face for the post-2014 Democratic Party.
A vice-chair of the House New Democrat caucus as well as finance chair (chief fundraiser) of the DCCC, Himes would be following in the unfortunate footsteps of former DCCC chair Rahm Emanuel. While head of the DCCC from 2005 to 2007, Emanuel went out of his way to recruit Wall Street-friendly Democratic House candidates, even putting a thumb on the scale in some primary fights.
Once Emanuel-approved Democrats were elected and Democrats took back the house in 2006, Emanuel made sure to enlarge the membership of the House Financial Services Committee -- to load it up with anti-regulation Democrats. This was thought to be a clever way for Democrats to raise scads of money from the financial industry. In the long struggle to enact Dodd-Frank, House Committee Chair Barney Frank had a hard time getting key reforms through his own committee because it was so stacked with Democratic allies of Wall Street.
In this respect, Emanuel was repeating a strategy pioneered by Rep. Tony Coelho of California, who chaired the DCCC from 1981 to 1987 -- namely, trade support of a big business agenda for big campaign donations. The slide of the Democratic Party to the right on economic and financial issues has many sources, of course. But at a moment when ordinary voters doubt whether Democrats still speak for them, do we really need the DCCC to double down on a Wall Street strategy?
If you think Himes is the wrong guy, another contender is Rep. Jared Polis of Denver. A tech entrepreneur, Polis is the sixth richest member of the House, according to the Center for Responsive Politics. Polis, who is openly gay, epitomizes the strategy of moving the Party left on cultural issues and center-right on financial and economic issues.
This strategy badly backfired in Colorado, where many analysts say it helped bring down incumbent Democratic senator Mark Udall. Polis was a co-sponsor of the "Race to the Top" education act promoting standardized school testing. Like other libertarian tech Democrats, Polis is a big defender of Bitcoin.
There is one clear progressive interested in the DCCC job -- Rep. Donna Edwards of Prince Georges County, Maryland. She would probably raise less money from Wall Street, but more from regular people, and Edwards would beat the bushes to recruit progressives to run for Congress.
House Democratic Leader Pelosi ascended the leadership ladder beginning in 2001, with the support of House progressives, narrowly defeating the centrist Steny Hoyer of Maryland, who had the backing of third-way types. Pelosi was a founding member of the House Progressive Caucus. She is hearing that Himes' appointment would please business Democrats and that Himes or Polis would raise a lot more cash -- but perhaps at further cost to the Party's soul and its broader electoral appeal.
Pelosi's decision will send a strong message about where the Democratic Party is heading--and will also influence who Democrats send to the House in the future.