Democrats had the leverage to nix a deal that opens the door to more Wall Street bailouts, but they caved in to Republican blackmail.
Progressives lost the battle over the budget last night because President Obama and a minority of Democrats took the side of Wall Street. It is the first of many losses we will see in the next two years as Republicans relentlessly pursue their corporate agenda. The bigger question is whether progressives will lose the war in the Democratic Party.
Blowing up this budget deal should have been easy for Democrats. They were handed a perfect message: the Republicans are willing to shut down the government so they can bail out Wall Street the next time it wrecks the economy.
Democratic votes were needed because a group of 67 right-wing Republicans opposed the bill on the grounds that it did not go far enough in opposing the president’s executive order on immigration. The Republican split gave Democrats the leverage to demand that the bank bail-out provision be stripped from the bill.
But with President Obama twisting enough Democratic arms (57 in total) to give in to the Wall Street-engineered Republican blackmail, that powerful, winning message was diluted.
Democratic negotiators also agreed to the deal to repeal a provision of the Dodd-Frank law that prevents government bailouts of banks who engage in a form of risky trading. Their argument was “Republicans made us do it; it’s the best we could do.” But of course, with all the Wall Street money going to Democrats, that’s a convenient excuse. They can turn around and wink at the lobbyists who deliver Wall Street campaign contributions, playing a game in which the dupes are the American people.
The bailout of banks and Wall Street speculators remains deeply and broadly unpopular. It is an issue that generates anger among grassroots activists on the left and the right. For Americans who see Wall Street billionaires getting richer by gaming the system while families struggle to meet the basics, there could be no clearer contrast.
Progressive Democrats fought back. In a rapid-fire display of the energy and nimbleness of progressive organizations and champions in Congress, the deal was quickly exposed.
Senator Elizabeth Warren laid it out clearly on the Senate floor: “We put this rule in place because people of all political persuasions were disgusted at the idea of future bailouts… Republicans in the House of Representatives are threatening to shut down the government if they don’t get a chance to repeal it.”
In the House, progressive Democrats joined the call. California Rep. Maxine Waters, the senior Democrat on the House Financial Services Committee, said, “We don’t like lobbying that is being done by the president or anybody else that would allow us to support a bill that … would give a big gift to Wall Street and the bankers who caused this country to almost go into a depression.”
The vigorous pushback from progressive groups and their allies in Congress convinced Minority Leader Nancy Pelosi to break with the White House. Pelosi said that they were being “blackmailed” to vote for the bill, which she called “a moral hazard.” Still, Pelosi did not use her considerable powers of persuasion to get fellow Democrats to vote no.
For the next two years we will see Republicans do everything they can to deliver for corporate America at the expense of the American people. The only question is whether Democrats will enable them. Will President Obama continue to make compromise after compromise? Will Democrats in the Senate use the filibuster to block the Republican attack on working families? Will enough Democrats in the House keep coming to the rescue of a divided Republican Party?
We will see the same fight in the Democratic primary for president. Will Hillary Clinton break from the Wall Street wing of the party with which she aligned as a senator from New York? Will her challengers make the same sharp contrast that Senator Warren did, when she began her speech on the Senate floor by asking, “Who does Congress work for? Does it work for the millionaires, the billionaires, the giant companies with their armies of lobbyists or lawyers? Or does it work for all the people?”
As I wrote after the election last month, Democrats who used a populist economic message – who named the corporate villains and declared that “we all do better when we all do better” – won. Democrats who ran to the mushy middle lost.
But this is not just a fight for the soul of the Democratic Party, it’s a fight for our very democracy. As Justice Louis Brandeis said almost a century ago, “We may have a democracy or we may have great wealth concentrated in the hands of a few, but we cannot have both.”
Americans are yearning for champions who stand up for them. If we have any hope of changing the direction of our economy from enriching the rich at the expense of the rest of us and of recapturing our democracy from the CEO campaign contributors and Wall Street bag men, it will be because progressive forces and elected champions stand up not just to Republicans but to President Obama and any Democrat who takes the side of Wall Street against America’s working families.
It is clear that progressives and the American people will lose battle after battle in Congress over the next two years. The real question is whether we will lose the war.
Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.