Today, former President Bill Clinton sits smack-dab in the center of the presidential race. He not only gave the most significant and widely praised speech at the Democratic Convention, he is practically the face of the Obama campaign. In one campaign ad, Bill Clinton speaks to the camera, blasting away at Republican tax cuts for the wealthy and Wall Street deregulation. Paul Krugman excitedly proclaims Clinton as the "explainer-in-chief," and Ryan Lizza penned a long and often cited piece in the New Yorker about how Barack Obama managed to turn a tense relationship into a productive one.
Bill Clinton is a popular, beloved figure, one of the most respected in America. It's not a mystery why -- the economy did well in the late 1990s, floating on a dot-com bubble and low oil prices. But his presence, in light of the financial crisis and the repudiation of the Clinton legacy in the 2008 primary, is an incredibly odd turn of events, and neither elite journalists nor the party establishment wants to convey why.
Back in June, Clinton angered Democrats nationwide by calling for an extension of the Bush era tax cuts for the wealthy. He also spoke glowingly of Mitt Romney's "sterling business career," getting in the way of an effective line of attack by the Obama campaign. And in terms of deregulation, Bill Clinton was one of the patron saints of the crisis: pushing through the final repeal of the Glass- Act, which legalized the heretofore illegal merger of Citigroup; signing the Commodities Future Modernization Act, which fully deregulated derivatives; and reappointing bubble blower Alan Greenspan to the chairmanship of the Federal Reserve.
As "Inside Job" director Charles Ferguson put it, “There was a kind of inflection point during the five-year period between 1997 and 2003 — the late Clinton and/or early Bush administration — when all the rules just went away. You went from a period, a regime, where people did have at least some concern about going to jail, to a point where everything is legal, and derivatives couldn’t be regulated at all and nobody went to jail for anything. And looking back I would say that this period definitely started under Clinton. You absolutely cannot blame this on George W. Bush.”
Mitt Romney hasn't brought any of this up. In fact, he has strangely praised Bill Clinton for his performance at the convention. But when you look at how both men made their fortunes, perhaps this isn't strange. Romney profited from private equity, but Clinton hasn't done so poorly himself in that business line. Clinton teamed up with Tony Blair at private equity and consulting group Teneo Capital, one of whose clients was MF Global, the bankrupt broker-dealer run by former New Jersey Sen. and Goldman Sachs CEO Jon Corzine. After losing bets taken with client money, MF Global collapsed. And despite a swirl of controversy, no criminal charges will be filed against Corzine. There's no evidence that the payoff to Clinton made a difference in the Department of Justice's position, but then, it couldn't have hurt. The incentives for a prosecutor who must decide whether to go after a politically connected former senator, with financial ties to a former president, in the midst of a reelection campaign for that prosecutor's boss, are unlikely to be stacked in the direction of justice.
The story is more comprehensive than just a one-off financial relationship; Clinton has in fact done phenomenally well from the financial services industry in his post-presidential career. He received $125,000 in cash apiece from Morgan Stanley and Credit Suisse just two months after signing the bill deregulating derivatives. His speaking arrangements, a well-known conduit to funnel cash to retired politicians, has garnered him over $80 million since 2001, a substantial amount of which has come from the financial services industry he helped. And his pay, unlike most Americans', has gone up -- in 2001, he was making roughly $125,000 a speech. By 2011, he was making $175,000 a speech, with some speeches topping out at $750,000. Not bad for an hour's work.
There's more. In 2010, Clinton received a six-figure cash payment from the American Chamber of Commerce in Cairo, one of many payments he received from groups with significant policy interests before the State Department run by his spouse. He garnered cash before energy groups, health insurers and the pharmaceutical industry, and offered political advice about healthcare and the Keystone pipeline. He has strange investments in a Dubai-based fund. Last year alone, which is the latest year for which we have disclosure information, Clinton received six-figure cash payments from Goldman Sachs ($200,000), HSBC Securities ($200,000), Fidelity Investments ($175,000), TD Bank ($260,000), Itau BBA USA Securities ($175,000), privatization specialist Highstar Capital ($175,000), Jefferies and Co. ($200,000), UBS Wealth Management ($165,000 and $150,000), American Express ($250,000), TD Ameritrade ($200,000), Highland Capital ($175,000), Wells Fargo ($200,000), the Association for Financial Professionals ($175,000) and Bank of America Merrill Lynch ($200,000).
A few years ago, Clinton said, “I never had any money until I got out of the White House, you know, but I’ve done reasonably well since then.” That's $2.9 million, just in 2011, for 15 speeches. Indeed. So while Romney and Clinton are ostensible political opponents, they share more than you'd know just from press reports. The primary difference between them is not a question of fealty to finance, but that Romney made his fortune with Bain Capital before he sought office, whereas Clinton made his afterward.
Paying off former political officials isn't, of course, new. Politics simply doesn't remunerate well relative to the levels that professional elites expect, so they derive their income from other sources, usually private sources that want specific policy outcomes. What is new is that the press, party leaders and voters at large have completely hidden the actual stakes in an election. Bill Clinton can star in a television commercial bashing the deregulation of Wall Street, and then immediately collect cash from Wall Street firms whose industry he deregulated. Barack Obama can say that this election is a choice between a middle-class country and extreme inequality, even as inequality is higher under his administration than it was under George W. Bush's.
What is interesting about the current state of American culture is how people like Bill Clinton and the political class at large experience politics, versus how an increasing number of Americans experience it. For Clinton, Romney, Obama, etc., finance is just a group of highly intelligent capitalists who make the occasional mistake, and kick back some cash for good measure. They are living in a democratic structure, where their voices are heard and policy changes in response to their needs. For millions of Americans, the financial services industry is a daily terror. Forty percent of young people are now describing themselves as poor, and one out of every seven Americans is being pursued by a debt collector. Student debt loads are staggering, and the possibility of a foreclosure is real for millions of families. These Americans are living, not in a democracy, but in an authoritarian state, where they have no choice but to claw at whatever job or jobs they can get, with no access to legal, political or social rights.
This split is why the 2012 election is so empty of substance, because the concerns of the elites are addressed, and the voices of millions are simply unacknowledged. Bill Clinton offers essentially the same belief system as both Barack Obama and Mitt Romney, one in which private industry runs the government through payoffs to ex-officials, and government returns the favor through bailouts. If Americans are ever going to grapple with the power of banks over their lives, they are going to have to come to grips with the real track record of their leaders, including Bill Clinton. And it isn't pretty. And until people like Bill Clinton can be compensated in ways that aren't obviously corrupting, and their track records honestly assessed, elections will continue to be unimportant, simple popular ratification of an increasingly authoritarian creditor state.