Wall Street and Hillary Clinton: The risk Democrats run by embracing the "big tent"

New report shows that Wall Street is as ready for Hillary as it gets. Here's why that should make Democrats nervous

Published November 12, 2014 8:20PM (EST)

  (Reuters/Kevin Lamarque)
(Reuters/Kevin Lamarque)

It’s been a while since I checked in with my friends at Red State — so there may be some bits of trenchant analysis that I’ve missed — but from what I can tell, it looks like most pundits have responded to last week’s midterms with an unusual degree of perspective. In marked contrast with what happened after Republicans won in 2004, and after Democrats won in ’06, ’08 and ’12, there have been few declarations that Americans now lived under de facto one-party rule. The fact that turnout last Tuesday was so historically atrocious is probably a key reason. It’s hard to credit an outcome to the people’s will if they don’t show up.

We’ve had low turnout elections before, though; so that can’t be the only explanation. More influential, I’d guess, is the role currently being played by Hillary Clinton, whose impending 2016 campaign looms over the rest of American politics a bit like the monolith in Stanley Kubrick’s “2001.” Among Republicans, the specter of another President Clinton is being used to tamp-down internal division and call a truce in the GOP’s ongoing civil war. And among Democrats, her front-runner status is being used as an excuse to chalk up the midterm blowout to demographics and avoid any further introspection. 

On both sides of the aisle, in other words, the assumption that 2016 is Clinton’s to lose is so dominant that it’s causing a kind of political stasis, with both sides deciding to more or less hold steady and see what happens. But while this is probably a smart move for a Republican Party that lost in 2012 due in no small part to internal squabbling that pushed its candidate too far to the right, a new report from Politico Magazine on Clinton’s relationship with Wall Street shows that, for Democrats, the wisdom of staying the course — especially in this increasingly agitated, restive political climate — is far less certain.

Sure, there’s value in Clinton’s being able to attract a “big tent” of supporters. And from a campaign manager’s standpoint, all those Goldman Sachs donations are no doubt enticing. But where is the line that separates a diverse coalition from an incoherent one? How big can the tent get before it becomes, in the immortal words of Yogi Berra, a place so crowded that nobody goes?

These questions are never too far from the surface, at least when it comes to the Democratic Party, whose coalition over the past generation or so has been markedly more diverse than the Republican one (indeed, a more appropriate name for Democrats would probably be “Not-Republicans”). But with the Barack Obama circa 2008 post-partisan/kumbaya approach now thoroughly discredited, I think most voters are going to be uninterested in a candidate who repeats empty clichés about coming together; and I know that most Democratic voters would rather hear just about anything else. For this reason, as well as the fact that Clinton herself is a longtime D.C. fixture, the “blank screen” strategy won’t work.

Yet if we’re to take the Politico piece on Clinton and Wall Street as any guide — and, coming as it does from former banker William D. Cohan, there’s reason we shouldn’t — it looks like that’s the approach the Clinton folks have decided to take. According to Cohan, Wall Street is almost giddy over the prospect of a Clinton candidacy, describing it with the kind of vacuous (and intensely ideological) “non-ideological” phrases that they used when rhapsodizing over Obama back in 2008. “Many of the rich and powerful in the financial industry,” Cohan writes, “consider Clinton a pragmatic problem-solver not prone to populist rhetoric.” Regardless of whatever she may say to win over Democrats, Clinton’s got a pass from these masters of the universe, Cohan reports, because “[n]one of them think she really means her populism.” The Street’s support is “rock-solid” and “not anything that can be dislodged based on a few seemingly off-the-cuff comments.”

As Cohan notes, despite their recently spotty record on wise investments, the Wall Streeters’ confidence in Clinton is pretty well placed. They already know her quite well from her years in the White House — years that were characterized by a wave of financial deregulations that came at quite a price for the rest of us, though they were doubtlessly beneficial to the 1 percent. And they know her better still from her brief stint as New York’s junior senator. Clinton and Wall Street, Cohan reports, are simply comfortable around one another. They go to the same parties (in the Hamptons) and travel in the same circles (among the financial, cultural and entertainment elite). She “understands how things work,” in the words of one Cohan source, who helpfully clarifies that, on the Street at least, “she’s not a populist” is what that means.

And the affinity is not just historical or cultural, either. Cohan finds that one of the reasons Wall Street is so gung-ho about Clinton 2016 is because it believes a second Clinton presidency would lead to progress on the issues that, in its eyes, matter most — namely, “fiscal and tax reform,” which is the elite’s favored euphemisms for cutting Medicare and Social Security as well as lowering taxes on corporations. “She will be trying to govern from the center with a problem-solving bent like her husband,” says Greg Fleming, the president of Morgan Stanley Wealth and Investment Management. Going unmentioned, of course, is the fact that the problems being solved in Wall Street’s imagination by a future President Clinton are currently only a significant concern among those in the 1 percent.

As a few quotes in the piece from those within the machine make clear, the Clinton people are not unaware of the political risks associated with being seen as the candidate of Wall Street. But if the vague endorsements of “vigorous government oversight” and tweaks to the tax code that they offer in the article is the best they can come up with, they’re going to have a real issue. Voters don’t know much about policy, and they certainly don’t have strong opinions about the carried-interest loophole or financial transaction tax. What they do understand, however, is that they live in a system rigged to benefit the already powerful and wealthy, and that the rules for some people — like those Clinton hobnobbed with, according to Cohan, at a recent party for Hollywood mogul/ogre Harvey Weinstein — are different than those for the rest.

So if two years from now Democrats find themselves on the defensive, watching in horror as someone like John Kasich or Ted Cruz successfully labels Clinton as the candidate of the status quo and the 1 percent, they shouldn’t say no one saw it coming. In an era of populist anger and increasing polarization, there are downsides to having such a big tent.

By Elias Isquith

Elias Isquith is a former Salon staff writer.

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