With a little over a month to go before the US Presidential election, Obama seems to have moved into a consistent 4 or 5 point lead over McCain in the national opinion polls – a lead which may increase after McCain’s lacklustre performance during the current crisis over the Wall Street bail-out.
Yet given the economic crisis and an unpopular war, Obama’s lead is narrower and softer than you might expect. Obama is doing well amongst college educated voters but is still struggling to connect with white working class Americans, especially women: the so-called ‘Wal Mart moms’. McCain is narrowly ahead in some swing states with significant numbers of these voters, for example Ohio.
Obama’s race is a factor, but only part of the explanation. It’s easy to dismiss US working-class support for the Republicans as cultural backwardness. Or as Obama suggested in an unguarded moment, that working class voters ‘cling to guns and religion’ for comfort in a rapidly changing world.
Perhaps there’s some truth in that, but it’s hardly the whole story. Most voters want politicians who represent their interests. Working class Americans are no different in this respect. As I predicted in these pages in April, and as the events of this week have confirmed, this election will be won by the party which can best present itself as standing up to the plutocrats on Wall Street. But can working class voters be confident that the Democratic Party is the party of Main Street? Over the last 20 years, some sections of the party of Franklin Roosevelt have tried to sell its soul to high finance.
How did this happen? In a process mirrored in the Labour Party in the UK, Democrats in the past decade have increasingly colluded with Wall Street in return for financial backing – to such an extent that many prominent Democrats have become more intertwined with Wall Street than the Republicans. For some Democrats this was a deliberate strategy. In his 2000 book Bull Run, Democratic writer Daniel Gross argued that northeastern finance was realigning towards the Democrats, and that the party should attempt to construct a Presidential majority coalition around New York and other money-centre states, underpinned by financial backing from the big finance houses. “The Democrats” Gross argued, “can be the party of Main Street and Wall Street, of the rich and the poor”
The “Presidential majority coalition” proved somewhat elusive, but the financial sector certainly became the Democratic party’s biggest funder. In 2004 the hedge fund industry gave 71 per cent of its political contributions to the Democrats; in 2006, 69 per cent. Leading Wall Street executives such as Jamie Dimon at JP Morgan Chase became prominent supporters of Hilary Clinton.
Wall Street’s comfort level with the Democrats had already grown during the 1990s, as Bill Clinton embraced the rising stock market and supported deregulation such as the 1999 repeal of the Glass-Steagall Act, the progressive New Deal legislation that mandated separation of commercial and investment banking in order to protect depositors from the hazards of speculation. The relationship became even closer in the Bush years, to the anger of many traditional Democrats. As former Democratic Labor Secretary Robert Reich pointed out in 2007: “You might think that Democrats would do something about the anomaly in the tax code that treats the earnings of private equity and hedge fund managers as capital gains rather than ordinary income, and thereby taxes them at 15% – lower than the tax rate faced by middle class Americans. But Senate Democrats recently backed off a proposal to do just that. Why? It turns out that the Dems are getting more campaign contributions from hedge funds than Republicans are getting. They don’t want to bite the hands that feed”.
The Democrat love-in with Wall Street may have seemed politically savvy in a rising stock market when hedge fund dollars were flowing into party coffers. It dosen’t seem so clever now. In an election campaign dominated by voter disgust at Wall Street excess, the decade-long alliance between the Democrats and the financial sector may be one reason why working class voters are uncertain of their political loyalties.
McCain and Palin, of course, have been trying to seize the populist mantle. At the Republican convention Palin introduced her husband as a “proud member of the United Steelworkers Union” and boasted (rather misleadingly) about how she pushed through a windfall tax on big oil as governor of Alaska.
Clearly this faux populism is rhetorical not real – the actual Republican record on taxation, health care and union rights leaves no doubt about their loyalties – but the Democrats’ dalliance with big money has muddied the waters. If you’re a working class voter and both parties seem in hoc to the same wealthy constituency, perhaps you don’t bother to vote at all. Or you might end up voting for the ticket which just looks and sounds more authentically working class – McCain with his blunt speaking and Palin with her union husband and pregnant teenage daughter.
For the Republicans to pose as the working class party is shameless hypocrisy, but the Democrats really have only themselves to blame. As the investment mogul Warren Buffett said not long ago, the class war is alive and well in the USA, and right now the rich are winning. Whose side are the Democrats on? Are they the party of Wall Street or the party of Roosevelt? After this week, let’s hope nobody has to wonder about the answer to that question ever again.
Richard Scorer is a Labour Parliamentary candidate
Categorised in: Article
This post was written by Richard Scorer