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Morning Jay: Democrats, Inc.

6:00 AM, Feb 17, 2012 • By JAY COST
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Two news stories from this week underscored the most important development in Democratic party politics in the last thirty years. First, from the Washington Free Beacon:

Politico Influence reports that House minority leader Nancy Pelosi and minority whip Steny Hoyer raised $400,000 last night at a fundraiser held at the home of Democratic lobbyists Heather and Tony Podesta. Heather Podesta runs the firm Heather Podesta and Partners.

Heather Podesta’s clients include liberal bogeymen such as the for-profit education industry and Brookfield Asset Management, the real-estate company that owns Zuccotti Park in lower Manhattan and which ultimately gave the NYPD the green light to evict the Occupy Wall Street movement from its grounds in November 2011. Pelosi is a vocal supporter of the occupiers, having once said, “God bless them.”

Second, from Bloomberg:

President Barack Obama returns to New York on March 1 for his first campaign fundraiser with investment bankers and hedge fund managers since asking Congress in his 2013 budget to increase taxes on the wealthy.

The president’s hosts include Ralph Schlosstein, chief executive officer at Evercore Partners Inc. (EVR), and his wife, Jane Hartley, co-founder of the economic and political advisory firm Observatory Group LLC, who were assured last week by Jim Messina, Obama’s campaign manager, that the president won’t demonize Wall Streetin his re-election pursuit.

The $35,800-per-person dinner at ABC Kitchen, the first of the evening’s four fundraising events, is being hosted by many of Obama’s top Wall Street donors, according to a person familiar with the matter. Sponsors include Blair W. Effron, partner and co-founder of Centerview Partners LLP; Marc Lasry, managing partner and founder of Avenue Capital Group; Mark Gallogly, a managing principal of Centerbridge Partners; James Rubin, managing director of BC Partners; Robert Wolf, UBS AG’s chairman for the Americas; and Antonio Weiss, global head of investment banking at Lazard Ltd.

The Democratic party used to be the party opposed to big business. Andrew Jackson was reviled by business elites, and William Jennings Bryan scared the living daylights out of them. Neither of those men would be caught dead asking for money from such lobbyists and bankers, who would never give them a dime, anyway!

But that is obviously no longer true. What we have instead is a party whose leaders simultaneously press the case for “fairness” while giving unfair access to wealthy donors such as these. And that has basically been the way of the world for the last 30 years; since the mid-1980s, the Democrats in Congress have usually matched or exceeded the GOP in terms of contributions from business and professional PACs.

Why has this happened? It has to do with the two sided nature of the modern Democratic party. On the one hand, the party promotes progressivism as its public-spirited governing philosophy. This is the ideology that animates the pages of The New Republic, The Nation, and well-intentioned liberals everywhere: The idea that a powerful central government can bring about social justice and true equality. But there is another side of the coin, less commented upon and much less noble: The Democratic party is also a massive patronage operation that uses the vast regulatory and redistributive powers of the federal government to attract and maintain political clients, whose loyalty stems not simply from the party’s public-spirited philosophy but also the special benefits they enjoy for being coalition members.

This is why politicians in the liberal party do so many illiberal things. Railing against “millionaires and billionaires” on one day then ponying up to them, hat in hand, on the other is one such example. Another is preening about the undue influence of the pharmaceutical industry during the 2008 campaign, and then giving them a sweetheart deal in Obamacare.

And let’s be clear, those “millionaires and billionaires” are getting something for their campaign contributions. Consider, for instance, this great article by Peter Schweizer in Reason about Warren Buffett. He’s now the Democratic party’s number one talking point in pushing for equality. It isn’t fair that he gets taxed at such a lower rate than his secretary. He doesn’t need the money! But Schweizer demonstrates that Buffett has in fact made a killing off his access to the higher-ups in the Democratic party. A modest increase in his tax rate is a small price to pay for the ability to influence public policy.

And he is no exception. As Charles Gasparino argues about the Dodd-Frank regulations:

The trade-off for all this regulation is government protection, which is what makes the crony capitalism of the modern banking business really work . . . [I]mplicit in just about every facet of the bill was that “too big to fail”—the notion that Citigroup, Bank of America, Goldman Sachs, J.P. Morgan, and Morgan Stanley are so large and intertwined in the global economy that they need to be monitored and propped up no matter how much money they lose—was here to stay.

This signals the core problem of the Democratic party: It has become the opposite of what its founders intended it to be, and indeed opposite of what it claims to be today. The party presents itself as the party of the people against the powerful, of political and economic equality for all, of true social justice. But the reality is that the party now offers special benefits, sometimes amounting to billions of taxpayer dollars, for those who contribute to its political success. 

Last week I compared the modern party to Tammany Hall, and its coziness with Wall Street is probably the most striking example of the parallel between the two. Tammany didn't win elections merely through the support of the Irish, but also by keeping its financial sponsors on Wall Street happy. So, year after year, Tammany pols would enorse the Democratic party platform, which inevitably railed against the GOP's coziness with special interests, while they themselves were cozy with those very same interests. That is the modern Democratic party in a nutshell.

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