Wonkbook: Will Obama occupy Wall Street?
Since its launch, Occupy Wall Street has gotten support from some high profile, and occasionally even unexpected, sympathizers. Neutral Milk Hotel's Jeff Mangum headed down to the protest to play a set. Kanye West and Russell Simmons toured Zuccotti Park. Personal-finance guru Suze Orman wrote to "public say thank you" to the protesters. Mohammed el-Erian, who leads one of the largest bond trading firms in the world, declared himself in agreement with the protester's desire to shrink the finance sector.
But all that was child's play. Kid's stuff. A march that just goes to the end of the block and back. Because it looks increasingly like Occupy Wall Street is roping in the biggest prize of all: President Obama.
My colleague Peter Wallsten reports that "President Obama and his team have decided to turn public anger at Wall Street into a central tenet of their reelection strategy." That isn't to say you'll find the president in Zuccotti Park with a sign and a sleeping bag anytime soon. But if Occupy Wall Street began lending out its organizers -- at least the ones that want to participate in the political system -- as campaign strategists, I think it's a good bet they would sound something like this: “12 months from now, as people make the decision about who to go vote for, the gut check is going to be about, ‘Who would make decisions more about helping my life than Wall Street?’ ”
But that's no protester. That's David Plouffe, the president's primary political adviser. And he is, to some degree, trying to make a virtue out of necessity. In 2008, Obama had heavy support from Wall Street. In 2012, after the passage of the Dodd-Frank financial-regulation reform bill, he doesn't. Instead, as the New York Times reported over the weekend, it's Mitt Romney who has emerged as Wall Street's darling: He's raised $1.5 million from the industry, while Obama is stuck below $300,000. The change is perhaps starkest at Goldman Sachs, which gave Obama's 2008 campaign more money than any other private employer in the country. So far, Romney has hauled in about $350,000 from the firm's employees. Obama has gotten less than $50,000.
Obama has not been nearly as tough on Wall Street as Wall Street seems to think he's been. The exception the finance industry taken to the applause lines in his occasional forays into populism and to a financial-regulation bill that works to contain blowups in their industry rather than fundamentally reshape it, is striking. But now that Wall Street has a new prince and Obama is a man in desperate search of a winning message, the president's reelection team is finding a lot to like in the chord Occupy Wall Street has struck.
1) Teachers' aid is the first piece Obama's breaking off from the jobs bill, reports Sam Youngman: "President Obama is returning to the road this week to press Congress to start passing the American Jobs Act, beginning with $35 billion for states to put teachers and first-responders to work. But White House officials said Sunday that Obama will not be sending a separate piece of legislation to Congress, referring questions about the process to Senate Majority Leader Harry Reid (D-Nev.) and House Speaker John Boehner (R-Ohio)...With the full $447 billion jobs bill suffering defeat in the Senate, Obama and his aides are moving to a second phase, publicly pushing for passage of the bill piece by piece. The first piece Obama wants is $35 billion in aid for states to prevent the laying off of or support increased hiring of teachers, police officers and fire fighters, Earnest said."
2) Mitt Romney is outraising Obama on Wall Street, report Nicholas Confessore and Griff Palmer: "Since this spring, Mr. Romney has raised $1.5 million from employees of firms like Morgan Stanley; Highbridge Capital Management, a hedge fund; and Blackstone, a private equity firm. Mr. Obama has raised just over $270,000 from firms that were among his leading sources of campaign cash in 2008. Employees of Goldman Sachs, who in the 2008 campaign gave Mr. Obama over $1 million — more than donors from any other private employer in the country — have given him about $45,000 this year. Mr. Romney has raised about $350,000 from the firm’s employees."
3) Republicans are whipping for a supercommittee deal that doesn't exist yet, report Jake Sherman and John Bresnahan: "House Republican leaders are planning to brace conservatives for another budget showdown, warning them that the product that emerges from the supercommittee is the best possible outcome of this budget fight. With the supercommittee racing toward a Nov. 23 deadline to produce $1.2 trillion in deficit reduction, Majority Whip Kevin McCarthy will begin rounding up support when the chamber returns from its week off, as GOP leaders are hoping to avoid yet another divisive internal fight over the party’s vision for spending and deficit reduction by laying out far in advance what the chamber could have to vote on...Speaker John Boehner and his GOP leadership’s message to its membership: Almost anything will be better than the so-called trigger, which contains hundreds of billions of dollars in automatic Pentagon cuts that Republicans find unpalatable."
4) "Occupy Wall Street" has gone global, reports Karla Adam: "Inspired by the Occupy Wall Street protests that began in New York, protesters here entered a second day of demonstrations Sunday as they reiterated their anger at the global financial system, corporate greed and government cutbacks. Rallies rippled across the globe on Saturday as more than 900 cities in Europe, Africa, Asia, and North America took part in the worldwide demonstration, including Washington, Toronto, Denver, and Chicago, where more than 175 people were arrested early Sunday for failing to leave a park after it closed. In cities around the world, a fraction of the protesters who joined the rallies Saturday were hunkering down for a second night of 'occupation.' It’s unclear how long protesters plan to stay, but it could be awhile: for example, according to local reports, hundreds in New Zealand are camping for the next six weeks in Auckland’s Aotea Square, while Toronto’s St. James park is now known as 'tent city central.'"
5) The White House killed the "CLASS ACT," reports Sarah Kliff: "The Obama administration has halted work on health reform’s Community Living Assistance Services and Support, or CLASS, Act after finding it too difficult to implement. There has always been concern about the CLASS program’s long-term stability. The long-term insurance program relies on voluntary enrollment. If only a small group of unhealthy people -- those who anticipate using the services -- sign up, the program could quickly destabilize. An actuarial review that Health and Human Services has just released confirms those fears: The administration could not design a long-term care program that would both hew to the health reform law -- which requires that CLASS beneficiaries receive a minimum of $50 in benefits per day -- and make the program actuarially sound."
1) Regulations don't create costs, they reallocate them, writes Robert Adler: "Anyone who insists that regulations necessarily impose new costs on society shouldn’t be taken seriously. The costs are already there, in the form of deaths and injuries -- and are often as much of a drag on our economy as any safety rule. So the real issue is who should bear the costs. For example, we recently required manufacturers to make sturdier cribs to eliminate the predictable deaths from suffocation caused when infants slip between flimsy slats and crib mattresses. In doing so, we may well have increased the costs of making cribs for companies that had not previously taken adequate safety measures. And, yes, our safety rule might increase the price of some cribs to consumers. But these are not new societal costs; they are simply costs that those manufacturers had previously offloaded on innocent, vulnerable children."
2) Bankers don't deserve anyone's gratitude, writes Paul Krugman: "The era of an ever-growing financial industry was also an era of ever-growing inequality of income and wealth. Wall Street made a large direct contribution to economic polarization, because soaring incomes in finance accounted for a significant fraction of the rising share of the top 1 percent (and the top 0.1 percent, which accounts for most of the top 1 percent’s gains) in the nation’s income...All of this was supposed to be justified by results: the paychecks of the wizards of Wall Street were appropriate, we were told, because of the wonderful things they did. Somehow, however, that wonderfulness failed to trickle down to the rest of the nation -- and that was true even before the crisis. Median family income, adjusted for inflation, grew only about a fifth as much between 1980 and 2007 as it did in the generation following World War II."
3) Herman Cain's business record isn't encouraging, writes Steven Pearlstein: "If Cain is the perfect Republican candidate for 2012, then Godfather’s Pizza is the perfect metaphor for the winner-take-all economy envisioned by today’s uncompassionate conservatives: a highly-leveraged management buyout that made fortunes for top executives and big franchise owners by closing stores, hiring mostly minimum-wage employees with no health or retirement benefits, and relying on slick TV ads to peddle an unhealthy and mediocre product...Economics, alas, has never been Cain’s best subject, going back to the health-care debate of the 1990s. According to Hermanomics, if he and all his pizza parlor competitors were forced to offer and help pay for health insurance for all their employees, then the only way they could stay in business would be to lay people off...If they are busy taking orders and making and delivering pizza, then laying them off isn’t really a particularly effective business strategy."
4) Equality helps economies grow, writes Nicholas Kristof: "In his important new book, 'The Darwin Economy,' Robert H. Frank of Cornell University cites a study showing that among 65 industrial nations, the more unequal ones experience slower growth on average. Likewise, individual countries grow more rapidly in periods when incomes are more equal, and slow down when incomes are skewed. That’s certainly true of the United States. We enjoyed considerable equality from the 1940s through the 1970s, and growth was strong. Since then inequality has surged, and growth has slowed. One reason may be that inequality is linked to financial distress and financial crises. There is mounting evidence that inequality leads to bankruptcies and to financial panics. 'The recent global economic crisis, with its roots in U.S. financial markets, may have resulted, in part at least, from the increase in inequality,' Andrew G. Berg and Jonathan D. Ostry of the International Monetary Fund wrote last month."
5) As long as there have been recessions, there have been calls for infrastructure spending, writes Robert Shiller: "In every depression the nation has faced, there have been proposals for the government to do just this: increase spending on public improvements to create jobs for the unemployed. An article in The St. Louis Post-Dispatch, written in 1877, during the 1873-79 depression, argued that the government could create a great many infrastructure jobs...An article in The New York Times, written in 1893, during the 1893-97 depression, described public improvements to relieve unemployment and said there were plenty of things that could be done to create jobs...But neither of those proposals got very far back then, because either substantial tax increases or substantial debt increases were politically unacceptable...It was not until the Great Depression of the 1930s that financing infrastructure programs through serious deficit spending was prominently advocated."
Live interlude: The National play "Slow Show."
Got tips, additions, or comments? E-mail me.
Want Wonkbook delivered to your inbox or mobile device? Subscribe!
Still to come: European leaders say they'll have a plan by week's end; some states are trying to take health reform even further; Rick Perry's resorted to military techniques to fight Mexican cartels; Obama's stuck between allies on the Keystone pipeline; and a baby thinks a magazine is a broken iPad.
European leaders say they'll have a rescue plan by Sunday, report Charles Forelle and Sudeep Reddy: "Top European officials this weekend vowed to unveil a sweeping euro-zone rescue plan by Oct. 23--setting the stage for one of the most critical weeks of the bloc's nearly two-year-old debt crisis. The deadline heaps pressure on euro-zone members to deliver a grand plan that would get them in front of their problems they have perennially been behind. But hurdles remain--among them the details of a new Greek bailout--and clearing them is likely to take weeks, not days...Finance ministers and central bankers of the Group of 20 industrial and developing economies, after concluding their gathering here Saturday, said they expected an Oct. 23 meeting of European leaders 'to decisively address the current challenges through a comprehensive plan.'"
Regulators are split over the Volcker rule, reports Ben Protess: "Regulators have faced a barrage of complaints from lawmakers and financial industry lobbyists in their 14-month-long quest to constrain risky trading on Wall Street, an effort known as the Volcker Rule. Now, as regulators begin a push to produce a final draft of the rule, they face hurdles from an unexpected group: themselves. Though several federal agencies agreed last week to propose the initial version of the Volcker Rule, they are divided over some of its crucial details. The Federal Deposit Insurance Corporation, for example, has pushed for tough language that would require bank executives to vouch for their compliance with the Volcker Rule -- a measure that the Office of the Comptroller of the Currency has been fiercely resisting, say people close to the regulators."
Herman Cain is dismissing criticisms of his "9-9-9" plan, report Lisa Rein and Matthew DeLong: "Republican presidential candidate Herman Cain acknowledged Sunday that some Americans would see a tax increase under his '9-9-9' plan, but insisted that 'most people will pay less' under his proposal to overhaul of the country’s tax code...He dismissed a Washington Post report citing economists who say the plan would hurt many poor and middle-class families because many of them pay little or no taxes under the current code. 'The people who spend more money on new goods' would see their taxes rise under his plan, Cain said, but the elderly would see their taxes fall. Many retirees receive income from investments, and the 'tax on dividends and tax on income generated from investments, you only pay once,' he said."
The supercommittee's co-chairs are hitting it off, report Marin Cogan and John Bresnahan: "Ror all the pessimism about dealmaking, lawmakers and staff working on the supercommittee express wonderment at how Murray and Hensarling are getting along, saying it makes their chance at getting a deal more likely. But the history of fast friends with admirable compromises that failed to pass congressional muster -- like McCain-Kennedy or Simpson-Bowles -- still lingers in the hive mind of Capitol Hill, making the Murray-Hensarling bond that much more important in the coming weeks...Hensarling and Murray insist that behind closed doors, they’ve found a few points of commonality on which to build a relationship. 'On a personal and professional level, we really have a great relationship in trying to move this thing along...' Hensarling said."
Globalization has losers, writes Steven Rattner: "We need to reverse the decline in incomes, and this requires a more thoughtful approach than the pervasive, politically attractive happy talk nostalgically centered on restoring lost manufacturing jobs. So let’s start by acknowledging that just as occurred decades ago with agriculture, the declining role in our economy of manufacturing, which over the last half-century is down from 32 percent of the work force to 9 percent, will continue...Instead, we should follow the example of successful high-wage exporters in concentrating on products where we have an advantage, as Germany has done with products like sophisticated machine tools. While America still leads in sectors like defense and aviation, our greatest strength, and a source of high-paying jobs, lies in service industries with high intellectual content, like education, entertainment, digital media, and yes, even financial services."
Ben Bernanke can't really do much more for the economy, writes Edward Luce: "Mr Bernanke faces a much more complex quandary. It may even be insoluble - at least to a central bank. Interest rates are already zero. Two rounds of quantitative easing have failed to reverse the trend towards slower growth. And nobody, including Mr Bernanke, believes Operation Twist, which was announced in September, will make a big difference...Even if the Fed took the hazardous step of setting a higher inflation target - the monetary equivalent of the nuclear option - it is unclear it would work. Were inflation to outstrip wage growth, it could have the perverse effect of shrinking demand. Boosting consumption is hard when consumers are trying to pay off historically high debt On the other hand, if it worked and expectations of higher inflation led to greater spending now, the move could cause serious damage to the Fed’s credibility."
Adorable children living in the future interlude: A baby thinks a magazine is a broken iPad.
Some states are trying to take health reform even further, reports Sarah Kliff: "As far as health-reform boosters go, Oregon Gov. John Kitzhaber is among the most stalwart...But at the same time, the health-care law puts Kitzhaber (D) in a bind. This year, Oregon passed its own plan, which starts with changing how it pays doctors and eventually ends with allowing public employees to enroll in Medicaid, the federal insurance program for low-income Americans. There’s just one big obstacle: What Oregon wants to do would require the Obama administration to waive integral pillars of its signature legislative accomplishment...Kitzhaber isn’t alone. A handful of states are pursuing health measures that go far beyond the Obama administration’s signature legislative accomplishment, the Affordable Care Act...The waivers become available in 2017, three years after most of the law takes effect."
The CLASS Act's failure makes the case for the individual mandate, writes Jonathan Cohn: "The sustainability of CLASS Act would not have been in such question if everybody had to sign up for it. In other words, if long-term care insurance were subject to an individual mandate, old and sick people would not have been the only people enrolling...We know conservatives don’t like universal health insurance if it means government coverage. We know conservatives don’t like universal health insurance if it means a private coverage with a mandate. And, based on their reaction to CLASS, we know conservatives don’t like universal health insurance if it means a private coverage without a mandate.But if they don’t like any of those options, what’s left? Could it be that conservatives just don’t like universal health insurance at all? That they simply don't believe it's possible or worthwhile to make sure everybody can pay their medical bills, the way every other developed country does?"
Rick Perry is using military methods to tackle Texas' Mexican cartel problem, reports William Booth: "A little before dawn on a sticky summer night in June, one of Texas Gov. Rick Perry’s Ranger Reconnaissance Teams was running a clandestine operation along the Rio Grande when its surveillance squad came across a Dodge Durango pickup truck loaded with bales of Mexican marijuana...In minutes, the traffickers had ditched the truck in the muddy water and were rafting the dope back to Mexico. Then the shooting started. Alone among his Republican rivals running for president, the Texas governor has a small army at his disposal. Over the past three years, he has deployed it along his southern flank in a secretive, military-style campaign that his supporters deem absolutely necessary and successful and that his critics call an overzealous, expensive and mostly ineffective political stunt."
The Supreme Court is under fire from all sides, reports Robert Barnes: "Newt Gingrich says the Supreme Court is so far off base that its decisions would be practically non grata in his White House. 'I would instruct the national security official in a Gingrich administration to ignore the Supreme Court on issues of national security,' he told the conservatives gathering at the Values Voters Summit. At the opposite end of the political spectrum, the liberal Alliance for Justice last week excoriated the 'Corporate Court' for its decisions upholding big business’ increasing use of arbitration to settle disputes with consumers...And Gallup has announced that only 46 percent of Americans approve of the institution, a drop of 5 percentage points in the past year and 15 points in the past two years...Somewhat surprisingly for a court that is moving to the right and where Republican appointees hold sway, the heavy fire is coming from those who want the GOP nomination."
Parliamentary systems do better in crises, writes F.H. Buckley: "Standard & Poor's said that the budget deal to which Republicans and Democrats had agreed wasn't sufficient to resolve the public debt problem. The two political parties had agreed to raise the debt ceiling, but that simply didn't do the job. In addition, the rating agency didn't hold up much hope for future cures, given the gridlock in government which the negotiations revealed. The problem was the separation of powers between branches of government in the U.S. Constitution. Had the delegates to the Philadelphia Convention adhered to their initial plans for a parliamentary system, without a separation of powers, we wouldn't have seen the gridlock, and very likely would have had a budget that satisfied all of the rating agencies."
Government aid is essential for strong families, writes EJ Dionne: "Liberals should acknowledge, as Obama has, that strengthening the family is vital to economic justice. Conservatives should acknowledge that economic justice is vital to strengthening families. For example: Our national policies on sick leave and family leave are among the most anti-family in the developed world. When faced with a choice between the needs of the family and the needs of employers, we nearly always tilt toward employers. Western European nations, influenced by both pro-family Christian Democrats and pro-labor Social Democrats, have done far more to make work compatible with family life. Conservatives often say that tax policies should be more helpful to families raising children. I agree. But this can’t be yet another excuse for cutting taxes on the wealthy."
Role reversal interlude: The world from the point of view of a pug.
Obama's allies are at odds over the Keystone pipeline, report Juliet Eilperin and Steven Mufson: "The Keystone permit decision has landed literally and figuratively on the White House’s doorstep. Several key union allies and the Canadian government are pitted against environmental and youth activists who are threatening to turn Keystone into a campaign issue for President Obama...In September 2010, four unions -- the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada; the Laborers International Union of North America; the Teamsters; and the International Union of Operating Engineers -- reached a tentative project labor agreement with TransCanada to build the pipeline, which is now finalized. They say the project will directly generate as many as 20,000 high-wage jobs for their members."
Rick Perry has a plan to boost oil drilling, reports Patrick O'Connor: "Texas Gov. Rick Perry sought to reinvigorate his presidential bid Friday by outlining a plan to boost domestic energy production, a proposal he predicts would create more than a million jobs. In his first major policy address since joining the race in August, Mr. Perry called for circumventing Congress to roll back environmental regulations, expand domestic oil and gas production and end a broad swath of incentive programs for energy production. The Texas governor, speaking to workers clad in hard hats on the floor of a Pittsburgh-area steel mill, unveiled the proposal as he sought to rebound from missteps and debate performances that resulted in eroding poll numbers and the loss of his front-runner status. The latest Wall Street Journal/NBC News poll showed Mr. Perry's support has slipped 22 percentage points since the end of August, from 38% to 16% at the beginning of October."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.