By Katrina vanden Heuvel
Tuesday, February 9, 2010; 10:34 AM
Speaking to the Tea Party convention in Tennessee, Sarah Palin roused the upscale crowd with a dose of white-hot populism: "While people on Main Street look for jobs, people on Wall Street, they're collecting billions and billions in your bailout bonuses." She suggested that top bankers should be fired or prosecuted. "Everyday Americans are wondering," she declaimed, "Where are the consequences for helping to get us into this worst economic situation since the Great Depression?"
But Palin's populist formula hasn't caught on with congressional Republicans. Instead of trying to stir outrage on Main Street, they're focused on trying to rustle up cash and allegiances on Wall Street. The pitch: Wall Street should be experiencing "buyer's remorse" about Obama now that he's trying to tax and break up the big banks. And if you're ticked off by Obama's (mild) reforms and (albeit, occasional) upbraiding of "fat cat" bankers, then you should buy Republican. The Wall Street Journal reports that House Minority Leader John Boehner scurried to meet with J.P. Morgan chief executive James Dimon, a major Obama donor, stressing that Republicans opposed the president's moves to control executive pay and impose new banking regulations. Meanwhile, John Cornyn, the head of the committee in charge of raising dough for Republican Senate candidates, has been making regular trips to New York. "I just don't know how long you can expect people to contribute money to a political party whose main plank of their platform is to punish you," Cornyn told the New York Times.
It's clear that a financial-industry overhaul -- regulating and shrinking the big banks so that they don't go back to making risky bets with the confidence that taxpayers will cover their losses -- is necessary. But not one House Republican voted for financial reform in December. And bipartisan Senate negotiations on reform just broke apart over Republican opposition to creating a Consumer Financial Protection Agency, or any quasi-independent agency with the power to protect consumers from the abuses, predatory lending and frauds of the financial community. Not surprisingly, Sen. Richard Shelby, ranking Republican of the Banking Committee, has been raking in Wall Street contributions.
Republicans are demonstrating they'll go for the money -- national interest, be damned. And that attitude extends beyond financial reform. Take the Republican response to Obama's proposed overhaul of federal student loans. The president wants to move from subsidized private loans that the government guarantees anyway to direct lending -- a switch that could save an estimated $80 billion over 10 years. The savings from ending this classic special-interest rip-off could in turn be used to expand the number of Pell Grants to help poor students go to college and for tax credits to help working families pay for tuition. It is, as the president says, a "no-brainer." But there's enough lobbying money up against student-loan reform -- Sallie Mae spent $3.48 million on lobbying in 2009 -- that it apparently made Republicans think twice. When the House version of the bill went up for a vote last fall, all of six Republicans supported it.
Of course, courtship rituals between politicians and big money aren't new to Washington. And Republicans aren't the only ones playing the game. In fact, the banks' high-powered Democratic lobbyists are on the hunt for Democratic senators who will help kill student loan reform altogether.
The natural impulse for too many Democrats heading into a tough election year will be to compete for Wall Street money by diluting financial, student-loan and health-care reforms. That's why progressives need to move on three fronts. Expose how Wall Street interests and bipartisan lobbyists block reforms. Redouble efforts to pass the Fair Elections Now Act, so small "d" democratic public financing counters special-interest money. And challenge the Supreme Court's recent Citizens United ruling with a constitutional amendment strategy.
Democrats should also give Republicans plenty of room to do themselves in. By openly declaring themselves for sale to Wall Street, Republicans are displaying the kind of crony capitalism that drives Americans to form Tea Parties.
Ironically, this doesn't seem to bother Sarah Palin. Faced with a choice between subsidizing the banks and poor kids, she went with the banks, warning the Tea Party activists that the Obama administration is "taking over" everything, including "health care, student loans." With views like that, she won't have any trouble getting speaking gigs at $100,000 a shot.
The writer is editor of the Nation and will be writing a weekly column for The Post.