In 2008, Wall Street backed Barack Obama. Hedge fund operators, private equity investors and mega-bank executives gave his campaign twice the amount they contributed to John McCain. Many of the financial masters of the universe saw in Obama a guy much like themselves — self-made, very bright, assertive and validated by all the right academic credentials.
Today, Alec MacGillis reports in the New Republic, Wall Street has turned against Obama with a vengeance. Hedge fund operators have given Mitt Romney four times what they’ve given Obama, MacGillis writes — and that doesn’t count their contributions to “super PACs” backing Romney and other Republican candidates. Just as notable are their assessments of Obama, which rival those of Glenn Beck at his most paranoid.
Chicago hedge fund executive Ken Griffin, who raised funds for Obama in 2008 but is now backing efforts to unseat him, told the Chicago Tribune last month that since Obama took office, the values of capitalism “are under attack. . . . This is the first time class warfare has really been embraced [by an administration] as a political tool.” Asked whether the ultra-wealthy had an inordinate influence on politics and government, Griffin responded, “I think they actually have an insufficient influence.”
Dan Loeb, a Democrat who heads a New York hedge fund, long ago turned on Obama. His 2010 letter to shareholders about the Securities and Exchange Commission’s lawsuit against Goldman Sachs prompted the New York Times headline “Why Wall St. Is Deserting Obama.” The lawsuit, for peddling as sound investments a number of mortgage-backed securities Goldman had pooled precisely because they were unsound (so that a prominent client could bet against them), struck Loeb as an outrage “designed to fracture the populace by pulling power and capital from the hands of some and putting it in the hands of others.”
Perhaps the bluntest expression of Wall Street’s discontent comes from Leon Cooperman of Omega Advisors, a onetime Obama supporter who complained to MacGillis that the president, by seeking to raise taxes on the rich, is “[expletive] on people who are successful.”
True, Obama wants them to pay higher taxes. Partners in hedge fund firms have their pay taxed at the 15 percent rate for capital gains, not at the 35 percent rate that applies to the highest salaries. Obama wants to tax their pay as if it were pay.
But there’s more to this anti-Obama animus than mere hedge-hoggery. What leaps out from the bankers’ indictments of the president, even more than their affronted amour propre, is their insularity, their complete cluelessness about how their fellow Americans see them and their effect on the U.S. economy. Who besides Wall Street’s more benighted denizens is affronted by legal action against what looks to be securities fraud? Who besides the very rich and Republican political candidates thinks the very rich don’t have enough political clout? Who believes that making Warren Buffett pay taxes at rates as high as his secretary’s constitutes defecating on the rich? (Buffett certainly doesn’t.)
As for class warfare — no one has waged it with the skill and relentlessness of Wall Street. Consider these outcomes of our real class war: From 1960 to 1984, Wall Street’s share of total U.S. corporate profits averaged 17 percent, according to economist Sameer Khatiwada of the International Institute for Labor Studies, but from 1985 to 2008, its share rose to an average of 30 percent. From 1970 to 2007, the percentage of all wages and salaries paid in the United States that went to the richest 1 percent rose from 5.1 percent to 12.4 percent. And in 2010, University of California economist Emmanuel Saez reported last month, the share of pretax income going to the wealthiest 0.01 percent reached its highest level since the IRS began recording incomes in 1913.
These transformations didn’t happen by accident. They’re the result of decades-long campaigns by Wall Street and corporate leaders to lower their tax rates; to craft a pay structure for executives that caused their incomes to soar, often at the expense of shareholders; to weaken domestic manufacturing; and to create ever more ingenious ways to market credit, which ultimately enriched bankers and nobody else. The ascent of the 1 percent was also fueled by its war on unions, which has lowered the living standards of working-class Americans while increasing their employers’ profits.
Wall Street has decimated the middle class and calls it a meritocracy. Obama won’t acknowledge that charade (at least, not sufficiently). Romney accepts it wholeheartedly. Wall Street leaders’ shift from Obama to Romney isn’t just about preserving their tax breaks and, by repealing the Dodd-Frank financial reform, bringing back high-yield deals that may imperil the broader economy. It’s also about having a president who won’t challenge the lies they tell about — and to — themselves.