I used to drink the Kool-Aid. I was in the banking industry for the early
part of my career. I always thought that the restrictions that prevented
investment banks and commercial banks from operating under the same roof were
arcane and unnecessary. With the benefit
of hindsight, I can see that I was wrong about that.
The Glass-Steagall Act was passed during the Great
Depression (1933) with the intention of preventing government insured
depository institutions (banks!) from taking too much risk at taxpayers’
expense. The elimination of
Glass-Steagall approved by a Republican Congress with enough Democrats to
provide a veto proof majority and signed by President Clinton in 1999 was, in
the minds of many, on the critical path to the financial crisis in 2007.
The champion of re-implementing those safeguards was
Elizabeth Warren who, in 2010, was Sen. Harry Reid’s appointee to the
Congressional Oversight Panel on TARP.
But, she was not alone. Sen. John
McCain (R-AZ) co-sponsored legislation to restore those regulations as did the
bi-partisan duo of Sherrod Brown (D-OH) and David Vitter (R-LA) in the
House. In the end, we had to settle for
the Volcker Rule that bans banks from using depositors’ funds for proprietary
trading.
The Tea Party, a movement that has libertarianism roots,
nevertheless agrees the restoration of the Glass-Steagall prohibitions would be
productive. The Tea Party Tribune recently featured a banner headline on the subject that
reads “Bring Back Glass-Steagall” and mirrors Warren’s opposition to the Too
Big To Fail (TBTF) banks.
Now a US Senator from Massachusetts, Warren has attracted
attention from the liberal wing of the Democratic Party, those who think of President
Obama as a centrist.
How was a former professor and government bureaucrat able to
leverage her limited experience into a Senate seat on her first run at
political office?
She did so by tapping into the anger that Americans feel
across the political spectrum.
Sen. Elizabeth Warren (D-MA) |
There seems to be alignment between the origins of the
support for both Sen. Warren (and what is now being called the “Warren Wing” of
her party) and the Tea Party. They agree on who to be angry with – Wall St. and
other corporate interests that have their way with our political system; and, politicians
that seem to be in their thrall.
There’s even some alignment between the philosophical
underpinnings of their respective platforms.
Here’s a quiz for you. What is
the source of this philosophy?
“Government … has three basic functions:
1. Provide for the national defense.
2. Put rules in place… that are fair and
transparent.
3. Build the things together that none of us can
build alone – roads, schools, power grids….”
Sounds simply and basic.
Must be a libertarian, right?
I was trying to tantalize you with my headline and chose an
issue where the far left and far right are aligned to back it up. But, it’s fair to say that when it comes to
solutions, those two extremes are far apart.
Unlike the Tea Party, the Warren Wing of the Democratic
Party, as it is now called, as well as Democrats more generally believe in
government solutions.
I could go on about how and why I think their approach will
lead to failure. Perhaps, that would be
the subject of another post (or three).
However, that’s not my focus here.
The Tea Party wing of the Republican Party has become an
obstacle to progress. Lacking seniority
in the House and seeking more clout, they prefer to stand on principle rather
than seek compromise to find solutions to the major structural problems we now
face – tax reform, unsustainable entitlement programs, an undereducated
workforce and so on.
Will the Warren Wing act the same way? Will the rise of a hard left to
counterbalance the hard right be nothing more than political intransigence
positioned as unwillingness to compromise on values?
The common origins of our anger and frustration with
Washington represent an opportunity to find common ground – even as it requires
us to compromise some of our principles -- to address the big issues of the
day.
We were promised a “grand bargain”. I’m still waiting.
WHO WILL LEAD?
Chuck Rosselle
ReplyDeleteManagement, Consulting and Governmental Regulation in Energy and Technology
You correctly identified that a common thread between orthodox Tea Party beliefs and left-leaning Progressivism is Libertarianism. In my view it's a mistake to immediately transition to the old Reagan line that government is the problem.
In fact, significant change is necessary if we are to rediscover economic dynamism in this
country. Government has a role as does the private sector; each side does things uniquely well when they are careful to stay within the bounds of their field of competence. Excessive regulation and inefficient bureaucracy is no worse than excessive greed and crony capitalism on the part of entrenched interest. If we cannot reduce the irrational demonization that seems to have infected both the far left and the far right, we will never get to a balanced set of governmental policies and realigned business priorities.
In my view, Rand Paul is the only current politician I see trying to figure this out.
Ralph Michalske, MBA
ReplyDeleteSemiconductor Product Marketing Professional
Hi John,
I appreciate that you chose an eye catching title to your blog. It caught my eye. However, your real argument comes at the end of your blog where you say, "(Congress should) seek compromise to find solutions to the major structural problems we now face - tax reform, unsustainable entitlement programs, an undereducated workforce and so on". This is a brilliant idea.
The far wings of the political spectrum don't really add anything to democracy or self governing, except a place to discuss and form new ideas. Yet today, the far wings have just enough power to stall centrist, highly compromised legislation. Often these extremists see their views as their principles for which there is no compromise. Such tenacious behavior doesn't work well in self-governing. In our Jeffersonian Democracy, we get gridlock. In the Middle East you get religious fanaticism which leads to perpetual war between religious sects. Even though these Middle East extremists are small in number, their war mongering tactics are gruesome enough to seize world attention. Despite the fact that their principles are defunct, they push on making life miserable for those within arms reach. They only captivate the hearts of a few, while alienating the rest of the population. I don't think we even have a name in English for this form of politics. I'm not sure we want one.
Nevertheless, I'm with you. Americans need to compromise more. Self-governing has become challenging. For democracy to work where polar regions are abundant, there will need to be a good dose of compromise for us all.
Lisa Wells
ReplyDeleteData Integrity and Risk Analyst
Now if we can just get Governor Jindal of Louisiana to voice his solidarity with teacher's unions regarding similarly felt antipathy to Common Core.... it would be great! I love Glass-Steagall; 11 elegant pages.
Alex Simonelis
ReplyDeleteFaculty at Dawson College
GS was excellent, and prevented the consumer banks from going to the casino with zillions of dollars of mortgage money, among other things.
And Warren is excellent - educated, articulate, smart, experienced. If the Dems have any sense they will use her on the ticket somehow in 2016. She is way better and more attractive than Hillary.
om Jeanette
ReplyDeleteEverything, and Other Duties as Assigned
The TEA Party agreeing with Elizabeth Warren on one issue (or even a few issues) doesn't merit the headline "Big News! Elizabeth Warren and the Tea Party Agree" any more than the NRA supporting rifle ownership by 18 year olds deserves the headline "Big News! NRA and Hitler Agree!" [Hitler lowered the age for rifles from 21 to 18].
Ted Phelps
ReplyDeletePCG Consultants
It's not so difficult to get agreement that there is a problem. It's the solutions that are telling. I'd be willing to bet that Sen. Warren's solution involves MORE government, while the Tea Party's solution will involve LESS government.
Tom Jeanette
ReplyDeleteEverything, and Other Duties as Assigned
With Sen. Warren being held responsible for the solutions she proposes, I would trust her more than a faceless, inexperienced, bunch of Koch puppets that can't even organize themselves into a political party.
Fred Bosick
ReplyDeleteIT Professional
I always thought that Occupy Wall Street and the Tea Party had much more in common than everyone expects.. Maybe that's why the coverage of the protests always had the "they're just bums" undertones in spite of the fact that most OWS protesters were degree'd people.
The "bums" the media and Corporate America are actually worried about are the Tea Party rank and file who think they'll join the 1% if they just sit tight. If those people ever figured out that the game was fixed before they were even 5 years old, the corporate beholden politicians are *gone*.