Politics & Policy

It’s (Still) a TARP!

(Alex Wong/Getty Images)
Elizabeth Warren, corporate-welfare queen

The so-called cromnibus bill funding the federal government through this fiscal year was passed over the objections of (some) House conservatives and (some) self-proclaimed progressives, for familiar reasons: Conservatives, eager that the Republicans should begin governing like they have a majority in Congress before they actually have a majority in Congress, argued that the bill locked in long-term support for too many of Barack Obama’s priorities — to hell with an amnesty fight in February or gutting Obamacare after the new majority is seated, they cannot wait to start scrapping. The Democrats’ left flank, led by Nancy Pelosi right up until the White House did Republicans the favor of steamrolling her for them, complained of many things, as is the Democratic habit: In this case, the litany of woe included abominable measures that would allow larger individual donations to political parties and repeal part of the destructive Dodd-Frank financial-“reform” law, the “swaps push-out” rule that requires banks to exile some derivatives trading to separate corporate entities not insured by the FDIC.

Senator Elizabeth Warren, the millionaire Massachusetts class warrior who has made the vilification of Wall Street bankers her second-favorite pastime (right behind prospering on the largesse of Wall Street lawyers, the gentlemen and scholars who funded her very generously compensated position at Harvard and fill her campaign coffers) did not exactly make the issue her hill to die on, but the fight did provide her an excellent opportunity for grandstanding.  

No doubt aware that 99 percent of those who look to her for guidance on financial regulation could not explain what a derivative is, Senator Warren did her usual dishonest shtick, engaging in her habitual demagoguery without ever making an attempt to actually explain the issue, which is a slightly complicated and technical one, to the rubes who make up the Democrats’ base. Angrily insisting that the reform is about nothing more than ensuring that “the biggest financial institutions in this country can make more money” is cheap, and it’s easier than trying to explain why many midsized banks believe that the rule puts them at a competitive disadvantage vis-à-vis the big Wall Street firms, to say nothing of exploring the convoluted question of why agricultural swaps are covered by the rule while interest-rate and foreign-exchange swaps are not. This led Maggie Haberman of Politico to admire Senator Warren’s “authenticity,” the choice of precisely that word being the cherry on this sundae of asininity. Senator Warren is as much an authentic champion of ordinary working people as she is an authentic Cherokee princess — and Mel Brooks and those Yiddish-speaking Indians from Blazing Saddles were more convincing in that role.

Bailout politics is still very much with us: People resent — rightly — what was done and how it was done. Many on the Tea Party right and the Occupy left intuit that there exists a dysfunctional relationship between Wall Street and Washington, though Senator Warren et al. maddeningly believe that the way to ameliorate this is to invest Washington with even greater powers, enabling even worse misbehavior and even more remorseless rent-seeking. And those who bother to keep up with such things know that neither Dodd-Frank nor anything else that has happened in Washington since the financial crisis has in fact eliminated, or even reduced, the phenomenon of financial institutions’ being considered — inevitable phrase — “too big to fail.”

#page#Here’s how the New York Times relates the cromnibus skirmish to bailout politics: “The liberal base of the Democratic Party, led by Ms. Warren, also found itself in an unlikely alliance with the Tea Party wing of the Republican Party. Both opposed the Wall Street bailout of 2008 and feared that the spending measure would not only provide a bounty for big banks but would also help cause another economic crisis.”

Both opposed the Wall Street bailout of 2008?

One wonders which of these famous progressives the New York Times has in mind when it states — as uncontested fact — that “the liberal base of the Democratic party” “opposed the Wall Street bailout of 2008.” Elizabeth Warren did not oppose the bailout per se, though she was critical of the way the Treasury Department implemented it. The bailouts were enabled by the Emergency Economic Stabilization Act of 2008, which enjoyed the support and votes of Senator Barack Obama of Illinois, Senator Joe Biden of Delaware, Senator Hillary Rodham Clinton of New York, Speaker of the House Nancy Pelosi, Senator Charles Schumer of New York, Representative Barney Frank of Massachusetts, Senator Patrick Leahy of Vermont, Representative Jesse Jackson of Illinois, Representative Sheila Jackson Lee of Texas, etc. The people who actually opposed bailouts by voting against bailouts were not in the main progressives, but were disproportionately conservative Republicans: Representative Michele Bachmann of Minnesota, Representative Michael Burgess of Texas, Representative Jeff Flake of Arizona, Senator Sam Brownback of Kansas, Senator Jim DeMint of South Carolina, etc.

The Left, predictably, is captive to the hipster impulse: “I opposed bailouts before it was cool” is the Democrats’ version of “I saw Hüsker Dü at Jay’s Longhorn Bar.” Show me the ticket stubs.

The Tea Party came into being as a reaction to Republican complicity in bailouts of all sorts: of Wall Street firms, and of irresponsible mortgage borrowers. Occupy, and the potty-trained version of that movement led by Elizabeth Warren, demands more bailouts: of people who borrowed money for college or to buy a home, of fashionable corporations that do not want to pay market rates for financing, etc. Senator Warren is an energetic proponent of corporate welfare for Boeing, General Electric Bechtel, Caterpillar, and other such poor, defenseless little mom-and-pop operations.

If you are looking for actual rather than theoretical opposition to bailouts and corporate welfare, then your choices include Senator Rand Paul and Senator Ted Cruz, but practically nobody who might be called a progressive.

Nobody ever says he’s in favor of more bailouts or more handouts to business interests, but every time you hear a politician trotting out federal loan guarantees for certain businesses or targeted tax breaks for others, that is what he is talking about. Senator Warren may dismiss the revision to Dodd-Frank as a sop to big business, but she does not oppose sops to big business —she only opposes the ones not originating on her side of the aisle.

— Kevin D. Williamson is roving correspondent for National Review.

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