This post first appeared at Election Law Blog.
Progressives revolted over two provisions in the massive compromise spending bill about to become law. One provision rolls back banking regulation of derivatives under the Dodd-Frank Act passed during the financial crisis. The other provision will vastly increase the amount of money which individuals can donate to political parties. A couple could give their favorite political party over $3 million during a two-year election cycle. (It is quite sad for the House to pass the provision the night of Tom Mann’s retirement party from Brookings; Tom was so instrumental in the writing and passage of the McCain-Feingold law, whose soft money limits have now been severely undermined by the Cromnibus.)
The two objectionable provisions might seem unrelated, but in fact they are quite interrelated. Both show the importance of the role of money and influence in Washington. On the derivatives law heavily favored by the banking industry, the NYT explains:
“The language in the spending bill was inserted by Representative Kevin Yoder, Republican of Kansas, but he did not write it. Citigroup did. In 2013, the bank and its allies were able to corral a bipartisan vote to pass the rollback out of the House Financial Services Committee. In an analysis by The New York Times of Citigroup emails, more than 70 lines of the committee’s 85-line rollback bill came from Citigroup’s recommendations. The banking industry strongly supports the rollback measure. James C. Ballentine, an executive vice president at the American Bankers Association, said financial instruments like credit deferred swaps are used to mitigate risk, not bolster it. To force their trading into units unprotected by federal taxpayers would be onerous, he argues.”
On the campaign finance measure, this was not something that anti-regulationist Mitch McConnell forced on unwilling Democrats. This was negotiated by Senate Majority leader Harry Reid and likely supported by President Obama. No one has been a bigger hypocrite on campaign finance than President Obama, who has always talked about the need for campaign finance reform while his actions did a tremendous amount to undermine and weaken existing law.Neither of these provisions were the subject of hearings or deliberation. Both were snuck into a massive bill through the back door at the behest of the powerful.
The Citibank provision got in the law because those with wealth have the best access and the greatest ability to influence law, especially on technical issues which are unlikely to rile up the public. The campaign finance provision is inside baseball and not salient for most people, who already believe money is out of control because of Citizens United. What that analysis misses is that as the money gets even closer to the politicians, politicians get to demand more money from the wealthy for access and reward them with a greater ability to influence both policy and elections.
The problem here, as I am detailing in my book in progress, is that in times of rising economic inequality we are witnessing an unprecedented ability for the wealthy to translate their economic power into political power, undermining political equality and our democracy.
A very sad day indeed.
The views expressed in this post are the author’s alone, and presented here to offer a variety of perspectives to our readers.