When do the interests of the 1% represent all of us? Never. But that’s not what you’ll see in Steven Rattner’s “The Warren Way is the Wrong Way.” (New York Times, November 5 2019)
I’ll save you some time: it’s a nasty, polemical hit job on Elizabeth Warren. Its core claim is neatly summed up in its subtitle: Warren’s “big government plans would damage rather than improve our economy.” Rattner rehearses the conventional criticisms of Warren’s ambitious agenda, with special attention, of course, to Medicare for All, the Green New Deal, and tax reform. Rattner, who purports to be some kind of liberal and cites FDR in what seems to be an approving way, describes the Warren agenda as “terrifying . . . effectively abandoning the limited-government model that has mostly served us well.”
Who are “we”?
Rattner has recently become a “regular contributor” to the Times and is said to be a close friend of Times publisher Arthur Ochs Sulzberger, Jr. He affects a posture of analytic impartiality and liberal benevolence. He claims to have concern for the common good and for the economy, which he understands as some kind of commonwealth. But as we know, and as he knows, the wealth of this nation is hardly “common.” And Rattner hardly speaks for ordinary Americans.
Beneath his byline, Rattner is identified thus: “counselor to the Treasury secretary in the Obama administration.” Over eight hundred words later, at the bottom of his tendentious column, a slightly fuller biography is provided: “Steven Rattner, a counselor to the Treasury secretary in the Obama administration, is a Wall Street executive and a contributing opinion writer.”
Let’s repeat the key phrase: is a Wall Street executive.
These five words perhaps deserve greater prominence than the Times accords them. And the sentence, whose well-placed comma misleadingly implies a sequence — Rattner was an Obama adviser, and now he is on Wall Street — would perhaps be more accurate if it read thus: “Steven Rattner has long been a Wall Street executive, he advised Obama to bail out General Motors and Chrysler and Wall Street’s big banks and finance houses during the 2008-9 financial crisis, and then continued to work on Wall Street.” But even these words would barely scratch the surface of Rattner’s biography and the light it sheds on his distinctive civic perspective.
For greater detail, one can turn to the Times itself, and to a 2013 profile of Rattner written by Andrew Ross Sorkin, “A Reputation, Once Sullied, Acquires a New Shine.” Rattner, you see, was no ordinary Wall Street executive. He was a star, a major player, in Sorkin’s words “the ultimate consigliere to power.” Starting out as an executive at Lehman Brothers, he moved to Morgan Stanley. He then went on to found the Quadrangle Group, a $1 billion media-centered private equity group whose early investors included the Times’s Sulzberger, Mort Zuckerman, and Merrill Lynch. According to Wikipedia, Quadrangle “grew to manage more than $6 billion across several business lines, including private equity, distressed securities, and hedge funds.” In 2008, Rattner became the personal manager of the assets of multi-billionaire Michael Bloomberg, his close friend.
But then Rattner became involved in a huge scandal that was investigated by both the SEC and New York State. As Sorkin summarizes: “He was accused of using ‘pay to play’ practices while raising money from a New York state pension fund when he was still at Quadrangle. In 2010 he paid more than $16 million to Andrew M. Cuomo, who was then New York’s attorney general, and the Securities and Exchange Commission to settle the civil cases without admitting or denying wrongdoing. He was ‘banned from appearing in any capacity before any public pension fund within the State of New York for five years’ and for ‘associating with any investment adviser or broker dealer’ for two years, according to the suits. As the case proceeded, he stepped down from his position in the Obama administration.”
Rattner, in short, was a player in the worst kind of insider trading. And if he was able to pay more than $16 million in civil penalties, then one can only imagine what he is worth (in 2009, ten years ago, Business Insider estimated that his net worth was between $188 and $608 million).
But this did not stop Rattner from remaining a major player at the intersection of finance and Democratic party politics, nor did it inhibit him from reinventing himself as a major MSNBC pundit on all things Democratic. He was, and remains, close to Chuck Schumer. He was a major fundraiser for Hillary Clinton in 2016. He is also close to Joe Biden. And he continues to be lauded by Democratic establishment leaders for his role in helping to engineer Obama’s 2009 corporate bailouts. Sorkin quotes David Axelrod, a key Obama strategist: “Whatever happened in New York didn’t obviate the great service he rendered. . . Steve did an extraordinary job for the administration and the country in helping to shape the auto plan, which was a clear success.”
The bailouts will continue to be a topic of serious debate among Democrats and in the society at large for years to come. There can be no doubt that they helped to stabilize capitalism at a time of great crisis. There can also be no doubt that they did so based on a philosophy of “too big to fail” that rescued failing corporate institutions but did little to rescue the ordinary American homeowners forced to default on their mortgages and lose their homes; ordinary workers forced to make major contract concessions or to lose pensions; and ordinary taxpayers forced to help to pay for the over $700 billion in bailouts.
It is clear that the Obama administration faced a genuine crisis. It considered a range of options, always under duress, and at crucial moments deliberately chose policies designed to favor investors over ordinary Americans (Reed Hundt’s A Crisis Wasted: Barack Obama’s Defining Decisions, is a compelling insider account of these choices).
It is also clear that one of the loudest and most consistent critics of these moves was none other than Elizabeth Warren, whose Consumer Financial Protection Bureau proposal was coopted by Obama, and whose election to the U.S. Senate in 2012 was fueled by her role as a staunch advocate for a middle class and consumer-centered economic policy. A December, 2014 Times story, “U.S. Declares Bank and Auto Bailouts Over, And Profitable,” includes this observation:
Senator Elizabeth Warren, Democrat of Massachusetts, took to the Senate floor in the closing minutes of the 113th Congress to blast the power of Wall Street — particularly Citigroup — which she said remained undiminished since the bailout. “Enough is enough,” she said. “Washington already works really well for the billionaires and the big corporations and the lawyers and the lobbyists, but what about the families who lost their homes or their jobs or their retirement savings?”
That was then and this is now. Warren has loudly and persistently pressed this perspective, moving it to the center of the post-Obama Democratic party, and proceeded to becoming a major contender for the Democratic presidential nomination, and perhaps even the current front-runner. She is no Bernie Sanders, who is her rival — but also her close colleague. Her campaign is grounded in a conversation about middle-class empowerment rather than working class mobilization, and her platform centers on consumer rights, market fairness, and citizen voice rather than on a more radical, anti-capitalist program of “democratic socialism.”
The differences between Sanders and Warren are real, and they will continue to play out in the primary and beyond. The only reason why Warren, and not Sanders, is currently the target of Rattner and his Wall Street associates is because at this moment it appears to them that she is perhaps a more viable contender for the Democratic nomination. But the logic of their attack would apply equally to Sanders, perhaps with even more vitriol, and beneath the surface of concern for “our economy” the logic is clear: the policies supported by Warren, and by Sanders, are threatening to the interests of the super-rich and to the financial and corporate institutions that they control.
Rattner says of Warren that “Left to her own devices, she would extend the reach and weight of the federal government far further into the economy than anything even President Franklin Roosevelt imagined.” This is true. New challenges call for new solutions. But Rattner fails to note that the very same charges were made against FDR in the 1930’s: that he was “abandoning the limited-government model that has mostly served us well,” and that this would destroy the economy. And, as we know, FDR did not destroy the system. By reforming it, and by instituting changes that made it serve a broader “us” that went beyond the financial elite, he helped to preserve capitalism and liberal democracy at a time of crisis.
Neither Warren, or even Sanders, is a revolutionary. Both are working through the democratic process and the Democratic party to advance broadly social democratic reforms of American capitalism. Neither adopts a zero-sum approach to change (even if some of Sanders’s rhetoric leans in that direction). But both acknowledge that most of the economic gains of recent decades have gone to a very narrow sliver of the population. They believe that the majority of Americans have long experienced major sources of social and economic insecurity; and that reckoning with the serious problems of precarity, climate change, decaying physical and social infrastructure, and a dysfunctional health care system requires new forms of corporate regulation and public investment and new forms of redistribution to pay for this public investment. Sanders sometimes talks about “abolishing millionaires.” Warren explicitly repudiates such imagery. But in fact neither of them seeks to end dramatic wealth and income inequality or to “soak the rich.” But both insist that social, economic, and political justice require a much fairer allocation of costs and benefits.
The rich need to pay more, and working families need to receive more, and better.
This scares the Rattners of the world. It is an unfortunate fact that many of these people are important Democratic donors with long-standing connections to the current party leadership. It is also a fact that right now, their influence in the party, and the advantages this influence brings, is currently being challenged. It is an equally unfortunate fact that Rattner’s rhetorical demonizing of Warren (and Sanders) has traction in the broader electorate, and that this will be exploited by Trump and the Republicans to their advantage.
The Warren campaign (and also the Sanders campaign) faces genuine challenges in projecting its vision; reaching out broadly beyond its core of supporters and even beyond the Democratic base; and explaining the real advantages of its policy agenda, and the net gains this agenda promises to bring to most Americans. Allaying the concerns of ordinary Americans about “freedom of choice,” especially regarding Medicare for All, is part of this challenge. But Ratner is not an ordinary American, and behind his fear-mongering is less a concern about ordinary “freedom of choice” than a concern about the concentrated wealth of the super-rich that he and his Wall Street colleagues manage and share.
This interest needs to be seen for what it is rather than for what it pretends to be.
Rattner concludes by suggesting that there are “many other Democratic hopefuls” who are both wiser and more “electable.” But the truth is that Wall Street is starting to run scared about the viability of Biden’s campaign; Buttigieg remains a novice; and anxious talk by Democratic elites about Bloomberg or Clinton or Kerry entering the race is simply a millionaire fantasy appealing to few outside their class. It is not clear at all there are “many other Democratic hopefuls” amenable to Rattner’s prescriptions. And it is this anxiety that surely fuels his vitriol toward Warren.
There are valid questions about the “electability” of Warren, or Sanders — or Biden, or Buttigieg, or any Democrat. The truth is, there is no guarantee that any Democrat will beat Trump in 2020. Worry about this is legitimate. And the only way to allay this worry is to support a vigorous primary contest that is focused on real issues, that takes seriously the need of the Democratic party to creatively and vigorously promote greater justice and democracy, and that takes equally seriously the need to come together behind the primary winner.
The Medicare for All plans being forwarded by Warren and by Sanders are not above criticism. A few months ago in The Nation, Joshua Holland outlined a range of approaches to universal coverage, including Medicare for All. He considered their relative advantages and disadvantages, and argued that “Democrats Need Litmus Tests on Health Care, But that doesn’t necessarily mean Medicare for All.” Back in January, Vox ran a similar piece, centered on an interview with Yale’s Jacob Hacker, a recognized expert on health reform. There are legitimate questions to be posed — regarding popularity, policy implementation, and legislative viability — about Medicare for All. But Rattner is doing something else entirely. He is dismissing the very notion that progressive reform is necessary, and doing so in the name of his own narrow and self-serving conception of economics. He writes about “our economy.” But what really concerns him is his economy.
The concerns of ordinary voters have a legitimate claim on the attention of all Democratic candidates. The fears of the Steve Rattner’s of the world do not. And candidates that cater to Rattner’s fears, either because they want his money or because they believe in the Platonic wisdom of his banker brethren, will be making a Faustian bargain that is not likely to benefit either the Democratic party or the people it claims to represent.
Jeffrey C. Isaac is James H. Rudy Professor of Political Science at Indiana University, Bloomington.
