On Hillary Clinton, Wall Street, and 9/11

So, in what might have been the single most memorable moment of the debate (other than that time when I was genuinely shocked to hear that Sanders actually wants to let the states run his single-payer health care program, like, actually), Bernie Sanders impugned Hillary Clinton's integrity over her donations from Wall Street (despite his protestations that he did no such thing) and then Hillary responded by invoking 9/11. It was pretty cringe-worthy. In no way is this post meant to deny that. What this post is meant to do, however, is suggest that Hillary has at least a very plausible argument for why those campaign contributions shouldn't be held against her the way Sanders wants them to be.

Let's start with getting at what Hillary was actually trying to say, or at least the coherent argument behind her (again, admittedly) facepalm-level 9/11 framing. The donations from Wall Street are on the record, and they almost entirely date from her tenure as Senator from New York. Sanders' hypothesis is that the bankers gave her this money because they know that, no matter how tough she might talk on financial regulation, she won't actually do it. Hillary's suggestion to the contrary is that these were essentially donations of gratitude for her service to the state and city in the wake of 9/11. That's... that's very plausible, right? Especially bearing in mind that when we say "Wall Street donations," we don't just mean donations from the corporations themselves, or even from their executives. Donations from any of their employees count for this purpose. And it sounds pretty plausible to me to think that a lot of Wall Street bankers might have donated to any and every politician who played a meaningful role in the 9/11 rebuilding efforts. It might not be true that that's what motivated the donations, but it's a valid and on-point argument to make.

And really, she didn't even need to get that specific. She was a Senator from New York! I have a feeling that anyone in that position is going to get a lot of donations from Wall Street. I'm sure Chuck Schumer has a long trail of such donations to his name. You donate even to candidates who are relatively speaking not on your side, especially because New York is a solid blue state with little hope of electing Republicans to the Senate. And, sure, you're probably hoping for some measure of access and influence, but, contra what the moderator said, candidates aren't actually indebted to their donors. Again, it's genuinely possible that Hillary went around to various Wall Street potential contributors and said, give me some money and I'll keep an eye out for your interests going forward. That would be bad! But it's also genuinely possible that a bunch of Wall Street bankers gave her money just because she was the only game in town, and she didn't outright reject their donations.

This sort of ties in with another dimension of this whole thing. She was Senator from New York. All the financial types from Wall Street were among her constituents. There are many valid theories of representation on which it would have been proper for her to promote Wall Street's interests, insofar as they were New York's interests, as against the rest of the country. This would have to be within reason, of course; politicians shouldn't support the interests of every scumbag who happens to live in their jurisdiction. But we don't think there's anything weird about Senators from Iowa promoting corn interests or whatever. It's natural, if slightly unsavory.

The question is whether this works for or against Hillary. And that depends, I think, on whether we think that a person who has once favored a certain interest because they represented that region will always be beholden to that interest, even if they now represent a broader constituency. I tend to think the answer here is "no." Kirsten Gillibrand, Hillary's successor in the Senate, is an interesting example. She used to be a Representative from a reasonably conservative district in upstate New York, and her record in the House was reasonably moderate. That led people to be concerned that she wouldn't be as liberal as a Democratic Senator from New York ought to be. But in fact, she's been great! Because now she's not representing a constituency that requires her to be more moderate. By analogy, even if Hillary did take Wall Street contributions, and aye, even if she did take relatively pro-Wall Street stances when she was Senator from New York, that doesn't mean she would do so as President, representing the whole nation.

Now, Sanders and his supporters could try to argue it the other way. That, a candidate's once having been willing to pander to a local interest, we should always view them with suspicion on that issue. But I really don't think he wants to open up that can of worms. Because he's confessed, more or less candidly, that his relatively moderate record on guns was largely a pander to his rural Vermont constituents. Which would look an awful lot like Hillary's purported record on financial regulation--if we grant the assumption that Hillary has been soft on financial regulation historically. If we get into playing this game, it's just not at all clear that Sanders is categorically more pure than Clinton. And that's not even getting into all the companies whose employees he's received donations from over the years, a list which is less than wholly devoid of what we might think of as villains. The sum totals are a lot lower 'cause he represented Vermont, which has about as many people in it as like a city block in Manhattan, but the logic would seem to apply reasonably well.

There's also an additional level as concerns Hillary: she's a lawyer. She went to Yale Law School. (Woohoo!) She knows a lot of people in the world of law, which has a lot of overlap with the world of finance. A lot of these people probably gave to her campaign because they know her, and (perhaps unlike their bosses or the corporate entities for which they work) they honestly don't care that much about the public policy dimensions of politics.

The bottom line is that there are an awful lot of genuinely good reasons to think that Clinton's past Wall Street donations do not mean that she will be in any way beholden to the financial industry if she becomes President. Again, it might in fact be the case that she would be beholden to them. But there are good reasons for thinking otherwise, and it's basically a matter of contestable fact. And while, again, I agree that her invocation of 9/11 was extremely poorly done, there was an argument at the heart of those remarks, one that fits into the basic pattern of the more general arguments for why we shouldn't be troubled by her donations. So yes, it's totally fair game to call her out for her heavy-handed, Giuliani-esque flag-wrapping, but it's wrong to pivot from that to simply assuming that she is in fact vaguely corrupt in the was Sanders was insinuating.

Political Donations Can't Be Irrelevant to Profits

The Chamber of Commerce, in opposing a petition to the Securities and Exchange Commission asking for a requirement that public companies disclose all political donations, had occasion to state that it "believes that the funds expended by publicly traded companies for political and trade association engagement are immaterial to the company’s bottom line." This is impossible. Every dollar that a company gives to a political cause is a dollar it doesn't have, i.e. a dollar subtracted from its bottom line. Insofar as it's true, then, that political donations do not cause a change in anything else about a company's costs or revenues, the expected marginal change in a company's bottom line on each dollar spent on political donations is -$1. Now, companies aren't usually supposed to do things where the marginal expected effect on the bottom line is -$1 per dollar spent. It's kind of irresponsible, from a business stand-point. Even things like charitable donations aren't thought to have an expected value of -$1; the assumption is that having a decent charitable reputation will generate goodwill, and therefore sales, for a company. You could imagine that some companies might try to do something similar with political donations, trying to generate goodwill with a particular segment of the political market and thereby acquire a loyal customer base. But that, of course, depends on conspicuous generosity, not on secret donations with non-disclosure. How might dollars spent on politicking make up some of their immediate losses? I don't know. Perhaps the corporations in question expect to fare better in a world where their preferred candidates are in office, either because they think they'll receive favors or because they think those candidates' policies will make the world a better place for them to inhabit. But I'm pretty sure that, when a corporation makes a political donation, it expects to get recoup some of that money, somehow. And if it doesn't, it's making an irresponsible business decision. So, by the very logic of profits and economic self-interest, the Chamber's statement must be wrong: funds expended for political engagement are extremely material to the bottom line, one way or another.

If Clean Elections Create Polarization, Maybe Polarization is Good!

Matt Yglesias has a new post out today discussing the apparent fact that Arizona's clean elections law has resulted in more extreme candidates winning elections. He's skeptical that this is really a general phenomenon. I'm skeptical that the explanation the political scientists he quotes give, which makes it seem like the whole fundraising process is good because it protects us from "extreme" candidates, is accurate. It seems more likely to me that there's a fairly consistent Money Agenda, and that if you require candidates to do private fundraising they will overwhelmingly need to cater to that Money Agenda. Take that impetus away, and more of the actual disagreements in society can surface. That's a good thing, isn't it? At the very least it's a democratic thing.

Super PACs Actually Are Worse Than Nothing

Super PACs, the major players in the post-Citizens United world of campaign finance, only have one rule of any significance: they cannot coordinate with a candidate's campaign. That's it, really: no limitations on contributions from humans or corporations, no disclosure requirements, etc. But as Jon Stewart and Stephen Colbert are ably demonstrating, that rule is a sham. Colbert, the "candidate," and Stewart, the Super PAC manager, spent a few minutes the other day sitting on the set of The Daily Show exchanging plans for the Super PAC's activities, but with the extremely-thin-veneer of talking to the audience instead of each other. Then they demonstrated that Jon could tell Stephen his plans for future advertising and Stephen could speak the sentence "I cannot coordinate with you in any way" with either a giant grin on his face or a worried look, with Jon taking the obvious inference, while staying within the bounds of the law, and that, even if they were fined for any violations, they could pay those fines with Super PAC money. In other words, the non-coordinate rule scarcely has any bark, let alone bite. This means, as best I can tell, that Super PAC-world is just like totally-unregulated-campaign-finance world except that, instead of ads being run by campaigns in their own name, they get run by group with names of a comparable silliness to Stephen's "American for a Better Tomorrow, Tomorrow." In other words, compared to zero campaign finance restrictions whatsoever, Super PACs serve only to reduce transparency and accountability. Great.