Watching the Tea Party’s successful messaging against crony capitalism, it’s no wonder that leading Democrat senators and presidential candidates, most prominent in the platforms of Bernie Sanders and Elizabeth Warren, have embarked on a populist campaign against policies they view as beneficial to Wall Street and well-connected lobbyists and detrimental to ordinary Americans. This was on full display at last night’s Democratic presidential debate as all the Democrat candidates ingratiated themselves to “the little guy” by bashing the evil rich people and their politically connected cronies.
While there is merit to some of the progressive populist diagnosis of the flawed and corrupt structure inherent in our political class, they have the wrong prescription to fix the broken political system. And in fact, their version of populism – de facto venture socialism, as former Senator Jim DeMint (R-SC) once observed – is nothing more than warmed-over government largesse, which has engendered the very sort of cronyism she inveighs against on a regular basis. Only free market populism, which eliminates the ability of the federal government to pick winners and losers in the first place, will foster the fairest and most prosperous economy for both Wall Street and Main Street.
Although both authentic conservatives and principled liberals share the same disdain for government-sponsored handouts to big banks, the banking industry in itself is not the source of the economic downturn in 2008, and trash-talking banks as an ends to itself will not usher in an era of prosperity.
Last December, Elizabeth Warren referred to the Dodd-Frank provision in the Cromnibus as “the worst of government for the rich and powerful” that “would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.”
It’s true that this non-germane carve-out had no business being slipped into a budget bill without any transparency. And indeed, the lack of transparency is one of many reasons why conservatives voted against the bill. But once again, her diagnosis of the problem and ensuing prescription misses the mark. The “worst of government for the rich and powerful” that led to the housing crash, credit crisis, and subsequent bailout of the banks stems from the very government interventionist policies that Warren and her fellow leftists have championed for decades.
Social engineering policies such as Bill Clinton’s National Homeownership Strategy, coupled with the officious interventions of Fannie Mae and Freddie Mac, created the entire culture – directed straight from Washington to Wall Street – that coerced banks to underwrite risky mortgages in order to please the central planners in Washington. It was these greedy government-sponsored entities that bought up almost all of the subprime mortgage securities. It was these government policies and agencies “that gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.”
In fact, it was her prized legislation – the Dodd-Frank bill – that created the Financial Stability Oversight Council – a government agency that can completely bypass the bankruptcy process and bail out companies deemed too big to fail. Dodd-Frank is ostensibly the Obamacare of the financial industry and is another example of how the arsonists in the political class dress up as firefighters to solve the problems they helped create. The fact that this law was named after two politicians who embodied this big government collusion with the big banks is quite fitting.
Warren is correct to assert that banking lobbyists have too much power in Washington. But the way to reduce their power is to eliminate government’s ability to pick winners and losers instead of empowering them to continue growing the government/Wall Street cronyist complex. People have the right to lobby and petition the government all they want, but if Congress actually followed the constitutional enumerated powers, their lobbying efforts would be moot.
PICKING WINNERS AND LOSERS
Like all “hard-core” liberals, Sanders, Warren, and Clinton are content with government handouts to big business so long as they are presented in the form of a subsidy. They continue to champion energy subsidies for green energy cronies who don’t pay taxes. They support the ethanol mandate which uses the boot of government to enrich a small subset of corporate farmers, while increasing the cost of food on families by as much as $2,000 per year. Food prices are projected to be $3.5 billion higher in 2017 as a result of the ethanol mandate. Sanders is a champion of the cronyist ethanol lobby.
They advocate draconian environmental regulations that would have precluded the recent decline in energy prices, and opposes policies that will ramp up production and exportation of energy, which would lower prices even further for American consumers on a permanent basis.
One of the most glaring examples of the Sanders/Warren support for crony capitalism is their vote in support of the Internet sales tax. The so-called Marketplace Fairness Act is pushed by K Street and the big brick and mortar retailers to create an inter-state online tax cartel. This version of taxation without representation will punitively hurt small businesses, consumers, and low-tax states – all to grow government and benefit big business. Indeed, many more Americans beyond the “Donald Trump and his billionaire friends,” whom Sanders decried at the debate, will pay “a hell of a lot more in taxes.”
Indeed, there is nothing novel about the Sanders/Warren brand of liberalism. It was summed up by Reagan long ago as follows: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
In order to encourage true economic growth for everyone without dividing America into classes, we need to slash taxes and regulations for everyone and abolish subsidies for everyone. Both the corporate and individual tax rates need to be cut, as well as the double taxation on investments, estates, and Social Security benefits.
On the regulatory side, the total cost of federal regulations in 2014 reached $1.88 trillion, which amounts to a $14,976 hidden tax per family every year. According to the Competitive Enterprise Institute, this amounts to 23 percent of the average family budget of $51,000. The $1.88 trillion number is also more than receipts from corporate and personal income taxes combined. By eliminating gratuitous and costly regulations and implementing congressional sunset powers over new regulations, both families and corporations would save more money, which in turn, creates more jobs, raises wages, and lowers the cost of living.
Finally, it would be insensible to ignore illegal immigration. Nothing embodies “the worst of government for the rich and powerful” to the detriment of ordinary Americans more than the elitist open borders/amnesty agenda. Illegal immigration has had a devastating effect on American workers, taxpayers, healthcare, education, and welfare – all to enrich big corporations and lobbyists who want to use lawlessness to artificially drive down wages. Sadly, populist progressive leaders like Senator Warren have bought into the illegal immigrant-first agenda – hook, line and sinker.
If Bernie Sanders and Hillary Clinton are really concerned about wage growth in this country, they should join conservatives in the effort to restore the rule of law and place the concerns of American workers and taxpayers ahead of the special interests and lobbyists. They would join in the conservative effort to protect the welfare system and Social Security from being illegally accessed by those encouraged to migrate here illegally by big business.
Ideally, there would be a lot of common ground to plow through a populist alliance between conservatives and liberals. But that would require courage on the part of liberals to buck the dogma of their party on critical issues, not just on some strategies – something these progressive Democrats have clearly been unwilling to do.
The conservative grassroots and some of members in Congress, on the other hand, have demonstrated an unambiguous commitment to place the interests of the American worker and taxpayer ahead of the lobbyists, even when it means bucking party leadership on fundamental issues. Bernie Sanders and Elizabeth Warren would be wise to listen and learn. (For more from the author of “Bernie and Hillary Try to Join the Tea Party’s Populist Bandwagon but Fall Flat” please click HERE)
Watch a recent interview with the author below: