The inside-the-beltway world of Washington, DC rarely deals with truly foundational economic issues. When they do, it is only because they are being forced to by crisis or a political movement forcing something onto center stage. The big fundamental issues make the powers that be uncomfortable simply because they may cause big changes that do damage to the wealthy economic incumbents who don’t want their privileged status upended. This is why DC seems so disconnected to people in the real world: while Congress is goofing around with stupid stuff like sequesters, the things that really matter to people go unaddressed.
Occasionally, though, the real issues are forced onto the DC scene by some combination of smart, gutsy politicians and political movements whose time has come. It’s too early to tell, but on what I believe are the two most central economic issues of the next generation, I’m hoping DC is finally going to be forced to pay attention.
The first of these issues is the steady destruction of the American middle class by the massive expansion of the low-wage worker economy. There is a movement on this issue that is coming together to take this issue on, and we are seeing the early signs of it in the New York and Chicago fast food strikes, and the huge nationwide day of action at Wal-Marts around the country last year. There will be more to write about this in the coming weeks, so that will be Part 2 of this story, but you heard it here first: this will be a big deal.
Part 1, though, is to discuss the on-going battle to break up the economic concentration of power in this society, starting with the most important of all industries to break up, the banking industry. The first step in that fight legislatively is the introduction of Sherrod Brown and David Vitter’s bill taking on the Too Big To Fail banks. Brown and Vitter, who to my great delight call their bill the Terminating Bailouts for Taxpayer Fairness (TBTF) Act, put serious pressure on TBTF banks in a variety of ways, and those banks are doing some serious squealing as a result. The banks are saying that if you make them be safer, if you lessen their risk of failure, that it will hurt economic growth. Seriously, guys- you can't come up with something better than that? I guess I missed all the great things these banks’ speculative unregulated trading did for the economy in that last few years. Perhaps a few waiters' jobs at high end Manhattan restaurants?
Brown and Vitter's bill is a little complicated, which worries me, as I tend to think that given the power of the industry, any complicated banking bill will inevitably end up being sprinkled with loopholes through the legislative process and weakened further in the regulatory process. But there is no doubt that as written, it would be a big blow to the power and profits of the TBTF banks. They would hate this bill, which makes it all good in my eyes. It would force the TBTF banks to stop playing some of their most egregious accounting games, and in a genius political move that splits the smaller community banks from the big boys, makes the TBTFers keep almost twice the percentage of capital reserves.
Sherrod Brown has been working incredibly hard on both the substance and politics of all this, and he has done masterful work. Getting a tea party ally like Vitter on board forces the big banks to take this seriously, and getting the endorsement of the politically powerful Independent Community Bankers of America is a very big deal, accomplishing what too many reform efforts in the past have failed to do: splitting the powerful and well-respected community bankers from the big boys. This is the kind of bill that has the potential to pick up a dozen or more votes from Republican Senators, and give wavering Democrats cover from local bankers back home to do the right thing. It is a real and substantial shot across the bow of the big banks who so dominate our economy and our politics. It opens up another major front against the Wall Street behemoths.
But the progressive movement is going to have rally around this in a very big way. The big banks have such extraordinary power in the nation's capital that any bill that takes them on will have a rough time without massive grassroots support. They have scores of eager lapdogs eager to do their bidding in every branch of government, in think tanks all across town, and in the media- and they are easily the wealthiest special interest there is. The people are going to have to rally before this bill has a chance. You can start by signing this petition, and in the days to come you will be hearing more from me and many other groups about how to build this movement.
Taking on the big banks is not just another issue. These TBTF banks have the capacity to crash our economy any time they get greedy and make a bad decision, and they suck trillions of dollars out of productive investment in Main Street businesses so that they can speculate and gamble with our future. This truly is one of the central foundational issues that our generation has to face. Help us build this movement.