By Daniel Kushner 02/09/2016 03:04 pm ET | Updated Feb 10, 2016
I began this campaign as a Hillary fan who respected Bernie Sanders and what he had to say about the economy and U.S. politics. I'm not surprised that this message has appealed to so many people, both those I know, and those I don't, in part because it's something which has gotten less attention than it has deserved, even if there are problems with elements of it.
In my calmer moments, I think that the Sanders campaign might represent a positive shift for the discussion of certain topics within the Democratic Party and the broader populace. Listening to him over the past year, however, I began to increasingly believe that for all the positive things his campaign represents, it also represents something deeply problematic: a fetishization of not knowing.
For me, this probably began with the discussion over foreign policy. I spend a decent amount of my time being horrified by the genocide in Syria, and how the instability that seems to be pouring out of that country may produce horrifying outcomes in states ranging from Turkey to Lebanon to Western Europe. I think there is space for multiple proposals about what we do now, and though I'm sympathetic to much of what Obama is doing and Hillary is suggesting continuing, I would have thought a liberal candidate for the presidency would have been talking about the need for increased foreign aid, or greater openness to refugees, or, well, something.
Instead, his primary comment on international affairs seems to be to reiterate and reiterate and reiterate that he had voted against the Iraq War in 2002. When forced to discuss other matters, he quickly bobbles. In the most recent debate, he seemed unsure about whether North Korea has a single or multiple dictators, and then managed to take both positions in a matter of minutes about whether the U.S. should negotiate without preconditions with other countries.
Now, Bernie Sanders is not the first candidate to not be an expert on even something as significant as foreign affairs. But what's deeply troublesome here is how he seems to have no respect for knowledge on it. It's visible in the almost-disdain he expresses for Hillary Clinton's experience on the matter. She had been Secretary of State for four years, but he has been in Congress for more than two decades. Exactly when does he think he'll have sufficient experience to speak fluently on foreign policy?
Even more disconcerting has been his apparent unwillingness to find advisers to help bridge the gap. It was only 15 years ago that Democrats mocked George Bush Jr.'s disinterest in foreign policy; he at least had the courtesy to be embarrassed by what he didn't know, and hired a staff, including professors of international relations and former Secretaries of Defense, to help. They proved to provide much terrible advice, but there was at least an effort to appear informed. Sanders hasn't done so.
But foreign policy isn't a crucial part of the Sanders campaign. Health care, though, is. Five years ago, Sanders proposed a universal health care bill that failed to get any co-sponsors. When he was reticent to provide information about what plan he was proposing now, the Clinton campaign started to criticize that bill. In response, Sanders withdrew his support of that bill, meaning it now had zero support. Shortly before the Iowa caucuses, Sanders proposed a new plan, which was written by Gerald Friedman, a professor of economics at U-Mass Amherst, whose research focused on the history of the labor union movement in France and the U.S. The plan would cost in the area of $14 trillion over 10 years (for reference, Obamacare was projected to cost in the vicinity of $800 billion over that same time period).
Kenneth Thorpe, a professor of health policy at Emory, whose research is on the cost of medical programs, and has advised the Democrats in the Vermont State Legislature when they sought to pass a single-payer plan, noted that the plan promised savings in the area of $324 billion a year from prescription drugs, which would have been impressive, considering Americans spend only in the vicinity of $305 billion a year.
When the Sanders campaign was presented with this disparity, as well as others, they quickly attacked Thorpe, and then changed their numbers to acknowledge $444 billion per year of increased costs, but also, instantaneously, magically, found the same number of savings elsewhere. This is not how somebody tries to suggest a serious effort to improve the deeply problematic health care plan in the U.S.
This disrespect for expertise is also manifest in how Sanders speaks about the establishment. Recently, when Planned Parenthood and the Human Rights Campaign endorsed Clinton, he referred to their leadership as being parts of the establishment. They are, to be sure, members of an establishment. They're members of the liberal Democratic establishment that has been promoting, sometimes intelligently and other times not, sometimes effectively and other times less so, liberal ideals for decades.
For efforts to promote human rights, these are the people one would expect to have the most understanding of how to do so. One of the fascinating things about this campaign has been seeing how so many of those who should know Bernie Sanders the best, and have worked the hardest on what would appear to be his issues, have been so eager to oppose him. He spent more than a decade in the House; of the 188 Democrats there now, two endorsed him, and 157 endorsed Hillary.
Sanders serves in the U.S. Senate with 45 Democratic-voting colleagues; not only have none endorsed him, but 39 have endorsed Hillary. Sanders has been a significant figure in Vermont politics for four decades. Patrick Leahy, his fellow Senator from Vermont, endorsed Hillary. The incumbent governor of Vermont, and two former Democratic governors of Vermont, endorsed Hillary.
Sanders has focused on issues relating to the labor movement; virtually every single major labor union has endorsed Hillary Clinton. For contrast, in the 2008 campaign, many of these people waited until a few primaries had been held before endorsing. This time, there is almost glee in their desire to make their views known.
Again and again, when the Sanders campaign learns of these moves, the emphasis is on their being parts of the establishment. And they are parts of an establishment. But if this establishment is the enemy, then on whose side is he?
Breaking up the big banks is a crowd pleaser, but it wouldn't fundamentally change Wall Street. Here are three ways he can make his plan a real threat to the finance industry.
By Mike Konczal January 28, 2016
In advance of the Iowa primary, Hillary Clinton and Bernie Sanders have duked it out over who would tackle Wall Street best. Clinton’s reform package aims wide, extending scrutiny from the banks to smaller players who played an outsized role in the financial crisis. Sanders—who, unlike Clinton, has rejected Wall Street money—actually takes a narrower approach that favors a popular but insufficient strategy to “break up the banks.” If Sanders wants to challenge modern finance, he should incorporate and surpass Clinton’s plan.
It’s helpful, first, to understand why many find Sanders’s approach insufficient. Sanders wants to break up the banks in two ways: by size and by line of business. Picture a horizontal cut making the largest banks smaller. Then picture a vertical cut separating ordinary banks from the investment banks. That would be the reintroduction of the Depression-era Glass–Steagall Act, which is at the core of Sanders’s proposed reforms.
However, the financial crisis started with the failure of Bear Stearns and Lehman Brothers. Neither of these were traditional banks, so Glass–Steagall wouldn’t have changed them. The panic created by those two failures spread through many other financial institutions, creating, for example, runs on money-market mutual funds. These, too, exist outside the traditional banking sector and would not be addressed by Sanders’s plan.
The tactic would also change the financial landscape less than many hope. The main policy tool proposed has been to cap the banks’ risky debt at 3 percent of the economy, or about $522 billion. That cap is larger than that of Bear Stearns, and not much smaller than Lehman’s $613 billion when it went bankrupt. A firm like Goldman Sachs would only have to downsize by about a third in order to make the cap—which would hardly change its power over markets and politics.
Because he views their primary sins as political—big banks wield big influence—Sanders focuses on making the banks smaller. But the left can and should change the way that modern finance shapes the economy directly.
Sanders could start by emphasizing the cushion that the financial sector needs to maintain in the event that times go bad. These cushions are called “capital requirements”; they limit how much banks can fund themselves with riskier forms of debt. It’s too easy right now for any financial institution, regardless of its structure or size, to quickly blow itself up with too much debt, destabilizing the economy. The Dodd–Frank Act already made an important start here: JPMorgan Chase slimmed down 6 percent based on the act’s initial requirements, and General Electric broke off its finance unit rather than comply. Building through Dodd–Frank is a perfect place to start.
Sanders also needs to address the “shadow banking” sector: short-term lending and borrowing in arcane financial markets like commercial paper and repo, which invite the risks of banking without any of the accountability. Reducing leverage and increasing requirements on these players is a necessary first step. These reforms would reduce risky activities across several kinds of institutions.
Finally, finance does bad things besides crashing our economy through risky derivatives. Since the “shareholder revolution” of the 1980s, Wall Street has pushed companies away from investment and toward high shareholder payouts. Corporations gave more than $1 trillion in buybacks and dividends to shareholders in 2014, largely to keep them happy and avoid takeovers. This far exceeds the roughly $200 billion these companies invested. Finance is sucking money out of productive enterprises rather than spurring investment in them. Rebalancing this power is essential for any left agenda.
Hillary Clinton is proposing reforms that address these problems, with a risk fee for debt and a focus on “short-termism” for investment. Republicans are likely to pay lip service to these issues, while stressing ways to weaken the progress that has been made. Sanders could immediately change the nature of this debate by proposing even stronger reforms, pointing toward a positive vision of finance.
Bernie’s bad accounting: Sanders is selling his followers a bill of goods on Hillary Clinton, Wall Street and the 2008 crash
Two-dimensional JEWEL SAMAD/AFP/Getty Images
Editorial NEW YORK DAILY NEWS Sunday, February 7, 2016, 4:05 AM
In the cartoon world inhabited by Bernie Sanders, criminal Wall Street titans get ever richer by looting the fortunes of American workers, and nothing short of breaking up big banks will restore hope of justice.
Sanders’ Occupy-worthy storytelling is scaring up plenty of votes, many from millennials still suffering from the financial crisis that began in their childhood and shadows them still.
At the same time, the democratic socialist’s tale is unhinging Democratic politics from reality, in the way that Trumpian lunacy has often disconnected the Republican nominating contest from the facts on the ground.
Sanders doodled two strips of comic-book panels at Thursday’s debate with rival Hillary Clinton, whom he paints as a corrupted stooge of financiers for having accepted their contributions and opulent speaking fees.
Comic strip 1: Wall Street’s criminals would be hauled off in handcuffs, if only a President had the nerve to criminally convict and imprison them.
As one recent example, Sanders sees a conspiracy in a pending legal settlement between Goldman Sachs and the Justice Department and the New York and Illinois attorneys general. The investment bank will pay a hefty sum to close investigations into alleged misrepresentations in decade-old mortgage-securities dealings.
“Kid gets caught with marijuana, that kid has a police record,” inveighed Sanders. “A Wall Street executive destroys the economy (and gets a) $5 billion settlement with the government, no criminal record. That is what power is about. That is what corruption is about.”
Except that the Justice Department already investigated and found insufficient evidence to pursue criminal charges.
It is a measure of the anger abroad in the land that anyone believes this hooey. Plainly, U.S. attorneys like Manhattan’s Preet Bharara and state prosecutors like Manhattan DA Cy Vance would love to have bagged a top banking chief.
But the facts and the law just weren’t there — even with New York’s super-strong Martin Act.
Comic strip 2: Pliant politicians brought doom by allowing banks to get too big.
At the debate, Sanders obsessed about Glass-Steagall, a repealed Depression-era law that kept a firewall between banking and speculative investment.
“I helped lead the effort against deregulation,” Sanders harrumphed. “Unfortunately, we lost that. The result was the worst financial disaster since the Great Depression.”
Try again. Letting big banks grow may have worsened the crisis, but the immediate cause was too-risky financial engineering by entities that were beyond Glass-Steagall’s reach.
Punchline: As senator, Sanders voted in favor of a 2000 law that made such disastrous wheeling-dealing possible.
The crusty Vermont firebrand is selling his economically ill-informed legions a bill of goods.
On foreign policy, the issue that is generally considered your greatest weakness, I believe that you have consistently shown yourself to be responsible, inquisitive and level-headed. And you and Secretary Clinton have run campaigns which, a few stumbles aside, stand in such stark contrast to the GOP field that it is difficult to fathom how anyone could possibly consider any of them over either of you.
Senator Sanders, I like you. I admire you. Most of the time, I wish that we had 99 more senators just like you.
And I would, wouldn't I? I'm on the younger end of the likely voter spectrum. I'm male. I'm white. I'm liberal as hell. I'm the kind of voter that you should have a lock on.
But Senator, we have a problem, and it's a big one. When it comes to the specifics surrounding the core issue of your campaign, you have too often come across as either disingenuous or strangely removed from current reality.
What the plan that you and Sen. Paul have put forth does is, a) pander to low-information voters, and b) make the Federal Reserve's every decision subject to congressional pressure. What you are proposing, Senator Sanders, would set the Fed's independence [ http://www.cbsnews.com/news/why-the-federal-reserve-needs-to-be-independent/ ] back four decades and allow Paul Ryan to pressure it at every turn.
Even when I agree with your proposed policies, I am too often alarmed by your extreme departures from reality.
Of course, it should bring in some money -- a good deal, perhaps. Taiwan, Hong Kong, India, South Africa and South Korea currently raise tens of billions (combined, annually,) with the tax. And a group of ten European nations is now hoping that a similar tax might generate [ http://www.theguardian.com/business/2015/dec/08/decision-financial-transactions-tax-june-eu ] as much as $15 billion annually, between them. (Good luck with that, say Italy and France.)
Senator, you're not going to pay for universal free public college with a Tobin tax.
But none of this holds a candle to the bizarre narrative you have consistently pushed around Glass-Steagall, your primary point of distinction from Secretary Clinton on finance. You have repeatedly insinuated, implied and said flat-out [ https://berniesanders.com/yes-glass-steagall-matters-here-are-5-reasons-why/ ] that the Gramm-Leach-Bliley Act, which you tend to call a repeal of Glass-Steagall, caused the financial crisis.
The law had little if anything to do with the practices leading up to the crisis. It aimed, as you well know, to separate commercial from investment banking. You can support that policy or oppose it, with honest, pro-regulatory arguments on either side. I might even agree with you. But you cannot with a straight face blame the financial crisis on its absence.
I often pose the following question to critics who claim that repealing Glass-Steagall was a major cause of the financial crisis: What disasters would have been averted if Glass-Steagall was still on the books?
I've yet to hear a good answer. While mortgage underwriting standards were disgraceful, they were promulgated by banks and mortgage finance companies and did not rely on any new GLB powers. The dodgy MBS were put together and marketed mainly by free-standing investment banks, not by newly created banking-securities conglomerates. All five of the giant investment banks (Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers, and Bear Stearns) got themselves into severe trouble without help from banking subsidiaries, and their problems certainly did not stem from conventional investment banking activities--the historic target of Glass-Steagall. Similarly, Wachovia and Washington Mutual died (and Bank of America and Citigroup nearly did) of banking diseases, not from entanglements with or losses imposed on them by related investment banks. In short, I don't see how this crisis would have been any milder if GLB had never passed.
If you had to pick a single government move that did more than any other to muck things up, it was probably this bill, passed by a Republican Congress and signed into law by lame-duck President Bill Clinton in December 2000. It effectively banned regulators from sticking their noses into over-the-counter derivatives like credit default swaps. There's no guarantee that regulators would have sniffed out the dangers in time. But banning them from even looking sent a pretty clear anything-goes message to OTC derivatives markets.
I'm not saying this to pin the blame on any one law, Senator. Certainly not to pin it on you. That would be absurd. I am merely pointing out that Glass-Steagall is an especially ridiculous boogeyman.
In fact, there is good reason to believe that Glass-Steagall would have made the crisis worse. The kind of combined institutions the law aimed to prevent weathered the financial crisis far better than the kind of independent investment firms it aimed to mandate.
The Gramm-Leach-Bliley Act had little if anything to do with the current crisis. In fact, economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been...
Deregulated banks were not the major culprits in the current debacle. Bank of America, Citigroup, Wells Fargo and J.P. Morgan Chase have weathered the financial crisis in reasonably good shape, while Bear Stearns collapsed and Lehman Brothers has entered bankruptcy, to name but two of the investment banks which had remained independent despite the repeal of Glass-Steagall.
Observers as diverse as former Clinton Treasury official and current Berkeley economist Brad DeLong and George Mason University's Tyler Cowen, a libertarian, have praised Gramm-Leach-Bliley has having softened the crisis. The deregulation allowed Bank of America and J.P. Morgan Chase to acquire Merrill Lynch and Bear Stearns. And Goldman Sachs and Morgan Stanley have now converted themselves into unified banks to better ride out the storm.
Sometimes, Senator, you really live up to your initials.
I realize that you're giving people easy answers to complicated problems because they respond to that better than wonky lectures about shadow banking. I am fully aware that three quarters of all readers checked out of this piece somewhere around the Tobin tax.
The problem is that you're talking to people who sense that something is wrong, are angry about it and want to know where to place the blame. You are giving them a cabal of boogeyman bankers, corporations and allegedly bought politicians to bear the brunt of that resentment. You're doing this through a fair degree of dishonesty, and the response of your supporters and campaign to any kind of reality check has thus far been to impugn the motives of impartial observers.
Bernie -- do you mind if I call you Bernie? That's bullshit, Bernie.
Senator, you are forming a mob of angry, misinformed people and then turning it on the likely Democratic nominee [ http://cookpolitical.com/story/9258 ]. That, Senator, is a dangerous and destructive game. Does your campaign honestly wonder [ http://www.buzzfeed.com/evanmcsan/the-bernie-bros ] why it has become synonymous with nasty online invective? If you mention the Bernie Bros online, fifty people fitting the profile pop up with abusive comments informing you that they don't exist. On the eve of the Nevada caucus, one of your supporters attempted to place [ http://www.reviewjournal.com/politics/caucuses-2016/attempt-place-review-journal-obituary-hillary-clinton-prompts-report-secret ] an obituary for Secretary Clinton in the Las Vegas Sun-Journal. Don't you think this all might have a little something to do with your "me against the corrupt establishment" bluster?
Meanwhile, anyone hoping to back up your claims will almost certainly be directed to your surrogate Robert Reich--whose website [ http://robertreich.org/ ] currently sports thirty-nine "above fold" links to purchase books targeted at leftist consumers. Your campaign is built on questioning the motives of the people who aren't trying to sell your supporters anything, Senator, while simultaneously directing them toward someone who is.
To be clear: I am not questioning Reich's sincerity. I am, however, pointing out how ridiculous it is, given the circumstances, for your campaign to behave as if the only honest, informed economists in the world are the ones acting as your surrogates.
Senator, I'm not an economist. But I know when someone is spouting nonsense because they think it's what I want to hear. If you want to know how that story ends, just take a look at the current Republican field.
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