Bernie Sanders and Donald Trump are strange bedfellows to be sure. But they were the big winners last night when the first primary votes of the 2016 presidential campaign are cast and counted in New Hampshire as each won astonishing and overwhelming victories in their respective party contests. Let’s be clear. They didn’t just win. They each won by huge margins. And their successes have badly embarrassed party leaders and pundits.
These very different candidates have some surprising commonality. They have each found a rich vein of popular (and populist) support as insurgents attacking the insidious corruption wrought by big money in politics. They see the political fight they are waging not as an ideological struggle so much as a class war. They want to gain control of the presidential process and the political parties at its heart by hostile takeover. As they see it, since the system is rigged, only someone not beholden to big-money special interests can make things right.
Trump, who is quite rich (if not nearly so rich as he claims), says he’s above the fray and can avoid money’s influence because he is able to self-fund his campaign and can therefore refuse political contributions (which isn’t quite true). Meanwhile, Bernie says he’s in a position to revolutionize the system because rather than being funded by and thus being indebted to special interests, he is instead funded by millions of small donors (“3.5 million individual contributions, averaging $27 dollars apiece” as of last week). The other candidates are all relying on their own sets of (sometimes interlocking) billionaires, corporate lackeys and PACs to fund and stand-in for their campaigns. Trump and Sanders do not.
Trump goes so far as to brag about having bought and paid for candidates of both major political parties in the past, including Democratic frontrunner Hillary Clinton. “That is the way it is. Somebody gives them money, not anything wrong, just psychologically, when they go to that person, they’re going to do it,” Trump told CNN’s Jake Tapper. “They owe them. And by the way, they may therefore vote negatively toward the country. That’s not going to happen with me.”
“I see the donors all over the place. I know them,” Trump said on Meet the Press. “And I know they don’t give because they happen to be nice people. …For Hillary Clinton, I said be at my wedding and she came to my wedding,” he said. “You know why? She had no choice because I gave to a foundation that frankly that foundation is supposed to do good.”
Secretary Clinton seethes when Senator Sanders makes the same connection as Trump. From the first moments of the Democrats’ debate last Thursday evening, Sanders spoke, as he often does, about how “big money controls the political process in this country.” Indeed, he is “very proud to be the only candidate up here who does not have a Super PAC, who’s not raising huge sums of money from Wall Street….” What made Clinton so angry was what she characterized as an “artful smear” – the unspoken inference that big money controls her.
Secretary Clinton acknowledged taking the money, of course, but insisted that it didn’t really mean anything. “Time and time again, by innuendo, by insinuation, there is this attack that he is putting forth, which really comes down to, you know, anybody who ever took donations or speaking fees from any interest group has to be bought,” Clinton said. And here her denial included a direct challenge: “you will not find that I ever changed a view or a vote because of any donation that I ever received.”
Unbowed, Sanders responded. “Let’s talk about why, in the 1990s, Wall Street got deregulated [when, not coincidentally, Clinton’s husband was president]. Did it have anything to do with the fact that Wall Street provided — spent billions of dollars on lobbying and campaign contributions? Well, some people might think, yeah, that had some influence. …[T]here is a reason why these people are putting huge amounts of money into our political system. And in my view, it is undermining American democracy and it is allowing Congress to represent wealthy campaign contributors and not the working families of this country.”
Earlier in the week prior to the debate, CNN’s Anderson Cooper had been more specific about Wall Street money Clinton had been paid. At a New Hampshire “town hall” meeting, he asked her about $675,000 in speaking fees that she had received from Goldman Sachs.* She said, “I make speeches to lots of groups. I told them what I thought. I answered questions.” But Cooper wasn’t satisfied: “But did you have to be paid $675,000?” Clinton replied simply, if inartfully, “Well, I don’t know. That’s what they offered.” She then shrugged and conceded that everybody does it before using the defense she would use in the debate, that the attempt at influence hadn’t worked. “Name anything they’ve influenced me on. Just name one thing.”
During the Thursday debate, this theme returned when moderator Rachel Maddow noted that many voters were concerned about the fees. Clinton bragged about her inscrutability. “Well, you know, Rachel,” she said, “I think I may not have done the job I should in explaining my record.” As for the speaking fees, everybody did it — “so many former officials, military leaders, journalists, others.” Secretary Clinton is surely right about that, which is precisely the point that Senator Sanders and Donald Trump want to emphasize.
But what did Secretary Clinton actually say in those speeches? To begin with, she didn’t criticize her hosts. Perhaps that’s simply indicative of good manners, but she also praised her hosts for raising capital, creating jobs and empowering women. “It was pretty glowing about us,” one person who attended the event said. “It’s so far from what she sounds like as a candidate now. It was like a rah-rah speech. She sounded more like a Goldman Sachs managing director.” At another event, she allowed as to how the financial crisis wasn’t solely the fault of the big banks and that Dodd-Frank was worth some re-examination. The Clinton campaign disagrees with those characterizations, of course, but (tellingly) refuses to release the transcripts, transcripts that she had demanded.
At the debate last week, Clinton said she would “look into” releasing the speech transcripts. A day after the debate, Clinton operative Joel Benenson told reporters, “I don’t think voters are interested in the transcripts of her speeches.” With George Stephanopoulos on ABC’s This Week on Sunday, Clinton changed her tune on calls to release the speech transcripts.
“Let everybody who’s ever given a speech to any private group under any circumstances release them. We’ll all release them at the same time,” she said. “I have never, ever been influenced in a view or a vote by anyone who has given me any kind of funding.”
This Wall Street connection may be a big reason why younger voters so far prefer Sanders by such enormous percentages. “I’m concerned with her talks with Goldman Sachs – the big money that is behind her,” Sarah Kocher, in New Hampshire from Hofstra University, told Slate earlier this week. On the other hand, she admires Sanders’s stance against “the big money and the banks.” Others are even more blunt. “I get the impression from Hillary that as soon as she gets in office … she wouldn’t be an effective president,” said another student, “and if she was effective, it wouldn’t be for me, it would be for her banker friends who were giving her millions of dollars.”
Sanders and other critics fear that Clinton is too close to Wall Street and will rely too much on Wall Street for advice, guidance and for such senior administration positions as U.S. Treasury secretary. The big money she was paid for brief appearances only intensifies the criticism. Even though Secretary Clinton seems to think that this line of inquiry is outrageous somehow, it is entirely fair to consider what special interests – Wall Street interests in this case – think they’re buying and why they’re willing to pay so much for it (no one who has heard her could ever think that Ms. Clinton can earn mid-six figures for a speech because of its quality and effectiveness).
When an entity like Goldman Sachs pays something like a quarter of a million dollars to Hillary Clinton for a one-hour appearance, they are doing so for three essential reasons: status, access, and influence. The status angle is a straightforward one. The message is clear: We’re Goldman Sachs. We can do what others can’t. We make things happen.
In terms of access, it takes two forms. The first is the access Trump talked about when Secretary Clinton attended his wedding. When Goldman Sachs has a message to convey or a problem to be addressed, they want to be sure that Clinton will pick up the telephone when called.
But access also takes the form of governmental service. Former Goldman executives who moved on to prominent government positions include Robert Rubin and Henry Paulson, who served as U.S. Treasury Secretary; Mario Draghi, President of the European Central Bank; Mark Carney, Governor of the Bank of Canada as well as Governor of the Bank of England; and Malcolm Turnbull, Prime Minister of Australia. In fact, there were so many Goldman people involved in the Obama administration that use of the moniker “Government Sachs” was ubiquitous. Therefore, it should come as no surprise that under the Obama Administration, in 2009 alone, Goldman Sachs took more than $20 billion in taxpayer cash through various bailouts, payments and backstop provisions.
That huge pile of cash points to the third reason for the lucrative speaking gigs: influence. Considerable evidence from the social sciences (see here, for example) suggests that even payments of negligible value can influence the behavior of the recipient in ways the recipient does not always realize. Even a small promotional item like a pen or a coffee mug has been shown to influence behavior. Conflict of interest rules routinely limit or entirely prohibit gifts and the sorts “fees” for service we’re talking about because the influence garnered is so routine and so insidious. Nobody thinks that picking up a pen at a conference booth will influence behavior; but it does.
Michael Lewis has commented upon Goldman’s deep influence on fiscal policy during the financial crisis. “[I]t is amazing to me the degree to which, say, Goldman [Government] Sachs is intertwined with the Treasury, and how they’re — there don’t seem to be any independent voices in the thick of the decision-making. The decision-making is all being done by people who one way or another might expect to make a lot of money from Goldman Sachs in the future [or had made a lot of money from Goldman Sachs in the past].” It’s easy to listen to friends and supporters. It’s easy to see their points of view. Friends want to help friends.
Contract law describes three elements of a binding contract: offer, acceptance and consideration. Hillary Clinton accepted huge amounts of money from Goldman Sachs because “That’s what they offered.” She would have us believe that there was no consideration, no quid pro quo. However, as we all know, our biases are overwhelming and, even worse, we see them in others while denying their personal effect. Just like Hillary Clinton.
Secretary Clinton would have us believe that huge piles of Wall Street cash delivered to her doorstep never had an impact of her. Nosiree. But Goldman Sachs isn’t stupid. They got and continue to expect to get exactly what they paid for. That’s why they offered what they did.
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* Between 2013 and 2015, Hillary Clinton gave 12 speeches to Wall Street banks (including four of the largest six), private equity firms, and other financial companies, pocketing a whopping $2,935,000. She has also benefitted from the fundraising efforts of investment firms, including this major benefit featuring a Jon Bon Jovi performance just before the Iowa caucuses (in case you think she’s had a change of heart about receiving these sorts of contributions).
Above the Market 